BIZ 365 reply 4 Reply to student post

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The work below has been posted by another student. Please respond to it by answering each questions individually, apa format and citations. Please keep in mind that your answers should be related to the work. reply to bian Thanks

1. What form of purchasing did Paradyne have before it made changes? What did it change to?

Paradyne used a decentralized approach to purchasing. While this allowed great flexibility to the factories (all individual factories across the world were responsible for the procurement of their own materials), it meant smaller profit for the company mainly because there were small contracts and practically no economy of scale advantages (Multi-National Sourcing, 2013).

The firm converted to a more centralized sourcing strategy. This forced managers in the central office to make all the purchasing decisions for the factories worldwide. Ultimately, this would cut costs and add to the organization’s bottom line.

2. Why was it necessary from Paradyne to change its sourcing strategy?

The company was incurring too many costs. In the competitive environment, it was just more advantageous for the organization to centralize its purchases. The company was able to cut not only its costs but the price of their goods from suppliers who were getting larger orders. Because all purchasing decisions were centrally-made, they resulted in fewer transaction costs. The managers involved were able to cut larger deals with fewer suppliers; this resulted in suppliers being more willing to cut on prices, which made Paradyne’s products more competitive in price while the company made a larger profit.

3. What did Paradyne do in order to increase the probability of a successful Sourcing Vision 2000?

The company’s core goal seems to have become a continuous amelioration of their strategies. First, managers analyzed existing contracts and costs to analyze where they could save the most money from. They have also identified which target areas will be the most impacted. Once that was done, these projects were then moved on to a team whose sole job was to work on making those savings happen. Managers would then move on to the next projects.

4. Discuss the difference between domestic and international purchasing.

While domestic and international purchasing are somewhat similar in some aspects, both are very different. When purchasing internationally, costs like duties and tariffs are a burden not incurred when purchasing domestically. Also, costs associated with customs, international taxes, insurance protection, handling and terminal fees should be considered when purchasing internationally.

5. What are some of the factors that would drive a company to source internationally instead of domestically?

With globalization, companies are now facing competition from international organizations. With easy entry to many markets around the world, companies now have to find new, creative strategies to stay competitive against international companies. Being able to purchase material or pay labor oversea are factors that provide an opportunity to save on costs. Quality can remain high, or improve, while costs stay down. Also, sourcing internationally allows a company to look for more technology-inclined countries, are thus improving their business.

6. What are some of the factors that would help a company successfully execute an international sourcing strategy.

As mentioned in the text, sourcing internationally is logistically complex. Global managers should be well-prepared with the proper research: obtaining the relevant data, aligning all necessary functional areas, creating cross-function and cross-locational teams, and conducting meetings periodically to re-evaluated goals and decisions. Also, managers should strive to constantly look for ways to cut costs.

References:

Multi-National Sourcing. (2013, September 13). Retrieved from Global Edge-MSU: http://globaledge.msu.edu/content/onlinecoursemodules/45/multinational-sourcing/player.html