Question: Explaining the role of 'suppliers' in an organization's microenvironment. Discuss the impact the supplier environment might have on the marketing of soft drinks.
Definition of suppliers: Firms and individuals that provide the resources needed by the company to produce its goods and services (lecture 3, p10). This includes materials and parts, capital items, supplies and service. (Diagram 1.4)
The Role of suppliers
Suppliers play a vital role in an organization's microenvironment. The relationship between suppliers and organizations are built on a solid foundation of value. (Diagram 1.3) The growth and the vision of the organization depend heavily on the values that the suppliers can offer. The extent to which organizations and suppliers work together toward their respective or common goals is defined as Joint action. In this Joint, the supplier contribute significantly in provides sources of competitive advantages towards the organizations against other competitors as well as save cost and achieve efficiency for the organization. (Diagram 1.1)
Supplier and organization are interdependent on each other. This relationship develops and nurture strong business ties and make both needed each other to achieve desired goals. The ties can become stronger when both an organization and a supplier are highly dependent on each other. The most important thing is that an organization cannot offer customers superior service if the suppliers are not giving the organization the same.
It is important that the organization has a high communication frequency and information sharing with its suppliers. A good frequent contact and information sharing helps routine issues such as product availability, order handling and delivery issues and reduce uncertainty. When the organization has frequent communication with it's suppliers, it can give the supplier the chance for operational improvements and product development. This can indirectly help the organization because when the advice is accepted, the efficiency and effectiveness of the supplies can be improved. If the role of the supplier is underestimated by the organization, the organization could prevent itself from improving and developing.
Customer accommodation(Diagram 1.2)
This reflects to what extent the suppliers are prepared to accommodate customer's changing needs and want, which is always changing rapidly and abruptly.
Can suppliers be flexible? Are they prepared to relax rules for customers? Can they respond to the unexpected? And so on. Here, the role of supplier is vital. If the organization cannot accommodate what customer need and want because of the supplier, the organization could incur a decrease in sale in short term and damage customer satisfaction in the long term.
A high level of product quality usually leads to customer confidence. An organization cannot build that confidence if their supplier cannot produce a high quality supplies.
The role of supplier here is to make sure they can produce quality product that an organization is expected as well as it's costumers.
Transaction cost is also another important element in supplier's offering. Transaction cost emphasizes the efficiency of inter-firm ex-change and the magnitude of transaction cost is what determines the degree of relational behavior between firms (K. Kim, 1999, p 218).
Transaction cost includes frequency of transaction, uncertainty and asset specificity, such as location of firms and the delivery.
Organization seeks suppliers that give the best price, such as cost of the products, materials of components purchased and other costs involved process. The supplier also needs to position their price that will bring cost benefits to the company so that their relationship is maintained steadily.
Brand and country of production
Brand and country of production provides value both to the Customer and organization. The quality...