Chapter 7

Market structures and supply research

Program

    Market and market structures Supply market research Structuring supply market research Supply market research and information technology

Markets and market structures

  External structure  Industrial branch, horizontal relationship  Industrial column or supply chain  Materials flow:  Diverging materials flow  Linear materials flow  Converging materials flow External factors determine the market structure  Number of suppliers  Number of buyers  Degree of differentiation

Market structures

 Structures at the

supply side:

 Pure competition  Monopolistic competition  Oligopoly  Monopoly  Structures at the

demand side:

 Pure competition  Oligopsony  Monopsony

Typology of market structures

One Few Many One

Bilateral monopoly, ‘captive market’ (spare parts) Limited demand side monopoly (telephone exchanges, trains)

Few

Limited supply-side monopoly (fuel pumps) Bilateral oligopoly (chemical semi manufacturers) Demand-side monopoly (weapons systems, ammunition) Demand-side oligopoly suppliers (components automobile industry)

Many

Supply-side monopoly (gas, water, electricity) Supply-side oligopoly (copiers, computers) Polypolistic competition (office supplies)

Definition

Supply market research:

Systematic gathering, classification and analysis of data considering all relevant factors that influence the procurement of goods and services for the purpose of meeting present and future company requirements.

 On a regular or project base  Qualitative or quantitative  Focused on long term or short term supply

Three areas of supply market research

Macro-economic research Meso-economic research Micro-economic research

Europe US BASF Shell e.g. Chemical industry Bayer r Ford Chrysle Steel Chemical industry Automotive industry US Japan adapted from Faes and de Weerd, 1983

Why supply market research?

The following factors have stimulated the development of supply market research:  Continuous technological development  Supply market dynamics  Monetary developments  Offset obligations  Changes in tax regimes

Structure of supply market research

Determine objectives Prepare research report Cost-benefit analysis

A stepwise approach

Data analysis Feasibility study Data collection What?

Desk research Design of research activities Execution of research activities Where?

Field research

Purchasing market research and IT

Companies are discovering the many ways in which ICT may support their purchasing operations and strategies. Some examples:     Company's like

Saint Gobain

, which is active in a wide range of products ranging from glass manufacturing to construction materials, have installed a worldwide purchasing Intranet. Other manufacturing companies have built similar systems based on Microsoft Outlook software.

Data suppliers like

Yellow Pages, ABC

have now available through their websites vast supplier bases covering supplier addresses in all major EC countries enabling buyers to conduct market surveys in short time.

Sony

uses its Purchasing website to attract new suppliers for certain commodities.

Companies like

FedEx, DHL, UPS

provide linkages through the Internet which enable companies to keep track of their deliveries.

Conclusions

    The ever-increasing turbulence in global supply markets makes supply market research a crucial activity.

Supply market research is required in order to keep informed about going on changes Supply market structures determine the buyer's tactics In setting up research a stepwise approach is recommended.