Buy Grid Model? Why Is It Important In Decision Making? What Is The Indication?

1129 words - 5 pages

Q3) Buy-Grid model? Why is it important in decision making? What is the indication?Supplier EvaluationAn important job of the purchasing agent is to evaluate potential suppliers and their offerings. The effects of purchasing on a firm's competitive ability are great, so companies pay close attention to how they evaluate suppliers. Marketers must also understand the process, for them the ones being evaluated. Understand the process is like understand the rules of any games; if you don't know how to score, you are unlikely to win.The buy-grid model is a version of a theory developed as a general model of rational organization decision making, explain how companies make decisions about, for example, where to locate a plant or make a purchase. The buy grid model has two parts: the buy-phase model and the buy class.The buy-phase model in a management class as the rational or extensive problem solving model or in consumer behavior as high-involvement model. Buy -phase model suggests that people go through a series of steps (or phrases) when making a decision, beginning with problem recognition. Then they search for alternatives, evaluate alternatives, and select a solution, which are them implemented and evaluated.For example, when an organization needs new office space, crowded conditions help force recognition of the need. The next step is to define the type of product needed: Does the organization want to build a new office building, add on to an existing building, or simply find a larger place to rent or buy? As the organization continues to examine its needs, detailed specifications such as the size and number of offices are created. If the decision in the second step was to build on, an architect would help create specifications drawing plans. Then suppliers would be contracted, included those recommended by architect. Step 5, acquisition and analysis of proposals, involves receiving and reviewing bids from each contractor. The architect and the executives would meet, evaluate the proposals, and select a contractor (step 6). Step 7 involves the creations of a contract specifying when the building will be completed, what it will look like, and when the payment will be made. Evaluation begins as the project begins, but continues well after the organization moves in.As observers of buying behavior quickly realized, many organizational purchase decisions do not involve that much work or include each and every step every time. A second element, the buy-class, was added, resulting in the grid. Buy-class refers to the type of buying decision, based on the experience of the buyer with a purchase of a particular product or service.Organizational researchers realized that once a decision was made, products were bought automatically over and over; recognizing a problem simply mean recognizing that the company is low in an item and needs to order more. The complete process was used only for new buys, products or services never purchased before. Automatic...

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