Page 601 - Business Principles and Management

Unit 6

Businesses must conduct a new task purchase process when they are purchas-
ing a product, inventory item, or supply for the first time. Businesses typically
purchase a large quantity of products and face larger risks than consumers mak-
ing purchases. For example, if a supplier is unable to supply inventory items, a
business could lose sales or have idle workers, resulting in higher costs. To lower
these risks, businesses conduct careful searches for suppliers, following all the steps
in Figure 22-1. Depending on the purchase, new task purchases can take over a
year to complete.
In a modified rebuy, a business purchases a new or modified product from
established suppliers. In this case, a business may submit new specifications or
ask for bids from new suppliers to ensure they are getting the best price for their
needs.
Many purchase decisions are low risk and can be made without modifications.
This is often the case when a business is engaged in a straight rebuy. For example,
when a business needs more paper for copiers or printers, it often repurchases
from suppliers it has used before.

CHECKPOINT

List the three levels of the business buying process.

22.1 Assessment

UNDERSTAND MANAGEMENT CONCEPTS
Circle the best answer for each of the following questions.
1. Businesses use which of the following sources of assistance in
determining what to purchase?
a. company records
b. salespeople
c. trade associations
d. all of the above
2. When a business is purchasing a new or modified product from
established suppliers, it is engaging in
a. a new task purchase
b. a modified rebuy
c. a straight rebuy
d. an established purchase

THINK CRITICALLY
Answer the following questions as completely as possible.
3. Describe the factors that influence a business’s decision about
when to purchase.
4. Explain the differences between the three
purchase processes used by businesses.

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