Pricing in the purchasing department; finding the right methodology to generate sustainable competitive advantage
Tutor / director / evaluatorCremades Oliver, Lázaro Vicente
Document typeMaster thesis (pre-Bologna period)
Rights accessOpen Access
During the economic development of the last decades, many companies have dedicated most of their efforts and resources in the generation of innovative products that allowed them to differentiate from the competition and gain market reach. The implications in the cost structure of the development, production and distribution of these products have not traditionally been given the same level of analysis. However, it is a market reality that prices and costs play a very important role when it comes to achieving sustainable competitive advantage. In this thesis, a general overview is initially given on the role played by the Supply Chain in large international enterprises, a more detailed look is given to the supplier-buyer relationships and the transfer pricing for the goods or services that are outsourced. As a next step, several methodologies are presented and discussed to assess the performance of the purchasing prices that are being paid. Finally, Linear Performance Pricing (LPP) is chosen as the suitable methodology to apply in two real life business cases in a large international enterprise of the construction industry. The applicability of the method is discussed for different groups of commodities, the methodology is described and the achieved results are outlined. Finally, the potential results of the application of this method are outlined and their implications for the different departments of the company are described.