Review questions exam International Entrepreneurship
CHAPTER 1: Focus on industrial procurement
1) What significant changes did we see in the industrial procurement process of large
companies over the last 25 years? What impact did these changes have on the seller?
Illustrate with your own examples.
Over the past 25 years, the industrial procurement process of large companies has undergone
significant changes:
Increased Status of the Purchaser: Procurement professionals have gained more strategic
importance in organizations. Their role is no longer limited to just placing orders but includes
influencing key business decisions, cost-saving strategies, and supplier relationships.
Direct and Indirect Procurement: Companies have started clearly separating :
• Direct Procurement: Refers to purchasing raw materials and goods directly related to
production processes (e.g., components for manufacturing).
• Indirect Procurement: Refers to acquiring goods and services that support business
operations but are not directly tied to production, needed to keep the business running but
are not part of the final product (e.g., office supplies or IT services).
Centralized Procurement: Instead of each department buying separately, companies now buy
everything from one central team. This saves money and makes the process smoother.
Fewer Suppliers & Supplier Relationship Management (SRM): Companies now work with fewer
suppliers but build stronger, long-term relationships with them (reliable suppliers). Companies prefer
to work with a smaller number of trusted suppliers. Tools like SAP SRM help manage supplier
relationships and track their performance.
Supply chain integration: Procurement is now better integrated with other parts of the supply chain,
making it easier to track products and improve efficiency. Supply chain integration means that
suppliers and buyers work closely together to ensure seamless operations. This involves sharing
information
Rise of quality department: Quality management is becoming a critical aspect of procurement,
where Companies now demand higher quality from suppliers.
Impact on Sellers:
Greater Dependence on Buyers: Sellers face stricter rules for quality, safety and
sustainability.
Pressure to Innovate: Long-term partnerships push sellers to keep improving their products
and technology.
Risk of Dependency: With fewer buyers choosing centralized suppliers, sellers may rely
heavily on one or two major clients, increasing business risks.
Stronger Competition: As buyers focus on fewer suppliers, sellers must work harder to win
contracts by offering better deals and extra value.
1
,Example ideas: Apple and Foxconn: Apple uses fewer suppliers but demands high standards and
constant innovation from Foxconn. Carrefour: Centralized procurement means all suppliers must
meet broader quality and pricing standards across all stores.
2) In industrial sales, as a small local supplier, you have little chance of getting into business
with large multinational companies. Discuss this statement.
Businesses nowadays use centralized procurement strategies, meaning they buy from a supplier
in one central location to save money by ordering in bulk. This often leaves out small local
suppliers because they can't meet the large demand. Big companies also prefer suppliers who
can provide the same quality and meet strict standards worldwide.
However, small players are not entirely pushed out. They can find opportunities by offering
specialized or unique products, aligning with sustainability goals, or collaborating through
cooperatives and networks to meet volume requirements.
For example, small cocoa farmers join Fairtrade cooperatives to supply companies like Mondelez,
and Patagonia partners with small ethical wool suppliers. These approaches allow small suppliers
to remain competitive despite the dominance of centralized procurement.
3) In the procurement process of large organisations, there are strong group dynamics, but we
should also not lose sight of the psyche of the individual buyer. Clarify this statement.
In the procurement process of large organizations, decisions are often influenced by group dynamics,
as many people with different roles and responsibilities are involved. These roles include users,
decision-makers, gatekeepers, influencers, and buyers.
At the same time, it is important to remember that each individual in the group has their own
personal motivations and reasons for making decisions. These motivations can be divided into three
categories:
1. Personal influence and evaluation criteria
2. Personal information processing
Selective exposure
Selective retention
3. Risk avoidance
Avoiding internal and external uncertainty
Mitigating internal and external consequences
4) Explain the concept of the Kraljic matrix and discuss the practical usefulness of this tool.
Part 1: Explain the concept of the Kraljic matrix
The Kraljic matrix is a tool for supplier segmentation and purchasing strategy. It categorizes goods or
services based on two criteria. (leverancierssegmentatie + inkoopstrategie)
- Risk, which includes supply risk and market complexity.
- Profitability focusing on financial and profit impact.
2
, This framework helps organizations analyze procurement priorities and tailor their approach to
different supplier types.
Part 2: Discuss the practical usefulness of this tool
The Kraljic matrix is practical because it helps businesses optimize resources and manage risks
effectively. It also gives you the explanation on the possible strategy you must use for your item. For
example, high-risk, high-profit items require partnerships ( ew suppliers), while low-risk, low-profit
items need minimal effort. You can choose between a lot of suppliers. By aligning strategies with
supplier characteristics, companies improve efficiency and resilience in their supply chain.
Non-critical items
Multiple suppliers
Low value per unit
Strategy: simplifying the purchase process. Reducing administrative burden
Automatization
Example: stationary
Leverage items
Standardized or commodified products
Bigger volume needed.
Strategy: divide and rule’ = exploit your power position
Example: packaging materials
Strategic items
Critical for business
Possible high cost of change
Strategy: invest (executive) time in relationship +buyer-seller process
integration
Example: rare raw products: grondstoffen
Bottleneck items
Oligopoly
Possible scarcity beit with limited profitability
Strategy: damage’ limitation Internal creativity + seek replacement by items
from ‘leverage’ suppliers
Example: spare parts
3
CHAPTER 1: Focus on industrial procurement
1) What significant changes did we see in the industrial procurement process of large
companies over the last 25 years? What impact did these changes have on the seller?
Illustrate with your own examples.
Over the past 25 years, the industrial procurement process of large companies has undergone
significant changes:
Increased Status of the Purchaser: Procurement professionals have gained more strategic
importance in organizations. Their role is no longer limited to just placing orders but includes
influencing key business decisions, cost-saving strategies, and supplier relationships.
Direct and Indirect Procurement: Companies have started clearly separating :
• Direct Procurement: Refers to purchasing raw materials and goods directly related to
production processes (e.g., components for manufacturing).
• Indirect Procurement: Refers to acquiring goods and services that support business
operations but are not directly tied to production, needed to keep the business running but
are not part of the final product (e.g., office supplies or IT services).
Centralized Procurement: Instead of each department buying separately, companies now buy
everything from one central team. This saves money and makes the process smoother.
Fewer Suppliers & Supplier Relationship Management (SRM): Companies now work with fewer
suppliers but build stronger, long-term relationships with them (reliable suppliers). Companies prefer
to work with a smaller number of trusted suppliers. Tools like SAP SRM help manage supplier
relationships and track their performance.
Supply chain integration: Procurement is now better integrated with other parts of the supply chain,
making it easier to track products and improve efficiency. Supply chain integration means that
suppliers and buyers work closely together to ensure seamless operations. This involves sharing
information
Rise of quality department: Quality management is becoming a critical aspect of procurement,
where Companies now demand higher quality from suppliers.
Impact on Sellers:
Greater Dependence on Buyers: Sellers face stricter rules for quality, safety and
sustainability.
Pressure to Innovate: Long-term partnerships push sellers to keep improving their products
and technology.
Risk of Dependency: With fewer buyers choosing centralized suppliers, sellers may rely
heavily on one or two major clients, increasing business risks.
Stronger Competition: As buyers focus on fewer suppliers, sellers must work harder to win
contracts by offering better deals and extra value.
1
,Example ideas: Apple and Foxconn: Apple uses fewer suppliers but demands high standards and
constant innovation from Foxconn. Carrefour: Centralized procurement means all suppliers must
meet broader quality and pricing standards across all stores.
2) In industrial sales, as a small local supplier, you have little chance of getting into business
with large multinational companies. Discuss this statement.
Businesses nowadays use centralized procurement strategies, meaning they buy from a supplier
in one central location to save money by ordering in bulk. This often leaves out small local
suppliers because they can't meet the large demand. Big companies also prefer suppliers who
can provide the same quality and meet strict standards worldwide.
However, small players are not entirely pushed out. They can find opportunities by offering
specialized or unique products, aligning with sustainability goals, or collaborating through
cooperatives and networks to meet volume requirements.
For example, small cocoa farmers join Fairtrade cooperatives to supply companies like Mondelez,
and Patagonia partners with small ethical wool suppliers. These approaches allow small suppliers
to remain competitive despite the dominance of centralized procurement.
3) In the procurement process of large organisations, there are strong group dynamics, but we
should also not lose sight of the psyche of the individual buyer. Clarify this statement.
In the procurement process of large organizations, decisions are often influenced by group dynamics,
as many people with different roles and responsibilities are involved. These roles include users,
decision-makers, gatekeepers, influencers, and buyers.
At the same time, it is important to remember that each individual in the group has their own
personal motivations and reasons for making decisions. These motivations can be divided into three
categories:
1. Personal influence and evaluation criteria
2. Personal information processing
Selective exposure
Selective retention
3. Risk avoidance
Avoiding internal and external uncertainty
Mitigating internal and external consequences
4) Explain the concept of the Kraljic matrix and discuss the practical usefulness of this tool.
Part 1: Explain the concept of the Kraljic matrix
The Kraljic matrix is a tool for supplier segmentation and purchasing strategy. It categorizes goods or
services based on two criteria. (leverancierssegmentatie + inkoopstrategie)
- Risk, which includes supply risk and market complexity.
- Profitability focusing on financial and profit impact.
2
, This framework helps organizations analyze procurement priorities and tailor their approach to
different supplier types.
Part 2: Discuss the practical usefulness of this tool
The Kraljic matrix is practical because it helps businesses optimize resources and manage risks
effectively. It also gives you the explanation on the possible strategy you must use for your item. For
example, high-risk, high-profit items require partnerships ( ew suppliers), while low-risk, low-profit
items need minimal effort. You can choose between a lot of suppliers. By aligning strategies with
supplier characteristics, companies improve efficiency and resilience in their supply chain.
Non-critical items
Multiple suppliers
Low value per unit
Strategy: simplifying the purchase process. Reducing administrative burden
Automatization
Example: stationary
Leverage items
Standardized or commodified products
Bigger volume needed.
Strategy: divide and rule’ = exploit your power position
Example: packaging materials
Strategic items
Critical for business
Possible high cost of change
Strategy: invest (executive) time in relationship +buyer-seller process
integration
Example: rare raw products: grondstoffen
Bottleneck items
Oligopoly
Possible scarcity beit with limited profitability
Strategy: damage’ limitation Internal creativity + seek replacement by items
from ‘leverage’ suppliers
Example: spare parts
3
