Contract & Procurement Management

Contract & Procurement Management 1
CONTRACT & PROCUREMENT MANAGEMENT
By (Name)
(Course Name)
(Tutor’s Name)
(University’s Name)
(City)
(Date)

Contract & Procurement Management 2
Question one: Purchasing power analysis
The economic paradigm which indicates an organization’s or an individual’s ability to
purchase services or goods in the market is defined as the purchasing power. The very best way
that can measure purchasing power is to calculate the number of items that one single customer
or a buyer can purchase with a fixed dollar amount. It is important to note that there are several
factors which can influence purchasing power which are inflation, supply, and credit or interest
rates.
Purchasing power can effect change in an organization via collective business decisions.
First by consumers pooling their purchasing power, they can effect Groupon oil company
decision by gaining access to oil product at a lower cost; when the company raises the price of
oil, then few customers or buyers will buy thus decreasing the sales of the product. This impacts
price related decisions of Groupon Oil Company. This can be even worse once buyers aligns
their economic interest as consumers they form collective purchasing power as no oil product is
bought if Groupon Oil Company increases price of their products. In addition, by buyers pooling
their purchasing power they can unlock the ability of Groupon Oil Company.
On the other hand new start-ups oil companies such as Groupon have made a lot of profit
around the concept of purchasing power. In here the organization have aggregated consumer
demand so as to secure daily deals for their gleeful consumers (BYRNE, n.d )
Question two: The three levels of trust
Trust is a key concept in understanding buyer-seller relationships. Trust is defined as the
belief that one can be dependable and will honor their commitments. Researchers have found out
that there are three levels of trust which are honesty, benevolence, and competence. Those
individuals or customers who are honest, organizations tend to give them an upper hand when