Kraljic Portfolio Positioning Model Analysis
Added on 2019-10-18
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INTRODUCTION:- This matrix was propounded by Peter Kraljic in 1983, which is known as Kraljic matrix. Kraljic matrix isused to analyze the portfolio of purchasing of a company. This matrix helps in knowing the workingmethods of a department of purchasing of different organizations. This matrix tells us how anorganization spends its time on various products. In this assignment, we will study about the Kraljicportfolio positioning model in a practical manner. (Bäckstrand, 2015) After reading this anyone can easilyunderstand the basics of this powerful strategic tool. This matrix firstly used in Review Business ofHarvard in 1983. It is a very famous and very worthy model for worldwide companies. In thisassignment, we will analysis the portfolio of Samsung by using Kraljic matrix. In this we analysisSamsung positioning by using four tools of Kraljic positioning which are following:- Classification of Purchase Analysis of MarketStrategic positioningPlanning of ActionStep 1:- Purchase classification:- In this step, we divided all products, components, commodities and services of Samsung organizationthat customers buy as per the risk of supply and impact of the potential profit. For Samsung, organization risk is high when the dealing item is a scarce product which is notavailable easily in the market. Availability of different required items affected by natural disastersor instability of government, or when there are few suppliers and delivery logistics of the item isvery difficult. (Bäckstrand,2015)For Samsung, impact of profit is high because the items of the Samsung adds additional value tothe outcome of the organization. This could be because the organization makes up a large1
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proportion of the output or it could be possible because of high impact on the quality of itsproducts.Product purchasing classification shows each item of Samsung at the right place on the productpurchasing classification matrix which is shown in below figure:-Figure 1: Product purchasing classification model:-This model includes thefollowing approaches ofpurchasing for every quadrant:-STRATEGIC ITEMS:-In this approach, thoseitems are includedwhich requires highattention from purchasing managers. Options include analyzing and managing risks regularly,considering producing goods in-house rather than purchasing from outside or long-term supplyrelationships, if all these seems appropriate. (Dabhilkar,2016)2
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LEVERAGE ITEMS:-It includes using the full potential of purchasing, placing high- volume orders and substitutingproducts or suppliers.BOTTLENECK ITEMS:-It is a useful approach to purchasing. It is a combination of various useful approaches which are:ordering in access when the raw material are available or identifying ways to control vendors.NON – CRITICAL ITEMS:-In this approaches following approaches are include monitoring and optimizing order volume,fully optimize inventory levels and using standardized products.Step 2:- Market analysis:-In this step, we will conduct market analysis to investigate the market. In this, we are analyzing potentialpowers of our suppliers and different buying powers of the customers. Conducted market analysis forSamsung organization helps the organization in enhancing their potential customers, build its image in themarket or greater its profit. (Liew, 2014) A market analysis helps the organization in knowing the trend ofthe market in current days. Due to this they remain updated, and their products also are in demandbecause of the latest technology.Step 3:- Strategic positioning:-In step 1 we classify the different products or available materials which are known as “strategic," in thestep 2 we identify the buying powers of customers or supplying power of suppliers. Enter all these itemsin purchasing portfolio matrix is known as strategic positioning. Strategic positioning is shown in thefollowing figure:- (Dabhilkar,2016)3
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