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Subco Business Case Study: Strategic Purchasing Management

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b. During a brainstorming session, the CS suggested the following: -
• Hire a Strategic IT Manager to provide ecommerce platform to counter the gradual demise of interruption marketing. With ecommerce, buyers would be able to learn details about SubCo’s products and compare pricing before deciding on a purchase.
• Ecommerce would also enable SubCo to sell as an agent to cheaper overseas producers and as there is no requirement for storage, selling price can be substantially reduced.
• For controlled items like steel bars, SubCo can buy in bulks when prices are low, store at its warehouse and sell when price goes up.
• For a more systematic and prudent purchases, key position of Strategic Purchasing Manager should be created. Currently, purchases …show more content…

The CEO who is an Engineer by profession is due to retire in 2 years. When he was roped in from the parent to join SubCo 14 years ago, the company was generating a healthy net margin of 15% compared to just 4-5% currently. He thought he wanted to achieve the same or at least 70% of that when he leaves. After all, the ideas of continuing with current business practices cannot even be considered as a decision! He argued that it is just a ‘non-action’ and purely a case of ‘fear of the unknown’ amongst the 2/3rds’. He understands their concerns that when they go in 4-5 years, would SubCo still be in the black if the proposals failed to live up to its expectations (or rather, can SubCo pays them the golden handshake due at the end of their employment services)? He added, ecommerce is the way to go for businesses these days and those who don’t care to provide similar buying experience to reach their audience will lose out to the competitors who do! And when the sales systems become more competent as a result, naturally the parent would not hesitate to make it compulsory for other subsidiaries to buy from SubCo as suggested by HHRA, even without asking. Following his comments, the management team had unanimously agreed to implement ecommerce as the company’s new marketing

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