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  • Published on: 14th September 2019
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Aim: The aim of this dissertation is to analyse buyer supplier relationships and the impact of managing the relationship with the supplier on the buyer performance.

The research will attempt to address the following research objectives in order to fulfill the above-mentioned aim:

1. To provide the background to buyer supplier relationships through the discussion of supply chain management and green supply chain management

2. To critically review and analyse the relevant literature on the buyer supplier relationships and their subsequent impact on organisational performance of the buyer

3. To specifically analyse if the buyer supplier relationship changed during the global financial crisis of 2008-09 in cyclical industries (e.g. oil, automobile and wine industries) and the resultant impact on organisational performance of the buyer firms

Methodology: The methodology followed by the research included the narrative literature review. The different search engines utilised for the purposes of the research included Science Direct, university e-library and Google scholar. These search engines were used to search for the key terms such as ‘buyer supplier relationships', ‘supply chain management', ‘green supply chain management' and ‘buyer supplier relationships during financial crisis'.

Conclusion: with regards to the above-mentioned research objectives, the dissertation arrived at the following conclusions:

• There is an increased focus on green supply chain management, which has contributed to a greater emphasis on buyer-supplier relationship as a source of enhancing sustainability.

• There is existence of a positive relationship between environmental regulations and green supply chain management as well as a positive relationship between external stakeholders and green supply chain management.

• The buyer-supplier relationship flourished after the global financial crisis of 2008-09, which allowed the buyers to negotiate discounts and improve the quality of the products across oil, automobile and wine industries. This positively influenced the organisational performance  

Declaration: This is to confirm that the dissertation is my original work unless referenced to the relevant authors.

Intellectual property statement

I. The author of this dissertation (including any appendices and/or schedules to this dissertation) owns certain copyright or related rights in the (the Copyright”) and he has given the University of Manchester certain rights to use such Copyright, including for administrative purposes

II. Copies of this dissertation, either in full or extracts and whether in hard or electronic copy, may be made only in accordance with the Copyright, Designs and Patents Act 1988 (as amended) and regulations issued under it or, where appropriate, in accordance with licensing agreements which the University has entered into.

III. The ownership of certain Copyrights, patents, designs, trademarks and other intellectual property (the “Intellectual Property”) and any reproductions of copyright works in this dissertation, for example graphs and tables (“Reproductions”), which may be described in this dissertation, may not be owned by the author and may be owned by third parties. Such Intellectual Property and Reproductions cannot and must not be made available for use without the prior written permission of the owner(s) of the relevant Intellectual Property and/or Reproductions.

IIII. Further information on the conditions under which disclosure, publication and commercialization of this dissertation, the Copyright and any Intellectual Property and/or Reproductions described in it may take place is available in the University IP Policy, in any relevant Dissertation restriction declarations deposited in the University's library, and The University Library's regulations.  

Chapter 1: Introduction

1.1 Overview of the topic area

Dunning (1993) was one of the earliest researchers to receive attention on the topic of supply chain management, when he argued that multinational corporations have developed global networks of suppliers that attempt to benefit from the industry and country specific characteristics in order to develop the competitive advantage. The rise of multinational corporations is attributed to heightened globalisation and to a changing focus of firms to competition among network of organisations and expansion overseas to benefit from the globalisation. It is in this context that Dunning (1993) asserted that supply chain management has become an increasingly important topic.  

As the awareness regarding the environmental protection increases across the globe (Flammer, 2013), this has contributed to a greater effort by the stakeholders towards protection and preservation of the environment. Although such a trend initiated in the developed countries (Safford et al., 2014), it has also become widely accepted across the developing countries now, which are increasingly taking measures to enhance the sustainability of their operations through reducing the impact on the environment (Khavul and Bruton, 2013).

A similar conclusion is reached by Kohler (2014), who argued that greater pressure and drive by the organisations is also attributed to globalisation, which has led to heightened awareness of the climate change worldwide and prompted organisations to undertake the efforts to improve sustainability of their operations. The result has been an increased concern demonstrated by the organisations, when it comes to the impact of the organisations on their environment through their operations. This argument is reinforced by Gmelin and Seuring (2014), who concluded that greater concern for the environment has increasingly become part of the corporate culture worldwide, which subsequently has led to increased adoption and implementation of the sustainable practices, such as green supply chain management to improve the operations of the business.

The heightened importance of supply chain management and green supply chain management has led the firms to analyse and better manage their relationships with their suppliers (Zhu et al., 2013). This is because improved buyer supplier relationships has positively impacted the organisational performance of buyer firms (Liu et al., 2012), which in turn has raised the interest in management of the supplier relationships to improve performance and gain competitive advantage. Besides a positive impact on organisational performance, buyer supplier relationships also contribute to improved sustainable production of both the buyer and supplier and transition towards green supply chain management (Ketkar et al., 2012), which contributes to greater sustainability.  

1.2 Research rationale

There are several reasons that the researcher decided to focus on this topic. Firstly, buyer supplier relationships has become an increasingly important topic in the current environment, as evidence of positive relationship between buyer supplier relationship and organisational performance has encouraged the organisations to pay attention to the results in order to improve their supplier relationships and consequently the organisational performance. This has led to greater research on the topic.

Secondly, researcher has a particular interest in exploring the buyer supplier relationship in the contemporary environment, especially in the low growth economic environment in the aftermath of the global financial crisis. This is because the researcher aims to be employed as a supply chain manager or purchasing manager in with a multinational organisation in the future.

The knowledge and understanding of management of supplier relationships gained through the assessment of buyer supplier relationships and the impact of managing the relationship with the supplier on the buyer performance will allow the researcher to become more fluent on the subject and consequently, maximise the prospects of gaining full time employment.

1.3 Aim and objectives

The aim of this dissertation is to analyse buyer supplier relationships and the impact of managing the relationship with the supplier on the buyer performance.

The research will attempt to address the following research objectives in order to fulfill the above-mentioned aim:

1. To provide the background to buyer supplier relationships through the discussion of supply chain management and green supply chain management

2. To critically review and analyse the relevant literature on the buyer supplier relationships and their subsequent impact on organisational performance of the buyer

3. To specifically analyse if the buyer supplier relationship changed during the global financial crisis of 2008-09 in cyclical industries (e.g. oil and automobile industries) and the resultant impact on organisational performance of the buyer firms

1.4 Significance of the topic and potential beneficiaries

The research based on the above-mentioned aim and objectives is considered useful for various stakeholders. Firstly, the purchasing and supply chain managers of the buyer firms are the main beneficiaries of this research. This is because it includes a comprehensive and critical assessment of the recent and relevant literature on the buyer supplier relationships and the resultant impact on the financial performance of the buyer firm. This will enable the managers in the buyer firm to clearly identify the impact of supplier relationships on their organisational performance and therefore, take steps to improve the firm performance.

Moreover, the study allows them to assess the impact of financial crisis on their organisational performance through supplier relationships too, which is a useful indicator of the way they should manage the supplier relationships in case of the future economic and financial crisis.

Another stakeholder that will be a beneficiary of the study is the management of the supplier firms, who can assess the ways in which, they can manage the relationships with the buyer firms. This allows them to better understand the dynamics across various industries (e.g. oil and gas, automobile industry etc.) and ascertain the importance of the bargaining power of suppliers and the extent to which, they should make use of such bargaining power to influence the price they charge to the buyer.

Another potential beneficiary of the research is the academics and students on the subject of buyer supplier relationships. This is because the research has undertaken a critical and comprehensive review of the relevant literature and therefore, combined the recent research on the subject into a single study. This can be a source of further work and ideas on the subject by the academics and researchers that are investigating the impact of buyer supplier relationships on the financial performance of the buyer and therefore, assist the researchers in developing an improved academic model on the topic in the future.

Finally, another potential beneficiary of this research is the government. The government can gain an understanding of the buyer supplier relationships across industries through this study and the resultant impact on the performance of the buyer firm, which will be useful in devising the policies that facilitate the development and sustenance of the relationships between the buyer and supplier in order to assists both the firms in establishing the competitive advantage. This will improve the international competitiveness of the goods and services produced by the firms and consequently, increase the exports.  

1.5 Scope and limitations

The scope of the study is such that it only takes into consideration the existing secondary research conducted by the other studies (in the form of literature review) in order to engage in the critical analysis and the subsequent analysis of data compiled by the other researchers. Therefore, this study does not consider primary data gathered by the researcher in order to engage in data analysis and only works with the data collected by the other researchers in the past.

A key limitation of the study is that as with most studies, this study also experienced time constraints. This was particularly the case whilst conducting literature review. This is because analysis of buyer supplier relationships made the researcher realise that despite the relatively recent interest of the researchers and academics in the subject, there is a vast availability of literature on the subject.

For example, a simple search on Google Scholar and JSTOR database for ‘buyer supplier relationships' returned over 200,000 and 25,000 articles respectively. This made it challenging to review majority of the literature due to the large volume of data, which means there is a limitation that a potentially highly relevant journal may had been overlooked by the researcher.

1.6 Structure of the dissertation  

Chapter one began by discussing the background and overview of the supply chain management and the impact of changes in external environment (e.g. globalisation) on sustainability and buyer supplier relationships. Then the chapter considers the reasons for conducting the research, which is followed by the discussion of the aim and various objectives through which the research aim will be achieved. Subsequently, the research discusses the potential beneficiaries of the research that include the management of the buyer firm, management of the supplier firm, academics and government who can benefit from the analysis and findings contained in this research. Finally, the chapter details the scope (analysis and evaluation based only on the secondary research) and limitations of the study.

Chapter two details the methodology used in this dissertation. The chapter begins by providing the details of the methodology used in this research, which mainly included the use of secondary data using the narrative literature review approach. The various sources used for the review of the literature included the search engines such as Science Direct, university e-library and Google scholar. These search engines were used to search for the key terms such as ‘buyer supplier relationships', ‘supply chain management', ‘green supply chain management' and ‘buyer supplier relationships during financial crisis'.

Subsequently, the chapter highlights the rationale for non-selection of other methods such as primary research methods as well as engages in the critical analysis of the narrative literature review approach, highlighting the advantages and limitations of using this approach to analyze buyer supplier relationships and the impact of managing the relationship with the supplier on the buyer performance.

Chapter three includes the literature review, which begins with a discussion on supply chain management and green supply chain management (GSCM). Within the analysis of GSCM, it focuses on the definition, overview and developments of the GSCM followed by the benefits of GSCM. Subsequently, the discussion of some of the GSCM practices includes the impact of environmental regulations and external stakeholders on GSCM and the resultant impact of GSCM on organisational performance.

The literature review then discusses the buyer supplier relationships and the impact of the relationship between the buyer and supplier on the financial performance of the purchasing firm. Finally, the chapter includes the discussion on the impact of economic downturn on the relationship between the buyer and supplier. Throughout the literature review, the emphasis remains on addressing the aims and objectives of the research whilst undertaking the critical review of the literature and data analysed.

Chapter four details the key issues analysed in the dissertation. The first included the analysis of the relationship between environmental regulations and green supply chain management as well as the relationship between external stakeholders and green supply chain management.

The comprehensive analysis of the green supply chain management allowed the literature review to progress to the second key issue, which is the impact of buyer and supplier relationship on the financial and organisational performance of the buyer. This issue was particularly evaluated in the context of the global financial crisis in 2008-09 and its impact on certain cyclical industries such as oil and gas industry, automobile industry and wine industry.

Subsequently, the chapter discusses the limitations of this research as well as further research and implications for practice, including the specific emphasis on the methodology that can be used to implement the recommendations.

Chapter 2: Methodology

2.1 Introduction

The methodology chapter begins by providing the details of the methodology used in this research, which mainly included the use of secondary data using the narrative literature review approach. The various sources used for the review of the literature included the search engines such as Science Direct, university e-library and Google scholar. These search engines were used to search for the key terms such as ‘buyer supplier relationships', ‘supply chain management', ‘green supply chain management' and ‘buyer supplier relationships during financial crisis'.

Subsequently, the chapter highlights the rationale for non-selection of other methods such as primary research methods as well as engages in the critical analysis of the narrative literature review approach, highlighting the advantages and limitations of using this approach to analyze buyer supplier relationships and the impact of managing the relationship with the supplier on the buyer performance.

2.2 Description of methodology

The research method adopted in this dissertation involved the collection of data using secondary research. The secondary data instead of the collection of data by the researcher himself (primary data) was undertaken because of the policy of the university to conduct the research using secondary data. The specific search terms used for the purposes of addressing the research aim and objectives are discussed in further detail in section 2.5 below.

The different search engines utilised for the purposes of the research included Science Direct, university e-library and Google scholar. These search engines were used to search for the key terms such as ‘buyer supplier relationships', ‘supply chain management', ‘green supply chain management' and ‘buyer supplier relationships during financial crisis'. The search engines included the search to be conducted in the time period between 1976 and 2016. However, more recent research papers i.e. 2006 and above (last ten year period) were given greater importance and consideration, as they cover the recent literature and are premised upon the analysis of the data in the current external environment.

Furthermore, the dissertation also made use of the inclusion and exclusion criteria to help address the research aim and objectives of the study. The inclusion criteria in the dissertation included discussing the key terms and concepts covered in the research, such as supply chain management, green supply chain management, buyer supplier relationships and the changes in buyer supplier relationships (if any) during the financial crisis and their subsequent impact on the performance of the buyer firm. Furthermore, besides the use of key terms in the inclusion criteria, it also included referring to the high quality and peer-reviewed journal articles that contained the empirical data and analysis on the topic and terms discussed earlier.

The exclusion criteria utilised in the dissertation included the data that was older than 1976 or the data and information that lacked the specific emphasis on the impact of buyer supplier relationships on the organisational performance of the buyer firm.

2.3 Alternative research methods and reasons for non-selection

The alternative research method that could be utilised for the purposes of the analysis of buyer supplier relationships and their impact on the financial performance of the buyer firm is through the use of primary research. The primary research could involve the use of research strategies, such as case study analysis, experiment, survey, action research, grounded theory, ethnography and archival research. This is on the basis of the research onion, as proposed by Saunders et al. (2009) (see figure 1).

Figure 1: Research onion detailing the research methodology used for primary research

Source: Adopted from Saunders et al. (2009)

However, these alternative primary research methods (that could have ultimately helped in the analysis of the research through quantitative or qualitative analysis of the data) were not utilised because the university regulations only allowed the narrative review of the literature to be undertaken using the secondary sources instead of primary sources. Finally, the chapter discusses the search terms and the specific research strategy undertaken in the course of addressing the research aim and objectives of this dissertation.

2.4 Critical analysis of method and data collection sources

The methodology undertaken in this dissertation included the use of secondary instead of primary research. This means that the research could not include the development and subsequent testing of the research hypotheses. Instead, the researcher had to resort to analysing and assessing the relationships in the research (e.g. relationship between buyer and supplier and the subsequent impact of this relationship on the performance of the buyer) on the basis of the existing secondary research.

The methodology undertaken in this research is narrative literature review. This approach involved the use of existing literature in the articles to describe, discuss and evaluate the particular theme or topic from a contextual and theoretical perspective. In this case, this included the critical analysis of the literature on the buyer supplier relationships and their impact on the performance of the buyer.

A key advantage of using the narrative literature review approach was that it enabled the researcher to make use of all the emergent themes that came to light on the subject using the analysis of a range of articles (Green et al., 2006). This maximised the prospects for the researcher to select the most relevant and suitable articles (Baumeister and Leary, 1997) (through the use of inclusion and exclusion criteria discussed in section 2.3 above) to undertake the suitable literature review, analysis and arrive at the accurate conclusions.

Moreover, narrative literature review was also advantageous because it enabled the researcher to undertake a comprehensive approach to reviewing a variety of literature (Green et al, 2006) on the subject of buyer supplier relationships and their impact on the performance of the buyer. The approach also enabled the researcher to account for the risk of potential lack of completeness i.e. the risk that a relevant journal article may have been missed during the course of the review of the literature. The completeness risk was reduced through reviewing carefully the bibliography of each of the key articles selected for the review.

2.5 Search terms and strategy

The research conducted for this dissertation is premised completely on the information gathered from the secondary sources, such as databases and journals / articles from the Internet. Different search engines used for the purposes of this research included Science Direct, university e-library and Google scholar to ensure that all the relevant journals and articles on the subject were analysed during the process of this research. The underlying rationale for selection of these research engines is the high credibility associated with the peer-reviewed articles that are available through these sources, which means they are suitable for the purposes of conducting academic research. The important phrases and words used to search and find the relevant academic publications in this research included the flowing:

‘Buyer supplier relationships', ‘supply chain management', ‘green supply chain management' and ‘buyer supplier relationships during financial crisis'

These phrases and words were considered critical for the purposes of research, as the major focus of the topic is analysis of buyer supplier relationships and their subsequent impact on the performance of the buyer firm. The use of these key words was helpful in further narrowing down the emphasis on the supplier relationships to help address the research aim and objectives. Research conducted also included reviewing the bibliography of the relevant and shortlisted academic papers to ensure that all the key literature was reviewed to gain a comprehensive understanding of the subject, in addition to undertaking a critical analysis of the data and analysis in these papers.

To ensure that the articles were of highest quality, the journals with the highest ranking (based on the ABS ranking guide) were given the priority. Some of the journals analysed for the purposes of the critical review of the literature included Industrial Marketing Management, Journal of Operations Management, International Journal of Environmental Science and Technology, Journal of Accounting and Economics, Advances in International Management, Journal of International Marketing, Journal of Supply Chain Management, Journal of Business Logistics, International Journal of Production Economics, The International Journal of logistics management and Journal of Money, Credit and Banking.

The approach of screening through the relevant articles in the above-mentioned journals on the topic of supply chain management, green supply chain management and buyer supplier relationships including the impact on the organisational and financial performance of the buyer firm led to around 65 articles to be shortlisted by the researcher. This was followed by the review of the abstract section of each of the 65 articles to make sure that the article and its contents covered the relevant material from the perspective of addressing the aim and objectives of this dissertation. The review of the 65 articles ultimately led to the selection of 25 articles, which were used for the purposes of this dissertation.

These 25 articles were critically reviewed and analysed in detail, with a specific emphasis on the data the study was conducted by the researcher, the geographical location where the study was undertaken, the research methodology and approach followed by the author, limitations of their methodological approach and the key findings of the research. This approach served as the basis for undertaking the literature review and the subsequent conclusion that was derived from the review of the literature.

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