PURCHASING PRACTICES - Assignment Example

Purchasing Practices: Critical Success Factors Unlike domestic purchases, international purchases are affected by numerous factors. To successfully purchase machinery for our company from China, there are a number of critical factors that may come into play. The three critical success factors in our case are economic, cultural and political in nature. Economic factors that come into play include exchange rates, tariffs, inflation and level of competition (Ellram). The exchange rate between the Canadian dollar and the Chinese Yen determines the cost of purchasing and transporting the purchased commodities.

If the exchange rate is unfavorable, there is a likelihood that we may be forced to cancel any purchases or reduce the quantities purchased. In purchasing commodities from China, we will need to adjust the value of the items for inflation both in China and in Canada. This could significantly adjust the value of the items. China and Canada have different cultures and trade practices. Business etiquette in China is heavily based on Chinese culture and if we are to complete and business, we have to adhere to the rules of engagement.

China’s government has a significant say on the manner that business is conducted within the country. At the moment, there is a relatively open policy that encourages international businesses to engage in business transactions with their local companies. It is thus expected that we will face little opposition from the authorities if we were to purchase the items from a Chinese supplier. Furthermore, there are reduced tariffs on purchases made from china and this should help reduce the cost of the purchases (Ellram).

Works CitedEllram, Lisa M. "Key Success Factors and Barriers in International Purchasing Partnerships." Management Decision 29.7 (1991). Print.