Organizational Buying Behavior

Subject: Strategic Management
Pages: 10
Words: 2880
Reading time:
13 min
Study level: Master


Corporate purchasing is the system of decision-making through which social groups identify, identify, assess, and select substitute products and vendors. Organizations acquire services and goods to representatives, consumers, or the community following organizational aims, such as production and delivery (Jonsson & Holmström, 2016). The demand for a finished piece or even for a service or product offered for sale by the purchaser’s customers is primarily affected by organizational purchase (Smith, Busi, Ball, & Van Der Meer, 2019). A manufacturer’s demand for components will rely on demand from its customers, retailers, and distributors who respond to their clients’ orders, the consumers.

Concerning buying centers, companies acknowledge that all stakeholders need to work collaboratively to oversee the procurement process for alternative equipment and other resources that would help address the potential issues threatening the success of their various operations. The emotional and psychological factors are generally unobserved (Lilien, 2016). By neglecting these less concrete aspects of sales, a seller may lose sales and may not even know why.

Taiwan Semiconductor Manufacturing Company’s (TSMC) Case Study

Thus, Taiwan Semiconductor Manufacturing Company’s procurement process illustrates the distinct organizational buying behaviors and the buying sectors. Notably, since it was established in 1987 and has always been the significant semiconductor fabricator ever since, the wholly-owned foundry model has been developed by TSMC (Inoni, Salami, & Olannye, 2019). The enterprise supports a thriving ecosystem of international partners and customers with leading process technology and innovative enablement solutions for the worldwide semiconductor industry (Cho, Moh, & Liu 2016).

Buying Behaviour: Howard Sheth Model

TSCM’s stakeholders value the marketing, social and psychological elements in determining their distinct purchasing behaviors. The Howard Sheth theory refers to an approach to assessing the combined influence on the purchase intention or preference of consumers and industrial buyers on the social, cognitive, and marketing elements in a precise sequence for processing information.

The Psychological World: The Buying Centre

TSMC conducts sustainability initiatives and sets out multiple effective and open stakeholder channels of communication. These networks aid TSMC in understanding its requirements and aspirations as essential benchmarks of our CSR policies and plans. A company that enhances its supply chain reach can deliver higher performance and market share (Cambra-Fierro, Centeno, Olavarria, & Vazquez-Carrasco, 2017). The key to the growth and continued existence of SMEs is customer satisfaction. The critical indicator is identified to distinguish between high or successful business performance and low or unsuccessful business performance in today’s society (Inoni et al., 2019). In other words, organizational performance can be improved due to the customer gratification product value or service provided by a particular organization.

The Buying Conditions or Situation

With the argument that a company’s purchasing behavior determines its success, TSMC acknowledges the significance of both the internal and external influences. For instance, the goal-oriented unit values its collaboration with the Openfire despite several other vendors available for selection. Openfire is developing a strategy into highly integrated custom domain SoCs. Besides, the enterprise improves the significance of its customer products through innovation at all phases of creation and then delivers thoroughly tested silicone and platforms to its partners.

The Joint Decision-Making Process

Interestingly, TSMC considers collaborating with suppliers that promote the principles of corporate social responsibility. The business is lucky to work with a few of its industry’s most sustainable and ecologically aware customers and partners (Schleper, Blome, & Wuttke, 2017). The partners and the client, both of whom they work with, are actively committed and proud to be engaged in a company focused on human beings, the planet, and financial gains. Thus, the stakeholders are also committed to their sustainable practices (Ariffin, Yusof, Putit, & Shah, M. I. A., 2016). Additionally, to have a social responsibility, a company must first be responsible to its shareholders. The more noticeable a company is and the greater its responsibility because of its compatriots, the more competition and sector to define standards of conduct it receives.

The Buying Centre

Organizational markets also have specific demand characteristics, as in consumption markets (Schleper et al., 2017). Current macroeconomic customers are buying the goods, apart from manufacturers and resellers. The government purchases goods for public use or use in or for industrial purposes in its departments. Organizations’ procurement decisions depend on environmental, strategic, social, and personal factors.

Implications of Buying Centre On Sales

In 2009, an internal committee devoted to managing its supply chain, the TSMC brought together fabulous operations, operations management, risk, and quality scheme management. The Committee focuses on mitigating risks and improving the distribution network (Goodman, & Sanders Thompson, 2017). Every other quarter, the management team comprises an executive vice president and the managers, sets performance objectives, and reviews advancement. The working group of the Committee aids suppliers in reducing the risk of manufacturing and processing by communicating risk management strategies and assisting suppliers to enhance quality management systems, green procurement, environmental protection, and security (Tseng, Chang, & Chen, 2019). Parallel to the financial situation of the core suppliers, the stakeholders monitor their supply chain inventories and draft support plans through constant contact or public information (Tamvada, 2020). The working team organizes regular meetings to check performance and deal with the problems of suppliers, an indication that they value the sustainable business-to-business (b2b) strategy for the company’s sustainable success.

People Involvement

The company helps build the distribution network on a feasible basis to ensure safe working conditions, respectful and dignified working relations, compliance with the ethical code, and ecological sustainability. TSMC suggested Local Supply Optimization and Sustainability Risk Management to fulfill its dedication to an accountable distribution chain. The proposed suggestions lead supplier members in social, environmental, and economic growth to strengthen their resilience continuously (Chavez, Yu, Feng, & Wiengarten, 2016). Partners must connect upstream suppliers, entrepreneurs, and providers to undertake sustainability management initiatives (Kusi-Sarpong, Gupta, & Sarkis, 2019). TSMC aims to strengthen the supply chain further, extend its outsized effect and accomplish the strategic objectives of the semiconductor industry.

Buying Situations

Political, socioeconomic, technological, and environmental factors may, in turn, influence overall consumers’ needs (Tjahjono, 2017). The organizational purchasing process differs from the purchasing process of the consumer. The prices and performance of the goods, together with the service supplied by the supplier, are more worried to organizational purchasers. Price is a crucial part since the prices of the building ingredients are the investments that generate profits. Price is, therefore, an essential factor affecting the company’s profitability. Service is also a critical aspect because no company wishes to purchase stuff from a supplier that cannot provide a reliable and effective service (Xu, Chen, Jia, Brown, Gong, & Xu, 2018). The majority of corporate purchases involve the buying of various large products. In these circumstances, a snippet is examined if the whole lot is shown in this sample.

New Task Purchases

TSMC invented the 7nm technology to help increase the output within a restricted period. The advancing technology that is promoting e-commerce calls for the need of the supply chain management to make amendments aimed at promoting the success of the business initiative (Miedaner, Kuntz, Enke, Roth, & Nitzsche, 2018). The delivery of their products is especially critical for businesses, which are hugely reliant on customers and suppliers (Nam, Dong, & Lee, 2017). The principal parties involved in the production supply chain, ending with merchandise delivery to customers, are the producers, retailers, suppliers, shippers, and distributors (Wang & Chen, 2016). The need for embedded inventory management is becoming relevant with a growing reliance on technological progress and changing customer expectations.

Modified Repurchases

The quality of the parts and components supplied can fall through the net without proper monitoring. Besides, a vendor audit is an efficient way of assessing the quality and risk of a specific supplier before this becomes an issue (Chen & Hung, 2016). By ensuring that the quality of their suppliers and the standards of delivery remains high, firms can maximize their overall quality – something that a distributor audit aims to achieve (Zhang, Pawar, & Bhardwaj, 2017). Supplier problems can cost enterprise money, or even worse, can harm its customers (Cambra-Fierro et al., 2017). A supplier evaluation can help identify serious issues early during the production cycle with an efficacious supplier quality management solution, but it depends on the positive feedbacks from the buyers.

Straight Repurchase

Manufacturers of their stock and delivery process can devise strategies to contact their operational providers and update deliveries in real-time. Production is a complicated task, and any production obstacles generally lead to higher costs and an increase in the product cycle time (Silvius & Schipper, 2019). By adopting technology, which will gain more visibility in all business fields and make data-oriented decisions involved inaccurate data, technology will make the entire production process more efficient (Scott et al., 2017). The net effect of technology use in the supply chain management includes lower product costs, fewer capital expenditures, and more significant customer and supply chain stakeholders’ satisfaction.

Organization Buying Model

Specifically, the organizational buying behavior process is a systematic process before making a buying decision. The process begins with problem recognition, with the entrusted key stakeholders identifying the need for new purchases within the corporation (Silvius & Schipper, 2019). Secondly, the business describes the distinct quantities and features of the critical needs to help address the problems (Cerchione & Esposito, 2016). Product specification is the subsequent phase that the procurement officers specify the available alternatives to help solve the identified issues. Next, a cost reduction approach where components are carefully examined to determine whether they can be modified, normalized, or produced using cheaper manufacturing methods before finding the best vendor (Malaquias, Malaquias, & Hwang, 2016). The firm invites qualified suppliers, selects the most skilled supplier, and finally orders the specified products.

One of Sales Elements: Negotiation

The US Company has a team with TSMC for more than one year to prepare the outsourced manufacture of CPUs in the new Tainan manufacturing plant. TSMC works closely with the suppliers to guarantee that they comply with the specific policies to promote sustainability in the department. Supplier inspections are a crucial component of the approval process of suppliers carried out by manufacturers and retailers when new suppliers are accepted (Caro, Chintapalli, Rajaram, & Tang, 2018). They also enable a consumer to constantly examine its suppliers so that the regulations and processes are updated. The overall objective of an audit by a supplier is to ensure that food and customer regulations are observed. As the supply chain of a company grows, its risk also increases. The danger of underperformance lies with every new supplier.

Impacts of Negotiation On Sales Process

TSMC recognizes the partners that disregard their unique organizational values and replace them with alternative dealers who uphold humanity and have vision and mission statements that match TSC (Hallikainen, Paesbrugghe, Laukkanen, Rangarajan, & Gabrielsson, 2017). Under a Provider independent audit, external auditors visit the production plant of their suppliers to analyze production capacity, quality management, safety, and social compliance or effect on the environment (Jajja, Asif, Montabon, & Chatha, 2019). It is the best means of getting a description of their provider’s company and regulations and receiving, if necessary, all the data appropriate to carry out corrective measures.

Culture Perspectives

Marketing strategies have a significant influence on culture. The seller must not neglect the history of native culture before marketing or advertising. Only if the product fits better in line with customs, traditions, standards, and cultural requirements can consumers be attracted. For instance, TSMC invests in modern technologies and techniques to guarantee that they meet the ever-changing interests of the customer bodies (Jankalova, 2016).

National Cultures

Although Confucianism influences the Chinese business culture, the TSMC serves as a dedicated corporate citizen worldwide with international operations extending to Asia, North America, and Europe. By offering the widest variety of developed, specialty, and advanced sensor services, TSMC dispatched 281 different process technologies and assembled 11,617 brands for 510 clients in 2020 (Kohnz, 2018). TSMC is the very first production facility to offer the world’s latest semiconductor innovation, a 5-nanometer industrial output.

Communities of Meaning

In the corporation-supplier relationship, ethical culture is of great significance. If the key players need acknowledgment as professionals, purchasers must show ethical conduct. Each group must therefore understand what is regarded as honest and unethical. When buyers perceive the business of selling as non-ethical, they can affect both the choice of supplier and the buyer’s work. Cultural values shared by members influence their purchasing behavior. Large companies have also established their own workplace culture that differs in values, standards, customs, and habits. In the organizational buying behavior of the company, the aspect of these different values, styles, and behaviors are essential.

Corporate Culture

The commitment of the company to promote CSR defines the operations within the organization. Charitable activities, and voluntary activities, companies will benefit the social system and bolster their branded products. It is equitably essential to the community as CSR is to a company (Wilhelm, Blome, Bhakoo, & Paulraj, 2016). CSR initiatives can help build strong relations between staff and companies, enhance morality, and assist both staff and workers in feeling closer to their world (Plambeck & Taylor, 2016). Specifically, the company establishes a sustainable and reliable supply chain that upholds human safety, rights, health, and the environment. The firm’s distinct Plan-Do-Check-At cycle makes it exceptional and compliant with the CSR principles.

Professional Culture

Global consumers have become more and more aware of the responsibility of companies to oversee their providers in recent years. TSMC believes that assisting suppliers promote the qualities of the environment, health, and safety increases the chance of their supply chains and provides TSMC with an opportunity to contribute to society (Chen & Dawande, 2020). The productivity of the union in the sustainable development of the value chain can respond to global consumer complaints (Platzer & Sargent, 2016). Although some actions are gradual and complicated, they are determined to maintain their leading position in implementing them.

Impact of Culture On Sales Strategy

However, a B2b buying behavior is critical for the success of an establishment, with their excellent association determining the much-desired customer satisfaction. The innovative ideas by the workers to promote the supply chain also make Taiwan Semiconductor Manufacturing Company oversee the successful distribution channels and hence meeting the specific organization’s values. Internal factors that influence purchasing decisions are motivation and culture. Each purchasing company has particular aims and goals, excellent producers and purchasing systems, and proper command characteristics.

Current Perspectives On B2B Buying Behavior

Digitalizing business processes is now more a requisite than a value-added proposition for manufacturers to build significant customer bases. This change has boosted the need to create a digital ecosystem incorporating operations performed in the distribution chain by different entities seamlessly (Leonidou, Christofi, Vrontis, & Thrassou, 2020). Technological progress now allows companies to develop end-to-end solutions that accelerate processes and prevent effects on the supply chain (Hallikainen et al., 2017). Furthermore, the critical component in supply chain management is real-time or near-real-time information. A supply chain application is installed to control and augment the information exchange between various key supply chains to achieve timely procurement. Additionally, introducing innovative tools results in inventory decreases, improved production efficiency, and convenient customer satisfaction.

Changing Buyer Behavior

The goal-oriented company partners with the suppliers and other stakeholders to meet the ever-changing expectations of its target customers. The quick delivery process is a vital ingredient for the satisfaction of the customer. Higher customer satisfaction leads to more excellent retention and business repetition. Technology can play a critical role in increased deliverability and maintaining the suppliers and other stakeholders informed about the production and delivery schedule (Bienhaus & Haddud, 2018). The processes can be designed to notify customers from order confirmation to fulfill an order throughout the process. It may provide an opportunity to improve the knowledge of customer narcissism and regulate while simultaneously transferring suppliers’ service assignments to the vendor, which spares money and time for manufacturing companies. Consumers are a parameter for the company to measure its success in a market rather than merely an asset. That is why it is so crucial to understanding customer behavior.

Conclusion and Recommendation

One remarkable fact is the desire to interact with the clients and other stakeholders during a company’s globalization process. These factors influence one’s purchase decision directly and indirectly. However, although the TSCM’s commitment to oversee successful supply chain management, it is evident that the company is continuing to experience losses following its business practices. Educating the suppliers and other members of the supply chain management team is crucial. For instance, the suppliers have to recognize and modify their figures regarding procedural dissimilarities among the agencies, which assign decision-making rights and duties to employment positions around the corporation according to the structural structure. Policies such as inventory levels and protocols such as disbursements or bids also affect organizational buyers’ purchasing choices.

Additionally, regular and comprehensive research practices will be usable in identifying the potential determinants that might undermine the successful B2b. Research indicates that “innovation” can generate economic assessments of new ideas representing progress in corporations’ economic development. Innovation is an essential factor in developing business success and gaining a competitive advantage while at the same time creating significant challenges for organizations. Thus, investing in research studies will help TSCM identify the loopholes in its supply chain, hence boosting its likelihood of realizing success.


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