Buyer–Supplier Relationships in B–B Markets—An Analysis from the Buyer's Perspective in Southern Indian Automotive Industry

Abstract

Today the auto component industry is a very vibrant industry of the Indian economy. The industry is scale sensitive and hence more massive volumes are needed for cost-effectiveness and improving quality. The industry is also capital and labour intensive. The players will have to think global and should set up capabilities and adopt the technology, deliver quality standards to meet the global requirements of the component or part. Long-term commitments and enhanced purchases from the automotive OEM's are the two critical aspects in which the automotive OE supplier will be interested. Long-term obligations are dependent on the buyer's purchase considerations and switching costs involved in the transaction. Purchase enhancements are dependent on the tangible and intangible value in the form of benefits received from the supplier. This paper is an attempt to understand the dimensions of buyer's behaviour and switching costs which affects the long-term commitments, and economic value which changes the purchase enhancements. The research is based on the buyer's perspective. A survey of automotive manufacturers found in Southern India was selected for the study.