Global Procurement: A Strategy for Improving International Business Competitiveness

Abstract

The 1980s and early 1990s have seen a progressive reduction in trade barriers around the world, culminating in several agreements, notably those setting up the North American Free Trade Area, the European Economic Area, and that which brought to a close the ‘Uruguay Round’ of GATT negotations. Whilst the precise nature and extent of the benefits arising from those agreements will probably remain matters for debate for several years to come, there seems little doubt that they mark further steps along the road to a general easing of constraints upon the internationalisation of trade. The consequences are therefore likely to affect not only the ability of suppliers to open new markets for goods and services, but equally will have similar impacts for purchasers. The changes will not be limited to ‘external’ transaction environments, but will also bear upon environments previously considered to be ‘internal’ or domestic. Freedom of competition means not simply that marketers are released from restraints imposed by tariff or non-tariff discrimination, but also that customers have a greater ability to source on a truly competitive basis — without being confined to local or domestic suppliers. Thus, companies who have previously been accustomed to secure conditions in local, protected environments will now find themselves faced with increased competition from ‘outside’, as competitors seek new sources of revenue, business and supplies.