The Commercial Environment
CHAPTER 1
THE COMMERCIAL ENVIRONMENT
INTRODUCTION
The commercial environment is the “arena” in which purchasing and supply professionals and many others in business operate. This environment is essentially live and developing all the time and it includes many factors beyond the organisation’s day-to-day control. This ever-changing business environment puts all organisations under pressure to conform, adapt, innovate, or suffer the consequences of any inaction. Continuous appraisal of the firm’s commercial environment detects potential threats and at the same time identifies any potential opportunities it presents. As the global economy becomes more integrated, purchasing and supply professionals must be able to recognise these threats and opportunities, identify their impacts on supply matters, know how to respond to them in the interests of their organisations and keep abreast of and put into daily use, appropriate professional purchasing and supply principles and practices.
Peter Drucker said in 1988, “the only certainty about the times ahead is that they will be turbulent times, and in turbulent times the first task of management is to make sure of the institution’s capacity for survival, to make sure of its capacity to survive a blow, to adapt to sudden change and to avail itself of new opportunities.” How right he was then and it is still right in 2005! Today’s business environment consists of a complex mix of challenge, uncertainty, ambiguity, paradox, discontinuity and competitive intensity.
The turbulent 1990’s are continuing into the 2000’s with unabated volatility and constant unpredictable change. The pace of this change, and its unrelenting pressures on an already turbulent business environment, has left many organisation floundering and unsure what way to turn just to survive, not to mention achieve and sustain success. Hitherto, change was fairly predictable – it occurred at a rate that permitted sufficient time to plan for
THE COMMERCIAL ENVIRONMENT
INTRODUCTION
The commercial environment is the “arena” in which purchasing and supply professionals and many others in business operate. This environment is essentially live and developing all the time and it includes many factors beyond the organisation’s day-to-day control. This ever-changing business environment puts all organisations under pressure to conform, adapt, innovate, or suffer the consequences of any inaction. Continuous appraisal of the firm’s commercial environment detects potential threats and at the same time identifies any potential opportunities it presents. As the global economy becomes more integrated, purchasing and supply professionals must be able to recognise these threats and opportunities, identify their impacts on supply matters, know how to respond to them in the interests of their organisations and keep abreast of and put into daily use, appropriate professional purchasing and supply principles and practices.
Peter Drucker said in 1988, “the only certainty about the times ahead is that they will be turbulent times, and in turbulent times the first task of management is to make sure of the institution’s capacity for survival, to make sure of its capacity to survive a blow, to adapt to sudden change and to avail itself of new opportunities.” How right he was then and it is still right in 2005! Today’s business environment consists of a complex mix of challenge, uncertainty, ambiguity, paradox, discontinuity and competitive intensity.
The turbulent 1990’s are continuing into the 2000’s with unabated volatility and constant unpredictable change. The pace of this change, and its unrelenting pressures on an already turbulent business environment, has left many organisation floundering and unsure what way to turn just to survive, not to mention achieve and sustain success. Hitherto, change was fairly predictable – it occurred at a rate that permitted sufficient time to plan for