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10.5593/sgemsocial2017/15/S05.005

ADVANTAGES AND DISADVANTAGES OF COMPANIES OPERATING IN GROUP PURCHASING ORGANIZATIONS

G. Zimon
Thursday 28 September 2017 by Libadmin2017

References: 4th International Multidisciplinary Scientific Conference on Social Sciences and Arts SGEM 2017, www.sgemsocial.org, SGEM2017 Conference Proceedings, ISBN 978-619-7408-17-1 / ISSN 2367-5659, 24 - 30 August, 2017, Book 1, Vol 5, 33-40 pp, DOI: 10.5593/sgemsocial2017/15/S05.005

ABSTRACT

Background: Strong competition, financial crisis, bankruptcy of contractors, all these factors affect negatively the financial situation of enterprises. Large international corporations with multiple divisions are less affected by their customers or suppliers. In the case of small and medium-sized enterprises the downfall of one customer is very important for their financial situation. Therefore, one of the possibilities that influences positively on the safety and financial condition of enterprises is the activity of group purchasing organizations.
Methods: Advantages and disadvantages of functioning within group purchasing organizations were determined on the basis of the financial statements of the surveyed companies and questionnaires. The selected financial ratios and questionnaire were used for the research. The research was conducted among 20 companies operating in purchasing groups.
Results: The study showed the strengths of purchasing groups and the few disadvantages. The most important advantage of GPOs is that they increase sales, reduce costs and reduce the risk of liquidity. The main disadvantage is loss of self-reliance and longer decision-making time.
Conclusions: Working together in group purchasing organizations helps keep small and medium-sized businesses in the market. Operating alone means bankruptcy for some of them. The major problem in purchasing groups is the emergence of intra-group competition and the growing lack of co-operation in them.

Keywords: groups purchasing organizations, strategies