0304

Problem

Harley-Davidson, the U.S. motorcycle producer, recently purchased some sophisticated manufacturing equipment to enhance its position in a very competitive market. First, what environmental forces might have been important in spawning this capital investment? Second, which functional units were likely to have been represented in the buying center?

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Step 1/3

Companies often proceed to spend heavily, even though it is usually an increased budget on sophisticated manufacturing equipment regularly to ensure them competent in the business market.

Company HD recently purchased sophisticated equipment for business purpose. Particular environmental forces might have been important in spawning this capital investment. They can be categorized into two:

I. Economic influences

II. Technological influences

Step 2/3

They are explained as following:

I. Economic influences:

Industrial demands are prone to elastic demands of the consumer market.

• Demand for industrial products fluctuates from time-to-time.

• Companies must ensure to check and modify business activities concerning sensitive economic conditions.

• To survive in business competitions against eastern countries.

II. Technological influences:

Technological change in a firm triggers decision-making unit to increased capital investments.

• Sophisticated technology is known for its accuracy and speed

• Production of high quality goods

• Assures of surplus profits

• Guarantees for the survival in extreme competitions

Step 3/3

Company HD has represented some specific functional units in the buying centers and they are detailed below in brief.

• Environmental functional units:

Buying mechanism must consider the behavior of demand and economic prospects of the markets along with interest rates.

• Organizational functional units:

The objectives and policies of the firm must be taken into consideration and ensure that the buying transaction able to satisfy interests of the company.

• Other functional units:

Political and legal conditions must be satisfied for the smooth flow of the business. Firms possess enough knowledge to compete in typical market segments and technological changes.