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Problem

Institutional buyers fall somewhere between commercial enterprises and government buyers in terms of their characteristics, orientation, and purchasing process. Explain.

Step-by-step solution

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Step 1/2

Other than government buyers and commercial enterprises, there is one category of buyers called institutional buyers. They lie in between government buyers and commercial enterprise buyers based on several distinct characteristics.

Step 2/2

In the case of institutional buyers, they often make a budget as soon as they find procurement needs. They tend to spend only within the budget limit. They face strong competition and budgetary pressures that keeps them, specialist, to enhance efficiency and effectiveness. Institutional buyers offer unique services that stimulate multiple buying requirements. There is found a conflict between the professional staff and the purchasing department with the same buying. Another important factor is that most of the institutional buyers prefer group buying. This is to qualify discounts on purchases. This allows the institutional buyer to enjoy purchases at low prices with high-quality materials. The suppliers who sell the products to purchasing groups at institutions do deliver the products to individuals in the group also. Some institutions do make a purchase like larger commercial enterprise does. However, some are different and make purchases as the government does. The policies to select local vendors, the delegation of purchasing responsibilities are different from that of government buyers and commercial enterprises; but lie in between them. Institutional buyers make purchases or procurement by mixing these practices and functions of government buyers and commercial enterprises. This is why it is said institutional buyers fall somewhere between government buyers and commercial enterprises.