PMM Assignment 2: Case Study on ABC Motor Company

Sameer Dubey 44C

Ans 1- The purchasing strategy of ABC was to purchase the parts and components in large volumes.
The overall cost structure of their suppliers was accustomed to the high volume production of
scooters. The quality measures were less stringent and the purchasing team was using the same
costing norms for the motorcycle parts as for the much larger volume scooters.
ABCs Company Strategy was focused on high volume 2 wheeler production. After a decision to foray
into motorcycle market, the strategy evolved from single focus scooter market to accommodate
upcoming motorcycle market too. The strategy involved to procure & produce as much local as the
company is technically capable of, strike a partnership with foreign manufacturer to leverage its
technical and financial strengths to build leadership in local market. When the market is protected or
the company becomes self-reliant, do entire production and procurement themselves.

Ans 2- ABCs Purchasing team was unable to get its suppliers to deliver for MCD because of the
following reasons.
i)

Suppliers were not ready for the change and focused mainly on scooter parts which were their
core strength.
ii) The suppliers did not want to invest time and cost into low volume MCD parts.
iii) Suppliers were unable to match the quality standards as the technical expertise was not at par
with JKLs standards.
iv) The pressure was building on MCD and hence on suppliers as the import cost was continuously
increasing.

Ans 3- To avoid this situation ABC could have taken the following steps:
i)
ii)
iii)
iv)

v)

ABC could have tied up with new suppliers who were ready to learn and then produce the
required quality parts for motorcycles.
ABC could have invested more in the training of the suppliers to increase their competence in
manufacturing MCD parts.
ABC could have incentivized their suppliers to provide high quality MCD parts.
ABC should have focused more on top-down leadership approach and the change should have
been driven by the top leaders by focusing more on collaborative activities between ABC and
JKL.
ABC could have entered in a much longer contract with the government instead of going for an
aggressive 5 year contract after assessing the situation at hand.

Ans 4- Arjuns strategy for MCD purchasing should be to convince the existing suppliers to invest in
manufacturing of motorcycle parts by incentivizing them. He should look for new suppliers that have
the technological advancement and are ready to deliver the required quality of parts and
components.
In order to purchase other parts and components, Arjun should approach the suppliers of the
competitors who are already ahead in the race and use the market leadership situation to its
advantage.

Ans 5- Arjuns strategy may impact the purchasing of parts for scooters by making the suppliers
more competent and they could use the new technology in the improvement of quality of parts for

scooter also. New relationships with the suppliers may lead to better prices for the scooter parts
also. As the motorcycle segment is booming the overall purchasing of parts for scooter might go
down and hence the strategy can be built according to this.