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Critical Review: Achieve Competitive Scope Or Advantages

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Question:

Describe about main purpose behind this is to achieve competitive scope or advantages over the competitors in the market or industry effectively?

 

Answer:

Critical Review

In this research article, the authors describes that, in today’s more competitive, globalized and challenging business era, organizations use different ways or strategies in order to enhance the production processes by minimizing different types of costs. The main purpose behind this is to achieve competitive scope or advantages over the competitors in the market or industry effectively.  In addition to this, the authors also found that, in the recent time, firms are also access to suppliers’ capabilities. But, the authors also argue that, the competitive scope is not only about or based of the capabilities of an organization. In the same manner, the competitive advantages also depend on the abilities and knowledge of the suppliers. On the other hand, it is also stated that, in the current time, it is more essential, important and significant for the organizations that, they should focus on using the supply-chain perspective and also consider the customer as well as suppliers in the process in order to enhance the competitiveness in an effective and proper manner.

At the same time, the authors also suggests that, the business firms or companies should also focus on developing and setting an Inter-Organizational Cost Management system in order to fulfill long term organizational goals and gain the competitive advantages. But, in order to set up this system, the companies would need customers as well as suppliers in order to search the significant ways for the purpose of minimize the costs collaboratively. Moreover, the authors also stated that, information sharing not only deals with distributing the supply as well as demand information across the members of supply chain but also considers allocating susceptible information related to the cost and this must be kept secret by the firms in order to gain competitive advantages effectively. Apart from this, in this research article, the authors also interpreted that, these types of secret information should be provided within the OBA system (Open-Book Accounting) and this system would also need anticipation of supportive behavior from the partner of supply-chain and confidence between those companies involved.

At the same time, the authors also represent the significance and roles in the context of OBA. For case, it is stated by the authors in this research article that, OBA would be fully characterized by the supportive and innocent relationships between suppliers and buyers in a more competitive business environment. On the other hand, the authors also interpreted that, OBA plays a lot of significant and valuable roles and to support the IOCM measures is one of the major functions of OBA. Furthermore, it is also presented by the authors that, cost intelligibility among the customers as well as suppliers can lead to reductions in the cost.

 

Along with this, the authors also criticizes that the changes in the price as well as objective justification of prices would be depends on the transparent accounting data and information that may assist in the price negotiations. Due to this, all these alteration may be deals with the fixed cost distributions resultant from a compact sales volume. Moreover, the authors also argue that, the development of faith among the suppliers & customers, and the development in the relationships would be analyzed as consequences rather than as functions of OBA. Moreover, the authors also stated that, OBA system is able to play a more comprehensive role in enhancing the management accounting system of the organization. In the same manner, effective and proper use of OBA can also increase margin pressure on the supplier.

On the other hand, with the help of this research article, the authors also stated that, cost structures of suppliers can help the customers regarding the knowledge and information of price negotiations. In contrast, the authors also describe the operational implementation challenges or obstacles attributable in relation to the OBA system. For example, if a suppler is fully positive in the context of opening books to customer, in this situation OBA system may not be work properly and valuable information as well as data would not be available to the suppler. Moreover, IOC models may also be more complex and affect the cost analysis directly or indirectly. In support of this, the authors also argue that, the methodologies of IOCM are used by business firms in order to perform certain functions such as: of product design and observing the relationships. Hence, this statement clearly indicates that, there would be an impact of power, mutual business volumes and trust on the development of an IOCM. In addition, the authors also stated that, business firms can get various positive benefits of IOCM but all the relationship situations should be met.

At the same time, it is also investigated by the authors that, there are various stages of exchange processes as determinants of IOCMs  and IOCM partnership is powerful in the early stage of an swap connection, such as during selection of supplier and development of product. Apart from this, the authors also provide a brief discussion in the context of legitimate functions of OBA for the expansion of planned partnerships. In the same way, by developing and creating the long term relationships among the business firms also helps in exchanging more sensible information and data in an effective and proper manner. Moreover, it is also found that, lack of trust make failure to the open book system and it should be involved both a prerequisite and a consequence of OBA. On the basis of this, the authors also argue that, there should be higher level of trust in order to exchange the information and data associated with the costs. Existence of commitment devices is another major element of OBA that helps in disclosure of mutual information of cost.

In addition to this, with the help of specific example, the authors also explain that, transparency related to the cost has no value. Moreover, apart from the commitment devices, there are various significant positive monetary motivation including fair division of benefits, can help to increase the willingness to introduce OBA. In the same way, it can be said that, the increased buy volumes can also provide as financial incentives. On the other hand, the authors also stated that, all these elements or determinants of OBA also have a significant impact on the willingness to connect in OBA through trust-based mechanisms and positive incentives. Moreover, power-induced OBA cannot defend a decrease of supply chain costs. Along with this, it should also be noted down that, the main objectives of authors behind this research article is to analyze and access the significance, roles and functions of OBA and how it is more important for the organizations in achieving the completive advantages and reducing the costs in an effective and proper manner. In the support of this, the authors also consider a study of the actual uses of cost transparency in customer-supplier relationships. Moreover, authors also try to analyze the significance of determinants or elements for influencing the inter-organizational use of accounting data. Furthermore, this research article also discusses the assumptions in the context of OBA and how to examine the potential manipulation of data that does not fit with cooperative relationship theory.

At the same time, in order to design this research, qualitative design is used and implemented with the help of quantitative analysis. In the same way, three-tiered design is used to analyze all the important aspects of the research paper. Moreover, interview method is also used in this research in order to collect the information and data in an effective and proper manner. Apart from this, a questionnaire method is also followed in order to collect the fresh and primary information. Simply, it can be said that, Expert Interviews and Online Questionnaire in designing the research and archiving the desired outcomes. Along with this, it should also be noted down that, there are several techniques, strategies and methods are also used in order to conduct this research. For case, content analysis is carried in order to analyze interview transcripts.

Moreover, a category scheme is also established on the basis of detailed research questions.  Framework deduction is analyzed as a “countercurrent process and answers are evaluated statistically with the help of SPSS 16. In addition to this, to maintain the reliability: stability, reproducibility, and accuracy of the research, different techniques are also used properly to get the desired outcomes. On the other hand, in the context of this research, validity measures are applied by using the criteria. The empirical observations indicate that, OBA is extremely applicable in today’s purchasing world. For case, 91% of interviewee’s state that they would like to has clearness concerning their suppliers’ costs, which designate that they anticipate distinct compensation from the use of OBA. Along with this, this chapter also indicates the main reasons for the cost transparency including Safeguarding optimal prices/management of price changes, Identification of cost reduction opportunities, risk management, disclosing supplier calculation errors etc. On the basis of above discussion, it can be said and conclude that, OBA helps the organizations in providing the cost reduction opportunities and achieving the competitive scope effectively.

 

References

Ashworth, L., & Free, C. (2006). Marketing dataveillance and digital privacy: Using theories of justice to understand consumers’ online privacy concerns. Journal of Business Ethics, 67(2), 107-123.

Attaran, M. (2004). Exploring the relationship between information technology and business process reengineering. Information & Management, 41(5), 585-596.

Austin, D. Andrew, and Jane G. Gravelle. (2007). Does price transparency improve market efficiency? Implications of empirical evidence in other markets for the health sector. Available: https://fas.org/sgp/crs/secrecy/RL34101.pdf. Last Assessed 2 March 2015

David Linich. (2014). The Path to Supply Chain Transparency. Available: https://dupress.com/articles/supply-chain-transparency/. Last Assessed 2 March 2015  

Dr Klaus Möller and Dr Melanie Windolph. (2012). OBA, IOCM and their impact on supplier relationship satisfaction. Available: https://www.fm-magazine.com/feature/depth/oba-iocm-and-their-impact-supplier-relationship-satisfaction. Last Assessed 2 March 2015

Hoffjan, Andreas Heinrich and Lührs, Sebastian and Kolburg, Anja. (2011) Cost Transparency in Supply Chains: Demystification of the Cooperation Tenet. Schmalenbach Business Review, Vol. 63, pp. 230-251. 

Julia Kirby. (2012). Trust in the Age of Transparency. Available: https://hbr.org/2012/07/trust-in-the-age-of-transparency. Last Assessed 2 March 2015

Li, L. (2007). Supply Chain Management: Concepts, Techniques and Practices Enhancing the Value Through Collaboration. USA: World Scientific.

Prater, E., Frazier, G. V., & Reyes, P. M. (2005). Future impacts of RFID on e-supply chains in grocery retailing. Supply Chain Management: An International Journal, 10(2), 134-142.

Rahman, Z. (2004). Use of internet in supply chain management: a study of Indian companies. Industrial Management & Data Systems, 104(1), 31-41.

Resatsch, F., Sandner, U., Leimeister, J. M., & Krcmar, H. (2008). Do Point of Sale RFID‐Based Information Services Make a Difference? Analyzing Consumer Perceptions for Designing Smart Product Information Services in Retail Business. Electronic Markets, 18(3), 216-231.

Stanley E. Fawcett, Paul Osterhaus, Gregory M. Magnan, James C. Brau, Matthew W. McCarter. (2007). Information sharing and supply chain performance: the role of connectivity and willingness, Supply Chain Management: An International Journal, Vol. 12 Iss: 5, pp.358 – 368.

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