University essay from KTH/Industriell ekonomi och organisation (Inst.)

Author: Jesus Mera Ruiz De Lira; [2011]

Keywords: ;

Abstract: Problem. The importance of strategic alignment between the purchasing and the firm strategy has increased in recent years because it has been pointed out as a mean to improve business performance. However, the use of different sourcing strategies depending on the characteristics of the components that firms are purchasing has not been considered when analyzing strategic alignment. That establishes a lot of limitations to the results obtained in previous analyses about strategic alignment. Purpose. The aim of this master thesis is to analyze empirically the consequences that the strategic alignment of the purchasing function with the firm strategy has on business performing overcoming previous limitations. In order to do so, sourcing strategies will be distinguished through Kraljic’s matrix. Methodology. A data sample collected through the International Purchasing Survey (IPS) has been used to the development of this master thesis. It consists of 429 firms from 9 European countries, Canada and USA. Two hypotheses were tested by multiple regression analyses. One of them verifies the relationship between strategic alignment business performance and the other one the link between the purchasing role and strategic alignment. In order to draw conclusions, both hypotheses were tested on the four purchasing categories of Kraljic’s matrix. Findings. Results show that business performance is affected positively by strategic alignment only for the category "strategic items" of Kraljic’s matrix. They also show that an active participation of the purchasing function on the overall firm strategy can promote strategic alignment for strategic items. Research limitations. It is difficult to establish a consistent index to measure strategic alignment. It is also hard to find all the factors that influence strategic alignment. Further research is needed on these themes. Practical implications. Companies have been encouraged to integrate the whole purchasing function into the firm strategy to improve business performance through strategic alignment. However, the positive economic effects of this integration can’t be generalized. The implementation of those activities that help integrate the purchasing function is a strategy recommended only when strategic items are involved. It is justified by the fact that it is the only quadrant where business performance can be improved through strategic alignment.

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