purchasing power

Examples of purchasing power in the following topics:

• Industrial Purchasing Behavior

  • 2010: Armajaro and the European cocoa market On July 17, 2010, Armajaro purchased 240,100 tonnes of cocoa.
  • The purchase was valued at £658 million and accounted for 7 per cent of annual global cocoa production.
  • Purchasing power is the number of goods/services that can be purchased with a unit of currency.
  • For example, if you had taken one dollar to a store in the 1950s, you would have been able to buy a greater number of items than you would today, indicating that you would have had a greater purchasing power in the 1950s.
  • As Adam Smith noted, having money gives one the ability to "command" others' labor, so purchasing power to some extent is power over other people, to the extent that they are willing to trade their labor or goods for money or currency.

• Wind power

  • Whether for sailing or rolling a grindstone in a flourmill, wind power has been around for centuries.
  • Size-wise, wind turbines can range from huge multi-megawatt, 11-storey towers (which power thousands of homes), to modest 1 megawatt turbines that can power 350 homes, or smaller 1–10 kilowatt roof-mounted turbines which are purchased from specialized retailers and can power a house or business.
  • Is wind power affordable?
  • Is wind power practical?
  • Most users of wind power seem to agree that the benefits outweigh the disadvantages.

• Another twist: capitalizing on guilt

  • The idea behind buying and selling carbon credits began in 1989 when global power firm AES invested $2 million in a forestry project in Guatemala.
  • The company made its purchase under the belief that laws would soon be enacted that limited carbon emissions and that these same laws would probably give companies struggling to reduce their carbon emissions the option of offsetting them.
  • (Ellison, Katherine, ‘Shopping for Carbon Credits') A growing number of businesses have since climbed onto the bandwagon by allowing customers to offset their carbon emissions by purchasing carbon credits.
  • For example, some airlines will voluntarily add a few dollars to the price of their tickets and several power companies provide the option of paying a higher monthly fuel bill to help offset carbon emissions.
  • In other examples, Range Rover automobiles offered an emissions offset for the first 45,000 miles (72,000 kilometres) which was factored into their purchase price and a ski resort in Vail, Colorado, once enticed skiers to buy energy credits to help buy a wind turbine so in the future the skiers will be carbon-neutral when they are lifted to the top of a nearby mountain.

• Cooperatives

  • The company shares its financial success each year with its members who get a refund each year based on their eligible purchases.
  • The company shares its financial success each year with its members who get a refund each year based on their eligible purchases.
  • In many industries, it is common for buyers to form cooperatives in order to increase their bargaining power relative to suppliers.
  • The cooperative, sometimes comprised of hundreds of smaller firms, is able to use its combined buying power to bargain with suppliers for better prices and terms.
  • Individuals and firms who belong to the cooperative join together to market products, purchase supplies, and provide services for its members.

• Is wind power right for your business?

  • Some turbines are designed to operate at low wind speeds while others can withstand powerful gusts.
  • Additional considerations that should be researched before buying into wind power include:
  • Some electrical producers do not tolerate competition and may refuse to buy the additional electricity a wind turbine produces or may force all your micro-power to be fed directly into the nation's grid.
  • Years ago a student of mine relayed the story of a village that invested in a huge wind turbine which produced hundreds of kilowatts of power.
  • Unfortunately, the regional power company would not buy the additional electricity and residents discovered that the cost of their purchase would end up taking years to recoup.

• Putting together a clean production line

  • To help avoid these pitfalls, the following questions should be asked before purchasing any piece of machinery or equipment: (Scott, Jonathan T., Managing the New Frontiers)
  • Is the full life-cycle cost of the machine being considered rather than its purchase price?
  • Inefficient, energy-hungry machines can consume their initial purchasing cost in energy per week.
  • The first reveals the machine's purchase cost.
  • For example, in 1897, Sakichi Toyoda innovated his company's power-driven weaving looms with a unique device that automatically shut the machines off when a thread broke, thereby preventing the wasting of good thread and the making of defective cloth.

• Benefit perception and service

  • Most people, when they purchase a product, are not interested in owning the product per se.
  • For example, when an airline passenger purchases a ticket, he or she seeks the benefit of traveling from one place to another; no one expects to purchase part of the plane.
  • Good service, therefore, is a powerful competitive advantage.

• Psychology of Purchasing

  • An example of the way psychology affects purchasing can be seen through colors.
  • Red is associated with energy, and creates the feeling of urgency (think clearance sale signs) while black is associated with sleek and powerful (think luxury goods).
  • Consumerism is a social and economic order that encourages the purchase of goods and services in ever-greater amounts.

• How much waste is out there?

  • Indeed, motors consume so much electricity that the amount they use over their lifetime always costs more than the purchase price of the motors themselves.
  • For example, a new electric motor purchased for $1,500 can cost as much as $13,000 a year to run and a typical 100 horsepower AC induction motor purchased for $5,000 can require $35,000-worth of electricity to operate annually (some motors actually consume more than the amount of their purchase price in electricity costs every week).
  • As much as 70% of the energy produced from burning coal is lost in the power plant due to poorly insulated and poorly designed furnaces.
  • (www.esource.com) It all adds up to huge financial losses for businesses and consumers because the more that is wasted, the more has to be purchased.
  • All together, the amount of electricity motors consume totals around 40% of the world's electrical power or roughly 75% of all industrial electricity usage.

• Purchasing

  • For example, a purchasing department will place orders as requirements become known.
  • Purchasing is the formal process of buying goods and services.
  • Most organizations use a three-way check as the foundation of their purchasing programs.
  • These departments may be designated as any of the following: purchasing, receiving, accounts payable or engineering, purchasing and accounts payable, or plant management.
  • For instance, a purchasing department will place orders as requirements become known.