5 Special Considerations Towards Government Institutions When Public Procurement As Strategic Partners

Developing business in industrial segments where governmental institutions are significant buyers raises
special considerations when Public Procurement takes place.

Special Considerations in Public Procurement

 Public accountability: While public procurement Governmental use of public money is often subject to controls and scrutiny that would be unthinkable in private corporations. This will vary from country to country according to the extent to which public accountability for expenditure is deemed to be important to the political system.

 Governments are rarely monolithic: Different government departments may have different cultures, agendas and resources. Regional political variations mean that local government purchasing units may have different processes.

 Political considerations: Public procurement will look at the whole social benefit and not merely costs. Therefore employment effects, and factors such as pollution will be considered. Government bodies may also require that its suppliers can show they conform to its own policies in matters of nondiscrimination, sustainability etc.

 Procurement by tender: Usual forms of procurement procedure are the open tender and the selective tender. For a selective tender process under procurement process, the firm needs to be accepted on the appropriate list. In some countries, it takes considerable persistence to get to that stage, since it may take several visits to appropriate government officials to establish a good working relationship.

Identifying country clusters
In choosing which groups of countries to enter, a firm might focus on particular countries or regions or
groups of countries with similar characteristics using the following bases.

Basic Data: Level of economic development, infrastructure and so on.
Issues: For example, the lack of a fixed line telecommunications network in Africa may encourage take-up of mobile telecommunications.

Basic Data: Cultural similarities (e.g. for intellectual property, common language).
Issues: It is easy to overestimate the similarities between two countries that might be assumed because they speak the same language. For example, despite the common use of English, there are distinct cultural differences between the US and the UK.

Basic Data: Member of economic groupings (e.g. a strategy for the EU).
Issues: Economic groupings such as the EU have tariff barriers for some external goods. They may have common product standards which must be adhered to.

Basic Data: Similar market or regulatory structures.
Issues: This suggests similar marketing mixes may be appropriate to more than ones market. American credit card companies have expanded in the UK because UK consumers use credit cards. German consumers tend not to use credit cards as frequently.

Basic Data: Inter-market timing differences: life cycles.
Issues: Certain markets have similar demand patterns for similar goods but that one leads and the other lags. For example, it is assumed that Internet penetration will rise in the developed world, but that the US will lead, and other countries will follow as innovations spread.

If countries are deemed to be similar, then it may be possible to use one country to ‘predict’ the behavior of another.

Mobility barriers

These are factors that make it hard for a firm in one strategic group to develop or migrate to another. They function as barriers to entry and, as such, can enable superior rates of profit to be enjoyed by firms within a strategic group.

They relate to the following.
 Characteristics, such as branding, user technologies and so on, specific to markets overseas or to
geographical regions within a country.
 Industry characteristics: To move into a mass volume end of the market might require economies
of scale and large production facilities. To move to the quality end might require greater investment
in research and development.
 The organization may lack the distinctive skills and competences in the new market area.
 Legal barriers.