In corporate purchasing,
competitive scrutiny is typically
limited to suppliers of items that are
Line directly related to end products.
(5) With “indirect” purchases (such as
computers, advertising, and legal
services), which are not directly
related to production, corporations
often favor “supplier partnerships”
(10) (arrangements in which the
purchaser forgoes the right to
pursue alternative suppliers), which
can inappropriately shelter suppliers
from rigorous competitive scrutiny
(15) that might afford the purchaser
economic leverage. There are two
independent variables—availability
of alternatives and ease of changing
suppliers—that companies should
(20) use to evaluate the feasibility of
subjecting suppliers of indirect
purchases to competitive scrutiny.
This can create four possible
situations.
(25) In Type 1 situations, there are
many alternatives and change is
relatively easy. Open pursuit of
alternatives—by frequent com-
petitive bidding, if possible—will
(30) likely yield the best results. In
Type 2 situations, where there
are many alternatives but change
is difficult—as for providers of
employee health-care benefits—it
(35) is important to continuously test
the market and use the results to
secure concessions from existing
suppliers. Alternatives provide a
credible threat to suppliers, even if
(40) the ability to switch is constrained.
In Type 3 situations, there ate few
alternatives, but the ability to switch
without difficulty creates a threat that
companies can use to negotiate
(45) concessions from existing suppliers.
In Type 4 situations, where there
are few alternatives and change
is difficult, partnerships may be
unavoidable.
Q36:
Which of the following can be inferred about supplier partnerships, as they are described in the passage?
They cannot be sustained unless the goods or services provided are available from a large number of suppliers.
They can result in purchasers paying more for goods and services than they would in a competitive-bidding situation.
They typically are instituted at the urging of the supplier rather than the purchaser.
They are not feasible when the goods or services provided are directly related to the purchasers’ end products.
They are least appropriate when the purchasers’ ability to change suppliers is limited.
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I chose E because it mentions in the last para"In Type 4 situations, where thereare few alternatives and change is difficult, partnerships may be unavoidable."
But the OA answer is "B".I agree with B too but how is that more correct than E ,can someone explain?
