Industrial organization theory and its contribution to decision-making in purchasing

Abstract

This paper tries to investigate how Industrial Organization Theory and in particular the Structure-Conduct-Performance paradigm, can contribute to decision-making in the purchasing year cycle. The structure of a market is the concept behind Industrial Organization theory, rather than the firm itself. The theory indicates the influence of competitive forces on the industry, as well as, how the profitability is determined by them. These opportunities and threats in the external environment of a firm are important factors, influencing strategic management in general and in particular Supply Chain Management.

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