Evguenia Shprits, Gregor Berz: How IFAMD Matrix links Procurement Strategy to Game Theory Measures in Industrial Procurement

We introduce a new approach to connect procurement strategies with supplier negotiations, which is the key activity of “Strategic Procurement”. We segment the supply markets into four different groups based on two dimensions which are own market position and the market attractiveness (“buyer’s market” vs. “seller’s market”). These fields form the new supply market segregation matrix which we call IFAMD Matrix. Each field implies different negotiation power for the negotiation participants. Then we propose the different norm strategies per field in order to achieve best negotiation results for the buyer.

For that purpose, we introduce an established methodology consisting of 10 steps to apply game theory into the negotiation preparation. As a link between procurement strategy and negotiation preparation, we introduce 12 generic strategic tasks to be performed by strategic procurement. Finally, we identify specific norm strategies for the different IFAMD Matrix fields and relate them – through the 12 strategic tasks – to the specific game theoretical relevant negotiation preparation
steps.

Part of the Munich Social Science Review, New Series, Volume 8 (2024)

The entire volume can be purchased online at this link.