Exploring strategic strengths and weaknesses of retail purchasing groups

Tarighi

2021

JRFM

The paper aims to investigate the effects of the COVID-19 pandemic on working capital management policies among Polish small and medium-sized enterprises operating in Group Purchasing Organizations (GPOs). The results show that the firms adopted a moderate–conservative strategy for their working capital management. Moreover, the evidence confirms that the COVID-19 pandemic crisis did not change Working Capital Management (WCM) strategies significantly. The companies that have high financial security as a result of the high ratio of Liquidity, Quick, and cash conversion cycle (CCC) have tried to attract more new customers in the market by increasing the due date of accounts receivable so they can improve their sales performance, and also reduce the liabilities turnover to be able to work with more suppliers in the market. Moreover, among the various WCM strategies, the companies with a higher CCC ratio, along with those whose bulk of current assets consisted of accounts receivable and short-term investments, managed to have higher sales returns. Finally, our outcomes indicate that the firms operating in large cities have lower sales returns, meaning even Polish small and medium-sized enterprises’ ability within GPOs with the aid of the central unit can also get high return on sales (ROS) results.

Section: Introductionmentioning

confidence: 99%

Effects of the COVID-19 Global Crisis on the Working Capital Management Policy: Evidence from Poland

Tarighi

2021

JRFM

“…The most important benefit for commercial enterprises is the possibility of obtaining low prices of the goods purchased and attractive trade credits. Low prices allow reducing the most important cost position for commercial enterprises, which is the value of goods sold at the purchase price and other cost items [53][54][55][56][57][58][59].…”

Section: Introductionmentioning

confidence: 99%

Trade Credit Management Strategies in SMEs and the COVID-19 Pandemic—A Case of Poland

Dankiewicz

2020

Sustainability

Every large or small enterprise needs to have financial liquidity and to be able to generate profits to develop. It is not important in which sector it operates, whether it is a private or public one, but profits and safety are two elements every enterprise is not able to function without. The low performance of these two measures can cause a number of difficulties for managers. To avoid this, leading companies, especially the smallest ones, should optimize the trade credit management policy. Most often, SMEs’ (small and medium-sized enterprises) owners try to work together as part of a group purchasing organization, which positively affects trade credit management. The aim of the paper is to present the trade credit management strategy in Polish group purchasing organizations during the COVID-19 pandemic. The study uses data on the construction sector because it is one of the most important segments of the Polish economy, which is financed to a large extent with trade credit. The paper indicates the mechanisms whose applications allowed SMEs operating in purchasing groups to change trade credit management strategies in such a way that these units could operate calmly and safely in the market. These changes could be observed in purchasing goods with a large reserve, strictly controlling all receivables, switching to cash sales or limiting sales on long-term trade credit. The analysis showed that enterprises changed trade credit management strategies from moderately conservative to highly conservative.

“…Thanks to cooperation in purchasing groups, its members can increase their financial security. The literature on the subject provides a lot of information on the operation and functioning of purchasing groups or other multi-entity organizations, it broadly discusses the classifications of purchasing groups, as well as identifies the benefits that companies operating in purchasing groups obtain [12][13][14][15][16]. Nevertheless, the literature shows a lack of studies on the approach to financial security management in central units managing a purchasing group.…”

Section: Principles Of Organization Of Purchasing Groupsmentioning

confidence: 99%

Financial Security Management in Central Units of Purchasing Groups

Wseas Transactions on Business and Economics

Kmiotek

Jurgilewicz

2020

Optimization of financial resources and funding sources is a guarantee of financial security. Enterprises need financial resources to develop. The conditions of the pandemic, even more than regular competition, show the problems resulting from the lack of financial resources, and the lack of adequate financial reserves makes it difficult to start after lockdown. In recent years, SMEs have merged into multi-entity organizations to improve their financial security. These organizations are managed by specially created central units (purchasing groups). If the central units run into financial difficulties, numerous companies operating within purchasing groups will also be at risk. The aim of this article is to assess the approach to financial security of purchasing groups depending on the location of the central unit. The analysis was conducted on a group of 9 central units making up the largest purchasing groups in the construction industry in Poland. They were divided into two groups into internal and external central units. The conducted analysis identified financial security management strategies as quite risky, which requires some changes, which are presented in the article