*** Please use “Scholarly references vice Book references ***
INSTRUCTIONS
For this Signature Assignment, will refer back to Assignment 2 in Week 4 for which you
developed problem statement and justification. This week, you will expand on that topic
and include the following in this final draft:
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Title Page
Title: The title of your work should be concise and describe what your research will entail.
Student Name
Course ID, Name, and Semester Taken
University
Date
Table of Contents
Background
This section will provide enough information so that the reader understands the general
context, settings, and basis for the proposed research. A non-expert may read the proposal so
ensure there is sufficient framing and discussion of the underlying concepts.
Problem Statement
This section will focus on the presentation of a literature-supported open research question or
problem that must be addressed. Additional areas should include detailed discussions of its
scope, nature, what the problem is, how it developed or evolved into a problem, why it is a
problem, and a brief discussion as to the other works that establish it as a problem within the
literature.
Goal
This section provides a concise definition of the goal of the study, what it will accomplish,
and how it will be measured. That is, how you will define success and failure of the study (if
applicable).
Relevance and Significance
This section provides additional support for the problem statement and goal by discussing
why the problem exists, who is affected by it, and the impact of the problem. Additionally,
discussion of the study's significance, the promise of its outcome, and its outcomes will
address the stated problem.
Literature Review
This section will focus on clearly identifying the major areas that the research will focus on to
establish a foundation of the study within the body of knowledge. The presentation of
literature is an expansion of an annotated bibliography that justifies the problem, hypothesis,
impact, and significance of the study.
Approach
A detailed explanation of how the study will be undertaken and how the goal will be
achieved. This should take the form of a discussion of the methodology used, each step,
milestone, and an explanation of each. Ensure that the approach is supported by the literature,
as it cannot be based solely on opinion or experience.
Conclusion
Length: 12-15 pages not including titles and reference pages.
References: Support your paper with a minimum of 10 scholarly resources
Your paper should demonstrate thoughtful consideration of the ideas and concepts that are
presented in the course and provide new thoughts and insights relating directly to this topic.
Your response should reflect scholarly writing and current APA standards
*** Please use “Scholarly references vice Book references ***
Problem Statement and Justification
ASSIGNMENT 2 WEEK 4
1
Problem Statement and Justification
2
Nature of the Problem
The main problem is the insufficient valuable literature review on risk in the purchase
behavior of the organization which demonstrates its importance in buying decisions of a firm.
Majority of top executives do not consider uncertainty about positive outcomes as a crucial risk
element. Risks exist in two ways; as a measure of possible results which considers a risky decision
like that with many potential consequences. The other way in which risk exists is as a hazard or
danger which consider risk as the one which contains threats and zero outcomes. Some managers
don’t see risk as mainly a probability concept. For instance, betting with USD 1,000,000 for a
project that determines the success of an organization is a risk whereas betting with USD 1 is not.
The likelihood of downplaying the probability of loss compared to the amount. Most managers do
not see a need for quantifying risk although quantities are used in explaining risks because they
need precision when quantifying risks (Aladwani, 2001).
Causes and Effects of the Problem
Studies have pointed out that the type and amount of risk in the purchase situation of a user
determine the choice of supplier. The literature has it that industrial buyers, several factors
influence risk perception including buyer demographics, Customer and Supplier interaction,
organizational performance and job Function
Buyer Demographics
Considering age demographics, research shows that younger managers are highly likely to
take higher risks as compared with elderly managers. Specific user characteristics would influence
Problem Statement and Justification
3
the perceived threat although the research would not find enough empirical evidence. These
characteristics include; high level of self-confidence, the user's buying history, decision experience
level, and technical and professional affiliation (Lopez-Nicolas et al., 2008).
Job Function
Job function has a significant impact on risk perception. However, most buying decisions
not only determined by the purchasing agents alone but there also some other contributing factors.
Every person attempts to make the main objective information meet with their prior expectations
and knowledge by analytically altering it. The primary influence of perception of corporate
engineers and managers is the economic consequences analysis at the corporate level. Thus, in
buying decisions, personality difference among managers is the most crucial factor.
Customer/Supplier Interaction
The amount of perceived risk will also be influenced by the level of communication and
interpersonal relationship between buyers and sellers. Researchers have noted four dimensions that
are fundamental to the danger perceived. They are; Value similarity between selling and buying
organization, the ability of the seller to adopt dependence, supply security and access to creativity
and innovation. Organizations find it extremely challenging to reconcile the end user needs for
reliable support service and system liability with the technological advancement of suppliers.
However, most researchers point that to overcome the problem, relationship management, and
interactive approach could be employed (Weisband et al., 1995).
Organization’s Performance
The excitement of risk-taking and its necessity in management is something managers
understand perfectly well. However, the report shows that in organizations, risk-taking is
maintained more by personal incentives rather than organizational incentives. There is a risk
Problem Statement and Justification
4
associated with the changes in profitability or liquidity ratios. Managers often believe that fewer
risks should be taken when the organization is dying. The relationship between risk and the dying
of an organization is so sensitive that the danger of operating below normal reduced. However,
when the organization is doing well, risks should be taken more often.
Strategies to Reduce Risk
Information Gathering
Research has pointed out that information gathering is a common occurrence in jeopardy
lowering strategies. Users depend mainly on the internal and external search of information when
the situation involves higher risk due to the more significant decision making. Bigger decisions
affect bigger risk and factors such as conflict, consensus, and uncertainty. The level of the company
and user risk in proportion to the amount of information search. The quality of information being
sought after will depend on the experience of the buyer, the size of the organization involved and
the level of risk associated. As the negotiations are ongoing, the dependence on the information
search increases (Mitchell, 1995). This information gathering is one of the best strategies in
reducing risk in buyer perception.
Quantitative Techniques
Most of the buyers are risk averse e and tend to go for alternatives that minimize their level
of risks. Thus, the availability of technology and its advancement in the computer makes it quick
and simple to quantify and calculate risk. Most of the industrial buyers are adapting the
sophisticated quaant5tative techniques of selection and analysis. Some system take a simple
approach others take a harder approach, but they all arrive at the same number (Safa et al., 2015).
Multiple Sourcing and Split Procurements
Problem Statement and Justification
5
Multiple sourcing and split procurements is a strategy for reducing risk by spreading risk.
Suppliers penetrate the loyal barrier since split procurements give way for the risk-averse to avoid
risk at all cost. Hence, this implies that the new suppliers should adopt split procurement and look
for opportunities that point to service. In other words, this method works by reducing the
consequences of choosing the wrong supplier thereby handling buyer perceived risk. It is not only
a corporate strategy, but it can also be used as a personal strategy for reducing risk.
User Participation
The user participation strategy helps reduce risk in two ways; First is giving users an
opportunity in making decisions on issues that affect them, secondly, use specialized knowledge
to make the decision. Studies show that low user participation was deemed to be reflective of poor
buying practice which is less effective and less efficient (Siponen, 2000). It is essential to have
high user participation as it enhances effectiveness and efficiency buying practices.
Partnering and Alliances
Partnering and Alliance strategy is when suppliers come together to save on certain costs.
In the purchase literature, the act of partnering alliances is receiving a lot of attention when
suppliers form alliances with part of the organization or other organizations to save on search cost
or to increase analytic expertise. Some companies in the UK adopt this strategy when appointing
planning consultants. Also, industrial purchases alliance can be formed. The buyer-supplier
relationship has been heavily gazette and practiced. This is why there is an emergence of joint
buyer-supplier relationship today. Ultimately, this is an extension of good communication between
buyer and seller. This way communication flow is facilitated, and risk reduced (Spears, 2010).
Problem Statement and Justification
6
References
Aladwani,
A.
M.
(2001).
Change
management
strategies
for
successful
ERP
implementation. Business Process management journal, 7(3), 266-275.
Lopez-Nicolas, C., & Molina-Castillo, F. J. (2008). Customer Knowledge Management and Ecommerce: The role of customer perceived risk. International Journal of Information
Management, 28(2), 102-113.
Mitchell, V. W. (1995). Organizational risk perception and reduction: a literature review. British
Journal of Management, 6(2), 115-133.
Safa, N. S., Sookhak, M., Von Solms, R., Furnell, S., Ghani, N. A., & Herawan, T. (2015).
Information security conscious care behavior formation in organizations. Computers &
Security, 53, 65-78.
Siponen, M. T. (2000). A conceptual foundation for organizational information security
awareness. Information Management & Computer Security, 8(1), 31-41.
Spears, J. L., & Barki, H. (2010). User participation in information systems security risk
management. MIS Quarterly, 503-522.
Weisband, S. P., & Reinig, B. A. (1995). Managing user perceptions of email
privacy. Communications of the ACM, 38(12), 40-47.
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