A Beginners Guide to Economic Indicators

An economic indicator is simply any economic statistic, such as the unemployment rate, GDP, or the inflation rate, which indicate how well the economy is doing and how well the economy is going to do in the future. As shown in the article How Markets Use Information To Set Prices investors use all the information at their disposal to make decisions. If a set of economic indicators suggest that the economy is going to do better or worse in the future than they had previously expected, they may decide to change their investing strategy. To understand economic indicators, we must understand the ways in which economic indicators differ. There are three major attributes each economic indicator has: Three Attributes of Economic Indicators Relation to the Business Cycle / EconomyEconomic Indicators can have one of three different relationships to the economy:Procyclic: A procyclic (or procyclical) economic indicator is one that moves in the same direction as the economy. So if the economy is doing well, this number is usually increasing, whereas if were in a recession this indicator is decreasing. The Gross Domestic Product (GDP) is an example of a procyclic economic indicator.Countercyclic: A countercyclic (or countercyclical) economic indicator is one that moves in the opposite direction as the economy. The unemployment rate gets larger as the economy gets worse so it is a countercyclic economic indicator.Acyclic: An acyclic economic indicator is one that has no relation to the health of the economy and is generally of little use. The number of home runs the Montreal Expos hit in a year generally has no relationship to the health of the economy, so we could say it is an acyclic economic indicator.Frequency of the Dat aIn most countries, GDP figures are released quarterly (every three months) while the unemployment rate is released monthly. Some economic indicators, such as the Dow Jones Index, are available immediately and change every minute.TimingEconomic Indicators can be leading, lagging, or coincident which indicates the timing of their changes relative to how the economy as a whole changes.Three Timing Types of Economic IndicatorsLeading: Leading economic indicators are indicators which change before the economy changes. Stock market returns are a leading indicator, as the stock market usually begins to decline before the economy declines and they improve before the economy begins to pull out of a recession. Leading economic indicators are the most important type for investors as they help predict what the economy will be like in the future.Lagged: A lagged economic indicator is one that does not change direction until a few quarters after the economy does. The unemployment rate is a lagge d economic indicator as unemployment tends to increase for 2 or 3 quarters after the economy starts to improve.Coincident: A coincident economic indicator is one that simply moves at the same time the economy does. The Gross Domestic Product is a coincident indicator. Â   Many different groups collect and publish economic indicators, but the most important American collection of economic indicators is published by the United States Congress. Their Economic Indicators are published monthly and are available for download in PDF and TEXT formats. The indicators fall into seven broad categories: Total Output, Income, and SpendingEmployment, Unemployment, and WagesProduction and Business ActivityPricesMoney, Credit, and Security MarketsFederal FinanceInternational Statistics Each of the statistics in these categories helps create a picture of the performance of the economy and how the economy is likely to do in the future. Total Output, Income, and Spending These tend to be the broadest measures of economic performance and include such statistics as: Gross Domestic Product (GDP) [quarterly]Real GDP [quarterly]Implicit Price Deflator for GDP [quarterly]Business Output [quarterly]National Income [quarterly]Consumption Expenditure [quarterly]Corporate Profits[quarterly]Real Gross Private Domestic Investment[quarterly] The Gross Domestic Product is used to measure economic activity and thus is both procyclical and a coincident economic indicator. The Implicit Price Deflator is a measure of inflation. Inflation is procyclical as it tends to rise during booms and falls during periods of economic weakness. Measures of inflation are also coincident indicators. Consumption and consumer spending are also procyclical and coincident. Employment, Unemployment, and Wages These statistics cover how strong the labor market is and they include the following: The Unemployment Rate [monthly]Level of Civilian Employment[monthly]Average Weekly Hours, Hourly Earnings, and Weekly Earnings[monthly]Labor Productivity [quarterly] The unemployment rate is a lagged, countercyclical statistic. The level of civilian employment measures how many people are working so it is procyclic. Unlike the unemployment rate, it is a coincident economic indicator. Production and Business Activity These statistics cover how much businesses are producing and the level of new construction in the economy: Industrial Production and Capacity Utilization [monthly]New Construction [monthly]New Private Housing and Vacancy Rates [monthly]Business Sales and Inventories [monthly]Manufacturers Shipments, Inventories, and Orders [monthly] Changes in business inventories is an important leading economic indicator as they indicate changes in consumer demand. New construction including new home construction is another procyclical leading indicator which is watched closely by investors. A slowdown in the housing market during a boom often indicates that a recession is coming, whereas a rise in the new housing market during a recession usually means that there are better times ahead. Prices This category includes both the prices consumers pay as well as the prices businesses pay for raw materials and include: Producer Prices [monthly]Consumer Prices [monthly]Prices Received And Paid By Farmers [monthly] These measures are all measures of changes in the price level and thus measure inflation. Inflation is procyclical and a coincident economic indicator. Money, Credit, and Security Markets These statistics measure the amount of money in the economy as well as interest rates and include: Money Stock (M1, M2, and M3) [monthly]Bank Credit at All Commercial Banks [monthly]Consumer Credit [monthly]Interest Rates and Bond Yields [weekly and monthly]Stock Prices and Yields [weekly and monthly] Nominal interest rates are influenced by inflation, so like inflation, they tend to be procyclical and a coincident economic indicator. Stock market returns are also procyclical but they are a leading indicator of economic performance. Federal Finance These are measures of government spending and government deficits and debts: Federal Receipts (Revenue)[yearly]Federal Outlays (Expenses) [yearly]Federal Debt [yearly] Governments generally try to stimulate the economy during recessions and to do so they increase spending without raising taxes. This causes both government spending and government debt to rise during a recession, so they are countercyclical economic indicators. They tend to be coincident to the business cycle. International Trade These are a measure of how much the country is exporting and how much they are importing: Industrial Production and Consumer Prices of Major Industrial CountriesU.S. International Trade In Goods and ServicesU.S. International Transactions When times are good people tend to spend more money on both domestic and imported goods. The level of exports tends not to change much during the business cycle. So the balance of trade (or net exports) is countercyclical as imports outweigh exports during boom periods. Measures of international trade tend to be coincident economic indicators. While we cannot predict the future perfectly, economic indicators help us understand where we are and where we are going.

The Cold War During World War II - 2269 Words

The Cold War was a crucial war that took place shortly after World War II. The Cold War was a war between the Soviet Union and the United States. It is interesting to note that two countries that worked together as a team and were allies during World War II goes into war against each other shortly after the end of the greatest war in human history. The defeat of Germany and Japan along with the economic devastation that had occurred in Europe left many of the superpowers in the world during this time with minimal power. The two major powers that came out of World War II were the USSR (Soviet Union) and the United States of America. Since the major superpowers during WWII were crippled after the end of WWII, there were no real competitors or regional competitors for to the Soviet Union and America. As a result, the Soviet Union and United States of America emerged as the new superpowers of the world. Since there was literally no competitions to these nations, both United States and th e Soviet Union started to spread their power worldwide. The United States’ political ideology was based on democracy whereas on the contrary the USSR’s political ideology revolved around communism. The major driving force of the Cold War is the difference in political ideologies between the nations. Both USSR and the USA did not support the spread of each of their ideologies. The conflict in ideologies made it prevalent that the superpowers- USSR and the United States did not trust each other.Show MoreRelatedThe Cold War During World War II930 Words   |  4 PagesThe Cold War was political hostility between the United States of America and the Soviet Union through threats, propaganda and series of warfare incidents that made these superpowers of the time suspicious of one another. With the sources of the reader I will explain who’s to be at fault for the Cold war, the United States or the Soviet Union. The term â€Å"Cold War† according to Heonik Kwon i n his document origins of the Cold War â€Å"†¦ refers to the prevailing condition of the world in the second halfRead MoreThe Cold War During World War II Essay1185 Words   |  5 PagesThe Cold War was not a military conflict, but was an ongoing political conflict involving both military and economic competition between two superpowers advancing rapidly wanting to be number one. The evolvement of the Cold War began during and after World War I, although the official beginning of the Cold War was in 1945, at the Yalta Conference after World War II. There were many causes of the Cold War, but can be summed up as a battle between capitalism and communism. Also, along with PresidentRead MoreThe Cold War During World War II Essay1298 Words   |  6 PagesThe Cold War was the name given to the non-aggressive conflict between The United States and Russia that began after World War II. However, there is disagreement over the exact dates of the Cold War. Nevertheless, it took place somewhere between the end of World War II and the early 1989 (Wendt n.d). The Cold War brought about a number of crises in the decades that it lasted. These crises include: Vietnam, the Berlin Wall, and the Cuban Missile Crisis. The Cold War itself was the result of the UnitedRead MoreThe Cold War During World War II854 Words   |  4 PagesThe Cold War was a major event in the U.S. and Soviet Union’s history. The main reason that these two countries entered into the Cold War after World War II was power. The USSR and United States had two very different perspectives on power coming out of World War II. This disagreement ultimately caused the Cold War. Russia’s perspective after World War II was influenced by Joseph Stalin. Stalin, the leader of the USSR at the time, was a merciless dictator. His main concern was maintaining power andRead MoreThe Cold War During World War II1397 Words   |  6 PagesWar is the result of hate and brutality that can affect people in a negative way. The Cold War relates to the war in the Butter Battle book as it demonstrates hate, which should not be taught to kids in children s books. Conflict and competition can lead to war. The Cold War was a 45 year long rivalry between the Western powers, led by the United States and the Soviet Union. The United States formed a military base to protect them from other threats such as the Soviets. The expansion of the SovietRead MoreThe Cold War During World War II1324 Words   |  6 PagesWhen World War II ended, the last thing the countries imagined was another worldwide conflict. But that’s exactly was soon ensued when the Cold War erupted between the Eastern powers and the Western powers. The Eastern powers consisted of the Soviet Union and the Western powers consisted of America, Britain and France. During World War II, these allies had a common ground to work together in effort to fight against Hitler and the Nazi Party. The Cold War wasn’t an actual war where battles were fought;Read MoreThe Cold War During World War II Essay1632 Words   |  7 PagesThe Cold War was a clash of culture, ideologies, and a standoff between the world s two greatest nuclear powers. The argument of the American side was based around Capitalism and a hunger for ever growing business while the Soviet Union’s was structured around Communism and it’s powerful theocracy that stated it must be spread to every country on the planet. As a result, there has been much debate about whether the U.S. initiated the Cold War through their usage of the atomic bomb in World War IIRead MoreThe Cold War During World War II1760 Words   |  8 PagesEssay One During World War II the United States and the Soviet Union were allies, but by 1950, their relationship had disintegrated and the two nations were engaged in a â€Å"Cold War.† The â€Å"Cold War† occurred due to efforts by both nations after the war to maintain influence in regions like Eastern Europe for the Soviets and Turkey and Greece for the United States, but the â€Å"Cold War† wasn’t limited to these disputes. The â€Å"Cold War† was influenced by many factors on the United States side including theRead MoreThe Cold War During World War II970 Words   |  4 PagesThe Cold War was a period of 44 years of both military and political tension after World War II. There were many ideals and events that lead to the Cold War. Nationalism, poor economic conditions, and a strong desire for democracy and human rights are the primary reasons that many believe the Cold War started. However, these are just a few of the reasons for the Cold War. Events s uch as the Yalta Conference, Truman Doctrine, Potsdam Conference, and the Marshall Plan also greatly influenced the startRead MoreThe Cold War During World War II2261 Words   |  10 PagesThe Cold War was a period of rivalry short of armed confrontation. Tensions oscillated between former allies of the World War II, Russia and America, leading to the infamous cold war. It is rather difficult to determine the starting point of the Cold War because the East-West relationship had been deteriorating since a long time due to their conflicting ideologies and aspirations. However, the circumstances required for them to form an alliance in World War II, but this friendship was short lived

The Laws Of The United States - 1631 Words

A number of states in the United States of America have passed right-to-work legislation and the idea has recently been trending as more states are enacting the laws. There are still plenty of states that do not follow the right-to-work provisions, but in those that do, significant effects have been witnessed. Right-to-work legislation allows workers to collect the benefits of any union agreements within their company, but can choose to forego paying fees. Also, the employees in the states with right-to work provisions can join labor unions if they wish to do so without being forced by their employers to join a union as a requirement for employment. This paper will attempt to detail the history of right-to-work laws, explain current†¦show more content†¦For instance, a worker in a unionized workplace and in a state with right-to-work legislation can decide to be represented by the union and at the same time opt not to pay the dues required by the union. This has develop ed to become a major point of contention for many labor unions which has caused them to fight back. The labor unions oppose the right-to-work legislation because they have degraded their abilities to fight for the rights of workers effectively. These unions depend on the membership dues as they help in keeping them funded and in enabling them to be more proactive on the issues regarding workers’ rights such as paid sick leave, overtime, and minimum wage. Many labor union representatives argue that the workers in unionized workplaces in the states that lack right-to-work legislation, tend to be better paid than the employees in states with right-to-work legislation. As per The American Federation of Labor and Congress of Industrial Organizations (2017), the largest federation of labor unions in America, the employees in right-to-work states make around $6,100 U.S dollars less in a year than the neighbors in the states that lack right-to-work legislation. Nevertheless, the push for right-to-work provisions has continued to increase, thus making the laborShow MoreRelatedThe Law Of The United States1314 Words   |  6 Pagespregnancies. The law requires an employer to allow twelve unpaid work weeks to be taken in a twelve month period every year. The United States Department of Labor states, â€Å"This law covers only certain employers; affects only those employees eligible for the protections of the law; involves entitlement to leave, maintenance of health benefits during leave, and job restoration after leave;. . . † This may guarantee your job and health benefits to be kept during the twelve week period, but the law does notRead MoreThe Law Of The United States1512 Words   |  7 PagesChristopher Kupka, Recent Developments in Labor and Employment Law: Remediation of Unfair Labor Practices and the EFCA: Justifications, Criticisms, and Alternatives, 38 RUTGERS L. REC. 3, (2010-2011) (finding that the remedies available under the NLRA are ine ffective at deterring employers from committing ULPs and therefore do not adequately protect workers.). HUMAN RIGHTS WATCH, UNFAIR ADVANTAGES: WORKERS’ FREEDOM OF ASSOCIATION IN THE UNITED STATES UNDER INTERNATIONAL HUMAN RIGHTS STANDARDS (August 2000)Read MoreThe Law Of The United States Essay1957 Words   |  8 PagesWhen the vagrancy law was out of the lawmaker reach, they found themselves back in the same problem they were in after slavery ended. Out of desperation to find a solution to their slave labor problem, the state took full advantage of the Tenth Amendment. The tenth Amendment â€Å"establishes a strong principle of states rights in the Constitution. Any powers not explicitly given to the federal government can be assumed to belong to the states, or directly to the people†. With this piece of legal documentRead MoreThe Law Of The United States1920 Words   |  8 Pageslegal truth that ignorance of law is no excuse (ignorantia juris non excusat) i.e., every prudent man of the society is supposed to know the law of the land which concerns about his right, life, liberty, duty, obligation, powers, privileges and immunities. The workmen, the employers engaging such workmen and the law enforcement agencies (Inspectors), it is expected, are required to know the law (Inter-State Migrant Workmen Act) with which they interact. Awareness of law for all such classes of personsRead MoreUnited States Law And International Law Essay2019 Words   |  9 PagesSubsequently this class provided a narrative I could adapt to understand international policies studied in my US law and international Law classes taught by former STPEC alumni Buz Eisenburg. His role and insightful experiences as an international attorney who has volunteered his time to such cases like Guantanamo Bay and domestic issues around prohibiting the construction of Corporate box stores like Wall Mart. His class continued to explain the involvement not only on global matters of human rightRead MoreCopyright Laws Of The United States1600 Words   |  7 PagesA copyright is a form of protection provided by the laws of the United States to authors of original works of authorship. â€Å"Copyright law in the United States is based on the Copyright Act of 1976, a federal statute that went into effect on January 1, 1978,† according to FindLaw. FindLaw also states that, â€Å"Individual states cannot enact their own laws to protect the same rights provided by the Copyright Act. Original multimedia works are protected by Copyright.† Literary, dramatic, musical, artisticRead MoreGun Laws in the United States1036 Words   |  5 Pagesin the United States (US) is too easy and the laws governing access should be strengthened. Current US gun laws are very permissive, which has led to excessive gun-related violence and deaths. Guns are one of the leading causes of violence in the US at the moment, and access to guns (legally and illegally) is very easy. Currently, there are ~211 million firearms in circulation and 70 million are handguns. (1) Today, there is at least one gun in fifty-percent of households in the United States. In 24Read MoreLaw Enforcement Of The United States1333 Words   |  6 PagesJuan Lopez Ms. Dennaoui English 12 23 April 2015 Law Enforcement Imagine if there was no type of law enforcement code for a month in your city. Crime rates will be at an all-time high. People would have no sort of protection or stability. There would also be no one to control the people; no one will ensure peace amongst the people. Thanks to our police officers all of these possible dangerous situations are kept under control on a daily basis. Police officers put their lives on the line each dayRead MoreImmigration Laws And The United States1251 Words   |  6 PagesImmigration laws have resulted in a situation where many illegal immigrants live and work in the United States. Yet, it is an important issue that has been blown out of proportion by the media and politicians. Here in the United States, Syrian refugees have enriched our cultural growth into a more diverse and positive outcome and have enhanced our influence in the World. However, Americans have responded to their arrival with violence and hate towards them. In the late 19th century, the Arab worldRead MoreThe United States International Law1217 Words   |  5 Pages The most destructive and destabilizing state crimes are wars of aggression. Under George Bush, neoconservatives ushered in a climate of unilateralism as well as militarism which stemmed from America’s lengthy experiences involving â€Å"open door† imperialism. State crimes are defined as criminal acts perpetrated by state representatives in an attempt to serve in their job’s capacity. However, some have promoted an expanded description of state crimes which includes behavior which violates international

Firms should seek to “get their own house in order” before seeking to manage suppliers free essay sample

Assignment Title: Firms should seek to â€Å"get their own house in order† before seeking to manage suppliers Purchasing is a vital process of the company, 100% efficiency is required at all times. There must be proper organization and flexibility in this department. People working in this department should constantly evaluate the current purchasing scheme of the company and adapt to changes at all times. Purchasing department or team of a company basically seek to answer these two questions: what we buy and how we buy. The answers to these two questions can change depending to companies size and sector. Indeed, by answering these two questions is the main goal of procurement team or department is to create best value for money and to maximize it. It is possible to maximize best value for money by obtaining surplus value. Surplus value is different from the value. Surplus value locates between cost of production for supplier and value of the product to the buyer. This is called the area zone of agreement. The surplus value which is retained by supplier is called producer surplus and the value which is retained by buyer is called consumer surplus, the procurement team/department aim to maximize consumer surplus. Purchasing process means that demand management. There are two ways to make purchase decision make-buy or outsourcing. Make-buy is required internal management it is related to the organizational buying behavior. Outsourcing is required external management consist of supplier management. The fundamental issue in purchasing process is to provide efficiency in demand management. Efficiency of purchasing process is related for instance a reduction in the number of suppliers used an automation of the purchasing process, the use of framework agreements, and the development of trusting relationship with suppliers. Providing efficiency contribute to get power. Business life means power games. The market is unforgiving for weakness so at first hand, while the firm seeks to establish its own house in order before seeking to manage the suppliers. It will provide efficiency. In order to get successful purchasing process, firm should manage its demand efficiently and firstly firm should be sure to provide this efficiency by establishing â€Å"in its own house in order† in this case firm could get power above its suppliers. Demand management problems in an organization could appear in different ways (Londsdale, SPSM, Lecturer notes, Week 3) Maverick buying, fragmentation of spend, early specification, over-specification, unnecessary change to specifications, poor demand information, lack of clarity, adverse selection, inappropriate contracting, poor monitoring leading to moral hazard, unnecessary purchase. These problems occur alone or together. Organizational buying behavior involves a multi-person activity and it is true for 90% of organizational buying. This includes a very meticulous process which can even take more than a year to decide and conclude. Today’s organizations are aware of the costs involved in making timely, accurate and efficient decisions; create more value for money. If firms are to succeed in one facet of its global goal to be known in the market, a strong leadership should be in place; guide and make it move in a synchronized manner. Most of whom started small in its own right to be able to manage its own people easily, efficiently and most of all, avoid unaccounted costs. For a firm to manage its buying behavior and create a benchmark, it needs to: recognize a problem, acknowledge a general need, create or come up with product specifications, make an efficient and able supplier search, make a buying step, select a supplier, make an order-routine specification and conduct a post-purchase performance review. Once this process is harnessed over time; the next step to go bigger; to expand. (http://www. smartcompany. com. au/marketing/sales/22378-20111007-marketing-strategies-organisational-buyer-behaviour. html) To further elaborate: Recognize a problem- anticipate and plan for purchase on a routine basis Acknowledge a general need extensive, objective cost-benefit analysis Create or come up with product specifications – using precise technical description using techniques such as value analysis Make an efficient and able buyer search- extensive search that extends to the search for a supplier Make a buying step – business to business Select a supplier- made after extensive evaluation of objective information Make an order-routine specification-routine calculation of re-order points as well as time and place of delivery Conduct a post-purchase performance review – extensive comparison made and feedback given, concern with quality management at source. All of these elements could still fail with the existence of problems that should be recognized and avoided at first glance namely (Londsdale, SPSM, Lecturer notes, Week 3) maverick buying, fragmentation of spend, early specification, over-specification, unnecessary change to specifications, poor demand information, lack of clarity, adverse selection, inappropriate contracting, poor monitoring leading to moral hazard, and unnecessary purchase. When fragmentation exceeds its neutral level, means that parts or branches in this situation are unconnected and/or missing and still expected to come up with results the same as what the entire system once did (http://www. ourfurutre. com/real101. htm) the whole is always better in presence as everyone will have a better understanding of each function. It is also good to note that when there is a â€Å"whole Picture† concept. There is a better understanding as to the fluid interaction and dependency of each part resulting to better result of each task at hand. To cope with organizational fragmentation it’s important to understand why fragmentation arise in organization what are conflicts between branches or parts. Fragmentation arises in an organization because of several reasons. First, each department of an organization performs different functions, it follows that these departments have different needs. For instance, engineering department of a company would definitely use different computer from the HR department. These two departments have two different functions through both departments require computers for efficiency but both use special applications, features and specifications of computers to perform well. Legacy method is an old system that firms continue to practice these days. This is the second reason why fragmentation arises in organization. Maybe the system works satisfactory so organization sees no reason in changing it. The cost for changing and redesigning system could be costly both time and money compared to the anticipated appreciable benefits of replacing it to a new one. And lastly, difficulties in consolidating efforts in the organization. Human as we are, we have different opinions and our way of thinking is always different to one another. There are organizational factors that make consolidation efforts difficult. Conflicting preferences within organization arise due to limited rationality. Bounded rationality can also contribute to conflicting preferences for decision makers make decision with limited and often unreliable information. Limited time could and human minds limited capacity to evaluate and process information. Powers is exercised within organizations. People in higher position control over resources, rule-making, information and etc. lower ranks needed to comply to show obedience and respect thus result to conflicts. And lastly, each departments employees behave relating to their knowledge for example for manufacture department quality is important, for purchasing department price important. Each department has goals and priorities to fulfill,these can result to conflict as well. Conflicting preferences can be solve through identifying the problem and build organizational alliance to change internal client. Setting a standard and centralize preference within the organization would definitely help resolve this problem. Building alliances would demand purchasing managers to sort out personnel according to their rank. This could help to solve conflicting references in the organization. Furthermore, when fragmentation exceeds its neutral level, two problems that will basically occur in an instant. Inflation of transaction costs which an organization can face to cope with unnecessary suppliers. Organization could lose its leverage over its suppliers and suppliers tend to classify the customers. They tend to work with customers that work closely with their strategic objectives or make a good proportion of their turnover or help to spread their fixed cost but suppliers eliminate customers who don’t provide an attractive account or high volume of business. (Lonsdale and Watson, 2005) In a specific example, Rushmore University Hospital Trust (RUHT) (Lonsdale, SPSM Lectures, Case Study) RUHT has fragmented throughout its 9 budget centres and each budget centre, clinicians could independently purchase. Fragmentation happens most of the time; each clinician in each budget centre can purchase commodities with the same specifications but under very different terms. For example, x-ray films purchase price could be differentiated 45% between budget centres. Lack of coordination and supplier opportunism cause inefficiency in RUHT. By understanding the characteristics of each budget center’s procurement needs, it could succeed consolidation between budget services. Another conspicuous example is Vodafone (Lonsdale, SPSM Lectures, Case Study). In 2003, Vodafone Global Supply Chain Management Director, Detlef Schultz realized the internal procurement management problem. For instance, Vodafone has lack of information how it spend and it couldn’t translate its global size to the benefit. Schultz succeeds saving Money by putting together 17 disparate purchasing departments into one supply chain management. He introduced pre-agreed prices for frequently bought items. He provided the use e-auction system creates category management and developed different strategy for each category and it standardized the judgment way of suppliers so all this efforts to establish efficient procurement management result a great savings in Vodafone. Novartis also achieved cost saving by transforming its procurement strategy. Novartis is operating in seven different divisions and each of operating separately with their own CEO and CPO and it realized that 60 per cent of the overall expenditure is homogenous so Novartis achieved its goal like previous examples by leveraging its scale and by implementing global category management. In purchasing, demand management and procurement department capture power, decrease transaction costs, saving money and using companies scale and technology effectively, so by understanding companies own needs and improving information sources, providing coherence benevolently among brunches and departments and implementing appropriate strategies for each categories by this way company get efficiency in internal demand management and could reach its neutral level of fragmentation in purchasing. So by this way, company could share its value with its suppliers and monitor them in terms of even them pursuing companies values so company get leverage over its suppliers. Finally, providing efficiency in order house provide efficiency in the same time in suppliers management.