When developing a procurement strategy, most procurement processes reconcile analysis of demand for the category with the attributes of the supply market to develop an appropriate strategy. Market analysis is the systematic review of the characteristics, capacity and capability of the supply market in order to understand the extent to which the market meets the needs of the buying organisation. For example, the definition of market requires decisions about two key dimensions: the geographical scope of the market, (is it a local, regional, national or global market?), and the technical scope of the market. Technical scope addresses the range of solutions that meet substantially the same need. Once the market is defined, tools of analysis may be used to profile the market, such as life cycle, trends, technology road map, the relative bargaining power of buyers and sellers, the threat of new entrants etc. See also Five Forces Analysis.
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