Challenging the model of industrial buying: the case of the Australian coal industry

Challenging the model of industrial buying: the case of the Australian coal industry

Despite their importance to the global economy, commodity markets have been the subject of limited research in modern times. In particular, the buying processes of these markets has been predicated on models of organisational decision-making developed in the 1960/1970s where dyadic selling relationships and strictly controlled information flow was the norm. Modern businesses, by contrast, rely heavily on digital and cloud-based technologies, with matrix relationships, flat organisational structures and with close relationships between buyers and sellers. These operational changes have been accompanied by rapid sharing of information, globalised markets and the development of intelligent tools and systems, all of which have influenced how business is transacted in industrial markets. Whilst considerable research has been undertaken examining the impact of these changes in consumer markets, their impact in industrial markets remains largely unexplored. This study will address this gap by investigating the buying process and market structures of firms engaged in the Australian coal market.

Adopting a qualitative convergent interview methodology, the study will explore the lived experiences of buyers and sellers of Australian coal to develop a deep and rich understanding of the market and the interrelationships between the buyers and sellers. The results of this study will contribute to the discourse on organisational decision-making by challenging the relevance of the existing models and by proposing new factors, new relationships and identifying redundancies that have emerged as a consequence of the context of modern business. In particular, the contribution of this work will be most relevant for those engaged in the research and marketing practice of industrial commodity markets. Our findings show that the buying behaviour of players in the Australian coal market operate quite differently to that proposed by incumbent models. In particular the differences emerge in three main areas: the shifting of negotiating power away from both buyers through their control of information flows to a more rational supply and demand driven relationship with open information and quality criteria; the redundancy of the buying centre due to flatter and more direct buying interactions; and the shifting of the influence of industry experience and networking from the buying centre to the individual.

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