Buy American Requirements
1. Specify the main points of the Buy American Requirements
The Buy American Requirements Act was introduced with the aim of protecting businesses within the United States. There is a variety of requirements and prerequisites that are addressed in this specification. The congress is mandated with imposition regulations on federal and governmental purchases. Therefore, it is required that all the purchases made by the federal government be produced and synthesized within the United States(Dot.gov, 2014). Any purchase that surpasses three thousand dollars is bound by the Buy American Act. The Act also outlines that, for the imposition to occur, the purchase must comply with the interest of the public, be affordable as well as are to be used within the United States. According to the Act, all the acquisitions must be attributed to the components of the United States. The production cost of the acquired components must be related directly or indirectly to the United States government. The enactment of the Act was done in 1933 and there have been minor amendments since its introduction(Hughes, 1995). Various changes have been introduced in the Act to cater for domestic legislation preference.
Indirect purchases made with federal funds that are not directly related to the budget and purchase of the federal content are covered in the little buy American acts which are an extension of the Buy American Act. This law, attaches a domestic value to all purchases that are incurred in the department of transportation. Therefore, individuals, companies and organizations that are willing to invest in the transportation sector are subjected to the enforcement of this Act. The business of drone navigation systems is affected by the Buy American Act. According to the United States department of transportation, the provisions made in the Buy American Act are drafted to ensure that the projects in the transportation infrastructure are supported by American made products. This means that any investor willing to engage in the development or supply of the transportation sector will have one supplier for the law materials; the department of transportation.
The final requirement that is imposed by this legislation is that all construction materials must be purchased within the United States or affiliates of the country(Hughes, 1995). The term affiliates in this case refers to the trading partners of the country that are acceptable. This poses a challenge as there lacks a standard that defines what acceptable in this case means.
2. Benefits Buy American Requirements
As outlined above, the Buy American Requirements states that the production materials have to be provided by the federal government. From a business point of view, competitive advantage is achieved when a firm has an advantage in acquiring raw materials at a substantially lower cost as opposed to its competitor. In this case, there is only one supplier of the law material; the transportation department. Since this is a branch of the government, a constant supplier cost will be adopted for all the companies in the market. The advantage of this for a new start up company is that the production cost will not only be reduced but will adopt a constant cost that the business can afford. On the other hand, VectorCal will continue with its production without noticing that a new firm has entered the market. However, on realization of a new competitor, VectorCal will have to lower the costs for its products in an effort to retain the market share. The overall advantage will be reaped by the customers who will enjoy low costs in the services offered. In an effort to gain market dominance and attract the largest share of customers, the level of service offered by the drones will be improved and this will ensure that the customers benefit from quality services(Jorgensen, 2010).
The developments and changes in the supplier deals will always be posted in the federal register. This is according to the requirements of the federal statutes that dictate the type of service offered to the public. This will give both firms a competitive edge. Based on this neutrality, the success of the firm will be determined by its marketing strategies innovativeness and provision of quality services to the customers. Various services will be improved in the drone industry in an effort to attract more customers. A shift will be realized in the current profits made by VectorCal. Different factors affect and influence the level and market of a firm. This include the bargaining power of customers and suppliers, internal rivalry, availability of substitutes and the market share(Dot.gov, 2014). Among these forces, the bargaining power of the supplier is constant and cannot be exploited for the benefit of the firm. A startup company will enjoy this benefits as it will not have to worry on how to control the supplier. News and updates regarding any changes such as the delivery time of the raw materials and the distribution channel adopted by the supplier will be dull delivered on the federal register(Luckey, 2012). This removes any inconsistencies and eliminates the threat of adopting a new change in the structure of the business.
The government of the United States government aims at protecting and promoting local business and manufacturers. This was among the fundamental reasons why the Buy American Requirements was enacted. Therefore, the commitment of the government in the supply chain will be advantageous to VectorCal and a new startup company. Investing in an opportunity where there is governmental support that does not discriminate between upcoming and continuing businesses is a viable choice and use of resources. A new startup company may not enjoy the benefits of competitive advantage based on acquisition of raw materials for production at a lower cost in this industry. However, the benefits of a common supplier are worth mentioning as they shield the new company and guarantee success due to lack of exploitation by the existing monopoly.
- Quote paper
- Dr Peterson Kelly (Author), 2012, The Buy American Requirements Act, Munich, GRIN Verlag, https://www.grin.com/document/280653