...Intermediate Pricing and Contract Integration Name Professor Institution Course Date TABLE OF CONTENTS CHAPTER PAGE Executive Summary ………...…………………………………………………………………………………… 3 Introduction ……………………………………………………………………………..4 Price Negotiation Memorandums (PNMs) 1. Issuing of government Contracts …….………....………………………………………5 2. Bidding and negotiation ………………….…….…………………………… ………6 3. Negotiation Summary..................................................................................................7 4. Introductory Summary……………………………………………………………….8 5. A tabular summary of price………………………………………………………….10 6. Government Contracting……………………………………………………………10 7. Vertical integration as a contracting technique……………………………………..11 8. Private-public partnerships…………………………………………………………..12 Executive summary This guide acts as a replacement to the earlier Air Force Material Command FAR Supplement with the intention of making it better than its predecessor. The scope of this document is to provide information on the necessities of developing prices and then devising of mechanisms to determine the fairness of the prices. It is with this precedent that the document goes back all the way from the historical behavior of factors that affect the prices up to the...
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...Individual Paper: Activity-Based Costing Matija Karaula Individual Paper: Activity-Based Costing Sippican Corporation Course: B2B Pricing: Negotiation, Calculation, and Strategy Matija Karaula B2B Pricing: Negotiation, Calculation, and Strategy Individual Paper: Activity-Based Costing 1) Defining the problem The main problem of a Sippican corporation was a low pre-tax operating income (1.8%). To solve that problem, a cause had to be found. Sippican reported gross margins of 35% on valves, 5% on pumps and 38% on flow controllers. After looking at a gross margins of the three product lines, one would think that pumps were an issue to work on, and a main cause for a low operating income, because the pump sales accounted for 47,36% of a total sales in March with just 5% operating margin. However, the method of measuring the product profitability had to be questioned. To be more accurate, the method of assigning the overhead costs to each product line was the reason for inaccurate gross margins of the Sippican´s product lines. Exhibit 1 – Result of a wrong overhead cost assignment Wrong assignment of overhead costs Innacurate product profitability Inappropriate product pricing strategy Lower operating income The method of calculating the manufacturing overhead used by Sippican would be accurate if every of their three product lines was of the same or similar complexity. More complex products require more indirect work so one cannot simply...
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...Airline Ticket Pricing The basis of airlines competition for passengers and a larger share of the market are based on: i. Frequency of service and departure schedule on each route served ii. Price charged, relative to other airlines, to the extent that regulation allows for price competition iii. Quality of service and products offered ‐‐airport and in‐flight service amenities and/or restrictions on discount fare products Passengers on the other hand choose combination of prices, flight schedules and product quality that will maximize the utility of taking a flight. Therefore, it is in the interest of each passenger to have the best service for the lowest price possible on a flight that departs at the most convenient time (Peoples, 2012). Price elasticity is a measure of how responsive consumers are to price changes or consumers' price sensitivity to changes in price. From the law of Demand, we know for certain that an increase in the price of a product will always result in a decrease in the amount demanded and vice versa. That is, we know the direction of the change. Price Elasticity answers the question: When price goes up, how much does the quantity fall. Knowledge of price elasticity helps a firm to accurately forecast the impact of price changes on unit sales. Price elasticity also helps the firm determine an optimal pricing strategy to max profits. The understanding of the price elasticity of demand for a given company's services can guide the firm in...
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...Federal Acquisition and Contract Management February 28, 2013 Analyze the process of pre-negotiation to determine why it is so important to the company. Holding pre-negotiation sessions provides a forum for both parties to communicate their objectives. These can be held anywhere between one week to a month before negotiations, depending on the complexity of the negotiations and the amount of needed information to be gathered (Ghamami, 2011). The process of pre- negotiations is important to company for many of the same objectives they are to the government. Those objectives are spelled out for the government in FAR 15.406-1 Pre-negotiation objectives. (a) The pre-negotiation objectives establish the Government’s initial negotiation position. They assist in the contracting officer’s determination of fair and reasonable price. They should be based on the results of the contracting officer’s analysis of the offeror’s proposal, taking into consideration all pertinent information including field pricing assistance, audit reports and technical analysis, fact-finding results, independent Government cost estimates and price histories. (b) The contracting officer shall establish pre-negotiation objectives before the negotiation of any pricing action. The scope and depth of the analysis supporting the objectives should be directly related to the dollar value, importance, and complexity of the pricing action. When cost analysis is required, the contracting officer shall document the pertinent...
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... In Negotiation Linda short MGT 445 January 9, 2012 Sangeeta Walsh Communication and Personality in Negotiation Individual communicate on a daily basic, he or she negotiate with friends, coworkers, family, and at home. Each element of our personal lives entails negotiation talents. The capacity to negotiate determines the boost to accomplishments, prospects, and enhances relations. Negotiating talents are not considered aspects of this country's schooling; although negotiation is used more frequently than mathematics ability, each day of the week. These talents generate the center of occupational and private lives. In our negotiation process with prioritizing in most cases are under the rule of irrational escalation of commitment. According to Lewicki-Saunders-Barry, escalation of commitment is partly individual perception and judgment (2006). According to Lewicki−Saunders−Barry, we consider negotiation as a process between individuals, within groups, organizations, between groups reaching joint agreement about differing needs or ideas.” For some people, negotiating appears easy, but other people view the process of negotiation as a conflict (Lewicki, Saunders, & Barry, 2006). The purpose of this paper is to define communication and personality in negotiation and the roles of how they contribute or detract from the negotiations. ...
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...The Sourcing Of Outsourcing — Presentation Transcript * 1. The Sourcing of Outsourcing Sourcing 2007: May 1 * 2. Why is outsourcing happen? Micro Drivers • You have the opportunity to reduce costs by 20% to 40% • Increasing accountability and improving services • Access to World Class capabilities • Shifting from relatively fixed to variable costs Macro Drivers • Shifting focus to strategic business objectives • Transforming your business through innovation • Being agile and ready to respond to market change: M&A , growth, divestitures, etc. 1 * 3. Global Trends Global Birth Rates Global Birth Rates ChinaPotential Player – Offshore IT services market in China will continue per 1,000 population: per 1,000 population: Eastern Europe: : China: : Potential Player – Offshore IT services market in China will continue China China 13.25 13.25 Eastern Europe to show aggressive growth over the next few years. BPO is a less mature Regional Player – to show aggressive growth over the next few years. BPO is a less mature India India 22.01 22.01 Regional Player – industry in China. English skills are being developed in government supported Large English- industry in China. English skills are being developed in government supported Philippines Philippines 24.89 24.89 Large English- programs to ensure further growth. Core competencies: low-end PC-based speaking educated programs to ensure further growth. Core competencies: low-end PC-based USA USA 14.14 14.14 speaking educated...
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...Contents Transfer pricing 3 Methods of fixing transfer price 4 1. Market based transfer prices 4 Buyer 4 Seller 4 Group 5 Conclusion 5 2. Full cost transfer prices 6 Buyer 6 Seller 7 Group 7 Conclusion 7 3. Cost-plus a mark-up transfer prices 8 Buyer 8 Seller 9 Group 9 Conclusion 9 4. Negotiated transfer prices 10 Buyer 10 Seller 10 Group 11 Conclusion 11 References 12 Transfer pricing Transfer pricing is the establishing the price of goods that are sold between related legal entities in a company. It is practiced by centralized organizations to monitor the transfer of products or service from one division of the company to another (O'brien & Oates, 2007). For example, the six segments of the General Electric Company are trading amongst themselves (General Electric Company, 2006). Methods of fixing transfer price Market based transfer prices The external market prices for the intermediate products are used to set the transfer price. The strategy presumes that the acquiring division will secure the products from the manufacturing division at the same price as in the external market. Although the external market is usually rarely or never accessed, the competitive price determines the minimal intra-organization transfer price (Feinshreiber, 2004). General Electric uses this strategy since it priced the intersegment...
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...Negotiation Strategy Articles MGT 445 June 20, 2012 Negotiation Strategy Article The negotiation process contains various strategies. The strategies of negotiation include accommodation, collaboration, competition, and avoidance (Lewicki-Saunders-Barry, 2005). Each situation may vary, allowing one or different strategies to become more effective than other strategies. For instance, two different negotiation strategies were applied in Negotiating New Vehicle Purchases and Do Manager Intend to Use the Same Negotiation Strategies as Partners? Each article will be reviewed, including the application of negotiation strategies to compare and contrast the two articles. Negotiating New Vehicle Purchases After reading the article Negotiating New Vehicle Purchases, it was found that the strategy used was competitive strategy. The article’s objective is to prepare a car purchaser for a dealership’s ploy and to maximize the purchaser’s negotiation power. The reading incorporates six stages of negotiation involving a new car purchase. The beginning step starts before visiting the dealership by shopping the dealer cost of a new vehicle. The second step is the introduction to sales consultant pertaining to the price of the vehicle. The third step is the reaction to the sales manager’s rejection to purchase offer and the sales consultant’s effort to raise the offer of the purchaser. The fourth step is the trade-in negotiation or actual cash value (acv) of the...
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...the advent of laptop computers business owners, students, and private citizens can take their businesses or academic projects as well as personal or social networking anywhere. However, the rechargeable battery power source is strictly limited with regard to time of available use after each recharge. Modern day rechargeable battery technologies are available with the use of solar power for a many things with the exception of laptop computer batteries. The following proposal will illustrate the need for and the feasibility of Hewlett Packard manufacturing a laptop technology that integrates solar power with the existing electrical power to include a solar power rechargeable battery backup. This proposal will also introduces pricing, and non-pricing strategies, and increases in product differentiation, minimizing costs of the product. Increasing Revenue: There are three ways a business can increase revenue. (1) A company must increase the number of new clients or customers. (2) Increase the value of each sale made to a client or customers with courtesy, and knowledge or technological innovations and advancements. (3) Increase the number of times that client or customer buys from the company (Doyle, 2005). Price is not always the answer, when company offers a lower price to the consumer he or she may look at this as a problem with the equipment the company is trying to sell. The consumer who values a company will pay a price reflecting the company’s skills, experience, and the...
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...the data, quick hit opportunities are present for savings. 2. What observations can you develop about Eagle's SKU usage, prices they pay and contracts they currently use? a. About the SKU usage, the there were broad range of products as well as individual items purchased per category. b. The prices Eagle paid with large difference in the prices for the identical items by the same supplier. Also, there was a greater variance across the vendors for the prices on some items as 50% or more. c. The spending was made through three suppliers-two are contract and one catalog supplier. The prices for the identical items by same supplier varied. The variance was even greater across the vendors. Though the catalog supplier used promotional pricing, price comparison shoed that the non-discounted items were prices premium as compared to contract suppliers. 3. Discuss potential implementation barriers. Though the office supplies category seemed easy target with larger impact, the few of the barriers it could faced: a. The catalog supplier used gift incentives for purchasing minimum quantities. These gift incentives were highly valued by the administrative staff handled office supplies. They saw these gifts as deserved rewards for the hassle of handling office products sourcing. It will be a difficult task to make these...
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...American defense industry. In 1958, TI developed the first semiconductor integrated circuit. TI has three main lines of business in 1984: components, which included semiconductor integrated circuits, semiconductor subassemblies, and electronic control devices; digital products, which included mini computers, personal computers, scientific instruments, and calculators; and government electronics, which included radar system, missile guidance and control systems, and infrared surveillance systems. The major management system of TI is OST System, which is Objective, Strategies, and Tactics System. OST System is a system for managing change and innovation. The system was employed to define the strategies the company intended to follow for further growth and development and to identify the tactics required to successfully implement such strategies. The OST System can be more easily understood if viewed in three strategies: 1. Presentation of the hierarchy goals 2. Dual responsibility of line management 3. Impact of matrix organization composed of strategic and operating modes The other main management system of TI is resource allocation system. This system included planning cycle, strategic...
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...the Dash 8 airplane which comprises 65% of de Havilland’s total manufacturing cost as a result of a company directive to reduce parts pricing by 25%. The flap shrouds and equipment bay door supplier arrangements have come up for consideration and the opportunity to satisfy the new strategic sourcing policy of fewer suppliers with long term, fixed contracts, along with reductions in cost of materials, has presented itself by going out to tender. Kim Tomar, Financial Analyst (material) is evaluating 9 RFP submissions for suppliers of flap shrouds and equipment bay doors in order to make a recommendation to de Havilland’s Source Selection Board (“SSB”). Tomar’s evaluation must include a financial evaluation as well as an assessment of the supplier’s viability as a long term supplier. Marton Enterprises (“Marton”) proposes the lowest cost bid and the opportunity to reduce the bill of materials of the Dash 8 although they have not submitted their financial information. Tomar’s recommendations to the SSB include negotiating a contract with Marton and accepting the current bid pricing. Immediate savings to the bill of materials can be realized as the costs of the flap shrouds and equipment bay doors are 25% of the current supplier. Once the recommendation has been approved contract negotiations can begin with Marton. A negotiation plan and timeline will be used, with constant monitoring, to ensure the 120 day limitation to signing a contract, imposed by Marton, can...
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...2 Value Chain Management The theoretical background is defined around the central term value chain. Chapter 2 presents research concepts to manage the value chain structured by their area of specialization either on supply, demand or values. Secondly, within an integrated framework, the results of the specialized disciplines are combined with the objective to manage sales and supply by values and volume. Value chain management is defined and positioned with respect to other authors’ definitions. A value chain management framework is established with a strategy process on the strategic level, a planning process on the tactical level and operations processes on the operational level. These management levels are detailed and interfaces between the levels are defined. Since the considered problem is a planning problem, the framework serves for structuring planning requirements as well as the model development in the following chapters. 2.1 Value Chain Value chain as a term was created by Porter (1985), pp. 33-40. A value chain “disaggregates a firm into its strategically relevant activities in order to understand the behavior of costs and the existing and potential sources of differentiation”. Porter’s value chain consists of a “set of activities that are performed to design, produce and market, deliver and support its product”. Porter distinguishes between • primary activities: inbound logistics, operations, outbound logistics, marketing and sales, service in the core value...
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...Global Negotiation between FD and Conquip Conquip’s Solicitation Of The 10% RFQ Conquip sent the RFQ possibly attempting to anchor the negotiation and to prove its strong position towards the negotiation. This strategy is risky and could be harmful if the other party doesn't have this value between its reservation and target price (Chang, Chung, & Van de Vyver, 2014). During meeting 2, FD walked into the negotiation with a poor BATNA: no agreement meant FD risked losing all its Conquip business to FF. Conquip seemed to have a strong BATNA: the company could easily switch to FF filters. However, de Winter convinces Conquip of the value of LEIF’s innovative technology, and Conquip knew they wouldn’t have suppliers that would be equivalent to the patented LEIF product (Chang, Chung, & Van de Vyver, 2014). Both FD and FILTECH stated they could meet Conquip’s 10 percent price cut demand over three years and still enjoy healthy margins (Chang, Chung, & Van de Vyver, 2014). The Downside to the Negotiation Sometimes, even with the best of intentions and skill, a principled negotiator cannot bring the other side around. Sometimes, the other side simply won't play fair and use bullying, psychological warfare, or deliberate deception tactics (DAU, 2014). Without a BATNA, a negotiator doesn't know how important the negotiations are, and will be vulnerable to pressure from the other side, and that pressure will come. With a BATNA, the...
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...type of negotiation in which the buyer and seller of a good or service dispute the price which will be paid and the exact nature of the transaction that will take place, and eventually come to an agreement. Bargaining is an alternative pricing strategy to fixed prices. Optimally, if it costs the retailer nothing to engage and allow bargaining, he can divine the buyer's willingness to spend. It allows for capturing more consumer surplus as it allows price discrimination, a process whereby a seller can charge a higher price to one buyer who is more eager (by being richer or more desperate). Haggling has largely disappeared in parts of the world where the cost to haggle exceeds the gain to retailers for most common retail items. However, for expensive goods sold to uninformed buyers such as automobiles, bargaining can remain commonplace. Dickering refers to the same process, albeit with a slight negative (petty) connotation. Bargaining is also the name chosen for the 3rd stage of the Kübler-Ross model (commonly known as the stages of dying), even though it has nothing to do with price negotiations. Contents * 1 Contexts where bargaining is allowed * 1.1 Regional differences * 2 Theories * 2.1 Behavioral theory * 2.2 Game theory * 2.3 Bargaining and posted prices in retail markets * 2.4 Processual theory * 2.5 Integrative theory * 2.6 Narrative theory * 2.7 Automated bargaining * 2.8 Anchor Pricing * 3...
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