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SCM 371: Final Exam
Final exam notecards
92
Business
Undergraduate 4
12/13/2009

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Term
Define Yield
Definition
____ is when unused capacity or advertising space is auctioned off (eg: airline capacity, bill boards)
Term
Describe the difference between Public and Private Exchanges
Definition
____ exchanges: need to be invited; ____ exchanges: anyone can do business
Term
Describe the difference between Buyer-centric and Seller-centric Exchanges
Definition
____ exchanges: organized by buyers; ____ exchanges: organized by sellers
Term
Describe the difference between Consortium and Independent Exchanges
Definition
____ exchanges: companies have the same needs; ____ exchanges: companies approach it individually
Term
Describe the difference between Vertical and Horizontal Exchanges
Definition
____ exchanges: narrow, but deep, with full-service in one industry; ____ exchanges: anyone can do business
Term
What does the Y-axis represent in a Reverse Auction?
Definition
The ____-axis in a Reverse Auction represents the dollar amount that the supplier is willing to charge the buyer for the RFQ
Term
What does the X-axis represent in a Reverse Auction?
Definition
The ____-axis in a Reverse Auction represents time
Term
Explain the Winner's Curse
Definition
Suppliers prepare months and see that their lowest bid is not the best, and just submit bids to get the business; they "win" the auction, but they then have no margin/profit
Term
List some characteristics of good items for which to run a Reverse Auction
Definition
Some characteristics of a ____ are:
1) basic or commodity goods
2) high-cost jobs
3) industries with lots of suppliers
Term
What are the benefits for the Buyer in a Reverse Auction?
Definition
The benefits for the ____ in a Reverse Auction are:
1) Lower cost
2) Find the true market price
3) quicker negotiations
Term
What are the benefits for the Suppliers in a Reverse Auction?
Definition
The benefits for the ____ in a Reverse Auction are:
1) Finding out where they stand based on competitors
2) Gaining market insight
Term
What is the primary benefit for suppliers of using a 3rd Party during Reverse Auctions?
Definition
The main benefit for ____ during a Reverse Auction is that it can alleviate concerns that the ____ will submit fake/dummy bids
Term
Define Champion, in relation to reverse auctions
Definition
The ____ is the person to lead and coordinate the initiative/reverse auction
Term
What are the 5 Common Myths about Reverse Auctions?
Definition
The 5 ____ about _____ are:
1) They are always only about the price
2) They damage the buyer-supplier relationship
3) They are a passing fad
4) Over time, the savings will decrease
5) They are only suitable for commodities
Term
Define Intermediated Exchange
Definition
A ____ is an exchange between buyers and suppliers where there is a 3rd party (auction provider) that intermediates or facilitates the exchange
Term
Define Demand Side Collaborative Planning
Definition
In ____ Planning, the customer and supplier communicate, and decisions are made based off of future demand
Term
Define Negotiation
Definition
A ____ is a formal communication where two or more people come together to seek a mutual agreement
Term
When are Face-to-Face Negotiations more likely to occur than Automatic/Electronic Negotiations?
Definition
When the value and risk are high, ____ negotiations are more common than ____
Term
What is the most critical component of a successful negotiation?
Definition
The most critical component of a successful ____ is preparation (90%!)
Term
***Define BATNA***
Definition
***Best Alternative To a Negotiated Agreement***
Term
What is the difference between Positions and Interests?
Definition
The ____ is the needs and wants, the manifestations of these desires, the upfront alignment shown; the ____ is the underlying motivation
Term
What are the 3 components of Triangle Talk
Definition
The 3 components of ____ are:
1) Know exactly what you need
2) Know exactly what they want
3) Propose action in a way that they can accept
Term
What are the 5 Steps of a Negotiation?
Definition
The 5 steps of a ____ are:
1) Identify or anticipate a purchase requirement
2) Determine if it is required
3) Plan for it
4) Conduct it
5) Execute the agreement
Term
Who should participate in a purchase negotiation?
Definition
While the purchaser should be the primary point of contact in an ____, anyone that can add value should be present
Term
***How does a Negotiator know what is important to the organization?***
Definition
***A negotiator knows what is important to the ____ by making sure the goals and the objectives of the negotiation are strategically aligned with the overall goals and strategies of the ____***
Term
Ranges have to do what in order for a negotiation to occur?
Definition
____ have to overlap some for a negotiation to occur (this is the area open for negotiation!)
Term
List 5 Common Weaknesses of Planning
Definition
5 ____ of Planning are:
1) Failing to commit sufficient time
2) Failing to establish clear objectives
3) Failing to formulate convincing arguments
4) Failing to consider a counterpart's needs
5) Believing quick and clever is enough
Term
Define Power
Definition
____ is the ability to influence other people or organizations
Term
What are usually the 3 Most Effective Sources of Power?
Definition
The 3 Most Effective Sources of ____ are:
1) Informational
2) Legitimate
3) Expert
Term
What are the 6 Sources of Negotiating Power?
Definition
The 6 Sources of ____ are:
1) Information
2) Reward
3) Coercive
4) Legitimate
5) Expert
6) Referent
Term
Define Informational Power
Definition
____ Power is: having information and using that in a negotiation
Term
Define Reward Power
Definition
____ Power is: basically, bribes
Term
Define Coercive Power
Definition
____ Power is: threatening the other party; punishing them for not signing a contract
Term
Define Legitimate Power
Definition
____ Power is: Deriving power from one's level of responsibility, based on one's title or level in an organization (IE: VPs have high ____ power)
Term
Define Expert Power
Definition
____ Power is: relying on the opinion of someone very knowledgeable in an area
Term
Define Referent Power
Definition
____ Power is: Wanting to appear nice (EG: you are negotiating with your superior for a raise, but are less aggressive than you would be because the VP is there)
Term
Define Concession
Definition
A ____ is a movement away from a position by offering something of value to the other party
Term
What are the 11 Tactics of Negotiation?
Definition
The 11 ____ of Negotiation are:
1) Lowball
2) Highball
3) Honesty and openness
4) Silence
5) Trial balloon
6) Questions
7) Caucus
8) Price increase
9) Best and final offer
10) Planned concessions
11) Venue
Term
Explain the High/Lowball Tactic
Definition
The ____ tactic is when you offer way below the asking price; the ____ tactic is when you ask for way above the price
Term
When is the Honesty and Openness Tactic effective?
Definition
The ____ tactic is only effective when your counterpart uses it as well, else you might get taken advantage of
Term
What does the Silence Tactic hope to do?
Definition
The ____ Tactic hopes to create ambiguity and nervousness for your counterpart, thus making them concede
Term
Define the Trial Balloon Tactic
Definition
The ____ Tactic is a test of opinion; float an idea out to see how your counterpart reacts
Term
When are Win-Win Negotiations most likely to occur?
Definition
____ Negotiations are most likely to occur when:
1) The items are strategic or important
2) Trust between parties exists
3) Both parties endorse this approach
Term
What are the 3 Win-Win Methods?
Definition
The 3 ____ Methods are:
1) Expanding the pie
2) Logrolling
3) Cutting the costs for compliance
Term
What are some examples of how to Expand the Pie?
Definition
Some examples of ____ are offering JIT and VMI
Term
Define Logrolling
Definition
____ is when both parties identify an important issue, and both give up something equal importance; quid pro quo
Term
What is an example of Cutting the Costs for Compliance
Definition
An example of ____ is keeping the price the same, but guaranteeing 100% defect-free (Adds value, but don't have to inspect items for quality)
Term
What are some of the added complexities and challenges of International Negotiations?
Definition
Some of the added complexities and challenges of ____ are:
1) Substantial extra time and effort required
2) Culture shock
3) Barriers and obstacles
4) Need for translators
Term
***What are the 4 main points from Getting to Yes?***
Definition
***The 4 main points from ____ are:
1) Focus on interests, not positions
2) Invent options for mutual gains
3) Objective criteria in evaluating solutions
4) Separate people from positions***
Term
What are the 6 Steps in the Contracting Process?
Definition
The 6 Steps in the ____ Process are:
1) Request for quote (RFQ)
2) Suppliers' proposals
3) Negotiation
4) Contract building
5) Contract award purchase order
6) Contract administration
Term
What are the 3 components of the Law of Agency
Definition
The 3 components of the ____ are:
1) Principle (company)
2) Agent
3) 3rd party seller (supplier)
Term
Define the Principal in the Agency Concept
Definition
The ____ in the Agency Concept is the buying organization
Term
Define the Agent in the Agency Concept
Definition
The ____ in the Agency Concept acts on behalf of the buying organization (EG: the employee)
Term
Define the Third Party in the Agency Concept
Definition
The ____ in the Agency Concept is the person with whom you would like to do business; the seller
Term
Define Counteroffer
Definition
A ____ is made after rejecting the suppliers' offer; supplier must decide whether or not to accept
Term
What are the 4 Outcomes of an Offer?
Definition
The 4 ____ of an Offer are:
1) The offer time may lapse
2) The offer may be rejected
3) The offer may be revoked
4) The offer may be accepted
Term
In the USA, the Uniform Commercial Code (UCC) Can be relied on to cover all but what 3 important terms?
Definition
The 3 important terms not covered by the ____ are:
1) A description of the parties involved
2) A description of the basic subject of the contract, and statement of work (including dates)
3) A clearly definable or determinable quantity
Term
What are the 4 Elements of a Contract?
Definition
The 4 Elements of a ____ are:
1) Mutual agreement
2) Consideration
3) Capacity of the parties
4) Legality
Term
Define Consideration
Definition
____ states that something of value needs to be exchanged for a contract to be valid
Term
Explain the requirement of Capacity of the Parties
Definition
The requirement of ____ states that both need authority to make a decision for the company; willing and able
Term
Does the buyer or supplier benefit more from Fixed Price Contracts?
Definition
The buyer benefits more from ____ Contracts
Term
Does the buyer or supplier benefit more from Cost Based Contacts
Definition
The supplier benefits more from ____ Contracts
Term
What are the benefits of Long-Term Contracts?
Definition
The benefits of ____ are: better cost; better buyer-supplier relationships; economies of scale; more negotiating power; less time exploring other suppliers
Term
What are the Risks of Long-term Contracts?
Definition
Some of the risks of ____ are: quality; laziness/complacency; bankruptcy
Term
What are the 3 Essential Elements of a Contract?
Definition
The 3 ____ of a contract are:
1) Offer
2) Acceptance
3) Consideration
Term
What are the 3 Reasons for Cancellation of Orders?
Definition
The 3 Reasons for ____ are:
1) For default
2) For convenience of the purchaser (anticipatory breach)
3) By mutual consent
Term
Define Green Procurement (Mitsubishi definition)
Definition
____ is striving to acquire materials characterized by low levels of environmental stress
Term
Define Greenwashing
Definition
____ is the act of misleading purchases regarding the environmental practices of a company, or the environmental benefits of a product
Term
What are the 6 Sins of Greenwashing?
Definition
The 6 ____ of Greenwashing are:
1) Fibbing
2) Unsubstantiated claims
3) Irrelevance
4) Hidden trade-off
5) Vagueness
6) Relativism
Term
Define the Sin of Fibbing
Definition
The Sin of ___ is: blatant misrepresentation
Term
Define the Sin of Unsubstantiated Claim/Vagueness
Definition
The Sin of ____/____ is: when the label doesn't tell much or is hard to prove
Term
Define the Sin of Irrelevance
Definition
The Sin of ____ is: advertising something that should have been done anyway
Term
Define the Sin of Hidden Trade-off
Definition
The Sin of ____ is: (example) saying the manufacturing plant is LEED certified, but that doesn't say anything about the product being green
Term
Define the Sin of Relativism
Definition
The Sin of ____ is: (example) claiming the "most fuel-efficient SUV in class", if the consumer cared about fuel efficiency, they wouldn't buy an SUV
Term
What is ISO 14000?
Definition
____ is a the standard for environmental behavior and practices for companies
Term
What are the 6 Myths of Being Green?
Definition
The 6 Myths of ____ are:
1) Buying and being green always cost more
2) Buying and being green comes with a loss of quality
3) You need to be perfect
4) You need to be a "green expert" to buy green
5) Green issues are "too big" for one person to have an impact
6) You need to do "all or nothing"
Term
Define a Complete Chain of Custody
Definition
A ____ is taking responsibility for the entire supply chain, example: ensuring the entire supply chain is green
Term
What are some examples of External Forces?
Definition
Examples of ____ are: global competition; mergers, acquisitions, and consolidations; government regulation; technology; increased product variety/shorter life cycles; social responsibilities
Term
What are some examples of External Forces?
Definition
Examples of ____ are: global competition; mergers, acquisitions, and consolidations; government regulation; technology; increased product variety/shorter life cycles; social responsiblities
Term
What are 4 Examples of Social Responsibilities?
Definition
4 Examples of ____ are:
1) Green
2) Sustainable
3) Fair trade
4) Ethics
Term
What is the main concept in the article "Who Really Does the Buying?"
Definition
The main concept in the article ____ is: the buying center, and 6 different roles in the buying center
Term
***Define Buying Center***
Definition
***The ____ is the purchasing department, plus all other stakeholders in the result of a decision***
Term
***What are the 4 Questions to Ask when Approaching a Sale?***
Definition
***The 4 Questions to Ask when ____ are:
1) Who is in the buying center (6 roles)
2) Who are the powerful buyers (what kind of power exists, and who has it?)
3) What do they want, what is their motivation?
4) How do they perceive us?***
Term
***What are the 6 Different Roles in a Buying Center?***
Definition
***The 6 Different Roles in a ____ are: Initiator; Decider; Influencer; Buyer; End user; Gatekeeper***
Term
Define Initiator
Definition
The ____ recognizes that a company problem can be solved or avoided by acquiring a product or service
Term
Define Decider
Definition
The ____ says yes or no to a contemplated purchase
Term
Define Influencer
Definition
The ____ has a say in whether a purchase is made and what is bought
Term
Define Buyer
Definition
The ____ obtains the purchased product or service
Term
Define End User
Definition
The ____ consumes the purchased product or service
Term
Define Gatekeeper
Definition
The ____ controls information and vendor access to corporate decision makers; determines which vendors get the chance to sell
Term
What are the Pros of Dynamic Bidding, from the Sun Microsystems case?
Definition
The ____ of Dynamic Bidding, from the ____ case are: cost savings; convenience; efficiency; speed; leverage over competitors
Term
What are the Cons of Dynamic Bidding, from the Sun Microsystems case?
Definition
The ____ of Dynamic Bidding, from the ____ case are: relationships with suppliers; loss of suppliers
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