Shared Flashcard Set

Details

CPSM BK1 PP 21-40
CPSM p21-40
38
Business
Undergraduate 1
09/27/2011

Additional Business Flashcards

 


 

Cards

Term
Purchase orders
Definition
a legally binding document prepared by a purchaser to describe the terms and conditions of a purchase. In the contracting process, the PO may function as an offer, acceptance, confirmation of an oral agreement, or a trigger for periodic performance under an established contract
Term
letters of intent (LOI)
Definition

(LOI) a precontractual document used to express expectation of contract formation in the future

-Should create no binding obligation to either party

-Purpose of a letter of intent is to gain time prior to to the issuance of a more complete contract or purchase order

Term

Types of Letters of intent:

 

Binding

Definition
may be binded by a letter of intent , even if you do not wish to be, unless steps such as verbage in the LOI stating that neither party wishes to be binded and the LOI is not intended to be a contract
Term

Types of Letters of intent:

 

Nonbinding

Definition
if a letter of intent is to be nonbinding, it must include an explicit and clear statement to that effect
Term

Contract/Agreement Types:

 

 

Definition
Term

ADEQUECY OF PRICE/COST ANALYSIS:

 

PRICE ANALYSIS

Definition
the examination of a supplier's price proposal or bid by comparison with reasonable benchmarks, without examination and evaluation of the separate elements of cost and profit making up the price
Term
cost analysis
Definition
an evaluation of actual or anticipated cost data (material, labor, overhead, administrative, and profit). The application of experience knowledge, and judgement to data to project reasonable estimated contract costs
Term

Quotation

 

Definition
a statement of price which may be given in response to a request (RFQ) or otherwise. May or maynot be a legally binding offer
Term

Best Alternative to a Negotiated Agreement

(BATNA)

Definition

the buying organizations negotiating strenght will be greater if the supply management professional has other options available.

-Increases strength when negotiating

-three types

1. alternative sources

2. alternative products

3. In-house production

Term

Sellers Competitive Position

(sole source or otherwise)

Definition

The suppliers negotiating power can be strengthened by:

1. the supplier may be the only source for a commodity or service

2. May operate in a limited competitive market market with only 1-2 sources

3. The supplier may have a patented designor feature

4. Good quality, lead time, and track record 

Term
SKILL AND AUTHORITY LEVEL OF THE NEGOTIATER/NEGOTIATION TEAM
Definition

22 characteristics that make a skilled negotiator/team

planning ability

desire to achieve

competitiveness

persistence

personal integrity

insight

analytical ability

self-restraint

flexibility

ability to listen

verbal clarity

patience/tolerance

intelligence

ect....

Term
Extent of Planning for a Negotiation
Definition

Planning is the most important trait of a negotiator.

The more planning you do, the more effective you will be.

Term
Sellers Financial Condition
Definition
You must know what your suppliers financial condition before negotiating any prices and conditions. A supplier in a poor financial situation is less likely to provide the nessary supplies and transportation to accomodate you.
Term

Buyers Financial Condition

 

 

Definition
The stronger the the organization is financially, the more leverage and position you have in a negotiation
Term
Market and product conditions
Definition

Sellers Market (demand exceeding supply): gives the supplier a negotiating advantage.

Buyers Market (supply exceeding demand): gives the negotiating advantage to the buying organization.

Should focus on long-term relationship building that benifits both the supplier and the buyer

Term
Development of strategies and tactics
Definition

The planning of strategies and tactics for negotiations involves three aspects:

1. Strategic planning concerns the long range goals of the organization concerning technology, price, and policy

2. Administrative planning concerns the logistics of getting people and information in place for the negotiations

3. Tactical Planning involves achieving optimal results at the bargaining table. includes setting goals and a SWOT analysisof the other party

 

Term
Organization Culture Factors
Definition
When conducting cross-cultural negotiations, the supply management professional's ability to understand the culture of the other party can reduce the number of misunderstandings that inhibit negotiations
Term
Fall Back Alternatives
Definition
give and take is a normal part of the process. If both parties establish inflexible positions for each negotiating point, there will be little opportunity to confer, discus, or bargain to reach an agreement
Term
Negotiation Philosophies
Definition

Three basic approaches:

1. Win-win (cooperational)

2. Win-lose (adversarial/competitive)

3. Lose-lose (confrontational)

 

Term
Win-win (cooperational)
Definition
both parties have a high degree of concern for their own and the others outcomes.
Term
Win-lose (adversarial/competitive)
Definition

the negotiator has a high degree of concern for his own outcome, and a low degree of concern for the other party.

 

 

Term
Lose-lose (confrontational)
Definition
Both negotiators have a low degree of concern for their own and the others outcomes.
Term
Negotiation Tactics
Definition

The choice of negotiation strategies and tactics results from the negotiation planning process. This includes:

-analyzing the suppliers proposal

-establishing objectives

-formulating optimistic, target, and pessimistic positions

-defining and organizing issues

-developing strategies and tactics

-selecting the negotiation team

-delevoping an agenda

Term

Optomistic Position

 

Definition

revealing the optomistic position is the most common approach when the supply management professional has the suppliers proposal

-establishes the range for the negotiation on each issue

 

Term
Fact Finding Sessions
Definition

are periods when the negotiator or team makes every effort to develop data and information about the other party.

-Study of the business history, length of time in business, growth, and overall success.

Term
Final Proposal Revisions
Definition
The Federal Aquisition Regulations require that their is an opportunity for suppliers to submit final proposal revisions at the conclusion of the negotiations
Term
Negotiating with sole offeror versus entire competitve range
Definition

When a supplier has little or no competition, the buyer is in a difficult negotiating position:

You can :

-say you are making the item in-house

-refuse to make the product that uses the expensive component

-advise the supplier you are considering substitute items

-focus on long term relationship, not a temporary price gouge by the supplier

Term
Documentations for negotiations
Definition

Should include the following:

-subject: an overview, phone numbers, addresses

-Introductory summary

-particulars

-Procurement situation

-Negotiation Summary

 

Term
Negotiations as a Consortium or Cooperative
Definition

Consortium: is when several organizations combine their purchasing power for selected items to gain leverage in the market place and to reduce costs.(Private, for-profit)

 

Co-op: for-profit or not-for-profit business that serves members in a single industry, such as hospitals, universities, or county governments.

Term
Elements of a contract
Definition

Contract: a legally enforceable written or oral agreement between two or more competent parties that defines a job or service to be performed

 

Whether an agreement has the legalconsequences is determined by the provisions of the act, if applicable, otherwise by the law of contracts 

Term
Offer and Acceptance
Definition

Offer: a proposal to make a contract; a binding expression of interest and willuingness to create a contractual relationship usually including certain terms

 

Must result from a mutual agreement (contract)

Term
Counter Offer
Definition
is an offer to enter into a transaction on terms different from those originally proposed.
Term
Acknoledgement
Definition
a communication used to inform the buyer that the has accepted a purchase order
Term
Consideration
Definition
Refers to a legal requirement for creation of a valid contract involving an exchange of value for value (money, services, ect)
Term
Competent Parties
Definition
both parties must have the mental capacity to enter into a contract
Term
Legality of purpose
Definition
the legal requirement for creation of a valid contract that it be consistant with federal, state, and providencial constitutions and not be in violation of legal statutesor public policy
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