Case of the Pricing Predicament

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Case Analysis: Case of the Pricing Predicament I. Major Facts A. Scott is a salesman for Standard Machine B. Scott received a call from Joann, the purchasing agent at Occidental Aerospace C. Occidental is Standard’s largest and most loyal account D. Scott followed Standard’s fixed price policy and submitted a bid of $429K E. Joann informed him that two competitors submitted bids of “under 390K” and another bid of “a little over 400K” F. Scott needs to cut his bid by an additional 22K to win the contract G. Joann informs Scott that Occidental will be building two new plants over the next four years, representing “a lot of potential business.” H. Scott goes to Tony, the sales manager, to ask for an…show more content…
2. Occidental could refocus on the mutually beneficial relationship with Standard and the quality products it has received over the years. F. The disadvantages to alternative number three: 1. Standard would run the risk of allowing foreign competition to erode its relationship with Occidental. 2. Standard could potentially lose Occidental’s future business from the new plants due to their rigid pricing policy 3. Occidental is Standard Machine’s largest accounts. Standard stands to lose millions in capital gain if it loses this account completely. V. Choice and Rationale I choose alternative number three. Standard Machine has to remain true to a policy that has assisted them in maintaining high capital gains and a competitive edge in the industry. Companies that do business with Standard Machine understand that they will always receive the high quality products that fit their needs. Joann, the purchasing agent, called Scott because Occidental wants to award the contract to Standard Machine. Occidental would rather do business with Standard because of their positive past history. But, Joann has to try and sync Standard Machine’s price to Occidental’s new purchasing policies. Standard realizes that global competition is a real threat and the economy landscape has changed. Yet, Standard Machine also realizes that value, quality and superior customer service plays a huge part in what another company
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