The Effect Of Bid Price Dispersion On Contracting ( Versus Contract Indecision )

​A Porter analysis will be performed throughout this paper, on the internet sales industry. Included in the Porter analysis is six relative competitive forces; threat of new entrants, rivalry amongst firms, threat of substitute services, bargaining power of buyers, bargaining power of suppliers, and relative power of other stakeholders.

Since Smith’s Information Services Company is in the business of processing and analyzing consumer data, the minimum number of vendors to solicit for outsourcing the data center would be three, with a maximum of ten. This would provide not only a fair solicitation process, but also would ensure the company receives the best value for the services provided by the selected vendor. While the goal of the outsourcing is to reduce the company’s soaring overhead costs, simply selecting any cloud computing company based on cost alone would be foolish. Ensuring there are multiple vendors solicited for this service would ensure the company’s costs are reduced while still maximizing profits. Given that personnel costs account for the majority of a company’s overhead costs, followed closely by utilities costs, any vendor solicited should cost less than Smith’s Information Services is currently spending on its employees and utilities. Limiting the number of vendors solicited to ten or less would also ensure a quick evaluation period without the chance of getting mired in minute details between the

After reading over the material in chapter 14, it is my opinion that selective contracting should not be allowed to exist between providers and payers. Utilizing selective contracting puts both the payer and the provider in a position to possibly limit the quality of care actually needed by the patient for their own benefit. This benefit doesn’t necessarily have to be in the form of a financial gain, but could merely be in the form of a financial security. Selective contracting appears to place of great deal of power within the hands of the payer, who now has the power to control fees charged by providers, through controlling which providers make it on their list of in plan providers.

Winner’s curse: a decision making dictum that argues that the winning participants in an auction typically pay too much for the winning item.

Our current vendor has reached their 3-year renewal period. As part of our operations management strategy, we like to reevaluate each contract before it’s renewed using a value matrix. We have considered 3 alternative vendors to compare our current vendor who is more than adequate, we are simple taking this opportunity to evaluate if the services and cost is competitive at $40K a year.

  Comments: Question 8. Question : (TCO 8) What is an independent estimate and why should a buyer produce an independent estimate before selecting a seller?

Outsourcing has become an integral part of many organizations today. Outsourcing has its advantages and disadvantages that organizations will have to weigh to decide whether or not outsourcing is the best possible solution to their current problems and business operations. Outsourcing refers to the process of hiring external provider to operate on a business or organization function (Venture Outsource, 2012). In this case, two organizations or businesses enter a contract where there will be an exchange of services and payments. This paper will discuss the possible risks an organization may encounter in outsourcing in relation to the use of an external service

7. (TCO 8) What is an independent estimate and why should a buyer produce an independent estimate before selecting a seller?

3. The new system allows charging additional services required by the clients, generating more revenue. 4. Knowing which are the cost drivers , it will be possible to control costs more effectively (reducing fixed costs and increasing net margin) 5. Market analysis with direct competitor in the region suggests that studio prices are at least 21% lower and one bedroom suite prices are at least 40% lower than the competition in the new pricing model. Comparison with the general market suggests similar findings. MAIN REPORT

When comparing competitive bids for a particular price or service, some systematic method of price comparison is essential. Of course, in some instances, it will be stipulated that a particular price ceiling is in place which will limit the number and types of bidders, or a particular relationship with a contractor has already been established for a series of contracts. However, when this is not the case, it is essential to use a method that offers the most effective way to find the best possible quality of service at the lowest possible cost. The simplest and most effective way is to compare the bids of a variety of competitive bidders.

The digital economy, as we learned in class (videos), is exerting a great pressure on the traditional firm-imposed pricing strategy. Firm

In the contract creation and management simulation involving Span Systems and Citizen-Schwarz AG (C-S) the conflict involved and possible resolutions could be beneficial or catastrophic for both companies. Legal risks for corporations in the process of implementation and development of a program are many. To prevent this there must be direct, quantifiable benchmarks that are acknowledged by all parties involved. Any contract ambiguity that occurs can result in differences in opinion on interpretation and the resulting need for negotiation, mediation, and possibly litigation. This would result in time, money, and effort for both parties which is not a desirable outcome.

YES-NO, if the individuals response is ‘Yes’ for the first bid and ‘No’ for the second bid, > . So, the highest willingness to pay will be between and .

A contract can be legally binding with its written format. However, a social or domestic agreement conduct by verbally cannot be enforce and claim.

Since our dependent variable (buyer contract) is a binary variable, we estimate a logit model with robust standard errors (Equation 3). is the latent utility a buyer i infers from project j. captures the effect of BPD on the buyer’s contract decisions. is a vector of the average freelancer’s characteristics like average experience, mean quality rating (control variables that affect the DV), and quality dispersion (potential confounding factor that affects both the DV and BPD). The freelancer’s average experience and mean quality rating represents the average quality of the freelancers that a project attracts. A buyer would have more high-quality freelancers to choose from with a higher average experience and mean rating, which may facilitate the buyer’s contracting decision. Freelancer quality dispersion is measured as the standard deviation of all freelancers’ rating (or experience), which represents the diversity of choices a buyer has; thus, it is