Campbell Keyboard Corporation
Opinions on the two proposals
Ingborgs proposed two options to Jims Smith. The first one was that the worth of the job would be the quoted price while the second one was to pay him $33 per hour straight time and $40 for overtime based on the hours; he had worked on the job.
In my opinion of the first proposal, Ingborgs idea of the worth of the job being the quoted price is reasonable given that Campbell designs were difficult to make, and the time frame he was given to hit the deadline was limited. As much as Smith wanted quality job, he had to consider the complexity of the job and its worth in deciding what he would be willing to pay. Therefore, by Ingborgs suggesting that the worth of the job would be the quotation price I think it would be a fair deal. It can be seen that the designs Campbell created were difficult and as such Ingborgs expected a difficult job in an effort to deliver quality and the exact outcome Campbell hoped for, which would enable them to win Plum Computers annual keyboard contract.
In the second proposal, Ingborg quoted the price he wished to work at. From the comprehension, it’s evident that Ingborgs Radio Company produced high quality products and he would meet strict delivery dates. He was a master craftsman who knew his business well, and that’s the reason he charged high prices. If anyone was expecting a high quality job, then Ingborg was the right man, but then, you should not expect cut-rate prices or bargains.
In my opinion I would go for the second option. Campbell Keyboard Corporation had a tight schedule and their supply management could not handle any delay in selecting a source for the RF transmitter and placing a purchase order. They had promised to supply a cordless keyboard with a radio frequency range of 100 feet which posed a challenge, in selecting a supplier. The only option where they were guaranteed quality job and strict adherence to delivery dates was with Ingborgs Radio Company. So by Ingborg charging them $33 per hour straight time and $40 for overtime based on the hours he had worked on the job is a better option. In any case, the price Ingborgs quoted could not be adjusted. It is noted that when a certain customer raised complains of him charging too much, he responded that his products were of high quality and that he knew his business well and thus he knew what price to charge. He further gives assurance that customers get products of quality which corresponds to whatever they have paid, and he does not deal with people who are looking for bargains or cut-rate prices.
I would choose option two because it seems a bit considerable where there is surety in quality, given the seemingly high price quoted. Going by what Ingborg said (that customers get what they pay for) this would thus be the only way out in order to win the contract offered by Plums Computers.
I would not choose option one because the worth of the job plus the expected quality of the job done would not be comparable to the quotation price. Ingborg was a master craftsman and a man of high integrity who was then expected to produce the best product given the good reputation his company had earned.
Although the two options are not so favorable, Smith had to make a choice between them since his company was in dire need of winning the contract. There was a time limit and so no matter how strained the situation could have been, a choice had to be made.
Choices open to Smith for an equitable agreement
No. Ingborgs was the only supplier willing and able to consider the RF transmitter procurement. Of all the companies he contacted which were capable of producing the units they refused to quote on a short schedule or were fully loaded. Therefore, Smith had no option but to work with Ingborgs. Right from the beginning, Smith knew that his negotiations with him were strained, and he therefore, expected a difficult time as well as stringent terms. Ingborg run his business as he saw it fit; he sought advice from no one and he was known to charge high prices for his products, but the high prices corresponded to the quality of work done.
Smith was as well constrained by the time as Plums Computers urgently needed the new RF transmitters. Unfortunately, Campbell Keyboard Corporation could not handle changing the power of the radio frequency transmitter, and thus, the production of the new RF transmitter would have to be placed outside. Most of the companies contacted did not have the ability to supply the FR transmitters and among the four that were capable, three refused to quote on the basis of being fully loaded and that the time given was on a short schedule. The only option for Smith was, therefore, Ingborgs Radio Company which agreed to the adherence of the delivery dates.
Handling of the procurement
Procurement involves the processes of handling goods that a corporation cannot deliver. It’s a process of purchase of products (supplies) or services. The aim of the procurement process is to buy the right products or services when needed at the least price possible.
If I were Jims Smith, I would have negotiated for more time from the Plums Computers, so that I can have ample time for more suppliers to bid their prices, and be able to deliver a quality job at a lower cost. From the comprehension, there was time constraint for the production of the RF transmitter. Niels Ingborg was incorporating the time factor in deciding his price and thus the high price.
To determine the price to be paid for the product, I would compare bids from other suppliers, and negotiate for the best price. These bids should be a reflection of work or product to be provided by the supplier including taxes and other charges.
More so, Campbell keyboard corporation had previously cancelled a sizeable order with Neils Ingborg and returned the work to its own shop to relieve an under load condition which did not go well with Ingborg. Smith, therefore, expected a tight-fisted, closed-mouth quotation price for the RF transmitter procurement. Therefore, I should have not agreed to the terms of Ingborgs but opt to look for another supplier with whom the corporation did not have past issues. This, however, could be a hard lesson to have good customer relations in the future and avoid cancelling orders once given or give a sound reason for such an action.
In addition, before I decide on which supplier to issue the order from, I would determine the expected time and quantity of the product required. Better still, before I accept any quotation, I would ensure it meets the set conditions and if it does not, charge a premium for it.
Finally, the quotation should support the expected quantity. The supplier should ensure that the quantity to be delivered is not less or more, since it may lead to loss of revenue.
Efforts to better competition
A corporation with a competitive advantage is able to produce and sell more goods than another corporation. Corporations should therefore develop strategies to maintain a competitive advantage. Several types of strategies are available to corporations which may include cost leadership where a corporation offers goods at the lowest cost compared to its competitors, differentiation where similar products appear slightly different from the competitors’ products and price strategy, such as penetration pricing where corporations initially charge lower prices, which gradually rise to the normal level.
Campbell through its human resource department should employ a specialist who deals with production of RF transmitters. If only Campbell had the right manpower specialized in production of the RF transmitters, he would not have gone the difficult way of having to deal with Ingborg and his high prices. Campbell should therefore strive to demonstrate their expertise and give Ingborgs and other companies reasons to be contacted. This would reduce the cost of outsourcing.
Campbell should learn from their customers and competitors by accessing their strengths and weaknesses. The company should learn from their strengths and use their weaknesses as stepping stones to avoid losing their customers to other competitors. In this case, Campbell should learn how Ingborg does his business and the secret for the high quality of his good job. They should specialize in business information, which would form a basis for their target market, and would enable them to compete better with their rivals.
Intimate customer knowledge as well as building strong relationships with prospects is important as it fosters horsepower in marketing and makes one stand out from the competition. As such, Campbell Corporation should not have cancelled the previous order with the Ingborg as this had made him unhappy making their situation more strained. This may lead to poor future relations with potential customers and possible loss of revenue due to decreased customer retention and demoralized prospective customers.
Ingborg charged high prices for his products. High prices drive away customers and Campbell should therefore apply cost leadership strategy by charging a lower price than that of its competitors. It can be seen that Campbell was having economies of scale by producing high levels of units at a low cost and this made it a successful bidder of Plums Computers annual keyboard contract. The only reason Campbell accepted Ingborg`s high prices was because they did not have enough time to look for another company willing and able to produce the amount of RF transmitters they required. If Campbell had not been so desperate to win the contract, it would not have entered into a contract with Ingborg who charges high prices that are mostly unnegotiable.
Just as Campbell Corporation was the highest bidder to win Plums Computers annual keyboard contract, it would have had competitive bidding for the production of the RF transmitters. This would have given them an advantage in having provision of the transmitter at a much lower cost. Ingborg was giving them stringent terms and a difficult time because he was acting as a monopoly who exploits its customers due to lack of competition.
Campbell should make sure to provide high quality services and products that attract many customers to themselves. Given their designs were already approved by Plums Computers, it showed that their products were of high quality. In order to have better competition a corporation’ products must be of high quality and so are the services they offer to their customers. Just like Ingborgs Radio Company had a wide reputation for reliable work and strict adherence to promised dates, Campbell should also strive to make it popular by providing high quality of goods and services offered. This way, even if high prices are charged most customers would not mind if they are assured of the right job or output they expect.
