Mr. Sharma has a problem!

109 reads

Competitive bidding is a fascinating subject; it is as much about business as about the workings of the human mind. The desire to achieve results prompts individuals to adopt strategies that reveal lessons from Game Theory. This issue relates to one such story.

Standard Metals, a large and reputed producer of steel, has bid to supply steel sections and other steel products to India Engineering & Construction Company (IECC).The steel will be used for construction of a bridge over a major river.

All things being equal 

IECC had floated a closed tender and invited twenty-three companies from India and abroad to submit prices for supply of steel. All bidders had been selected after a rigorous pre-qualification process.

The products of prospective vendors were approved after they had passed necessary tests.

According to tender rules, the lowest bidder would be the sole supplier. If more than one quotes the lowest price, each will be given equal share of the business.

Standard Metals and one other company – Sterling Steel Mills, a much smaller firm in size compared to  Standard – have quoted the same lowest price.

Fortunately, the winning price is reasonably profitable for both suppliers. In deference to their size and reputation, IECC have invited Standard first to finalise the order. Next they will meet representatives of Sterling to award the contract.

The Managing Director of Standard Metals has impressed upon Mr. Sharma, Vice President of Standard Metals, to wrest at least two-thirds of the business. He has been instructed to emphasise their size, reputation and history of good relationship with the Buyer.

In Mr. Sharma’s shoes 

Mr. Sharma has at least two choices: accept what is offered, that is 50% of the steel requirement, or decline anything less than two-thirds of the volume

If you were Mr. Sharma representing Standard Metals, what would you do? How would you handle the situation? What other cards, if any, would you play?

I would love to hear your comments. And respond to them in the next issue.

Trending

824
Harvey Mackay's picture

Develop high performance habits

Are you performing up to your potential?  Are you afraid to jump to the next level?  Are your habits pushing you forward or holding you back?The most important book on self-motivation and achieving more than you imagined hit the bookstores
790
Harvey Mackay's picture

Your business depends on your personal touch

Mamie Adams always enjoyed going to a branch post office in her town because the postal employees there were friendly.  She went there to buy stamps just before the holidays one year and the lines were particularly long.  Someone pointed
708
vnbhattacharya's picture

What will you do in this difficult situation?

Instead of writing about my views on business strategy as I do every month, I would like to present an exciting and tricky problem today.It is an issue of decision making similar to what many senior and top managers have to deal with from time to
698
johnsullivan's picture

The New New Thing: Blockchains and Recruiting

If reading about AI is making you feel like Alice in Wonderland, then take heart, there’s something new on the horizon — Blockchains. The technology has been around since 2008 but is now getting more mainstream in business applications, though...
694
hindustantimes's picture

Year of Culture: India’s diversity rocks London audience

 Sufi music, opera singing and Indian folk dances merged seamlessly with British hip-hop and tap dance as more 150 artistes put on a vibrant performance at one of the last events of the UK-India Year of Culture 2017.Billed as the Independence
649
davecrenshaw's picture

How To Get Work Done Without Stretching Yourself Thin – Pick Dave’s Brain

Could you pass the insanity test? This week’s question comes from David in Salem, West Virginia. He asks: I’m following your time management training program, yet often I find I’m putting appointments on my calendar and then not completing them—
636
jackcanfield's picture

5 Leadership Traits of Great Leaders

Whether you’re climbing the corporate ladder, building a network marketing downline, working for social change, or even coaching a Little League team or organizing a civic event, knowing leadership traits of effective leaders will make you more
635
anandmahindra's picture

youtube.com/watch?v=7SNwhZ…

From: twitter.com Via: twitter.com This could constitute a serious threat to Mahindra Odyssea, our boat building company. https://t.co/AwzTQVLp1lYou
626
johnsullivan's picture

AI or IA? Intelligence Augmentation for Recruiting

IBM’s Watson is synonymous with AI. Perhaps IBM should have named it Sherlock. Anyone familiar with the Sherlock Holmes stories knows that Watson wasn’t very bright. But he did have his uses. He was good at collecting and summarizing information,...

Pages