Nationwide Telephone Case Study

Tags: business practice strategic planning business procurement college competition ethics determination

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Introduction

Nationwide telephone has been in the business of manufacturing low-cost and high-quality telephones from 2001. The company is reliant on local suppliers in order to minimize lead times and at the same time utilizing the number of suppliers. This facilitates faster delivery times and also decreasing the travel costs. In the past 6 months, Roger Stoga who is the president of the company has seen a decline in sales of the company. Subsequent to further analysis, he was able to determine the issue to be linked to a rise in the prices of plastic components, supplied by ABC Plastics. The main aim of this analysis is to ascertain why the price of the components has increased.

1. What analytical tools can be used by the supply group to determine the right price?

There are different analytical tools that can be employed by the supply group to make a determination of the right price. One of the tools is environmental scanning. Through this method, the supply group can be able to determine the price being charged by rivals in the market and therefore determine the suitable price to charge. Another analytical tool is cost-price technique. In this way, the supply group is able to determine the fitting price by knowing the costs incurred and placing a mark-up in order to attain the sought-after profit.

2. How could Nationwide’s supply department have prevented the price escalations?

One of the actions that could have been undertaken by Nationwide’s supply department in order to prevent the escalations in price is to have a fixed-price agreement.

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The kay advantage of this is that it would have dissuaded ABC Plastics from placing price increases in the 6-month period irrespective of their individual state of affairs. This would have been attained by Bill whose role in the department is procuring plastics. Also, the supply department could have from time to time conducted checking of the costs incurred in order to ascertain the areas that led to the increases and the reasons why, which would facilitate in getting the appropriate price while negotiating with the supplier.

3. How does the competitive condition of the plastic component industry impact the use of price analysis?

In particular, Nationwide gets its bids from the local suppliers and therefore selecting the lowest bud for plastic components within the local region. It is imperative to note that the plastics sector is huge and comprises of several players. A great number of companies generate a virtuously competitive marketplace and therefore make the prices being charged to be largely determined by the level of consumer demand. This implies that in the event that Nationwide has a problem with ABC Plastics in terms….....

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References

Burt, D., Petcavage, S., Pinkerton, R. (2010). Supply Management. New York: McGraw Hill Publishers.

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