Thật không may, hấp dẫn nhất của các đối tác liên minh tiềm năng đã tham gia vào một liên minh cung cấp chiến lược với các đối thủ cạnh tranh lớn nhất của khách hàng của chúng tôi. Kể từ khi dòng chảy công nghệ là một mối quan tâm lớn cho khách hàng của chúng tôi, nó đã trở thành rõ ràng là thứ hai | Page 27 Exhibit D-1. The firm fixed-price contract. Cl St this instance costs were to exceed 110 . Because the supplier receives 100 of all savings below targe or incurs 100 of all costs above target we call this a 0 100 sharing relationship. From the purchaser s point of view two primary benefits accrue ease of administration and certainty of purchase price. A potential disadvantage to the buyer stems from the supplier s incentive to control cost-every dollar saved represents a dollar s additional profit. Accordingly a supplier may be tempted to reduce quality to lower production costs. Little danger of this exists if the buyer is purchasing standard 9 7 2006 10 21 AM off-the-shelf items. But if the supplier is producing a non- 9 7 2006 10 21 AM Page 27 Exhibit D-2. Fixed price with escalation. standard item or is providing a nonstandard service a desire to maximize profit may conflict with the seller s desire to receive the specified level of quality. A useful variation of the FFP contract involves the introduction of a provision whereby the customer accepts the risk associated with inflation when it is impossible to predict accurately the degree of potential increase or decrease in production costs. To illustrate let us examine a prospective supplier s pricing strategy when it knows with a high degree of accuracy the quantity of materials and labor required to provide the product or service but faces considerable uncertainty as to how much production costs will increase. The logic for decreasing costs is similar but will not be carried forward in this discussion. See Exhibit D-2. Assume that the seller believes that costs will rise between 5 and 25 with an advance of 15 most likely. What value then will be used in preparing the price If the seller is a rational risk-averse supplier and believes that the competition is similarly risk averse the pricing quote probably will include a contingency sufficient to protect the firm. Thus the seller in this example will .
