SCMN 3730 EXAM 2 2024-2025 WITH
ACTUAL CORRECT QUESTIONS AND
VERIFIED DETAILED
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QUESTIONS AND SOLUTIONS |ALREADY
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What is a concession? How are concessions effectively used in the negotiation process?
-Movement away from a position by offering something of alternative value to the other party
-To make negotiating process work, all parties must be willing to demonstrate flexibility
-Without willingness to concede and find alternative solutions, parties to a negotiation will find
themselves in deadlock
-Manner in which a negotiator approaches concessions is an important part of the negotiating strategy
Identify / explain some negotiations tactics to improve one's power in negotiations.
No supervisors, willing to compromise, emphasize progress
How do international contract negotiations make the process more complex?
-Language, time, culture, authority, legal systems
-Different rules, policies, and laws in international relationships; depending on country
What are the characteristics of a win-win negotiation? A win-lose negotiation?
-Win-win: Understand each other's needs and wants, Parties build on common ground, Develop
solutions that provide added value, Use of power focused on common interests, Engaged in open
sharing of information
-Win-lose: Rigid negotiating positions, Arguing over a fixed values (vs. ranges), Strict use of power by one
party over other, Adversarial competition at negotiating table
What is a price-based contract and how is it applied to improving the value of a contract?
-Often Transactional
>Firm fixed price: cannot change the price for 1 yr.
>Fixed price w/ Escalator/De-escalator: price fluctuates with conditions
>Fixed price w/ De-determination: giving a fixed price for a certain amount of time, then re-negotiate
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,afterwards
>Fixed price w/ incentives: fixed price with bonuses for better performance (superstars)
Firm Fixed Price
PRICE stated in agreement does not change regardless of reason
Fixed Price with Escalator / De-escalator
PRICE can increase or decrease based on specific identifiable changes in labor or material prices
Fixed Price with Re-determination
Initial target PRICE based on best-guess estimates of labor and materials and renegotiated when a
specific volume of production is reached
Fixed Price with Incentives
Target PRICE is a best guess estimate of labor and materials and renegotiated if value added as result of
supplier initiatives; savings shared at predetermined rate
What is a cost-based contract and how is it applied to improving the value of the contract?
-Based on supplier costs (supplier compensation)
-Products go into each other usually
-Help each other
-Time & Materials Contract, Cost Plus Fixed Fee, Cost Sharing, and Cost Plus Incentive Fee
Time & Materials Contract
Supplier compensated for labor and materials per specified labor, overhead, profit, and/or material rate
Cost Plus Fixed Fee
Supplier receives reimbursement for all allowable COSTS plus a fixed fee for services (typically % of cost)
Cost Sharing
Allowable supplier COSTS shared between buyer and seller on predetermined % basis; may include
productivity improvement goals
Cost Plus Incentive Fee
Supplier COST is the sum of allowable expenses plus generated savings which are shared between the
buyer and supplier calculated on predetermined rate
What are options for contract length? What are considerations / benefits / risks for contract length
options?
-Spot, short-term, & long-term
-Considerations: market uncertainty, industry, dollar value, process uncertainty, relationship
-Long-term benefits = supply assurance, technical access, information, volume leverage
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, -Long-term risks = unreasonable buyer, supplier opportunism, wrong supplier, supplier forgoes other
business
What are non-traditional contracts; what are examples of non-traditional contract types?
done less often/differently: software, minority-owned, consulting, construction
Software Contract
contract designed to provide access and value to computer networks; software is expensive and
companies struggle with justification
Minority-owned Contract
minority-owned supplier defined as >50% minority ownership
Consulting Contract
consulting services contracts define the consultant as an agent for the organization; not employee
Construction Contract
construction contract often results in lengthy bid process
What behavioral traits do successful negotiators exhibit?
-compromise, emphasize progress, commitment
-Realize that training, planning, and practice are required to become an effective negotiator
-Committed to higher negotiating goals and aspirations than their counterparts
-A skilled negotiator is destined to become one of the most valued professionals in an organization
What is a warranty; how do they apply to contract agreements?
promise by seller which can be legally enforced; guarantee of performance/longevity (don't promise if
you can't deliver)
Express Warranty
promise by seller relating to purchased goods; promise becomes basis of the bargain creating assurance
that goods will conform to promise
Implied Warranty
Concept of assurance of fitness for use and merchantability
Warranty of Title
seller warrants that goods being sold do not have any liens against them, seller has title to goods and
they are not stolen or subject to liens
Warranty of Infringement
guarantee that goods being exchanged do not infringe on another party's patent protection
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