One textbook (Profex Publishing) for this course under the heading 'Right price for the supplier' re-fers to:
'A price which allows the seller to win business, in competition with other suppliers (according to how badly it needs the business, and the prices being charged by its competitors)'
Which of the following mechanisms is being referred to here?
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Correct Answer:
B
A competitive exercise is being referred to, in which the seller is under competitive pressure to try to win the business, yet not charge so much they don't win the business. This is commonly known as a 'tender', or 'tender exercise'; also 'competitive bidding' etc.
It is this desire to win profitable business, restricted by an upper limit on price because of competitor behaviour, that forces suppliers to be competitive with their prices. This tension between the bid-der's desire for profit; and the need to be realistic with price, explains why the competitive approach is so highly valued in procurement.
