Which of the following are internal factors in supplier decision-making? Choose two.
Correct Answer: B,C
Cost of production, and shareholder and managerial expectations of profit, are both internal factors in decision-making. Although shareholders may be outside the firm, management will condition shareholders' expectations. Customer perception of value and the extent of marketplace competition are significantly outwith the control of the company.
Question 7
A common term for the win-lose style of negotiations is:
Correct Answer: D
Distributive: at the other end of the spectrum from 'collaborative'.
Question 8
Which one of the following could not be classed as a form of performance specification?
Correct Answer: D
Since performance specifications are all to do with outputs, 'input-driven' leaps out as being the cor-rect answer here.
Question 9
Assume you calculate a selling price by adding a profit element onto costs. Assume the profit ele-ment is equivalent to 100% of costs. Is mark-up or margin being described here?
Correct Answer: D
When price is discussed as a % of costs to be added on, the term is 'mark-up'.
Question 10
What is the term for a situation where a seller sets a high introductory price for a new product, to attract buyers who have a strong desire to get the product early, and who can afford it? The price then gets gradually reduced over time.
Correct Answer: B
'Market skimming' is the correct answer. An obvious example of this type of pricing behaviour is in the field of technology, where 'early adopters' will pay significantly more for a product, even although they know the price will drop subsequently. For commercially-used products, sometimes there is an urgent need for an organisa-tion to acquire - a topical example as I write (early 2022) is some new surveillance technology which is in the news and which some governments are desperate to have. In consumer markets, everyone's 'go-to' example is the next generation smartphone, especially Apple products. Promotional pricing is a short-term price reduction (or 'two-4-one' type offer) to generate sales in the short-term, for example to clear stock, or because of a manufacturer financial support arrangement. Price discrimination is where the seller sets different prices for different market segments. An ex-ample would be charging different rail fares in UK or mainland Europe based on customer age. Contribution pricing is based on the notion that sales should cover costs, contributing to the busi-ness, without necessarily making a profit. For example, a large order may be accepted which will keep the workforce employed (retaining their skills as well as having a considerate / ethical outlook) to see the firm through a rough period.
