Tony Dauginas is a purchasing agent for a consumer packaged goods company based in the United States. His company manufactures various goods in the health and beauty industry, such as cosmetics, skin lotions, toothpaste, and shampoo. Tony’s company has come under assault from another, much larger company. The larger company can use its large purchasing volume as leverage to buy components for its products much less expensively than Tony’s company can. This has put a lot of pressure on Tony’s purchasing group to get the best price possible on the components it buys for manufacturing. One of the types of materials that Tony buys is corrugated boxes. The boxes are used as secondary packaging for all of the company’s goods. The price of wood pulp used to make the boxes has been steadily rising, causing prices of corrugated boxes to rise along with it. Tony has been very concerned about this price trend because the company spends a large percentage of its product-related costs on boxes. Tony just got back from a trade show, at which he received some interesting insider information about one of his suppliers. While talking to a fellow purchasing manager at a noncompeting company, he found out that the other purchasing manager’s company was terminating its contract with one of Tony’s corrugated box suppliers, Amalgamated Boxes Inc. The company Tony’s friend works for is Amalgamated’s biggest customer, constituting about 50 percent of its business. The loss of this business will likely be a damaging, if not fatal, blow to Amalgamated. Tony is considering calling on Amalgamated’s sales office to chat with the vice president of sales. He figures that Amalgamated will be desperate for business and will be willing to do just about anything to secure Tony’s company as a customer. Tony is thinking that he might be able to negotiate a long-term contract that locks in prices over several years. While in effect, that contract would prevent Amalgamated from passing on rising wood pulp prices to his company. He is also thinking about making a deep reduction in Amalgamated’s prices, a condition of the contract. 1. What are the ethical implications of Tony’s plan to negotiate a long-term contract under the conditions presented in the scenario? Explain your answer. 2. If you were in Tony’s shoes, what would you do, and why?
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
Tony Dauginas is a purchasing agent for a consumer packaged goods company based in the United States. His company manufactures various goods in the health and beauty industry, such as cosmetics, skin lotions, toothpaste, and shampoo. Tony’s company has come under assault from another, much larger company. The larger company can use its large purchasing volume as leverage to buy components for its products much less expensively than Tony’s company can. This has put a lot of pressure on Tony’s purchasing group to get the best price possible on the components it buys for manufacturing.
One of the types of materials that Tony buys is corrugated boxes. The boxes are used as secondary packaging for all of the company’s goods. The price of wood pulp used to make the boxes has been steadily rising, causing prices of corrugated boxes to rise along with it. Tony has been very concerned about this price trend because the company spends a large percentage of its product-related costs on boxes.
Tony just got back from a trade show, at which he received some interesting insider information about one of his suppliers. While talking to a fellow purchasing manager at a noncompeting company, he found out that the other purchasing manager’s company was terminating its contract with one of Tony’s corrugated box suppliers, Amalgamated Boxes Inc. The company Tony’s friend works for is Amalgamated’s biggest customer, constituting about 50 percent of its business. The loss of this business will likely be a damaging, if not fatal, blow to Amalgamated.
Tony is considering calling on Amalgamated’s sales office to chat with the vice president of sales. He figures that Amalgamated will be desperate for business and will be willing to do just about anything to secure Tony’s company as a customer. Tony is thinking that he might be able to negotiate a long-term contract that locks in prices over several years. While in effect, that contract would prevent Amalgamated from passing on rising wood pulp prices to his company. He is also thinking about making a deep reduction in Amalgamated’s prices, a condition of the contract.
1. What are the ethical implications of Tony’s plan to negotiate a long-term contract under the conditions presented in the scenario? Explain your answer.
2. If you were in Tony’s shoes, what would you do, and why?
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