A supplier partnering agreement Essay

IntroductionThe supplier partnering agreement at the University of Las Vegas case reflects the initiative of the Nevada Office append Company (NOSC) to become the sole supplier of office goods, not only to the University, but also to all state institutions involved in education. NOSC already is a major supplier to these institutions with approximately 50% of the business, and has provided competitive prices, good quality and service in the 15 years the company has been present in the industry. NOSC wants to go beyond and take the full 100% of the business by offering the University a series of incentives in the form of discounts and rebates. NOSC doesnt want any control competition with the other 7 suppliers and gave Mr. Bob Ashby, the purchasing director at the University, 15 days to accept the offer. This case represents a good opportunity for twain NOSC and the University of Las Vegas to increase their business ties. Mr. Ashby wanted to reduce the add together of suppliers in order to reduce the number of purchase orders, the number of contracts, and the number of delivery trucks on campus.On the other hand, NOSC expects to grow and increase its sales by about 20% next year. This forecast was based on the continuous growth seen in the rationalize rein sector, the education system and the population growth of Las Vegas and the state of Nevada. This partnering agreement will allow NOSC to meet the 20% growth figures forecasted and take the full office tally demand in the region that amounts to $1 million to $1.5 million a year. It will also help the University of Las Vegas to streamline the flow of office supplies and take vantage of the very attractive discounts (between 50% and 70%) in addition to the 2% rebate from all combined purchases when they exceed $1 million offered by NOSC. On the contrary, this agreement will allow NOSC to form a monopoly in this sector and as a result, this move might drive small suppliers out of business. parole Questions 1. What legal issues involved in NOSCs proposal?NOSCs proposal, which in the long run persuades Mr. Bob Ashby not to perform a regular bidding competition process, has the potency to be illegal. Under the Sherman Act of 1890 any type of agreement or conduct thatrestricts trade and destroys competition, is considered illegal. The Sherman Act rests on a legislative judgment that ultimately competition will produce not only lower prices, but also bettor goods and services. persona 2 stands as a vital precaution of that competitive process. Individual firms with monopoly power can act anticompetitively and harm consumer welfare.Firms with ill-gotten monopoly power can inflict on consumers higher prices, reduced output, and poorer quality goods or services. Additionally, in certain circumstances, the existence of a monopoly can stymie innovation (Competition and Monopoly Single-Firm Conduct Under Section 2 of The Sherman Act 10-11)Even though both parties have a potential gain in th is agreement, the fact that NOSC is requesting to be the education systems sole office supplier in the growing area of Las Vegas and the State of Nevada, and most likely wants to eliminate some of the competition, makes it an illegal and unfair act against the other suppliers. The true meaning of a free market economy arises from acts that lead to healthy competition, cost reduction and better product quality. It is likely that if Mr. Ashby brings to the board other suppliers, they may be able to the Tempter or even surpass the offer NOSC is proposing. This is the free market and healthy competition in action.2. What are the ethical issues?As stated previously, NOSCs heading with this negotiation is to monopolize the growing office supply business the University of Las Vegas and other educational institutions demand. By asking Mr. Ashby to exclude the other suppliers from the negotiating table, NOSC is negating the possibility for others to help reconcile whats in the best inter est of the University and the education system when it comes to ordering office supplies. If this agreement goes through, it is possible that some small suppliers end up conclusion their business due to this unfair act. This can be an example where ethical sourcing, which attempts to take into account the public consequences of organizational buying, is put aside. A transparent organize bidding process should be the option to make sure that the best possible agreement can be reached without sacrificing good quality andcompetitive prices.3. How should Mr. Ashby take apart the proposal?Mr. Ashby needs to decline the proposal regardless of how attractive and profitable it might look. The right approach is to call on NOSC and invite them to participate in a real bidding competition, where the other 7 suppliers have the chance to expose their ideas on cost reduction and business incentives. After having heard the others and remedy NOSCs offer is the most attractive, at this point it is in the best interest of the University to choose to do business with NOSC. In my opinion, The University should keep some number of suppliers to diversify the stream of supplies coming in, and allow the arisement of each of them individually in case one or two of them cant comprehend to comply with the Universitys needs.ConclusionThe possible agreement between The University of Las Vegas and NOSC, where NOSC would supply the 100% of all the Universitys office goods need, may be perceived as unethical and opportunistic. This move might leave some of the smaller suppliers out of business and would close any door leading to similar or better opportunity with other supplier. This business relationship would go against the Sherman Act of 1890, which prohibits any type of monopoly and acts that destroys competition. Regardless of the great business opportunity this partnership represents on the table in terms of cost and administrative work reduction for ULV and profit opportunity an d market growth for NOSC, this agreement has some potential for failure. What would happen in the event that NOSC cant comply with ULVs demands? There needs to be a pool of suppliers ULV can count on in the unlikely event NOSC is unable to meet its responsibilities. Instead of taking the path of one sole supplier, ULV should implement a policy of supplier development, where it can help develop and better the performance of many suppliers. This approach will incentivize the suppliers to offer better services, and lower prices.Works CitedUnited States. U.S Department of Justice. Competition and Monopoly Single-Firm Conduct Under Section 2 of The Sherman Act. 2008. Web.