subject: Negotiations Of A Growing Company [print this page] In some cases, the company may enter into meetings with representatives from the different bidders in order to discuss the details of the contract. This may involve clarification from both sides of the technical specifications dictated by the contract. If there are stages, the company may choose to reveal them sometimes under the protection of a non-disclosure agreement with the bidders. This stage allows potential suppliers to take a look into the requirements and make changes to their initial offer. This improves their qualifications for the contract. These changes will later on be used during the negotiation stage of outsourcing.
There are two approaches to supplier competition in outsourcing. One approach is the supplier-allocation. In this approach, one or more suppliers are contracted to do the outsourcing. In an effort to achieve a higher quality of service, the company splits the demand between them. This relates to the saying two heads are better than one. On the other hand, the second approach known as the supplier-selection approach gives the contract only to one supplier. This approach is oriented towards one goal, and that is to produce the best possible service for the buyer or requesting company.
In some cases, the parties may choose to enter into due diligence. Due diligence involves evaluation by one company of another. In mergers and acquisitions, due diligence is a process used by the potential buyer to determine if the seller's assets are worth being invested on. As a concept in outsourcing, this involves a representative of the buyer checking out the facilities and equipment of a bidder in order to determine whether or not the supplier can deliver the services demanded under the outsourcing contract. A supplier may also choose to look into the company's processes for the service.
At the end of the competition, the bidders are required to finalize their bids. These proposals are considered "best and final" offers, from which the buyer will choose and base its decision to which company is better suited to provide outsourced services.
Negotiations
After a company has finalized all the scrutinizing procedures called for under the supplier competition stage, it can then identify which of the bidders will be awarded the contract. This winning bidder is usually announced or notified by the company. The negotiations phase is then entered, wherein all parties finalize the rudiments of the contract before they legally execute it.
In this stage, the winning bidder can then make specifications on what it expects the company to do under the contract. This includes the pricing structure or how the company is expected to pay for the outsourced services. Payment is either done through cash, through term payments, or through the transfer of certain assets to the winning bidder. These assets could include existing equipment that could help the outsourcing company understand and serve the buyer better.
