Tony faces challenges with a key client, Occidental, who now prefers lower bids from Asian rivals. Scott pressures Tony to lower prices rashly. However, Tony believes their strategy of fixed-price, high-value partnerships will serve them and clients better long-term. He plans to justify their prices to Occidental by detailing the value-added services rather than just reducing prices blindly. Tony will also seek input from others and focus on understanding Occidental's needs to find ways to reduce unnecessary costs instead of prices.

1. THE TONY CASE
BY:
Dhimant Patel MM1113152
Geet Sawhney MM1113153
Geet Verma MM1113154
Rahul Tapa MM11131
DUAL A

2. The Case ( Problems):
• Changed procurement policies of the client,
occidental
• Occidental likes to do business with Standard
• Tony ( the Hero) wont take the proposals of
Scott to Top management
• The villains: Company’s policy of ‘Fixed Price’,
The Asian Rivals
• Scott is too anxious and eager to get the deal
done

3. AKITA,
KAKUCHI
TONY
OCCIDENTAL
SCOT Company policy

4. Rationale behind Fixed Price:
• Organization should know the customer in and
out, better than the customer itself
• Help customers define their needs, design their
plant layouts, train their employees, support
their manufacturing systems
• Avail such a great level of service that no other
supplier will win on price only as Akito et al are
trying
• Support the kind of R&D that will constantly
help keep itself and its customers competitive

5. What tony & Scott are doing?
• Worrying about the upcoming winters and rays
of sun.
• Resting on laurels
• Trying to convince each other
• Scott is trying to mindlessly
imitate the competitors.
• Worrying about the PLANNED upcoming
projects of Occidental, which may not even come

6. What they aren’t?
• Looking to train the sales team in the true
philosophy of Fixed Price
• Opening a channel beyond Joanne
• Opening a two way channel with own top
management
• sharing info with each other aka competitive
bidding and field centers

7. Why Reducing Price( price strategy)
may fail?
• Standard ‘s policy is of quality leadership not of
price leadership.
• The competitor follows price leadership. If standard
reduces the price, AKITA might as well further lower
it. ( they need a foot in Standard’s door).
• Occidental may think that there always has been a
scope of price cut for last 15 years and they didn’t
avail it.
• Every other customer may demand a price cut

8. Why the solutions proposed by Scott
may fail?
• Reduction in on site training , trouble shooting
and service might lead the reduction in the
PERCIEVED VALUE
• Cosmetic changes: Occidental is in business for
quite long and are big players. They will
immediately come to know about the ‘ clever act’
of standard bringing bad name for them

9. What Tony should do!
• Put together a cost-justified solution that truly
conveys value-added marketing.
• Send a break up of his cost sheet over to
Occidental to justify the price.
• Try and understand through meetings and
deliberations with the purchase team of
OCCIDENTAL what is that is not of value to
them and cut corners there instead of assuming
them

10. Cont…
• Get Davis involved in such a big ticket order. He
may give some creative ideas.
• Include a point about Switching Cost in the cost
sheet. That may increase the perceived value.
• Take a serious note of the competition in the
next meeting to sustain profitability

11. Focus on VALUE instead of price.
Price can be justified.