Summary Fundamentals of Contract and Commercial Management Book cover image

Summary Fundamentals of Contract and Commercial Management

- International Association for Contract, et al
ISBN-10 9087537131 ISBN-13 9789087537135
319 Flashcards & Notes
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A snapshot of the summary - Fundamentals of Contract and Commercial Management Author: International Association for Contract and Commercial Management ISBN: 9789087537135

  • 1 Commercial relasionships: building a foundation

  • 1.1 The relationship continuum

  • What are suppliers of a commodity?
    • Product is viewed exactly the same as several other produces (same specifications, grade and quality)
    • Price and availability are the traditional differentiating factors 
    • Examples are paper goods, heating oil, hardware  
  • What are Suppliers of functioning equipment/systems?
    • Meets the customer's minimum standards. 
    • Include suppliers of computer servers, large-scale copiers, or corporate vehicles. 
  • What are Value-added products/systems and services?
    • Viewed as a reliable and value-added supplier of products and services. 
    • Contractual arrangements are fulfilled on time
    • products are provided conveniently
    • additional services may be provided such as training) technical or financing support
    • Price remains important, but may not be the main criterion. 
    • customer becomes less likely to shop around competitors and the cost of switching may be high. 
    • include suppliers of integrated technology, engineering or construction service 
  • What are Consultant/critical business advisor?
    • Based on providing value-added products and systems and extra service
    • Helping the customer to deal better with some of its important business issues.
    • Understanding the customers business situation and objectives, by generating workable ideas for solving problems, advantage of opportunities, jointly planning with the customer, being sensitive to the customer's organzational issues 
  • What is a transactional buyer
    • easily switch all parts of its purchasing from one supplier to another. 
    • low internal costs of switching between suppliers. 
    • easy for a new supplier penetrate the customer and harder for an incumbent to defend. 
    • Price, features, support, and delivery intervals are important cU criteria. 
    • Timeframes between purchasing decisions are usually short
    • Maximize their negotiating power 
    • Comparisons between suppliers is easy
    • buyers try to commoditize every purchas
  • What is a relationship buyer?
    • customer faces high costs of switching suppliers and changes suppliers
    • Changes require substantial investment
    • The perceived risk of changing is high due to the critical nature of the product 
    • Difficult to penetrate
  • Chart of how business relationships are changing
    Emerging needs of success
  • 1.2 contracts to document commercial relationships

  • Which are agreements requiring contractual arrangements?
    • Teaming and partnering agreements 
    • Franchises, distribution agreements 
    • Agency and representative agreements 
    • License and right to use agreements 
    • General sales agreements 
    • Service agreements 
    • Outsourcing agreements 
    • Engineer, build and install agreements 
    • Professional consulting agreements 
    • Standard purchase orders 
  • Why is the importance of an agreement not reduced due to the fast moving business environment
    All of these types of business arrangements require specific understanding of the roles and responsibilities and the expectations from each party.
    The extent of change and the need for speed increase the importance of a foundational agreement that accurately records the underlying business objectives and associated commitments.
  • What are benefits of effective contractmanagement?
    • Improved quality of service and customer focus 
    • Greater value for money and cost control 
    • Reduced crisis management 
    • Decreased level of risk 
    • Effective implementation in relation to changes or development in the market 
    • Continued improvement through incentive based contracting and risk sharing 
    • Early identification and resolution of poor contract performance and associated problems and disputes 
    • Controls over performance, costs and standards 
    • Identification of things that worked well and not so well to inform and benefit future contracts 
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