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After identifying the customer key evaluation requirements I have identified three risks that may affect our bidding strategy. First, I want to identify why it’s important to know your risks when creating a bid strategy to help you understand why I choose these top three risks. Risk management is the process of identifying risk issues and the options for controlling them, commissioning a risk assessment, reviewing the results and selecting amongst the assessed options to best meet the goals.
The purpose of risk analysis is to help managers better understand the risks (and opportunities) they face and to evaluate the options available for their control. (Vose software, 2007) The top risk of the bid strategy for this company would be price. Price was selected as the top risk because although the company would like to win the bid, the price has to be within a range where they could also make money. The second risk selected is Logistics. This risk was selected since the product has to travel overseas. Depending on the time frame and the cost to have the product shipped the product may not make it to the destination in time.
It is very important to have the product delivered in a timely manner to satisfy the end user requirements. Thirdly, the last risk selected is Customer Commitment. Our company must follow all the requirements in order to make the end user happy. Since the product is going overseas it will be hard to follow up on maintenance. Without having our own personnel at the end user location or close to the location it will also be a challenge if there are any issues with the product. Based on the three risks of the bid strategies that were selected there are also three opportunities to mitigate each risk.
First we have the price, now when negotiating on the rate we will really need to do our research. It’s important to have knowledge of previous pricing and to also include overhead, packaging and transportation. Although, we have to take all these things into consideration we also have to remember we are not the only company bidding on this offer so we must rate acceptable amount. Next, we have logistics. Our company would have to negotiate with a freight forwarder for a reasonable rate to have the freight transported to the final destination.
In order to negotiate a reasonable rate we would mention that if the rate offered is good this would be an opportunity for extreme growth. While we are negotiating we would have to make sure the transit times would be guaranteed in order to have freight delivered to the destination on time. Finally, we have customer commitment. This may be the most important opportunity of them all. If our company is able to provide a reliable solution to the end user needs we will gain past performance while making our customer happy.
We will provide this service by checking with the customer on a monthly basis and sending an employee over to the end user location every two to three months to check that our products are working correctly. The flip side of risk is opportunity. Every bid carriers with it some opportunities beyond those represented by winning the contract. Potential opportunities include future additions or changes to contract value via market share, maintaining dominance in a particular area, protecting an area or contract from assault by competitors, or using the contract as a gateway to future procurements. Osborne, 2011)
In conclusion, by looking into these risks and opportunities we will be able to determine whether we want to bid or no bid. If we cannot provide the end user with the requirements they need in a timely manner at a great cost it will not be beneficial for us to move forward with the bid procedures. As a company we must protect our brand and our products. So, we need to look closely at this conclusion to make our final bid or no bid decision.