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Exam_1_Study_Outline-final - Exam I Material Outline 1...

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Exam I – Material Outline 1. Purchasing is Power a. Definition of Purchasing i. the action of acquiring materials and services ii. a functional group whose activities include acquiring inputs to enable the organization to deliver maximum value. b. Definition of Power, five types of power (know and define them) i. Power: The ability to control the environment around them, including other people’s behavior. ii. Five types of power 1. Coercive Power: 枪 ability to punish financially, physically, or mentally 2. Reward Power: 枪枪 reward or offers the other party sth of value 3. Expert Power: 枪枪 A person who has accumulated vast knowledge, often with credentials, and uses that knowledge to influence others. Relies more on persuasion than reward power – use information & technology to persuade others 4. Legitimate Power: 枪枪 based on the position that an individual holds 5. Referent Power: 枪枪 individual who has charisma and quality has been admired by others c. Know five steps in organizational purchasing process i. Identify users’ needs and wants – Statement of work ii. Bid, negotiate and select supplier – determine, compare, communicate and finalize w/ supplier iii. Purchase approval - iv. Release and receive purchase requirements – material packing slip, receiving discrepancy report v. Measure supplier performance – track performance and communicate d. Understand RFQ, RFP, RFT i. RFQ - Request for Quotation – invites supplier to submit bids for a purchase contract . Issues a RFQ when it is merely checking into the possibility of  acquiring a product or service. A response to an RFQ by a prospective  contractor is not considered an offer, and consequently, cannot be  accepted by the organization to form a binding contract. ii. RFP – Request for Proposal (with blueprints and specs) :  a document that an  organization posts to bring out bids from potential vendors for a product or  service. An RFP is part of an organization's procurement process, which  begins with an assessment of needs and ends with delivery and/or support  of the finished product or service. iii. RFT – Request for Tender - – similar to RFP, used in specific industries – government, much formal : a document by which an organization seeks prices  and terms for a particular project to be carried out under a contract. The  sealed offers themselves, including company information, a project outline,  and a price quote, are known as tenders or bids. e. Power in our purchases – large, small and no purchase (boycott) f. Impact of purchasing on profit – be able to calculate and compare with sales initiative g. What do you think of Lester Thurow’s quote on democracy and capitalism?
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i. Democracy believes in a completely equal distribution of political power , “one man, one vote”, while capitalism believes that it is the duty of the economically fit to drive the unfit out of business and into economic extinction. Survival of the
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