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Mars Inc. Online Procurement Case Solution & Answer

Mars Inc. Online Procurement Case Study Analysis

Introduction

Mars Incorporated originated from America as a private company, offering a variety of food items,such as: are pet food, confectionery and other food products. Besides this, the company also offers services such as animal care, and earned sales of $ 33 billion in 2015. It is owned by the family of Mars and operates in five business segments globally, which are: Mars Wrigley Confectionary from Chicago, Petcare from Belgium, Food from California, Beverages from Pennsylvania, and Symbioscience from Maryland. Mars achieved success with the passage of time and increased its revenue from $300 million to $14 billion, in approximately 30 years, i.e. in 2002.

Mars has become an international brand, having a market in more than 100 countries. Mars always focused on its values that revolve around its visions which are: are quality, responsibility, mutuality, efficiency and freedom. Its core principles play a significant role in successful relationship management with stakeholders and purchasing negotiations. Another factors which enhances the company efficiency and productivity is its customer satisfaction, which was possible to be obtained only because of the Mars website. According to Forbes; it is ranked as sixth in their list of the largest private companies.

Problem statement

Mars is considered to be the largest business in the category of private firms owned by families. The company faced problems when it incurred a cost of purchasing manually and reporting procedures for the same, as it needed to purchase massive materialson annual basis, worth over $4 billion.However, other firms were not doing the same for procurement and were using online services for auctions through which they were saving 5%, annually. Therefore, the company vice-president started to rethink about applying the same tactic to design an online website especially for auctions so that Mars efficiency and productivity could increases by fulfilling its special needs and savings, which could then be utilized for expansion or growth of the company market share.

What are the basic types of auctions?

The basic types of auction mainly include: absolute auction, Dutch auction, sealed bid auction and online auction.

Absolute Auction:

One of the widely used auction  Absolute Auction deals in the sale to the highest bidder i.e. irrespective of the property price. The initiation of bidding by the auctioneer leads towards the acceptance of all high bids. This is because of its communication characteristics with a motivated seller.  (REALTORS, 2020)

Dutch auction:

This type of auction initiates with the highest price that is known to be reduced at one time, followed by the presence of sufficient participants. Such participants are likely to accept the price asked by the auctioneer.

Sealed Bid Auction:

This primarily involves private bidding and submitting one of the most appropriate bids in a sealed envelope. All the submitted bids are opened privately by the auctioneer and the seller. However, it is the right of the seller to either reject all the bids or lead the acceptance of higher bid. Similarly, negotiation can also be done with the bidders or a call bid in the presence of the highest bidders.

Online Auction:

It is one of the auction modes, which involves the participation of auction users in the bid and the sale of any product mainly by the use of internet. It develops a connection between larger number of buyers and suppliers across the world. Thus, it significantly facilitates them through a process of virtual auction. The presence of wide-ranging auction sites is known for the provision of the platform to both sellers and buyers, to promote the utilization of multiple software for product auctioning. (Tygar, 1998)………………………………..

 

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