Mars Incorporated: Online Procurement Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Question 1

What are the basic types of auctions? [1 point]

There are many types of auctions and each of them has its own bidding behavior. The behavior of the bidder in an auction is determined by the way and the reason due to which a particular bidder is participating in an auction. One of the important reason due to which the bidder participates in an auction is that the bidder is willing to acquire the needed goods for his personal consumption. The second reason might be to use the item for commercial use or resell the item. There are many basic types of the auctions however; the main types of auctions of all are described briefly below:

Ballroom or Live Auction

The other name for this type of auction is the on-site auction. This is because this type of auction is basically conducted in a meeting room or meeting facility such as an indoor location and hotel convention. All the bidders that are interested in this auction would have already inspected the property that is being auctioned. Lastly, when the bidding option is finally open, then the pictures of the property are also shown and displayed in the ballroom. This type of auction is conducted in an open place and therefore, all the auctioneers compete at the same time that’s why it is also called as a transparent auction.

Online Auctions

The second basic type of the auction is an online auction. During the online auction bids, all the bidders have to submit their bids online over the internet for the particular product or the service in which they are interested. These type of the online auctions have become an important part of the electronic commerce field because of their range of possibilities and flexibility. The property that would be sold is put on display over the internet. Therefore, the sale of the property is entirely conducted on the internet. There are also specific timelines for such online auctions such as the opening and the closing dates and there are also times when there are fixed increments of the bids. Each bidder is required to enter his bid against all the other competing bidders with his desired price.

Sealed Bid Auction

The sealed bid auction is more preferred when the seller wants to set a more confidential bid. The time and the place for opening all the submitted bids is already predetermined and after that the auction process is commenced. This type of the auction is basically chosen when the seller is looking for optional terms of the sale. Furthermore, this type of auction is also preferred in a situation when there is a sale of more than one type of service or product in the auction. In this way, each bidder determines the best combination of the items that best meet their needs and they bid on that.

Question 2

What features of the proposed Mars’ auction present implementation challenges? [1 point]

There were a range of features of the proposed auction of Mars that presented implementation challenges for the management of the company. Although the online auctions were thought to make the purchasing process more efficient however, suppliers faced difficulties because of the brute force reliance on price. Additional efforts were required in order to maintain good relationships with the suppliers.

Specifically the main challenge faced by the management of Mars was that most of the item such as the packaging items were usually in small lots and it took a lot of time for the suppliers of Mars and the management itself to deal with each of the lot separately. Another important challenge was that Mars did not want to have a list of just a few suppliers however, the management also did not wanted to create the administrative overhead of spending resources and extra time for dealing with a large number of suppliers.

Apart from placing a limit on the number of the suppliers, the management of Mars also wanted to put a limit on the total amount of the dollar that could be won by any of the supplier so that the overall exposure could be reduced. Moreover, the round by round auction financing also required two new rules to be formulated such as in the case of the tie the first bidder would be the winner and after the first round was completed, the new bid would have to be at a price, which should be less than the current price................

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