Case A THE HIDDEN DISCOUNT Dr. Marsten, a researcher at University Pharma, neede
THE HIDDEN DISCOUNT
Dr. Marsten, a researcher at University Pharma, needed an expensive piece of complex research
equipment, which would include a computer and related software. He based his specs on a device he was
familiar with, manufactured by BioNeeds Inc. and sent his requisition to supply management. As their
regulations required, supply management issued a “request for bids” for a “BioNeeds or equal” device.
On the morning of the day bids were due to be opened, Dr. Marsten called Mr. Goodby , the Director of
Supply Management, to say that he had received a bid from another company, Alternate Technologies,
and that he would walk it right over. When he arrived, it was discovered that he had received an
information copy of the bid and that supply management had already received the original. There was a
letter attached to Dr. Marsten’s copy, which in part said:
I am prepared to offer you, at no additional cost, one additional software package. However, this offer
will not be shown on the bid that has been sent to the supply management department.
According to an attached price list, the value of the additional software package was $18,500.
When the bids were opened, it was found that the Alternate Technologies price was substantially higher
than the price bid by As Specified Enterprises and, sure enough, it made no mention of the extra software
Dr. Marsten recalled that the Alternate Technologies sales representative had visited him during the
bidding period admitted that his bid would probably be high. But the rep expressed confidence that, if Dr.
Marsten were to do a proper technical evaluation, the Alternate Technologies equipment would be
selected regardless of the high price.
As Dr. Marsten related this story, his face clouded over and his eyes widened. “Does this sound like a bribe
to you?” he asked Goodby. Goodby leaned back and pondered what he would do next.
A TIGHT BUDGET SOLUTION
At Mid-Cal Tech, as at most mid-size technical schools, budgets always seemed to be very tight—so tight,
in fact, that the faculty never seemed to have the resources to attend all the technical conferences they
felt were necessary to keep up with what their colleagues were doing. This was seen by the administration
to be a detriment to the teaching and research mission, but more recently was recognized as a specific
handicap in the recruitment of new faculty. It was well known that the administration was receptive to
innovative ideas to help solve this problem.
This morning, when Harold Nurley, Mid-Cal Tech’s supply manager, opened his mail, he found a letter
from the Engineered Products Corporation announcing a new incentive program for buying firms.
Engineered Products, a supplier of a broad line of transducers and analyzers, which are widely used in doing seismic studies on older buildings, was offering “frequent buyer points” to all those buying its
products over the next 12 months. At the end of that period, Engineered Products offered to redeem
points for hotel stays of one to three nights, and various registration and dinner packages in connection
with next year’s Structural Engineering Society meeting in Honolulu.
Source: eParagon LLC
Prepare a 3-page analysis of both cases described above that covers the following aspects. The case write-
up is due at the beginning of the class on September 29.
1. Describe the cultural, ethical or business conduct issues being presented.
2. Detail your solutions to the problems.
3. Provide an explanation of why you chose the particular solutions.
1. The case should be done in groups of around 3 students. Please hand in one write-up per group,
including the names of all contributing group members clearly displayed on the front page.
2. Your responses must be typed on computer, and should be written in a professional way (e.g.
clear statements, no grammatical errors, etc.). Upload your completed assignment on Canvas at
the beginning of the class on the due date.