Transrail Is Bidding on a Project That It Figures Will

question 34

Essay

Transrail is bidding on a project that it figures will cost $400,000 to perform. Using a 25% markup, it will charge $500,000, netting a profit of $100,000. However, it has been learned that another company, Rail Freight, is also considering bidding on the project. If Rail Freight does submit a bid, it figures to be a bid of about $470,000. Transrail really wants this project and is considering a bid with only a 15% markup to $460,000 to ensure winning regardless of whether or not Rail Freight submits a bid.
a.
Prepare a profit payoff table from Transrail's point of view.
b.
What decision would be made if Transrail were conservative?
c.
If Rail Freight is known to submit bids on only 25% of the projects it considers, what decision should Transrail make?
d.
Given the information in (c), how much would a corporate spy be worth to Transrail to find out if Rail Freight will bid?

---

Definitions:

Team-Based Organizations

Organizations structured around teams rather than traditional hierarchical lines, emphasizing teamwork and collective goals.

Complex Environments

Complex environments are characterized by multiple, dynamic factors and variables that interact in unpredictable ways, making navigation and decision-making challenging.

Informal Communication

The exchange of information, ideas, and feelings through unofficial or casual channels within an organization, not bound by formal rules or structures.

Division of Labor

Refers to the separation of a work process into a number of tasks, with each task performed by a separate person or group.