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Mar. 27, 2007

When prices seem too high on a B2B website, they can seriously discourage potential buyers. By the same token, participants might be unwilling to buy if overall prices drop below expected price limits. So-called price mediators provide a balanced mix by identifying a neutral balance that is fair to both buyers and sellers concerned.

Overall, certain considerations must be carefully implemented to ensure that specific objectives are met at any given situation and for any given period of time.

For example, within the world of equities investing, it's easier to allow buyers and sellers of securities to meet through a common exchange where the key concentration is on shares being floated for public ownership. Generally speaking, stock exchanges follow specific procedures in verifying the validity of transactions, starting with securities licensing that must be secured before shares of stocks are sold.

These include verifying the existence of a corporation and its owners, as well as presentation of financial conditions to keep the investing public informed, among others.

For companies venturing into an initial public offering , underwriters go through a book building exercise before final pricing is agreed on. Here, an issuer’s fundamental merits are considered, and material references via prospectuses are distributed for proper data dissemination.

Benchmarking is also made possible through analysts’ quantitative comparisons within industry and regional markets, especially on selected indicators applicable to the listed stock being evaluated.

As soon as a company lists its shares in the exchange, systems are in place that allows holders of stocks to sell shares through brokers, and repurchase them depending on their portfolio call.

Within privatization platforms in the fiscal arena, planning is also made before any scheduled bidding event. Prospective bidders go through pre-qualification rounds, and are likewise given enough time to conduct their respective due diligence on the asset being sold.

The same route is also followed for large-ticket privatization undertakings, although bidding procedures must be done properly and cohesively to avoid a re-bidding route.

The typical scenario is that prospective buyers would likely express keen interest ahead of a bidding event, yet the wildcard rests on whether or not identified buyers will be keen enough to make their bid during the actual event.

When the bidding process fails, re-bids are considered, but only within a "tolerable" timeframe. Too may re-bids could elicit the wrong signal to the market, either on price, administrative guidelines covering specific terms and conditions, or the attractiveness of the asset being sold.

The worse scenario occurs when awarding has been made, only to be opposed due to unforeseen circumstances later on.

In the B2B segment today, and on private e-marketplaces, purchasers are regarded as "equilibrators" tasked to ensure that the best possible option has been considered, more specifically in prudently evaluating objectives that are not abrasive both for the buying and/or selling party.

Given this task, procedures must be in place, from pre-qualification, pre-bidding to actual online bid and awarding, among others.

Purchasers need to blend their negotiating expertise based on technical considerations from key engineers down to trivial items, even aspects tied to finance and treasury, among others.

Simply put, purchasers pro-actively involve themselves in the entire supply chain management so resolutions are realized to prevent possible disputes.

So-called noise within the information chain are filtered out through requests for quotations that are readily available in e-marketplaces.

Through such facilities, purchasers and budget planners can get a gauge of how prices behave, specifically when integrating up-to-date conditions in specific macroeconomic and industry settings.

Since active collaboration is facilitated via e-marketplaces, purchasers are more armed in simplifying accreditation based on participating members’ scorecards, either as a buyer or seller. More importantly, purchasers can focus on more important tasks that would help them get involved in higher decision-making, which considers research and analysis for alternative variants and improving social commitments, among other things.

Simply put, valuations are best verified via participation in e-marketplaces where the actual pulse of supply and demand is fully validated. Uniformity in data dissemination is enhanced to help support the awarding process.

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Source: Philstar