Case $1-2$ Brennan Bank

$"$We will do it for $10$ percent less than what you are paying right now." Rachel Bonnell, purchasing manager at Brennan Bank, a

large financial institution based in California, had agreed to meet with Scott Kyle, a sales representative from P$.$ Jolon Inc. $($Jolon$),$ a

printing supplier from which Brennan currently was not buying anything. Scott Kyle's impromptu and unsolicited price quote concerned

the printing and mailing of checks for Brennan.

Brennan, well known for its active promotional efforts to attract consumer deposits, provided standard personalized consumer checks

free of charge. Despite the increasing popularity of online banking, the printing of free checks and mailing to customers cost Brennan

$$10$ million in the past year. Rachel Bonnell was the purchasing manager in charge of all printing for Brennan and reported directly to the

vice president of procurement.

It had been Rachel's decision to split the printing and mailing of checks equally between two suppliers. During the last five years, both

suppliers had provided quick and quality service, a vital concern of the bank. Almost all checks were mailed directly to the consumers'

home or business address by the suppliers. Because of the importance of check printing, Rachel had requested a special cost analysis

study a year ago, with the cooperation of both suppliers. The conclusion of this study had been that both suppliers were receiving an

adequate profit margin, both were efficient and cost conscious, and the price structure was fair. Each supplier was on a two$-$year contract.

One supplier's contract had been renewed eight months ago; the other supplier's contract expired in four months.

Rachel believed that Scott Kyle was underbidding to gain part of the check printing business. This, in turn, would give Jolon access to

Brennan customer names and their contact information. Rachel suspected that Jolon might then try to pursue these customers more

actively than the current two suppliers to sell special "scenic checks" and other products that customers paid for themselves.