Negotiation as a tool for effective material pricing

Project Abstract

Negotiation is a critical tool in the realm of material pricing as it plays a significant role in determining the final cost of goods and services. This research project aims to explore the various strategies and techniques involved in negotiation to achieve effective material pricing. The study will investigate how negotiation can be used to obtain favorable pricing terms from suppliers while maintaining strong and mutually beneficial relationships. By understanding the dynamics of negotiation, organizations can enhance their procurement processes and optimize their cost savings. The research will delve into the importance of preparation in negotiation, emphasizing the need for thorough research and analysis of market dynamics, supplier pricing models, and cost structures. Effective preparation sets the foundation for successful negotiation outcomes by providing negotiators with valuable insights and leverage during discussions. Additionally, the study will examine the role of communication in negotiation, focusing on the significance of clear and transparent dialogue to build trust and reach agreements that meet the interests of both parties. Furthermore, the project will analyze the impact of power dynamics in negotiation and how parties can leverage their positions to influence pricing decisions. Understanding power dynamics enables negotiators to navigate complex situations and assert their interests effectively. Moreover, the research will investigate the role of creativity and flexibility in negotiation, highlighting the importance of exploring alternative solutions and trade-offs to reach mutually satisfactory agreements. The study will also explore the concept of value-based negotiation, which involves focusing on the value delivered by the materials or services beyond just the price. By emphasizing the total value proposition, negotiators can shift the focus from price competition to value creation, leading to more collaborative and sustainable supplier relationships. Additionally, the research will examine the role of ethics and integrity in negotiation, emphasizing the importance of upholding ethical standards and building trust with suppliers for long-term partnerships. In conclusion, this research project will provide valuable insights into the strategic role of negotiation in achieving effective material pricing. By understanding and implementing the various negotiation strategies and techniques discussed in the study, organizations can enhance their purchasing practices, drive cost efficiencies, and foster strong supplier relationships, ultimately contributing to their overall competitiveness and success in the market.

Project Overview

<p> </p><p><strong>Introduction</strong></p><p>1.1 &nbsp; &nbsp; <strong>Background of the Study</strong></p><p>One of the fundamental responsibilities of procurement function in an organization is source selection. It deals with the entire process of how prospective suppliers are being surveyed, evaluated and determine policies relating to those who can most suitably meet the requirement of the organization, before they are being considered for a buyer and supplier relationship. However, this assessment is base on a number of essential instrument which price is one of the such.</p><p>Price in general term refers to the amount offered for the purchase of an item. It can also be value pay for obtaining something, it is quite crucial to purchasing as price play vital role on the product manufacturing and its sales value.</p><p>Negotiation among other relevant tools in sourcing selection function that purchasing employ in making an organization to actualize their goals to arrive at a most judgment on which suppliers are to be selected.</p><p>Negotiation usually requires that the buyer have a face discussion with the suppliers in order to arrive at a common understanding on essence of a purchase/sale contact among which is price. Infact, price determination is the main focus of negotiation.</p><p>In negotiation, to determine purchase price buyers and supplier usually discuss such element, as cost of production overhead market conditions. Speeds needs of the buyer and supplier eventually arrive at a mutual price, that both deliver the best value of item and at reduced cost to the buyer as well as favours the supplier fair interest to ensure a continued supplier-buyer rapport.</p><p>This study set out to investigate some related problems having to do with purchasing a high item cost also looks at how negotiation as a tool for effective material pricing can be deployed to determine the right price of supply.</p><p>1.2 &nbsp; &nbsp; <strong>Statement of Problem</strong></p><p>Most problems associated with negotiation especially when the issues of price is the pivot, buyers tend to overlook the variables that determine the price itself. This most time leads to arriving at a very high price for the purchase or contract.</p><p>Moreso, lack of proper planning before approaching the negotiation table is very high fundamental and essential for any successful negotiation. The other negotiation exercise such as source of information and idea delivery time, quality of suppliers, fair and reasonable deal. Hence, since negotiation comes before any purchase or contract, what will happen to purchase without negotiation on specification and at multiple effect on terms of payment etc.</p><p>Also the negotiation must not over power by one part or one principles, dirty trick all they lead to failure in the objective. One can derive benefit as solving problem source for information learn some experience, quality fair and reasonable price, control and relationship management.</p><p>1.3 &nbsp; &nbsp; <strong>Objectives of the Study</strong></p><p>The objective of conducting this research among others are as follows:</p><ol><li>To identify objective of negotiation.</li><li>To identify the approaches of negotiation.</li></ol><ul><li>To identify the requirement for negotiation.</li></ul><ol><li>To determine the impact of negotiation on material pricing.</li></ol><p>&nbsp;</p><p>&nbsp;</p><p>1.4 &nbsp; &nbsp; <strong>Research Questions</strong></p><p>In dealing with the research question, the following question will be answered or addressed<strong>:</strong></p><ol><li>What are the objectives of negotiation?</li><li>What are the approaches of negotiation?</li></ol><ul><li>What are the requirements for successful negotiation?</li></ul><ol><li>What are the impact of negotiation on material pricing?</li></ol><p>1.5 &nbsp; &nbsp; <strong>Significance of the Study</strong></p><p>The study will be of benefit to the organization which the study is being carried an investigation, and also it will serve as guide for relevant organization which have similar departments or problems, also it will serve as reference to the similar topic and serve as reference for further studies.</p><p>Also, it will be beneficent to research in future, the organization also broaden the knowledge of the researcher; it will also assist the research especially in partial fulfillment of the requirements for the award of Higher National Diploma in Purchasing and Supply, Kaduna Polytechnic.</p><p>1.6 &nbsp; &nbsp; <strong>Scope of the Study</strong></p><p>The research work will cover carious department with the store function and look at the process at which negotiation and its effect on materials pricing in Peugeot Automobile Nigeria Ltd. Furthermore, the research cover various departments with the total population of 65 and with the sample size of 30-49 staff. It will be carried out within department of procurement, administrative production, quality control and material inspection unit as well as close department.</p><p>Also, it will look at requirement for successful negotiation and the method employed in the conduct of negotiation also it will cover from 2010 – 2012 how they conduct their negotiation and we will look into quality control.</p><p>1.7 &nbsp; &nbsp; <strong>Definition of Terms</strong></p><p><strong>Negotiation: </strong>This is a process of where people come together to reach an agreement.</p><p><strong>Procurement:</strong>&nbsp;This term is mostly used in the military organization as well as the public set up mean purchasing, it is activity which involve logistic, buying, transportation and distribution</p><p><strong>Lead Time:</strong>&nbsp;This is the period between placing an order to its fulfillment or delivery.</p><p><strong>Expediting:</strong>&nbsp;This is a continual progressing orders with suppliers to make sure that goods are received on time.</p><p><strong>Inspection:</strong>&nbsp;This is a process whereby incoming items are examined so as to ensure that the quality and quantity conform with specification.</p><p><strong>Quality:</strong>&nbsp;This is the standard feature of an item that make it different from item of the same characteristics.</p><p><strong>Effective:</strong>&nbsp;This is the ability of producing a sound and successful result.</p><p><strong>Purchasing:</strong>&nbsp;This is the process of buying things or item especially for a company.</p><p><strong>Price:</strong>&nbsp;This is the amount of money to be paid for obtaining an item or items.</p><p><strong>Suppliers:</strong>&nbsp;A supplier can be individual or company whose sole business is to supply items for people or companies.</p><p><strong>Specification:</strong>&nbsp;This is the detailed description of how an item is or should be.</p> <br><p></p>