Project Materials

AN APPRAISAL OF EFFECTIVE NEGOTIATION AS A TOOL FOR THE ACHIEVEMENT OF PURCHASING OBJECTIVES

Chapter one

INTRODUCTION

1.1 Background of the Study

The primary purpose of any organisation or industrial activity is to develop and manufacture things that may be sold and maximise profit. This goal is achieved by the appropriate mixing of what many management authorities refer to as the five (5) m’s, which are machine and man. Material, money, and management; material organisation.

No industrial organisation can function without them; they must be accessible at the right time, in the appropriate quantity, for the right price, and in the right location.

Whether in an inflationary, price-stabilizing, or recessionary environment, procuring material at the proper price can literally be the difference between a company’s success and failure.

As a result, every organisation, business or non-profit, places a premium on pricing accuracy. To achieve the proper price, a buyer can utilise one of three fundamental methods:

They are:

1 published pricing list

2. Competitive bidding.

Three Negotiations

When a buyer is dissatisfied with a price after using published price lists and competitive bidding, he turns to negotiation.

According to the Chambers 20th Century Dictionary, “NEGOTIATION” means to confer for the aim of mutual agreement. Webster describes it as conferring, talking, or bargaining to reach an agreement in a business transaction.

According to Oyeoku (1993), negotiation is simply a procedure in which representatives from the buying and selling organisations strive to establish precise agreement on the terms and criteria that govern the formation of a contract.

It entails a thorough examination of all aspects of purchasing, with the ritual serving as a shared understanding of what is best for both sides.

In a good negotiation, both parties win; nevertheless, the winners are rarely evenly distributed. Invariably, one side wins more than the other. This is how it should be in business.