NEGOTIATION AS AN EFFECTIVE TOOL FOR MATERIAL PRICING
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FIRST PART
INTRODUCTION
1.1 CONTEXT OF THE STUDY
Source selection is one of the main responsibilities of an organization’s procurement department. Before prospective suppliers are considered for a buyer-supplier relationship, it covers the complete process of surveying, evaluating, and determining policies for those who can most effectively meet the organization’s requirements. However, this evaluation is based on a number of crucial instruments, one of which is pricing.
In general, price refers to the sum provided for the acquisition of an item. It is also important to pay a fair price for something, as the price plays a significant role in the production and sales value of the product.
Negotiation is one of the key instruments in the sourcing selection function that purchasing uses to achieve their aims and make the best decision regarding which suppliers are to be selected.
Typically, negotiation needs face-to-face discussion between the buyer and suppliers in order to reach a consensus on the essentials of a purchase/sale contract, including pricing. Price determination is the primary objective of negotiation.
In negotiations, to decide the purchase price, buyers and sellers typically examine production overhead costs and market conditions. Accelerates needs of the buyer and supplier to eventually come at a joint pricing that both delivers the best item value at a reduced cost to the customer and favors the supplier’s fair interests to secure a sustained supplier-buyer relationship.
This study examines how negotiation as a method for successful material pricing can be utilized to identify the optimal price of supply, in addition to investigating a number of issues relating to the purchase of expensive items.
1.2 DESCRIPTION OF THE PROBLEM
Buyers have a tendency to miss the aspects that affect the price itself, which accounts for the majority of negotiating concerns, particularly when price is the central issue. This typically results in an extremely expensive purchase or contract price.
In addition, a lack of sufficient preparation before to entering the negotiating table is key and crucial to any effective negotiation. The other negotiation activity, including information and concept delivery time, supplier quality, and a fair and reasonable deal. Consequently, given that negotiation precedes any purchase or contract, what will happen if there is no negotiation on the specifications and terms of payment?
Also, the negotiation should not be dominated by a single party or set of values, as dirty tricks would lead to the failure of the objective. Benefits can be derived as a source of information for problem-solving, quality at a fair and affordable price, quality control, and relationship management.
1.3 OBJECTIVES OF THE STUDY
Among additional reasons for doing this investigation are the following:
I To establish the negotiation’s purpose.
ii) To identify the negotiation approaches.
iii) To identify the negotiation requirement.
iv) To determine the impact of negotiation on the pricing of materials.
1.4 RESEARCH QUESTIONS
In addressing the research question, the following will be addressed or answered:
I What are the objectives of a negotiation?
ii) What are some negotiation strategies?
iii) What are the prerequisites for a good negotiation?
What effects does negotiating have on the pricing of materials?
1.5 Significance of the Research
It will also act as a guide for organizations with similar departments or issues, as well as a resource for similar topics and future research.
In addition, it will be advantageous for future research, as the organization broadens the researcher’s knowledge; it will also aid the research, particularly in partial completion of the requirements for the award of the Higher National Diploma in Purchasing and Supply from Kaduna Polytechnic.
1.6 SCOPE OF THE EXAMINATION
The research will examine the bargaining process and its effect on the pricing of materials at Peugeot Automobile Nigeria Ltd.’s numerous departments with retail functions. In addition, the research covers multiple departments with a total population of 65 and a sample size of 30-49 employees. It will be conducted inside the procurement department, administrative production, quality control and material inspection unit, and the closing department.
In addition, it will examine the requirements for a successful negotiation and the approach adopted in the conduct of negotiations, as well as how they conducted their negotiations from 2010 to 2012, as well as quality control.
1.7 DEFINITION OF TERMS
This is the procedure wherein parties come together to reach an agreement.
This term is commonly used in the military and in the public sector to refer to purchasing; it is an activity including logistics, purchase, transportation, and distribution.
This refers to the time between placing an order and its completion or delivery.
This is a continuous process of advancing orders with suppliers to ensure timely delivery of goods.
Inspection is the process of examining incoming things to ensure that their quality and quantity conform to the specifications.
This is the property that distinguishes an object from others with the same features.
Effectiveness is the capacity to produce a sound and fruitful outcome.
Purchasing refers to the act of acquiring goods specifically for a business.
Price is the amount of money required to acquire an item or items.
A supplier can be an individual or a firm whose main purpose is to provide goods to individuals or businesses.
This is the comprehensive description of how an object is or should be.
NEGOTIATION AS AN EFFECTIVE TOOL FOR MATERIAL PRICING
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