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Negotiation 15

Negotiation Definition "an occasion where one or more representatives of two or more parties interact in an explicit attempt to reach a jointly acceptable position" Lysons and Farrington, Purchasing and supply Chain Management, 7th edition, (c) Pearson Education Limited 2005. The Buyer's Negotiation position will be Strong If: Demand is not urgent Suppliers are keen for the business Buyer is in a monopolistic position Demand can be met by alternatives / substitutes.

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115 views

Negotiation 15

Negotiation Definition "an occasion where one or more representatives of two or more parties interact in an explicit attempt to reach a jointly acceptable position" Lysons and Farrington, Purchasing and supply Chain Management, 7th edition, (c) Pearson Education Limited 2005. The Buyer's Negotiation position will be Strong If: Demand is not urgent Suppliers are keen for the business Buyer is in a monopolistic position Demand can be met by alternatives / substitutes.

Uploaded by

zakria100100
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Slide 15.

Negotiation

Definition
An occasion where one or more representatives of two or more parties interact in an explicit attempt to reach a jointly acceptable position on one or more divisive issues about which they would like to agree.

Lysons & Farrington, Purchasing and Supply Chain Management, 7th edition, Pearson Education Limited 2005

Slide 15.2

Negotiation

Contractually Related Issues


Type of contract (1) Fixed price or lump sum (2) Cost reimbursable (3) Unit price Legal charges Dispute of resolution Cancellation rights Right of audit and open book agreements Set of rights Force majeure Conditions, warranties and guarantees Non-compensatible delays Inspection rights Use of sub-contractors Liability of sub-contractors Ownership of jigs, tools, moulds, etc. Confidentiality and restraint of trade issues

Some Contractually Related Negotiation Issues

Charges for use of patents need by supplier/purchaser Sharing of savings due to improved design/production Payments in advance Milestone payments Changes to specifications and designs

Environmental issues

Health and safety issues

Disposal of surplus material

Lysons & Farrington, Purchasing and Supply Chain Management, 7th edition, Pearson Education Limited 2005

Slide 15.3

Negotiation Conditions that Prevent Spontaneous Response When there is little latitude in determining their position or posture When they are held accountable for their performance When they have sole responsibility When they are responsible to a constituency present in the negotiations When they are appointed rather than elected

Lysons & Farrington, Purchasing and Supply Chain Management, 7th edition, Pearson Education Limited 2005

Slide 15.4

Negotiation The Buyers Negotiation Position will be Strong

If:
Demand is not urgent Suppliers are keen for the business

Buyer is in a monopolistic position Demand can be met by alternatives/substitutes


Make and buy options are available Buyer has a reputation for fair dealing Buyer has excellent supply market intelligence

Lysons & Farrington, Purchasing and Supply Chain Management, 7th edition, Pearson Education Limited 2005

Slide 15.5

Negotiation Pre-negotiation Considerations


Who is to negotiate?
The venue Intelligence gathering Negotiation objectives Strategy Tactics Conducting dummy runs
Lysons & Farrington, Purchasing and Supply Chain Management, 7th edition, Pearson Education Limited 2005

Slide 15.6

Negotiation Stages of a Negotiation


Introductions, agenda agreement and rules of procedure

Ascertaining the negotiation range

Agreement of common goals

Identification and removal of barriers

Agreement and closure

Lysons & Farrington, Purchasing and Supply Chain Management, 7th edition, Pearson Education Limited 2005

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