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Negotiation As A Cost Reduction Tools In Materials Purchases
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1.5 DEFINITIONS OF TERMS.
Negotiation:
This is the process of planning receiving and analyzing used by the
buyer and the seller to reach an acceptable compromise in an aspect of
business transaction such as price delivery, specification, terms of
payment etc. also it is the act of attiring at a common understanding
between the buyer and the seller through bargaining on essential of the
contract:
Purchasing:- This term is also here as the process of
buying in the market. But in a broader sense, it is a professional term
used when buying goods and services by an industries, commerce and
co-operation by a professesional buyer
Haggling:- Since negotiation
is sometime mistaken to means the same thing as haggling it is good at
this juncture to point out that haggling means arguing about price.
Expediting:- it is also referred as follow up.
Supply:
This is the process of obtaining by legal means materials supplies,
services and equipment required in the operation of organization.
Specification:
This is the process of defining an item in terms of it brand or trade
name chemical analysis sample standard, performance or any other
relevant characteristic suitable in all aspect for the purpose for which
it is intended.
Bargaining: Is an agreement to discussion in order to arrive at a compromise.
Competitive Bidding: Is calling for bids and evaluating the bids to arrive at the best price.
Both
side wins something. Invariably one side wins, more than the other,
this is how it should be in business, superior skills mentis superior
records.
HEINRITZ AND FARREL (1981, P.265) define negotiation as the
act of arriving at a common understanding through bargaining on the
essential of contract such as delivery terms, specification, price and
others terms. Because of the interaction of these factors and many
others, it is a difficult act and requires the exercise of judgment,
fact and common senses. The effective negotiation must be a real
shopper, alive to the possible of bang aiming strength. A negotiation
knows where to be firm or make pessimistic concession on prices and
other terms.
According to Baily and farmer (1981,
P.237) negotiation form substantial part of the jobs of most purchasing
people with any measure of responsibility. Like sales men, buyer needs
to be proficient in such skills as asking good question listening,
interpreting, terms in negotiation pre – planning a negotiation ensuring
that what is agreed is implemented. They need to be able to analyses
and interpret information, and be aware of dangers, making unwarranted
assumptions, since negotiation is an interpersonal process, they need to
understand something about human behaviors, needs and motivations and
the need to develop interactive skills.
WESTING J.HC 1976, P-198)
commented in established concerts sources of supply that have proved
satisfactory in quality, services and prices have been developed over
the years. These sources tend to be regularly utilized when the sources
are found to be lighter in price or to offer delivery terms that are nor
as desirable as those offended by a completion, the buyer will
frequently negotiate, with the regular success for better price and
delivery terms.
Negotiation may be conducted with the
suppliers, sales men or they may sell or buy. It permits a more personal
approach to the problem of agreeing on the terms of sales than does the
formal invitation method.
LYSON (1989,P.208) defines negotiation as
any form of verbal communication in which the participant seek to
exploits the relative strength of the respective bargaining position to
achieve exploit or implicit objectives within the overall purpose of
seeking to resolve the identified areas of disagreement.
According to
UGBANA (1987, 9.102) negotiation is seen as the art and science of
arriving at a common understanding through bargaining on the essentials
of a contract since as delivery price terms and conditions of services
within the purchasing context.
It is essentially a technique of
communication of interchanging ideas and information as a result of
which buyers and sellers arrives at a mutually acceptable bargain. To be
successful the purchasing manage should do some home work well by
planning his objectives and stages before hand entails the session with a
position attitude of success, collecting and sending all relevant facts
before the meeting and developing on agenda for the meeting.
Since
the essential element in negotiation is bargaining between individuals.
The process involves personalities, human motive people strength and
weakness and a great deal of psychology.
Again Baily (1987,
P-197-198) asserted that the scientific aids of operations research the
elaborate calculations and the expensive computer hard with supplier
after the fact .
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ABSRACT - [ Total Page(s): 1 ]This research work on negotiation as a cost reduction tools on materials purchases a case study of Asaba Tex Nig. Ltd. The scope of this research work covers every activity which has to do with negotiation problems, background to the subject matter, rationale for the study and the limitations of the study. The research reviews the related literature about the topic under discussion by gathering from distinguished authors and scholars, facts and opinions the finding of this study through the admi ... Continue reading---
