Page 64 - DMGT525_MATERIALS_MANAGEMENT

Unit 5: Negotiation

2. A negotiation is a discussion on all aspects of a ……………….. Notes
3. The …………………. power will definitely be influenced by the preparedness of the buyer
as well as the place and time of negotiation.

5.2 Objectives of Negotiation

The basic objectives of negotiation are not only to purchase materials on favorable terms but to
maintain the continuity of supply of raw materials and at the same time to reduce the cost of
production. It is the primary concern of the negotiator to react at proper agreements regarding
price, quality, time, etc. Negotiation leads to an agreement, an agreement results into a contract
which becomes both legally and morally binding on the parties to the agreement. Therefore, it
is necessary to know what to negotiate and how to negotiate. The negotiator should be very
clear as to:
1. What for the negotiation is being planned?
2. What is planned to be achieved through such a negotiation?

3. What are the assumptions upon which the negotiation is going to be negotiated?
4. What is going to form the basis of negotiation?
5. What is intended to be negotiated?
The objectives of negotiation in each case will also differ sometimes materially. But fundamentally
the objective of negotiation will obviously be:
1. To see that the interest of the organization is not bartered out.
2. To see that the organization is not put in a disadvantageous position.
3. To see that the organization gets all the benefits which can easily and comparatively come
to it in normal circumstances?
4. To see that distant future is not bargained for the present.
5. To see that long as well as short term effects are properly measured and pros and coins are
fully weight.
6. To see that times, etc. are settled in unambiguous terms and nothing is left to interpretations
which may lead to misunderstanding and bitterness.

Self Assessment

Fill in the blanks:
4. Negotiation leads to an agreement, an agreement results into a contract which becomes
both legally and morally binding on the ……………… to the agreement.
5. The basic objective of negotiation is to maintain the continuity of supply of raw materials
and at the same time to reduce the cost of ………………….

5.3 Techniques of Negotiation

Negotiation is referred to as the style of discussing things among individuals in an effort to
come to a conclusion satisfying all the parties involved. Discussions should be on an open forum
for everyone to not only participate but also express their views and reach to an alternative
acceptable to all.

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