Page 74 - DMGT525_MATERIALS_MANAGEMENT

Unit 5: Negotiation

Hosking concluded: “There is no question in my mind that this program has had an Notes
impact on the bottom line — and it’s in the millions.”
Questions

1. Study and analyze the case.
2. Write down the case facts.
3. What do you infer from the case?

Source: http://www.backdoorselling.com/negotiation-case-studies.php

5.8 Summary

 Negotiation has been accepted as a policy by some material managers, since perfect
competition does not exist in Indian situations and hence the concept of lowest bid does
not always work.
 Thus, a negotiation is essentially a discussion on business transactions leading to
finalization of purchase and sale contract of goods and services.
 The bargaining power will definitely be influenced by the preparedness of the buyer as
well as the place and time of negotiation.
 Negotiation leads to an agreement, an agreement results into a contract which becomes
both legally and morally binding on the parties to the agreement.

 One has to be extremely patient and also understand the second party’s needs and interests
as well. Never impose your ideas on anyone.

 A successful negotiator has to possess the qualities of patience, persistence, persuasiveness,
clear thinking, logical analysis, optimism, knack of getting along with people, ability to
plan and be thick skinned while negotiating, the buyer should hope for the best and at the
same time be prepared for the worst.
 He weights carefully the pros and cons blows hot and cold, suggests and investigates and
tries to learn and lets the other party learn before either settling for the terms or rejecting
the terms.

 Quality cannot be negotiated when its conforms to a national or international standard or
it is an conformity with the buyers specifications, service, quality, price, and other terms
are certainly negotiable, provided of course, the materials are not scarce or not being
transacted by a monopolistic strategy and later tactics may pay good dividends provided
each of the party is ready to understand the view point of the others and have mutual
confidence in each other.
 An effective negotiation may result in a long term benefit to the organization on the other
hand in effective negotiation may cost time, money and energy landing the organization
into trouble.
 It may prove beneficial if negotiation is divided into the following three phases:
Pre-negotiation phase or the preparatory phase, Meeting phase and Post-negotiation phase.

5.9 Keywords

Negotiation: It is a discussion aimed at reaching an agreement.
Negotiator: He is a person who negotiates.

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