A CRITICAL ANALYSIS OF NEGOTIATION AS A VITAL TOOL TO EFFECTIVE BUYING IN A MANUFACTURING COMPANIES

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  • Name: A CRITICAL ANALYSIS OF NEGOTIATION AS A VITAL TOOL TO EFFECTIVE BUYING IN A MANUFACTURING COMPANIES
  • Type: PDF and MS Word (DOC)
  • Size: [205 KB]
  • Length: [77] Pages

 

CHAPTER ONE

INTRODUCTION

By no means can all purchases and suppliers matter be dealt with by correspondence and telephone. It is therefore a necessity that face to face •counters sometimes take place to resolve problems and differences which id be overcome by negotiation.

This research work looks at negotiation as an important tool in ensuring effective buying in a construction company.

It is important to recognize that the primary task of purchasing manager in fulfillment his role of maintaining suppliers is through effective negotiation.

The purchase manger should be a specialist in satisfying the needs of the company by seeking suitable sources of supply and negotiating to secure the best terms and service possible negotiation is necessary whenever it is require reconcile two or’ more different opinion in order that action “may be initiated continued  in mutual  agreed condition.

It is very important that all buying and selling transaction leave both parties satisfied and hence negotiation is not forcing and unwilling acceptance.

Though negotiation is complex and costly, but it is use for primarily for naira value purchase. For high Naira value purchases, where five criteria which dictate competitive bidding prevail. Though competitive bidding is only used to narrow down the number of supplier which implies dealing with a few successful bidder.

1.2      HISTORICAL BACKGROUND

Bulleting Construction Company limited is a duly registered company. In corporate in Nigeria in 1989, the company which is owned by both indigenous and foreign partners has operated responsibility with the lanes of Nigeria.

The company’s head office is in Ilorin the Kwara State Capital with branch offices all over the Federation from Kogi State to Deltal State, from River State to Bauchi state and making further rapid cursion into other state of the Federation.

As a responsible specialized corporate entity with a group of highly responsible indigenous and foreign technical crew, the company has had the honour of handling numerous construction Works both within and outside the state. The company future is very promising as this can readily be assessed through its many tangible and intangible assets.

Despite the present economic downturn in the country which has forced many organizations out of the business the company still forging a head with work force about (679) six hundred and seventy nine workers, of this number (674) six hundred and seventy four are Nigerians.

However, the staffs of the company are well pay and motivated hence the company has contributed into small measure to social economic development ‘Nigeria.

This analysis has become imperative to show the Nigerian government that Bulletine Construction Company is a well established responsible corporate body operating with in the frame work of the Nigeria law.

1.3      STATEMENT OF THE PROBLEM

Negotiation with suppliers is one of the most important functions of purchasing department. The success or failure of an organization depends largely on the effectiveness and efficiencies of the buyers to negotiate with suppliers on terms and conditions of the contract such as price, quality, delivery services etc. However investigations have shown that the purchasing departments of the company are not given free hand to operate in the procurement of materials for the organization. Though the role of buyer in any organization is to contribute immensely to the profitability and realization of objectives of the organization. But during the economic recess the market becomes unsuitable a fluctuation in prices. A very good example is what is happening currently in Nigeria with reference to deregulation of Naira as a result of which purchasing power of Naira was drastically reduced.

The activities of buyer in this situation become need with

  1. i) What Procurement procedure could be applicable for this situation? And this could include any of the following
  2. Speculative purchase
  3. Hand to mouth purchase
  4. Spot purchase
  5. Time budgeting of purchase

 

  1. How to obtain the right quality and quantity of goods at the right times?
  • How can (he right or fair price could he achieved?
  1. How could the right materials or goods he gotten from this right source or location?

1.4      SCOPE OF THE STUDY

The research work will cover a broad area in purchasing operation and procurement procedure in organization.

It entails the following specific area which the research would like to emphasize upon in the course of writing the project. These include contract negotiation supplier relationship and others, buyer’s role in negotiation, objective of negotiation, creating conducive environment during the course of negotiation. In consolidation with the above areas the research or will give various definition of terminology used in the course of the project work.

1.5      LIMITATION AND CONSTRAINTS

The researcher encountered numerous problems during the course of carrying out this research work; some of the problems include the following. The uncooperative attitude of personnel of the commercial department of the organization who felt reluctant in the first instance in providing necessary and required information to the researcher not until a letter of identification was produced.

Among other limitation and constraint, to this research work includes financial .constraint, limited text book and journal related to the topic and time available for the research work which hard compelled the researcher to combine academic programme and at the same time carry out the research.

1.6      SETTING OF HYPOTHESIS

Hypothesis is a tentative guess postulated for the purpose of assisting the researcher in directing his thinking towards the solution to the research problem.

In carrying out the research, the researcher will use both null (Ho) and alternative (HI) hypothesis to find out whether negotiation is a vital tool to effective buying.

Ho, proper negotiation does not necessarily lead to              effective buying in a construction company.

HI, proper negotiation is inevitable to effective buying.

1.7       DEFINITION OF TERMS

  • Purchase order:   –   This   is   the   document   used   by   purchasing department to request for the supply of certain items from the vendor
    or supplier.
  • Competitive bidding: – This is used for standard items in which the quotation will requested from the vendor.
  • Negotiator: – Is a person authoritatively appointed to represent a company for negotiation he must be skilful and have a broad business experience.
  • Negotiation: – Is a process of planning reviewing and analyzing used by a   buyer   and   a   seller   to   reach   acceptable   agreement   or These agreement and compromise include all aspect of the business transaction not just price.
  • Vendor: –   An   outside   supplier   of  raw   material   who   suppliers equipment or services needed in operation of an organization
  • Purchasing: – U is a continuous managing process that is responsible for the anticipation, identification and the provision of goods and
    services that are required by an organization with the objective of helping it to increase its profitability.
  • Specification: – This is the document which describes in details the requirements to which the supplier or services must conform.
  • Spot purchase: – Is the purchase that is made on

Impulse.

  • Hand to mouth purchase: – The buying of the exact quantity of materials needed only with out stocking.