The impact of negotiation on purchasing
Negotiation has moved from the industrial relations arena to the forefront of managerial interest. As the nature and structure of managerial challenges evolve, negotiation skills become necessary. Considerable research has been conducted to determine how negotiators either fail to reach agreements that are in their best interest or leave them worse off. The focus of this article is to consider how managers could negotiate more rationally that is reach agreements that maximize the negotiator’s interests. Unfortunately, natural tendencies in negotiation and decision making contain biases that systematically reduce our ability to reach agreements that maximize our interests. While there has been significant research directed toward identifying these cognitive biases and their impact on negotiator behavior, there explore negotiator’s predilection for framing proposals in ways that reduce information search and analysis and direct the choice of alternatives. Thus, suggest that the frame such manager imposes on problems or disputes are function of the referent point by which we evaluate success or failure and gains or losses. In the context of negotiation, there is often little objective about the choice of particular referent point, although the point that we choose can significantly influence the attractiveness of various outcomes. The need to describe the impact of various frames and identify ways in which managers can guard against being unduly influenced by the frames of disputes as well as ways managers can use frames to improve the potential for resolving disputes.
The study of negotiations is giving increasing attention to relationships between the negotiating parties. This study describes the development of multidimensional index to measure the strength of the various facets of relationships. Results that used this instrument show that cohesive relationships encourage information sharing and discourage use of coercive tactics, both of which have direct or indirect effects on the attainment of integrative outcomes, negative affect, and the negotiators’ ongoing relationship. The selection and negotiation of purchasing bids is complex decision making process that requires consideration of variety of vendor attributes such as price, delivery performance, and quality. Although several decision models have been utilized for vendor evaluation and selection, this paper propose buyer–seller model that has distinct advantages over existing methods for bid selection and negotiation. The model effectively evaluates alternative bids based on the ideal targets set by the buyer. The alternative bid ratings are then utilized in an integer programming model in selecting an optimal set of bids that satisfy the buyer’s demand requirements. The model assists in proposing effective negotiation strategies for unselected bids in order to make them competitive. Finally, propose variations of model for evaluating different bid scenarios thereby providing flexibility for the buyer in selecting the appropriate method and report findings from field study of purchasing agents negotiating rebuy purchases of component parts.
The negotiating stance adopted by industrial buyers is characterized by their reliance on three basic negotiation strategies: problem solving, manipulating perceptions about competition and tough tactics. A structural model relating the purchasing agent’s use of each of strategies to six characteristics of the purchase context, the material cost sensitivity of the buying firm, supplier competition, uniqueness of the buying firm’s specifications, buyer’s cooperative orientation, having information, and formal planning is developed and empirically tested with data collected in national survey of more than 100 purchasing agents. There demonstrate the ability of the contextual variables to predict the emphasis purchasing agents will place on each of the individual strategies in any particular set of negotiations.
Indeed, successful path to purchasing negotiation often hinges on a buyer’s ability to gain relative bargaining strength. Unfortunately, the establishment of a strong bargaining position for a buyer is not a simple matter because of the multitude of factors affecting the buyer’s negotiation leverage. To help purchasing professionals develop more effective negotiation strategies, this study empirically identifies key factors affecting the bargaining position of purchasing professionals and their subsequent impact on negotiation outcomes. Thus, vendor selection and negotiation models have been developed to deal with multiple attributes including price, quality and delivery performance.
The computer has become useful tool for purchasing managers in administering contracts and in daily operations. Additionally, computer support for contract negotiations may also be provided. Research will investigate the use of computerized Negotiation Support System as an aid to purchasing manager, and to the sales manager with whom he or she is dealing, in an industrial buying/selling negotiation. After reviewing the results of three prior studies using student subjects, there reports on research study using purchasing managers as subjects designed to test the effectiveness of negotiation and to be able to conclude with suggestions about which organizations should develop an negotiating power upon purchasing process and how they should begin the purchasing based development effort.
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