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APPRAISAL OF THE APPLICATION OF NEGOTIATION TOOL IN SMALL SCALE FIRMS IN NIGERIA

ABSTRACT

Obviously, this project deals on the appraisal of the application of negotiation tool in small scale firms in Nigeria. And thereby provide essential theoretical and practical information on negotiation functions and techniques for professionals in the area under study. The project work is meant to equip managers as well as other interested individuals or bodies for professional careers in the managerial cadre of this topic of research. It is taking the user through a step by step guide in the application and co-ordination of the various functions included in the application of negotiation concepts to attain the objectives and benefits of the concept in the business word. Therefore, to remain in business and survive in the manufacturing industries, there is the need for rightful application of negotiation tools concept which ensures a continuous flow of right price and quality requirements in the harsh and unpredictable marketing environment. I therefore believe that the project work will be a very useful resource material for all grades of users, whether students, and practicing managers.

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND TO THE STUDY

Negotiation is one of the most important as well as one of the most interesting elements of purchasing and materials management. In these days of material shortages, high price and galloping inflation and general unfriendly supply market, it will be suicidal for any business firm and indeed small scale firm’s to ignore negotiation exercise in its purchasing activities. In purchasing, negotiation it is important to always be on the alert when negotiating a contract to ensure that agreement reached are not to out detriment or disadvantages.

According to UZOR (2004:280) negotiation is one of the most important tasks of purchasing professionals. It is also the most delicate and difficult. It is delicate because it involves dealing with a seller whose primary aim is to maximize profits, hence price. The buyer on the other hand, has the opposite objective, to hold sellers profits and prices to acceptable levels. The execution of the purchasing functions with out negotiation is therefore unthinkable. According to Webster defines negotiation broadly as conferring, discussing or bargaining to reach agreement. Where the buyer cannot compile a reliable estimate price verification is more difficult. Again, the starting point is to obtain the suppliers price breakdown, supporting evidence and substantiation, is sufficient to enable the buyers to confirm that the pricing basis is reasonable.

1.2 STATEMENT OF THE PROBLEM.

For any company to survive, grow, remain competitive and enhances productivity, there is need to identity, develop and implement those negotiation techniques will surely contribute to organizational profitability. Despite all this certain situation can be a hindrance or drawback. 1. the inability of the parties to negotiation to think fast, express himself very well, unable to posse analytical ability. 2. Unable to consider other persons ideas and objectives. 3. A common problem is failure to prepare thoroughly enough. 4. Faulty allocation of time might be nearer the mark. 5. Trying to score a great victory instead of arriving at a mutually satisfactory solution.

1.3 OBJECTIVES OF THE STUDY

The underlying principle governing this study is to find out how the application of negotiation tools is applied in various firm and Mevok enterprise as my case study;

1. This study will explain how valuable a firm may become, if the negotiation tools is properly applied and managed.

2. It will also outline the fact that application of negotiation tools in small scale firm are of the paramount importance of the achievement of corporate objective.

3. The study will also view the extent to which negotiation tools is been apply in Mevok enterprises.

4. To examine the calibre of staffs involved in the various activities includes negotiation, competitive bidding and progressing etc. 

5. To find out the contribution of the application of negotiation tools in small firm, to profitability and efficient running of the industrial as a whole.

1.4 RELEVANCE OF THE STUDY

The primary reason behind the research is for the partial fulfilment of the condition for the award of Higher National Diploma (HND) in purchasing and supply management. The secondary reason of this project is to guide industrial buyers for effective procurement using negotiation tools, when price are no more stable in the market. Emphasis will be laid on the best method of procurement to use during inflation and its important in negotiation. Price is also aimed at presenting a situation to a large extend that affect the purchasing power of the MEVOK ENTERPRISE. The study cuts-across all categories of manufacturing companies (small scale) firms with particular reference to Mevok enterprise. The study shows that proper.

1.5 SCOPE OF THE STUDY

This research study is undertaken to cover negotiation activities in Mevok enterprises. The population and sample size of Mevok enterprises is made up to 40 men out of the 40 men, 3 falls under management cadre, 30 under the operative cadre and 7 men under supervisory manager’s cadre. Population and sample size is elaborated in chapter three in full. The scope of the company is wide since its establishment is solely based on growth and profitability. Though some services are rendered to buyers of the company’s product the area of concern to the company is profit making. Despite the high competitive of the product faces in the market from the product of other similar company yet they still maintained their market share.

1.6 RESEARCH QUESTIONS 

The following question have been selected for the study to enable it arrive at valid conclusion.

1. Does your organization have purchasing department?

2. Who is in charge of negotiation in your organization?

3. The negotiator of your organization is he / she a professional?

4. is your purchasing a custodian of large portion of your procurement

5. Who lead the team of the negotiation in your organization?

6. Do your purchasing department have all facilities needed for negotiation?

1.7 HYPOTHESIS 

One important thing a research of this nature needs to achieve is to empirically prove the subject matter. It therefore becomes necessary to formulate some hypothesis on which the conclusion would be based. These are:

1. Ho: The Company does not apply negotiation tools in procurement process.

H1: The Company apply negotiation tools in procurement process.

2. Ho: The tem leader of the negotiation is not the administration manager

Hi: the administration manager lead the team of the negotiation in the organization.

1.8 LIMITATIONS OF THE STUDY.

There cannot be any successful research of this magnitude without encountering some difficulties. The following were some of the constraints or problems encountered. 1. A difficulty in securing some of the vital documents containing some valid information relating to the subject matter of research. 2. Another problem was the uncomprising attitudes of the staff of the company especially those in purchasing and stored department. 3. The degree of time consumed at the expense of lectures and other important assignment 4. A financial constraint is another dimension, which did not allow the researcher to visit other company. Normally a research like this requires a considerable amount of information, typing of gathering of information, typing of manuscript and other minor expenses.

1.9 DEFINITION OF TERMS

The terms defined here are some of the terms used in this project work, is necessary because these terms have their grammatical definition. The attributed to English language. Therefore in order that their expected meaning be understood in the content of this work that are defined duties as follows.

1. PROCUREMENT: A term used to cover the series of activities which need to be performed to acquired and deliver to a user, an item of material or service. It cover the whole circle of activities from the conception of the need through design, purchasing, storage, delivery to the user, monitoring and feeding back operational experience and ultimate disposal.

2. VENDOR: an outside supplier of raw materials, suppliers of equipment or services needed in the operation of an organization.

3. NEGOTIATION: Is a process of planning, reviewing and analyzing agreements or compromises including all aspects of the business transaction not just price.

4. COMPETITIVE BIDDING: Is one of the methods being used to determine price.

5. PURCHASING: It’s a continuous management 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 its profitability or service provided.

6. NEGOTIATOR: Is a person authoritatively appointed to represent his/her organization for negotiation. He must be skilful; and have broad business experience.

7. AGENT: One who acts for another (called a principal) in dealing with a thirty parth.

8. DELIVERY: The transfer of possession. In shipping, delivery takes place when the bill of lading is handed over to the consignee and tidal on the goods passes to the consignee.

9. Strategy: Is the basic plan of action chosen to achieve an objective.

10. TACTICS: Are the means by which this plan is implemented or the means to be used to ensure that the negotiator is able to follow the chosen strategy.

11. PURCHASE: To procure goods, property or services for a price or by barter.

12. PURCHASE ORDER: A purchaser’s document used to formalise a purchase transaction with a supplier.

13. PURCHASE REQUISITION: A form to request the purchase department to procure goods or services from vendors.

14. QUOTATION: An offer of goods for sale by a vendor to a purchaser, wherein the terms and conditions of the sale are specified.

15. REBATE: A discount or reduction in price offered by a vendor.

16. LEAD TIME: The total time it takes to obtain supplies.

17. DISCOUNT: An allowance granted by vendor to buyer.

18. DELIVERY PERIOD: The period of time between the date of issue of a purchase order and the date the materials are received.

19. DELIVERY SCHEDULE: The time span or rate of delivery of goods during a future period as per terms of the contract.

20. DEMAND: Estimated quantum of sales or usage in a certain period.

21. SOURCING: The identification or development of suitable sources of supply.

22. PRICE: The value of a product or service measured in monetary term.

23. QUALITY: Ability to satisfy given needs relates to the value of the product or service to the customer including economic value as well as safety, reliability and other relevant features.

24. QUANTITY: Refers to the value or amount of material, which can be most economically purchased at a particular time.

25. CONTRACT: A deliberate agreement between two parties to perform specific act or acts.

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