Planning Scenario
Your company manufactures DELAMIX blenders, and you are negotiating terms with a supplier of a critical component in your manufacturing process (XYZ Plastics). The chief operating officer (COO) wants you to lead the contract negotiations with XYZ Plastics; however, your planning team has no formal training in negotiation strategy planning. To assist you, the COO provided a recommended template to guide your planning effort. He asked that you review the template and prepare a discussion or narrative for each section that will outline the key components required and guide the planning process.
After reviewing the template, you decide to host a series of training sessions (one per week) designed to coach your team on the negotiation strategy planning process. Your first planning session will serve as an introduction to the planning process and outline the purpose of negotiations and the intended outcomes.
Use the template provided (Negotiation Strategy Planning Template). You will write a discussion of 600–800 words on the following topics:
Purpose of the Negotiation (300–400 words)
Characteristics of negotiations (why negotiate)
Discuss the purpose of negotiations in the supply chain.
Discuss at least 2 situations where negotiation is appropriate.
Discuss at least 2 common negotiation situations.
Desired outcome (300–400 words)
Discuss the desired outcomes of your organization.
Discuss the importance of identifying the organization's goals and objectives as a part of negotiation planning.
Define and describe the term most desirable outcome (MDO).
Full Answer Section
- Communication and discussion: Negotiations involve communication and discussion between the parties involved. This communication can take place in person, over the phone, or in writing.
- Agreement: The goal of negotiation is to reach an agreement that is acceptable to all parties involved. This agreement may be formal or informal, written or oral.
Purpose of Negotiations in the Supply Chain
Negotiations are an important part of the supply chain. Suppliers and buyers often negotiate on a variety of factors, such as price, delivery terms, and quality specifications. Negotiations can help to ensure that both parties are satisfied with the terms of the relationship.
Situations Where Negotiation is Appropriate
Negotiation is appropriate in a variety of situations. Here are two examples:
- When you need to reach an agreement with someone who has different interests or goals: For example, you may need to negotiate a salary with a potential employer or a price with a potential seller.
- When you want to improve an existing relationship: For example, you may want to negotiate with a supplier to get a better price or with a customer to get a longer-term contract.
Common Negotiation Situations
Here are two common negotiation situations:
- Contract negotiation: Contract negotiation is the process of reaching an agreement on the terms of a contract. This type of negotiation often occurs in a business setting.
- Dispute resolution: Dispute resolution negotiation is the process of reaching an agreement to resolve a conflict. This type of negotiation can occur in a variety of settings, including personal relationships, business relationships, and legal proceedings.
Desired Outcome
The desired outcome of a negotiation is the agreement that you hope to reach with the other party. This agreement should be in line with your organization's goals and objectives.
Importance of Identifying the Organization's Goals and Objectives
It is important to identify your organization's goals and objectives before entering into any negotiation. This will help you to focus on what is important and to avoid making concessions that are not in line with your organization's best interests.
Most Desirable Outcome (MDO)
The most desirable outcome (MDO) is the best possible outcome that you could hope to achieve in a negotiation. It is important to be realistic about your MDO, but it is also important to aim high.
Conclusion
Negotiation is an important skill that can be used in a variety of situations. By understanding the purpose of negotiation, the characteristics of negotiations, and the importance of identifying your organization's goals and objectives, you can increase your chances of achieving a successful outcome in your negotiations.
Here are some additional thoughts on the purpose and characteristics of negotiations:
- Negotiations are not always about winning or losing. It is important to remember that the goal of negotiation is to reach an agreement that is acceptable to all parties involved. This may mean that you have to make some concessions, but it is important to make sure that the agreement is in line with your organization's best interests.
- Negotiations can be a complex and time-consuming process. It is important to be patient and persistent. Don't be afraid to walk away from a negotiation if you are not able to reach an agreement that is acceptable to you.
- It is important to build trust with the other party. This will help to create a more positive and productive negotiating environment.
- It is important to be prepared for negotiations. This means doing your research and developing a strong negotiating strategy.
Here are some examples of desired outcomes in a negotiation with XYZ Plastics:
- A lower price for the critical component that you need
- A longer-term contract
- A more flexible delivery schedule
- Improved quality standards
- A commitment to sustainability
Here are some tips for identifying your organization's goals and objectives for the negotiation:
- Start by brainstorming a list of all the things that you want to achieve in the negotiation.
- Prioritize your goals and objectives.
- Identify the minimum that you are willing to accept.
- Be realistic about your goals and objectives.
**The most desirable outcome (MDO) in the negotiation with XYZ Plastics would be to reach a long-term contract for the
Sample Answer
Negotiation is a process of communication and discussion between two or more parties who have different interests or goals. The purpose of negotiation is to reach an agreement that is acceptable to all parties involved.
Characteristics of Negotiations
Negotiations can be characterized by the following:
- Two or more parties: Negotiations involve at least two parties, each with their own interests and goals.
- Different interests or goals: The parties involved in a negotiation typically have different interests or goals. This is what drives the negotiation process.