Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Supply Chain Management > Lecture 7 - Negotiations > Flashcards

Lecture 7 - Negotiations Flashcards

1
Q

List examples where supplier negotiations have made firms profit.

A

Lloyds Bank saved £236m annually in procurement in 2012.

Birmingham City Council saved £36 million in 2009-2010.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What enables good contracting and negotiations?

A
  • Confidence in contracting organisation
  • Good staff/skill development
  • Early buyer and early supplier initiative
  • Understanding and working with your provider
  • Ensure risk is managed effectively
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Define negotiation

A

“The skilled use of the power parties have in a relationship to obtain what they perceive as the best possible outcome”

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What stages are involved in planning complex supply negotiations?

A

UNDERSTAND THE MARKET
Porters 5 Forces

UNDERSTAND COSTS

UNDERSTAND STAKEHOLDERS

GENERATE AND VALUE THE VARIABLES
- Warranty, quantity, price, deliverables, exclusivity, payment methods, training/development, future contracts.

UNDERSTAND HOW THE OTHER SIDE SEE YOU

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What factors determine the attractiveness of an organisation?

A
  • Blue chip
  • If they pay on time
  • Financially stable
  • Informed
  • Good planning
  • Transparent dealing
  • Market leader
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What does the size of impact on project and your attractiveness of organisation if you appear CORE to the other party?

A

High impact on project opportunity

High attractiveness of organisation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What does the size of impact on project and your attractiveness of organisation if you appear as a DEVELOPMENT OPPORTUNITY to the other party?

A

Low impact on project opportunity

High attractiveness of organisation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What does the size of impact on project and your attractiveness of organisation if you appear as a NUISANCE to the other party?

A

Low impact on project opportunity

Low attractiveness of organisation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What does the size of impact on project and your attractiveness of organisation if the other party want to EXPLOIT you?

A

High impact on project opportunity

Low attractiveness of organisation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is ZOPA?

A

Zone of Potential Agreement - if we create a zopa we can see whether it is worth going into business with this party.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is BATNA?

A

Best Alternative To Negotiated Agreement
Searching the market for an idea of price and specification before the negotiation to see where the next best alternative is, if the negotiation does not go your way.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is WATNA?

A

Worst Alternative To A Negotiated Agreement
The cost of walking away if we do not reach a final agreement.

It does not happen often where you have no alternative but as a buyer you must be aware of what the best alternatives are beyond this party (BATNA)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What are the 5 main tactics for negotiation?

A

USE POWER - who has the power, big firms?

INTIMIDATION - Use on firm not a person

SALAMI TACTIC - negotiate in thin slices

RE-ESCALATE DEMANDS - close to negotiation and then restart, puts party on the backfoot.

SET DEADLINES - set a timeframe

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What are the key elements of negotiation?

A

1) Testing understanding (9.7% s 4.1%)
2) Summarising (7.5% vs 4.2%)
3) Seeking information (21.3% vs 9.6%)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are Sebenius’ 6 mistakes of negotiation?

A

1) Neglect the other sides issues
2) Price over other elements
3) Searching too hard for common ground
4) Neglecting BATNA
5) Failing to correct skewed vision/wrong assumptions
6) Neglecting the culture effect

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What are the approaches to negotiation?

A 
Emotion
Bargaining
Threat
Logic
Compromise
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

How can a negotiator use emotion?

A
  • Be in control of emotion
  • Use from a sincerely held belief
  • Use sparingly
  • Use to increase perceived value
  • Use to counter logic (would you do that if you were me)
  • Give a feelings commentary
18
Q

How can a negotiator use bargaining?

A
  • Don’t expose position too early
  • Don’t put a marker down
  • Don’t seem too eager
  • Move in small steps
  • Get a return for any concession you make
  • Thank and bank (give and take)
  • Summarise often and move on
19
Q

How can a negotiator use logic?

A
  • Get your own logic in first
  • Keep to one powerful argument
  • Be credible
  • If other’s can’t see it, change track.
  • Counter logic with emotion, start with logic then move to emotion if no better option.
20
Q

How can a negotiator use threat?

A
  • Be slow to threaten
  • Threaten the business not the person
  • Use a discreet and veiled threat
  • Never threaten what you cannot execute
  • Add “if” to threat if bargaining
21
Q

How can a negotiator use compromise?

A

Last resort

  • Remember it is not always a 50/50 option
  • Let other party suggest as they probably move towards you
22
Q

What kind of terms and variables can be negotiated?

A
  • Specifications
  • Price
  • Quality criteria
  • Delivery dates
  • Acceptance criteria
  • Service level
  • Staffing (Training/development/pay)
  • Functionality
  • Support arrangements
  • Guaranteed performance
  • Work packages
23
Q

What are the 5 styles of negotiation?

A 
Accommodating
Avoiding
Collaborating
Competing
Compromising
24
Q

What is the accommodating negotiation style?

A

Individuals enjoy solving other party’s problems and preserving personal relationships.

  • Feel taken advantage of when other parties put little emphasis on relationship
  • Sensitive to emotional states, body language and verbal signs.
25
Q

What is the avoiding negotiation style?

A

Individuals do not like to negotiate and do not do so unless warranted.

  • Dodge confrontation
  • Perceived as tactful and diplomatic
26
Q

What is the collaborating negotiation style?

A

Individuals enjoy negotiating to solve tough problems in creative way, understanding the interests of the other party.

27
Q

What is the competing negotiation style?

A

Individuals who enjoy negotiations because they can present an opportunity to win something.

  • Strategic
  • Can dominate bargaining process
  • Often neglect importance of relationships
28
Q

What is the compromising negotiation style?

A

Individuals eager to close the deal by doing what is fair and equal for all parties involved.

  • Useful when there is limited time to complete the deal
  • Often unnecessarily rush the negotiation process and make concessions too quickly
29
Q

How does culture affect negotiations?

A

Contract vs relationship
Win/win vs win/lose
Personal style: formal vs informal
Sensitivity to time (VW in China 1986, did not appreciate Germans wanting fast results)

  • Do not always choose the best negotiator, choose the best culturally intelligent negotiator.
30
Q

What differences can cause problems in international business negotiations?

A
  • Language
  • Non-verbal behaviours
  • Value thinking
  • Decision-making processes
31
Q

Why should contracts be managed?

WHY ARE CONTRACTS GOOD TO MANAGE

A
  • Avoid loss of memory of the agreement
  • Avoid future arguments
  • Ensure obligations cannot be avoided
  • Provide transparency
32
Q

What is work transfer in contracts?

A

Defines the work one party will do for the other.

33
Q

What is risk transfer in contracts?

A

Defines how the risks inherent in the work will be allocated between the parties.

34
Q

What factors make complex contracts?

WHY ARE CONTRACTS BAD TO MANAGE

A
  • Bundling products and services
  • Public/private relationships
  • Customisation
  • # of future contingencies
  • Length of relationships
  • Contracting for unique/breakthrough projects
  • Government/market policy
35
Q

How should contracts be monitored?

A
  • Outline measurement requirements
  • Identify and involved key stakeholders
  • Describe specific activities for monitoring and control
  • Establish objective evaluation and review activities
  • Establish and identify key deliverables
  • Identify resource commitments
  • Assign responsibilities and authorities
36
Q

What needs to be monitored after writing a contract and reaching an agreement?

A
  • Schedules
  • Milestones
  • Budgets
  • Performance
  • Payments
37
Q

What are the principles for good contracting?

A

Transparency

Supplier involvement

Risk sharing

Long term view

38
Q

What are the advantages of contracts for suppliers?

A

Uncertainty reduction

Relationship leveraging

39
Q

What are the disadvantages of contracts for suppliers?

A

May be blocked from buying from others

Retailer complacency - lack of incentive for improvement

40
Q

What is an example of using bargaining negotiation?

A

Microsoft offering to bundle AOL into their operating system for free -> increased market share against Netscape in the long run as they were new to the market

41
Q

What is an example of using logic in negotiation?

A 
Frey Farms (retailer of watermelons) moving into Walmart in 1997.
Sarah Talley lead negotiator went in demonstrating the logic for achieving shared outcomes for both firms.

“Let’s work together and drive costs down and produce it so much cheaper you don’t have to replace me, because if you work with me I could do it better.”

42
Q

What is an example of compromise in negotiation?

A

Nepal-India water supply - Nepal has water rich supplies which meant it was able to negotiate better terms with India. Had no choice but to choose Nepal for water.

Supply Chain Management (9 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions