TABLE OF CONTENTS
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND
OF THE STUDY
1.2 STATEMENT
OF PROBLEMS
1.3 PURPOSE
OF STUDY
1.4 OBJECTIVE
OF THE STUDY
1.5 RESEARCH
QUESTION
1.6 STATEMENT
OF HYPOTHESIS
1.7 SCOPE
OF THE STUDY
1.8
DEFINITION OF TERMS
CHAPTER TWO
2.0 LITERATURE
REVIEW
2.2 DEFINITION
OF NEGOTIATION
2.2.1 PUBLISHED PRICE LISTS
2.2.2 COMPETITIVE BIDDING
2.2.3 COMPETITIVE BIDDING VERSE NEGOTIATION
2.3 OBJECTIVE
OF NEGOTIATION
2.4 WHEN
TO NEGOTIATE
2.5.1 PRICE ANALYSIS NEGOTIATION
2.5.2 COST ANALYSIS NEGOTIATION
2.5.3 SOLE SOURCE NEGOTIATION
2.5.4 COMPETITIVE NEGOTIATION
2.6 PLANNING
FOR NEGOTIATION
2.7 REACHING
NEGOTIATION OBJECTIVES
2.8 NEGOTIATION
STRATEGY
2.8.2 BUYERS BARGAINING
2.9 TACTICS/TECHNIQUES
NEGOTIATION
210 USE
OF NON - VERBAL SIGNAL NEGOTIATION
2.11 ATTRIBUTE
OF GOOD NEGOTIATOR
CHAPTER THREE
3.0 RESEARCH
METHODOLOGY
3.1 THE
RESEARCH DESIGN
3.2 THE
QUESTIONNAIRE DESIGN
3.3 SAMPLING
AND SELECTION OF RESPONDENTS
3.4 POPULATION
OF THE STUDY
3.5 OTHER
TECHNIQUES
3.5.1 SURVEY
3.5.2 OBSERVATION
3.6 DATA
SOURCES
3.7 DATA
ANALYSIS METHOD
CHAPTER FOUR
4.0 DATA
PRESENTATION AND ANALYSIS
4.1 DATA
PRESENTATION
4.2 TESTING
OF HYPOTHESIS USING SIMPLE PERCENTAGE
4.3 DISCUSSIONS
ON MAJOR FINDINGS
CHAPTER FIVE
5.0 SUMMARY,
RECOMMENDATION AND CONCLUSION
5.1 SUMMARY
5.2 CONCLUSION
5.3 LIMITATION
OF THE STUDY
5.4 RECOMMENDATION
REFERENCES
QUESTIONNAIRE
CHAPTER ONE
1.0 INTRODUCTION
The basic goal of any industrial
activity is the development and manufacture of products that can be marked at a
profit. This goal is accomplished by the appropriate blending of what many
management authorities call the five mis-machines, men, Material money and
management, material today are the life blood of industry. No industrial
organization can operate without them. They must be at the right time, in the
right quality, at the right quantity, at the right price, and at the right
place.
Whether in period of inflation, or
price stability or recession, obtaining materials at the right place can
literally mean the difference between a firm’s success and failure. Hence, the
right price is prime importance to every buyer and seller. Unfortunately no
single set of pricing principle or criteria exist for calculating precisely
what constitutes a fair and reasonable price. Therefore to obtain the right
prices, three basic methods can be used by buyers.
These are:-
a. Published price list
b. Competitive bidding
c. Negotiation.
When a buyer is not satisfied with
the price after using published price list and competitive binding in resort to
negotiation.
According to the chamber century
dictionary “negotiation means to confer the purpose of mutual agreement.
The Webster dictionary defines it as
“conferring discussing or bargaining to reach agreement in business
transaction.’ In industry “Negotiation” is sometime confused with happening and
dieseling while in government it is frequently visualized as a nefarious means
of avoiding competitive bidding and of awarding large contracts to favored
suppliers.
According to Oyeoku (1993)
Negotiation is just but a process whereby a representative of buying
organization and the selling organization attempt to reach precise agreement on
all terms and conditions which makes a contact come into being. it involve all
aspect of purchasing rationed discussion, conferring and bargaining on each
aspect and the arrival at a common understanding of what is the best in the
interest of both parties.
In successful negotiation both sides
win, the winnings are seldom equally divided. Invariably one side wins more
than the other. This is how it should be in business”. Negotiation is
particularly useful though not always fully successful, in dealing with seller
controlling multiple source that behave in a monopolistic manner, in cased
where cost are not reliable determine in advance, as in most research contracts
and in any contract for items that had never been made before there is no
alternative to negotiation.
The important of negotiation of
purchasing is that it is a method used especially were the time of purchasing
of materials is too short the money value involved is too low, the number of
bidders is made adequate, they are not willing to compete, specifications are
not clear but vague, the supplier is a monopolist, where all these situation
exist or prevail, the buyer has no alternative than to negotiate. Hence,
negotiation is a practical technique arriving at a price to pay for goods and
service.
On the other hand, materials
management is a total concept involving an organizational structure, unifying
into a single responsibility the systematic flow and control of materials from
identification of the reed through customer delivery. Through negotiation, the
materials functions of planning, scheduling, buying, stiring, moving and
distributing of material are met. The objective is to contribute to increase
profitability by co-operation of this function into a simple material
management department with no doubt result in the reduction of operating cost.
1.1. BACKGROUND OF THE STUDY
Mobile producing Nigeria united (MPN)
is the second largest oil producer in Nigeria. It started operation in the
country in 1955 as Mobil exploration.
In June 16, 1969, mobile producing
Nigeria limited (MPN).MPN began producing crude oil on February 15, 1970 in The
offshore area of the eastern region. The areas are now in Akwa Ibom state.
In February 1985, after 215v years of
production MPN hit ONE BILLION Barrel mark. Ten years latter, specifically in
may 1995, MPN made the TWO BILLION BARREL mark. In April 1991, MPN struck
another land mark when along with its joint venture partner, the NNPC, it
signed loan agreements for about 900 million us dollar with international
lenders to develop and produce its 800 field condensate reserves, estimate at
about 500 million barrels.
The company’s overall construction
towards the country’s economic and social development has followed closely in
the wake of its production growth. It was in recognition of this contribution
that it won together with its parents and sister companies. Mobile oil
cooperation and mobile Nigeria plc, the 1985 honor award of the Nigeria.,
America chamber of commerce. MPN was also the first cooperate citizen to win
the honor award of the society of occupational health physicians of Nigeria
(SOPNON).
In 1989, MPN won the energy press
award for making notable contributions to the growth of energy journalism in
Nigeria and for peace setting relationship with the media. NNPC mobile joint
ventures also assist in various community development project and participates
in the cultural life of the host community.
In 1993 MPN initiated the four year
community action programs for community and has enhanced the company’s
relationship with the communities. Mobile has contributed to the development of
human resources in Nigeria it currently. Award 450 scholarships annually to
Nigeria students studying in institution of higher learning.
1.2 STATEMENT OF PROBLEMS
Negotiation as an aspect of
purchasing is not given prime place. It is an attempt to look at the various
problems facing the purchasing department in purchasing the right quality
materials at the right price. In some of the organizations, their tactic has
given rise to a lot of problems. The negligence arises as a result.
LACK OF COMPETENT STAFF
For materials to be purchased at a
reasonable price there is need for competent staff who understands the various
methods of pricing. There is lack of good negotiation in this organization;
therefore, this reduces the success of negotiation.
EXTERNAL CIRCUMSTANCES
An external force also contributes
the problems of the purchasing department. These are political, economic and
social force.
UNRELIABLE SUPPLIERS
The reliability record level, this
poses problem to the purchasing department.
1.3 PURPOSE OF STUDY
The purpose of this research is to look
at
a. The different method of pricing
are published price list, competitive bidding and negotiation.
b. The importance of negotiation
against the other method of pricing.
c. The bargaining strategies used by
the industries and how effective they are used.
d. The effect of the non-used of
negotiation in the purchasing of goods.
1.4 OBJECTIVE OF THE STUDY
The objectives of the study are to
identify the different methods of pricing and by so doing state the importance
of negotiation as one of the means of arriving at a price to pay for goods and
services. It is also to high-light negotiation tactics and how effectively
negotiation is used in industries.
1.5 RESEARCH QUESTION
To test this assertion requires
collecting response from a group of question, bidden in various parts of the
questionnaire.
1. Do you think purchasing has a role
in the area of negotiation:
1. Is purchasing department a
separate entity or under a department.
2. If you have no purchasing what
department is responsible for purchasing.
3. Does your organization policy permit
the buyer in purchasing decision? ,
4. Can effective negotiation help in
the attainment of purchasing objectives?
1.6 STATEMENT OF HYPOTHESIS
Ho:
There is no significant relationship
between effective negotiation and the attainment of purchasing objectives
HA: There is significant relationship between
effective negotiation and the attainment of purchasing objectives.
1.7 SCOPE OF THE STUDY
This study is focused on MNL as a
case study and research on the importance of negotiation to purchasing and
materials, management. However, ideas are newspaper, notes, data collected from
the purchasing and supply department and from experience.
1.9
DEFINITION OF TERMS
ROLE: can be seen as a specific
function, the usual or expected function of something plays in an organization.
NEGOTIATION: Resolving of
disagreement, the reaching of agreement through discussion and compromise
especially in business affairs.
ATTAINING: Reaching a particular point or achieving a
particular goal.
PURCHASING: the ability to make purchasing according to
income and saving.
OBJECTIVES: the desired aims or goals of a particular entity
PROCUREMENT: this means buying of
materials, equipment etc that are used for production of finished goods.
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