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THE ROLE OF NEGOTIATION IN PURCHASING AND CONTRACT MANAGEMENT (A CASE STUDY OF FAN MILK NIGERIA PLC, ELEYELE, IBADAN)

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    ABSTRACT

    A research cannot be carried out if there is no missing link or lacunars or it there is no question unanswered. Negotiation has been seriously dealt with in this research work to know it role on purchasing and contracts management to some unanswered question as to give answer.
    Chapter one familiarized us with the meaning of Negotiation, statement of problem, objective of the study, important of the study, limitations and constraints, Historical background of (Fan Milk Nigeria Plc, Ibadan), organization structure of Fan milk Nigeria Plc, Ibadan, research question etc.
    We can see in chapter two the series of literature we reviewed to know what the past authors have said about Negotiation. The theories under Negotiation skill were also reviewed.
    Chapter three and chapter four dealt with research methodology and data presentation and analysis respectively. Questionnaire was used to collect the primary data and researcher employed the use of table and simple percentage for the use of presentation and analysis. The hypothesis stated in chapter one was also put to test.
    The summary of our findings, recommendation and conclusion were done in chapter five (5).

     

     

    TABLE OF CONTENTS

    Title Page                                                                                          i

    Certification                                                                                      ii

    Dedication                                                                                        iii

    Acknowledgement                                                                           iv-v

    Abstract                                                                                            vi

    Table of Content                                                                               vii-viii

    List of tables                                                                                     ix-x

    CHAPTER ONE

    1.0     Introduction                                                                                      1

    1.1     Statement of Problems                                                            2

    1.2     Objective of the Study                                                             2-3

    1.3     Importance of the Study                                                                    3

    1.4     Limitations and Constraints                                                    3-4

    1.5     Historical Background of the Subject Matter                                    4-5

    1.6     Organization Structure/Chart of the Subject Matter                          5

    1.7     Research question/hypothesis                                                  5-6

     

    CHAPTER TWO

    2.0     Literature Review                                                                    7-8

    2.1     The Concept of Negotiation                                                    9

    2.2     What to Negotiate                                                                   9-10

    2.3     Preparing for Negotiation                                                        10-12

    2.4     Planning Negotiation                                                               12-15

    2.5     Tactics in Purchasing and Contract Management                    15-16

    2.6     Broad Objective of Negotiation                                                16-17

    2.7     Buyer-Seller Positions in Negotiation                                       17-18

    2.8     The Three Phases of Negotiation                                             18-26

    2.9     The roles of Negotiation in Purchasing                                   26

     

    CHAPTER THREE

    3.0     Research Methodology                                                                  27

    3.1     Research Setting (Design)                                                               27

    3.2     Research Population                                                                        27

    3.3     Sample Size                                                                                      28

    3.4     Research Sampling Method Used                                                     28

    3.5     Methods of Data Collect         ion                                                     28

    3.6     Method of Data Analysis                                                                  29

    3.7     Primary Sources of Data                                                                   29

    3.8     Secondary Sources of Data                                                              29

     

    CHAPTER FOUR

    4.0     Presentation, Interpretation and Analysis of Data                  30

    4.1     Data Presentation                                                                    30

    4.2     Data Analysis                                                                          30-43

     

    CHAPTER FIVE

    5.0     Summary of Findings, Conclusion and Recommendation       44

    5.1     Summary of Findings                                                                44-45

    5.2     Conclusion                                                                                45

    5.3     Recommendation                                                                      45

    REFERENCES                                                                              46-47

    APPENDIX                                                                                  48-49

     

     

    CHAPTER ONE

    INTRODUCTION

    Negotiation is a fact of life. Everyone negotiates something every day. Negotiation is a method by which people settle differences. Negotiation is one of the instruments employed by the buyer organization in order to reach a fair and reasonable price through sound discussion. Negotiation forms a substantial part of most purchasing officer or agent’s needs to be able to analyse and interpret information and be aware of danger involved  in any wrong decisions by the parties involved.

    It is also important to recognise that the main task of the purchasing manager in fulfilling and carrying out his operation of maintaining suppliers is negotiation. The purchasing manager is a specialist in satisfying the needs of the company by seeking suitable sources of supply and negotiating to secure the best terms and services possible. Negotiation involves two or more parties with the aim of reaching an agreement of their term dissemination. Whenever it is required or reconcile two or more differing opinions in order to initiate the action or continue in mutually agreed condition. It is very vital that all buying and selling transactions leave both parties satisfied and hence acceptance on any of the parties.

     

     

     

    1.1     STATEMENT OF PROBLEMS

    Negotiation is very important between buyers and sellers. This is because it improves buyer-seller relation.

    Unfortunately, negotiation is not effectively employed in some organizations.

    (a).    What are the causes of lack of skilled negotiation personnel?

    (b).    How can the negotiation situation of both the buyer and the seller affect the relative strength of both parties?

    (c).     Why is time pressure a problem faced in the course of negotiation?

    (d).    What are the unpredictable behaviours of the buyer which the supplier cannot satisfy, that later result into problem between both parties?

     

    1.2     OBJECTIVE OF THE STUDY

    The aims of this research work are to:

    (i).     Examine the roles of negotiation skills in purchasing and contract management of an organization.

    (ii).    Identify factors critical to successful bargaining.

    (iii).   Determine how to obtain a fair and reasonable price.

    (iv).   See how relevant negotiation network is to the buyer and the supplier as a whole.

    (v).    Determine how organizations can strategically select the best supplier that will help in linking them to target market

    (vi).   Examine how quality specification can be obtained or achieved.

     

    1.3     IMPORTANCE OF THE STUDY

    The research will enable the researcher to have broad knowledge of the role of negotiation in purchasing and contract management.

    The study will enhance the reputation of the case study (FanMilk). Engaging in this research will help build the company’s brand.

    The research would enable the future researchers to know what has been said about the problem, what researches in the area have been carried out and what contradictions there are in the chosen field. This is because good ideas are not left in a desk drawer; instead their economic potential are addressed and assessed.

    The outcome of this study will improve the economy, the effectiveness of public services and the quality of life of the society at large.

     

    1.4     LIMITATIONS AND CONSTRAINTS

    The researcher encountered many problems in the process of carrying out this study. The main problem was the collection of needed information in Fan Milk Plc. A lot of products had to be observed which served as a cog in the wheel of progress of the project.

    The researcher also faced series of financial challenges as the project work involved travelling from place to place for the collection of data and owing to the general economic hardship in the country, it was not easy achieving the needed result.

     

    1.5     HISTORICAL BACKGROUND OF FAN MILK PLC

    The company fan milk plc West Africa was founded in the mid 1950’s the Danish entrepreneur, and the diary production 3rd of June 1963 the first director of the company was Erick Enabory and founding members were Fredrick Clark, Lars Skansued, Williams hardy, and chief B.Olusola Olufemi.  Before the company is called fan milk the name was Ghana milk company ltd. In 1962 the fan logo was introduce to the company and the company become FAN MILK. Erick Enabory diary plan technique Denmark was carefully chosen to associate the nutritious fan milk produces with their cool refreshment value.

    The company with a modest diary, plant was located at Eleyele industrial layout, Ibadan but in space of it modest size with the most modern equipment in the market at the time of original range of diary product produced was limited to plan full cream, super yogo, fantastic yogo, chocolate, fan yogo, ice-cream both field and packed in the revolutionary and unorthodox triangle tetra pack which fan milk was the first company to introduce in west Africa.

     

     

     

    1.6     ORGANIZATION STRUCTURE/CHART OF THE SUBJECT MATTER

    The organization chart records lives of formal authority and responsibility and shows how functions are distributed within an organization (Lawal and Babrinde, 2005, Page 58).

     

    1.7     RESEARCH QUESTION/HYPOTHESIS

    The research attempts to give expression to the following hypothesis:

    HYPOTHESIS I.

    Ho: An effective negotiation does not help in the procurement of right quality of goods.

    Hi: An effective negotiation helps in the procurement of the right quality of goods.

    HYPOTHESIS II.

    Hi:- There is no proper and effective negotiation exercise done in manufacturing sub-sector.

    Ho:- There is proper and effective negotiation exercise done in manufacturing sub-sector.

    HYPOTHESIS III.

    Ho:- An effective negotiation does not have influence on the price quality and delivery time of the goods procured.

    Hi:- An effective negotiation has influence on price, quality and delivery time of the good procured.

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