Cost Analysis Negotiation and Concluding Remarks

Cost Analysis Negotiation

As was stated previously, price analysis negotiation is more commonly used than cost analysis negotiation. 

 

Cost analysis negotiation also referred to as ‘cost negotiation’ is steadily growing in use.

It has been used successfully for decade by large firms such as General Electric, Ford and Honda and in recent years it has been increasingly employed by small and medium-size firms.

 

Characteristics of a Successful Negotiatior

 

The characteristice of successful negotiations should now be clear.

 

These people are skillful individual’s with broad business experience.

 

They have a good working knowledge of all the primary functions of business, and they know how to use the tools of management, accounting, human relations, economics, business law, and quantitative analysis.

 

  1. 1.      all realize that specialized training and practice are required for an individual to become an effective negotiator.  Although some people have stronger verbal aptitudes than others, no one is born with negotiating knowledge and skills.
  2. 2.      All habitually enter into negotiations with more demanding negotiation objectives than their counterparts, and generally they achieve them.
  3. 3.      All the pragmatic and flexible in their ability to deal with different negotiation techniques from “hardball” to “collaborative.”
  4. 4.      All are included, or are destined to become included, among an organization’s most highly valued professionals.
  5. 5.      All are good listeners.

 

Concluding Remarks

Negotiation is free enterprise as its very best!

When traditional negotiation (win-lose) are appropriate, negotiation pits the skills of determined buyers against those of equally determined sellers.  Both explore ways to achieve objectives that tend to maximize the self-interest of their organizations. In short, in such circumstances negotiation is a powerful supply management tool which competent professionas use to achieve maximum value at minimum cost.  By rewarding efficiency and pernalizing inefficiency, the negotiation process not only benefits the negotiating firms but benefits the nation’s economy as a whole.

 

The increasingly common collaborative approach to negotiations that is required with collaborative and alliance supply relationships substitutes a win-win approach for the more traditional transactional one.  With this approach, both parties are better off entering into the negotiated deal than they would be if they did not reach agreement.  This approach substitutes the expertise of the buying and selling firm’s representatives for the forces of marketplace competition.  Thus, costs must be driven to their lowest possible levels (without adversely affecting quality or service) to ensure the survival and success of the buyer and seller’s supply chain in the marketplace.