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PURCHASING PRINCIPLE AND LAW

Home PURCHASING PRINCIPLE AND LAW

 Executive Summary

In case of this organisational operation, the qualitative paradigms play an effective role for their business performance and expansion in UK market. The researcher has chosen Maval as a designated company for this report. In this process, preparation includes technical procedures of concerning organisation, on the other hand, planning includes, gathering fund, prepare business strategy and pricing of product. A good negotiation helps Maval to develop better relationship among business partners which provides lasting as well as quality solution. Leadership and management, both are important for business conduction and they are also relevant in product development. Therefore company should maintain their production line always efficient and keep their product quality same.

Table of Contents

Introduction. 3

Commercial option for production. 3

Negotiation inventory as evidence. 6

Pre-negotiation plan. 8

Justification of negotiation team in UK.. 11

Conclusion. 12

Reference List 13

Appendices. 15

Appendix A: Negotiation inventory. 15

Introduction

This assignment aims to focus on negotiation and teamwork of an electromechanical organisation. In this regard, this assignment has chosen Maval Electrical and Mechanical Engineering Co Ltd, a UK based electromechanical company. Negotiation is an important paradigm for any organisation to conduct their business. It is an important tool of bargaining approach which infuses dealing between two parties who gain profit. In context of bargaining and negotiation a clear communication has been placed with effective teamwork.

Commercial option for production

This report has focused on evaluating business operation and negotiation in UK market. In order to conduct this research, researcher has conducted PESTLE Analysis of UK which has justified for choosing UK as research market of conducting its research.

Factors

Effect

Impact

Political

●      Corporate tax rate in UK market is 19%.

●      Nature of UK market is stable and entrepreneur oriented (Golsing et al. 2015: 205-206).

●      £ 0.011 currency rate of UK is effective for business conduction in UK market.

 Positive

Economical

●      G.D.P. of UK has witnessed 1.8% change which adversely affected market.

●      Brexit has brought a major surge in UK economy.

Negative

Socio cultural

●      U.K. consumes a total population of 6.6,000,000.

●      UK possesses mortality rate of 0.92%.

●      Mean age in UK is 38.

Positive

Technological

●      UK market has witnessed a technical growth of 4.5%.

Positive

Legal

●      Employee Rights Act 1996.

●      National Minimum Wage Act 1998.

●      Equality Act 2008.

Positive

Environmental

●      Pollution Act (1990)

●      Pollution, Prevention and Control (IPPC) regulations and directives (1996).

 

Positive

Table 1: PESTLE Analysis of UK

(Source: Given by researcher)

Researcher has conducted a PESTLE Analysis to understand opportunities in UK market for expansion of any business. This analysis has shown aspects and variables in UK market which is important to justify scope and analysis of markets in UK depends upon different political, social and economic attributes.

Political: Political variables are important paradigm for any country as well as market for business expansion. In case of UK market corporate tax rate is 19% fort business officials. Business expansion depends on different corporate tax rate. Therefore, 19% corporate tax rate indicates financial effectiveness for business expansion. Nature of electromechanical market is an important political factor for any organisation to expand their business. In this context, UK market can be said as stable and effective for entrepreneurship (Golsing et al. 2015: 205-206). This also can be said as an important instrument for business houses to maintain their business operation. Currency rate is another important factor for business conduction. Fluctuation of currency rate makes an impact on revenue generation of a company. Political factors in any country can often create turbulence in legal, social and political framework of a country as well as business institution. UK market has witnessed £ 0.011 currency rate which is important for any business house for their business expansion. These factors play effective role for Maval by infusing low corporate tax rate to profitable outcomes. This organisation conducts their business in electro mechanical business field. Therefore, it is important for them to gain profitable outcome for investing into their next technical venture.

Economical: Economical parameters play a role of insulator in any market for business operation. This research has been based on UK market and PESTLE analysis has also been done on this market context. G.D.P. is a prime factor for any organisation to conduct their business. There is a change in G.D.P. by 1.8% that affects taxation. Brexit leads to UK government to exit from the economical supporting ethics of European Union. Brexit is an important factor which makes adverse impact on business organisations who conduct their operation in UK market owing to exit of Great Britain from European Financial Organisation. Maval may witness a down surge in their profit margin owing to the threats presented by economic conflicts and Brexit controversies.

Socio-Cultural: Socio-cultural aspects are important feature of any country which makes severe influence on business operation in concerning market. The researcher has pointed out socio cultural effectiveness in UK market that his helpful for an organisation to expand their business. UK acquires a population base of 6.6,000,000 which is important for any organisation to maintain their employee and client base (Thomas et al. 2016: 146-147). It is also significant that UK market consumes a mortality rate of 0.92% that indicates good life span of inhabitants with an effective manner of standard. Mean age of UK is 38, which is also significant for business organisations to maintain their employee and customer base. Mean age of 38 refers to existence of young people who are efficient to perform their task in engineering organisation like Maval Electrical and Mechanical Engineering Co Ltd.

Technological: Technological factor is a key thing for business operation of any organisation in referring market. In the context of UK market, it has been witnessed 4.5% growth in technical field which is important business organisation to conduct their business (Jeretina, 2018: 50-51). This research has taken Maval Electrical and Mechanical Engineering Co Ltd which is an electro mechanical organisation, needs technical advancement. The aforementioned growth rate can thus liberate the risks that are prone to hinder the rate of internal processes of a new entrant in the market.

Legal: Legal framework is an important factor of any market to expand their business. In the context of UK market, there are some legal regulations, proclaimed by UK government that helps business organisations to expand their business. Employee Act 1996 provided an effective framework on employee retention of business organisations. National Minimum Wages Act 1998 prescribes a wage framework for business companies. Equality Act 2008 coursed equality in workforce that is important for any organisation to conduct their business (Gillard et al. 2015: 683-684). In this manner, Mavel officials follow those effective guidelines to perform their business operation.

Environmental: Environmental factors are important for any organisation to expand their business. In above mentioned PESTLE table Pollution Act 1990 emphasizes on maintaining CSR policy of Mavel according to directives of IPPC (Pollution, Prevention and Control)

Negotiation inventory as evidence

In order to do businesses with consumers marketing managers have to negotiate well with them to increase productivity of Maval Electrical and Mechanical Engineering Co Ltd. There are various kinds of ways to negotiate in this highly competitive market. In this segment researcher will discuss some negotiation strategies.

Figure 1: Steps of negotiation

(Source: De Mascia, 2016: 77-81)

  • Lack of compromise while negotiation: Solid communication is maintained by marketing managers of Maval organisation from starting of any negotiation. Managers believe that this negotiation helps organisation in future negotiation. According to Kennedy, (2017: 65-69) being attentive as well as responsive towards any serious issues can build a good relationship with suppliers of products. This has a good effect in efficient product delivery which helps organisation to stay ahead in competition.
  • Researching actual cost of product: researching actual cost of product helps authority of Maval to understand market value of a product. It also helps to understand the dealing price of consumers. As stated by De Mascia, (2016: 77-81) after knowing actual price of a product helps to negotiate with consumers in an efficient way. Figuring out actual price of a product also helps to understand demand of that product in this market.
  • Understand dream of supplier: higher authorities of this electrical and mechanical organisation has to think like supplier in order to increase efficiency in product supply. Supplier want to sell their products as much and as fast as possible. Therefore organisation has to maintain availability of product which helps to maintain rate of supply of product. As stated by Gertner & Villar (2016: 35-39) Company also has to keep track of resources in order to maintain a target of supply. Suppliers keeps doing job with a company when they find good market of that company product. Therefore company should maintain their production line always efficient and keep their product quality same. Trust and credibility between suppliers and organisation play role of determinant in terms of business partnership and rate of favourable products.
  • Discovering areas of mutual gain: Maval spend quality time to understand main goals of suppliers in order to increase mutual gains on agreement. As an example, if suppliers of Maval product would not budge on price of those products then company managers should focus on other relevant areas of their partnership agreement (Gosling et al. 2015: 203-218). That could be down payment method or scope as well as length of warranty or an attractive amount of discount if anyone buys those products in bulk. In addition to that, managers can focus on other negotiation part for achieving benefits for both Maval and its suppliers.
  • Quote multiple suppliers: one of the best ways to do business is to get quoted by various suppliers. If one supplier know that Maval has other suppliers in option to deal with then it can create a competitive market for all suppliers. This can deliver effective as well as efficient product delivery to customers. It also helps Maval to create competitive pricing. Leadership and management, both are important for business conduction and they are also relevant in product development.
  • Playing high or low quality game: Maval do their research on market and also have a target price amount that company want to pay. Maval deal their suppliers that they want to sell high quality of products with reasonable price. Also Maval want to sell their products in cheaper price which helps to create a good and efficient market for Maval. This company also sets reasonable price for their products which is quite tough to beat and this helps this organisation to stay ahead in competition.
  • Reference company customers: In order to get information about customers Maval use their suppliers’ resources. Higher authority of this company ask their suppliers to provide a list of customers and a reference list of type of products that customer mainly intend to buy (Thomas et al. 2016: 145-150). It has been noticed that customers like to talk about those products that they want to buy. Customers also share their product prices with other people if they are happy with pricing of those products.
  • Available of deposits: in order to create a grasp with suppliers of Maval products, higher authority of this company is willing to make a deposit of 60 to 70%. This organisation believes that higher this deposit go, more negotiation power will organisation get in overall rate. It is noticed that suppliers’ main concern is getting paid within time. Therefore, Maval convince their suppliers that they will get paid in time and also shows other ways that they are efficient to work with. This gives Maval leverage to negotiate effectively as well as efficiently.
  • Want the product least: in most of its negotiation, Maval wants to deal with those persons who want it least as authority believes that it makes deal better. This organisation always wants their backup suppliers ready in case of any deadlock took place in market (Zipperer et al. 2017: 123-127). This backup supplies strategy provides a peace of mind to higher authority of this company and also helps to negotiate with stakeholders’ effective way. However, Maval also do not think twice to walk away from any negotiation that is not providing any profit to organisation.
  • Help suppliers to save money: Maval treat their suppliers as a partner in business which is a critical part in business success. Marketing managers of Maval finds out various possible ways to efficiently work with suppliers. Organisation tries to save suppliers money from their vendors by effective negotiation and also try to save their time by order. Managers of Maval try to understand business model to take order in efficient way that helps to lower overall costs of products.
  • Pass the authority: Negotiators of Maval ask their suppliers if they are able to take any decision which they need to make in any context. This provides a challenge to those suppliers to utilize limits that are in their authority. In addition this, Maval also makes sure that every suppliers know that they are not the only one with whom Maval is working to deliver their electrical or mechanical products. [Refer to appendix A]

Pre-negotiation plan

There are five steps of negotiation process, among which two primitive steps are Preparation and Planning that are being included as a part of pre negotiation plan. It has been mentioned earlier that Maval Electronics and Mechanical Engineering Co Ltd is a technical organisation that conducts business in UK market (Thomas et al. 2016: 146-147). Therefore, a pre-negotiation plan is important for them to prepare a plan for pre negotiation. In this context, pre-negotiation plan includes documentations of technical production, business strategy and pricing issues that are being composed by officials of Maval. A good negotiation helps Maval to develop better relationship among business partners which provides lasting as well as quality solution.

Figure 2: Pre-negotiation phases

(Source: Given by researcher)

Preparation: Preparation is a core segment of pre-negotiation plan in Maval Electrical and Mechanical Engineering Co Ltd. Preparation includes technical planning and up gradation of concerning organisation. It has been mentioned earlier that this organisation conduct their business in technical sector of UK by producing electrical and mechanical installations. Therefore, making a pre-negotiation plan to negotiate with commercial buyers is important for Maval officials. In order to produce concerning products, an organisation has to maintain their technical preparation by observing customer’s demand and market orientation (Zipper et al. 2017: 25-26). It is important for a technical organisation to maintain their product development and it has also been mentioned in PESTLE table that UK market has witnessed 4.5% technical growth. This trend is helpful for Maval Electrical and Mechanical Engineering Co. Ltd to prepare their technical strategy to maintain product generation.

Research and Development: Research and Development wing of concerning organisation plays an important part of their technical planning. Maval officials instruct this wing of their organisation to observe market policy and technical up gradation in market by their competitors. This department is also accountable for observing market strategy followed by other organisations and situational demand of clients. It is important for concerning organisation to manage adequate funding for their production management (Genoese et al. 2016: 34-35). Therefore, it is duty of production and development wing to attract their stakeholders to invest in production. In order to maintain product development of concerning organisation, Maval officials maintain their leadership strategies and management styles according to improve product generation and development.

Planning: Planning is an important part of pre-negotiation plan that has been adopted by Maval Electrical and Mechanical Engineering Co Ltd. Planning includes business strategies, fundraising mechanisation of product and pricing. In order to evaluate business strategies that are being followed by Maval Electrical and Mechanical Engineering Co Ltd, commercial buyers have focused on their product generation and market operation. In order to emancipate a new business strategy Maval officials focus on market feedback and customer’s demand. It has been mentioned that this organisation produces engineering installations; therefore, it is important for them to observe market to negotiate about their products and business strategies (Grubb & Drummond, 2018: 78-79). Officials of concerning organisation make awareness campaign about their product by advertisements in media and social networking. In order to develop their business policy, this organisation maintains Pollution Act 1990 for maintaining their business strategy.

Fundraising: Fundraising is another important segment for Maval Electrical and Mechanical Engineering Co Ltd. It is important for Maval in case of negotiating with commercial buyers, to make an organisational pre-negotiation plan to introduce effective fundraising for business operation. Concerning organisation raise their fund by using two type of fund raising instrument. Officials of Maval encourage their stakeholders to invest into their organisational operations. In order to attract them, they promulgate different type of business development products and business strategies that are reliable to stakeholders for getting profitable outcome.

Figure 3: Fundraising pyramid

(Source: Jeretina, 2018: 67-68)

 On the other hand, Maval officials get loan from banks to arrange adequate funding for their re-negotiation planning. However, this tool is not in effect due to Brexit that insulates economic condition of UK in a turmoil situation. Adequate funding is an important tool to negotiate in business sector (Jeretina 2018: 67-68). Therefore, it can be said that fund raising has a significant value in pre-negotiation planning of Maval.

Mechanisation: Mechanisation has a different segregation in business operation circulated by Maval Electrical and Mechanical Engineering Co Ltd. It has been mentioned earlier that this organisation produces engineering installations that are important for household purpose as well as official uses. There are other organisations in UK like; Bishopsgate Logistics and Universal Business Installations. In case of negotiation, Maval often negotiate with their mentioned competitors to perform their business in a smooth manner. However, in case of individual business Maval officials need a strong base of commercialisation. Advertisements play a vital role in the context of commercialisation of their products. They circulate advertisements in social media platforms and conduct awareness about effectiveness about their product. In case of engineering appliances, impacts on health and environment are an important variable (Mendez-Para et al. 2016: 68-69). Therefore, Maval officials focus on their business policy of commercialisation based on environmental friendliness.

Pricing: Pricing is another important aspect for a business organisation in UK market. It is also important for pre-negotiation plan in Maval Electrical and Mechanical Engineering Co Ltd. In the competitive market of UK it is important for an organisation to control their price to make goodwill in business consideration. It has been mentioned above that, there are many business competitors of Maval operate their business in UK market like; Bishops gate Logistics and Universal Business Installations. Pricing is an important parameter to attract customers towards business operation of Maval (Eubanks et al. 2016: 560-561). However, it is important for commercial buyers to negotiate about pricing of concerning organisational product.

Justification of negotiation team in UK  

 Negotiation is an important process where two or more parties who are doing business with various needs and goals discuss issues. This negotiation helps to find a solution that is mutually accepted and everyone in that negotiation stay happy after final discussion (Genoese et al. 2016: 133-135). In electrical and mechanical business negotiation is highly important in both informal interaction with business partners as well as formal interaction such as lease, creating an effective negotiation condition for selling of products and formation of other legal contracts. A proper negotiation provides noticeable success in business of Maval. Quality negotiation helps create effective solution rather than short term solutions that cannot satisfy any of the business partners. Additionally, this helps Maval to avoid problems and potential conflict that can develop in future which has an adverse affect on business (Jeretina, 2018: 45-67). Negotiation among business partners needs gives and takes as organisation is aiming to develop constructive interaction that can leads to a successful situation for both parties.

  • An ideal negotiation in this UK based company is where managers and other higher authorities make compromises that are little for Maval whereas this little compromise means lot to other business partners.
  • Teamwork is an important factor of negotiation with commercial buyers of Maval Electrical and Mechanical Engineering Co Ltd. In order to justify negotiation of teamwork of Maval, in UK market, it is important for circulating an effective communication.
  • Communication is an important method for concerning organisational employees to negotiate with Bishops gate Logistics and Universal Business Installations. Maval team of negotiation often makes a deal with them to perform business in stable market of UK (Gillard et al. 2015: 684-685).
  • Total population of UK consisted to 6.6 million people that make an effective business of engineering appliances and installations. In order to serve this population base, Maval team negotiate with their competitors in case of separate business communication or joint venture.
  • Negotiation team of Maval observes different policies and marketing needs that are being followed by their competitors and negotiate with their commercial buyers. These policies adhere to Negotiable Instruments Act

Negotiation team of Maval is also accountable for maintaining legal operations and negotiations. Officials appoint solicitors in their negotiation team to conduct any negotiation with their competitors and commercial buyers (Amiri et al. 2018: 307-308). This team of negotiation, instructed by Maval officials for conducting their business plays important role to negotiate with both their internal and external stakeholders. Internal stakeholders of this concern are important to raise their funds, whereas external stakeholders, commonly known as customers are important to business negotiation and operation.

Conclusion

In this report different negotiation tools and plans are discussed to execute effective negotiation. In order to make this report, a researcher has chosen an UK based electrical and mechanical organisation named Maval. A PESTLE analysis has been done on UK market to understand customers’ interests and overall negotiation strategies in market. In this process, preparation includes technical procedures of concerning organisation, on the other hand, planning includes, gathering fund, prepare business strategy and pricing of product. After that, pre negotiation plans are developed. From this report it can be concluded that, negotiation is highly effective tool in business while dealing with commercial buyers and other external stakeholders.

Reference List

Books

De Mascia, S. (2016) Project psychology: using psychological models and techniques to create a successful project. Abingdon: Routledge.

Gertner, A. V., & Villar, A. (2016) Autonomy and Negotiation in Foreign Policy. Basingstoke: Palgrave Macmillan.

Kennedy, G. (2017) Strategic negotiation. Abindon: Routledge.

Journals

Eubanks, D. L., Palanski, M., Olabisi, J., Joinson, A., & Dove, J. (2016) Team dynamics in virtual, partially distributed teams: Optimal role fulfillment. Computers in human behavior61, 556-568.

Genoese, F., Drabik, E., & Egenhofer, C. (2016) The EU power sector needs long-term price signals. CEPS Special Report, (135)

Gillard, S., Holley, J., Gibson, S., Larsen, J., Lucock, M., Oborn, E., ... & Stamou, E. (2015) Introducing new peer worker roles into mental health services in England: comparative case study research across a range of organisational contexts. Administration and Policy in Mental Health and Mental Health Services Research42(6), 682-694.

Gosling, J., Towill, D. R., Naim, M. M., & Dainty, A. R. (2015) Principles for the design and operation of engineer-to-order supply chains in the construction sector. Production Planning & Control26(3), 203-218.

Grubb, M., & Drummond, P. (2018) UK Industrial Electricity Prices: Competitiveness in a low carbon world. UCL Institute of Sustainable Resources, www. ucl. ac. uk/bartlett/sustainable.

Jeretina, U. (2018) Consumer Online Dispute Resolution (ODR)–A Mechanism for Innovative E-governance in EU. Central European Public Administration Review16(2), 45-67.

Mendez-Parra, M., te Velde, D. W., & Winters, L. A. (2016) The impact of the UK's post-Brexit trade policy on development.

Thomas, J. M., Kappil, J. J., Peter, K., Krishna, N. A., Vijayakumar, V., Thomas, J. M., ... & Vijayakumar, V. (2016) Design and Fabrication of Electro Mechanical Ladder. International Journal2, 145-150.

Zipperer, V., Sato, M., & Neuhoff, K. (2017) Benchmarks for emissions trading–general principles for emissions scope.

Online Article

Amiri, I. S., Ariannejad, M. M., Vigneswaran, D., Lim, C. S., & Yupapin, P. (2018) Performances and procedures modules in micro electro mechanical system packaging technologies. Results in Physics11, 306-314. [online] Available from https://www.sciencedirect.com/science/article/pii/S2211379718316103 [accessed on 15th February 2019]

McDonagh, S., Wall, D. M., Deane, P., & Murphy, J. D. (2019) The effect of electricity markets, and renewable electricity penetration, on the levelised cost of energy of an advanced electro-fuel system incorporating carbon capture and utilisation. Renewable energy131, 364-371. [online] Available from https://www.sciencedirect.com/science/article/pii/S0960148118308553 [accessed on 15th February 2019]

Riasudeen, S., & Fernandez, C. R. (2017) Negotiation and its complexities: A case study of public sector negotiation with vendors. Asian Journal of Management Cases14(2), 88-93. [online] Available from https://journals.sagepub.com/doi/abs/10.1177/0972820117712328 [accessed on 15th February 2019]

Sanchez-Graells, A. (2015) Public procurement and the EU competition rules. [online] Available from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2561196 [accessed on 15th February 2019]

Website

Maval Electrical and Mechanical Engineering Co Ltd (2019), Maval Co.Ltd. About Us, Retrieved from http://www.maval.co.uk/about-us/

Appendices

Appendix A: Negotiation inventory

How likely are you to do each of the following when NEGOTIATING?

 

Very Unlikely

 

 

Unlikely

Neither Likely nor Unlikely

 

 

Likely

 

Very Likely

1.     I’ll come up with a plan so that I can steer the negotiation to go my way.

 

 

 

 

2.     I’ll do things expressly to make sure that the negotiation stays friendly and comfortable.

 

 

 

 

3.     I’ll go out of my way to make sure that the outcome for the other person is fair.

 

 

 

 

4.     I’ll do things so that both of us can get what we want from the negotiation.

 

 

 

 

5.     If something needs to be negotiated, I’ll immediately step forward to do it.

 

 

 

 

6.     I’ll give some in order to get some from the person I’m negotiating with.

 

 

 

 

7.     If the negotiation is not going my way, I’ll bail out of the negotiation.

 

 

 

 

8.     I’ll suggest creative solutions that allow both of us to get what we want from the negotiation.

 

 

 

 

9.     If it seems important for the other person to come out on top, I’ll give in to them.

 

 

 

 

10.  I’ll avoid difficult issues to keep the negotiation from getting nasty.

 

 

 

 

11.  If the other person compromises their position, I’ll compromise my position in return.

 

 

 

 

12.  I’ll make sure that both of our needs are understood so that both of us can come out on top.

 

 

 

 

13.  I’ll present information, when negotiating, even if it doesn’t necessarily always support my position.

 

 

 

 

14.  I’ll propose a place in the middle where we both can meet.

 

 

 

 

15.  I’ll try to see things from the other person’s viewpoint and be considerate of their needs.

 

 

 

 

 

Rate your level of agreement with each of these statements.

 

Strongly Agree

 

 

Agree

Neither Agree nor Disagree

 

 

Disagree

 

Strongly Disagree

16.  In every negotiation, both sides have to give something up to get something in return.

 

 

 

 

17.  What’s good for me is really all that matters when negotiating.

 

 

 

 

18.  I’ll do almost anything to keep from having to engage in negotiation.

 

 

 

 

19.  In negotiating, someone wins and someone has to lose.

 

 

 

 

20.  The feelings of the other person that I’m negotiating with are important to me.

 

 

 

 

21.  Negotiation works better when the focus is on common agreement rather than differences.

 

 

 

 

22.  I can be aggressive when it comes to getting my way from a negotiation.

 

 

 

 

23.  When you compromise in a negotiation, you really just lose.

 

 

 

 

24.  If the other person gets a “raw deal” from our negotiation, that really doesn’t matter to me.

 

 

 

 

25.  Keeping the comfort level high is very important to me when I’m negotiating.

 

 

 

 

(Source: Given by Researcher)

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