Page 93 ANSWER QUESTION 3 Negotiation is among the vital skills in managing the procurement process. Without the proper skills, negotiations may fail. Rundingan adalah antara peranan yang penting dalam menguruskan proses perolehan. Tanpa kemahiran yang betul, rundingan mungkin gagal. (a) Explain THREE (3) purposes of negotiation. Jelaskan TIGA (3) tujuan rundingan [7 marks] Answer 3a) 1.A Negotiation Mindset is Beneficial with Everyone from Clients to Employees While the ability to negotiate is certainly an important part of boardroom meetings and hammering out contracts, the benefits actually extend far beyond those betterknown applications. For example, negotiation skills can be invaluable when discussing the responsibilities an employee or new hire will have, and can ensure that both parties understand exactly what is expected of the other. 2.Creates Win-Win Situations Contrary to what some believe, negotiation skills are not about beating the opposition out of the other party. In fact, the best negotiators are ones who are able to create winwin situations, in which everyone walks out thinking that the deal is a good one. While the ability to aggressively get what one wants might seem like a victory in the moment, the reality is that the lack of goodwill generated by this can cause problems down the road.There is no question that finding a deal which makes everyone happy is difficult, but this is exactly why it is so highly valued. 3. Good Negotiating can Improve your Bottom Line Ultimately, the goal of a negotiation is to get the best deal possible for you and your organization. In doing so, you are by definition improving your bottom line. For example, if you are able to reduce your overhead by 10% due to an effective negotiation, that money goes straight to your profit margin.
Page 94 ANSWER (b) List the stages in the negotiation process Jelaskan langkah-langkah dalam proses rundingan [10 marks] Answer 3b) 1.Identify the main supplier you want to negotiate terms with. 2. Identify a second option, in the event that you and your first choice cannot reach an acceptable agreement. 3. Form your negotiation team. Consider the skills and experience required for this particular supplier. Ideally, you’ll have a team based on facilitation skills, experience as a negotiator, technical/subject matter expert, legal support, and financial analysis skills. 4.Agree on the roles people on the team will take. Determine who will lead the negotiations and facilitate discussion. Determine who will track concessions and points on the agreement. 5.Check that the team has the authority to negotiate, agree on the contractual terms, and commit your organization to sign a contract. Get the authority recorded in writing. 6.Determine the location and format of your negotiations. Will they take place in person, over the phone, or via video chat? 7.Invite the main supplier to negotiate terms. Determine who the principal negotiator is. 8.Insist the supplier assigns a negotiator who has decision-making authority. 9.Gauge your leverage with the supplier. How does the supply view you and the potential deal? What’s the supplier’s position in the market? What about the company culture and style? What are their goals, needs, and pressures? 10.Determine your goals, issues, and pressures. Consider the type of supplier relationship you’re looking for, and the timeframes you need to be met. Are you looking for a short-term transactional relationship or a long-term relationship that’s collaborative? This information will help you determine your approach.
Page 95 ANSWER (c) Discuss FOUR (4) benefits of negotiation Terangkan EMPAT(4) faedah-faedah dalam proses rundingan. [8 marks] Answer 3c) 1.It can prevent a conflict from escalating by using "preventive diplomacy" 2.It can open wide new areas of interests to both parties by expanding the “pie” 4.It saves trouble & money by resolving in a short period of time disputes 5.It improves communication maximizing the odds of a positive outcome 6.In court proceedings the judge decides. In negotiation the decision is in the hands of the parties. 7.It allows parties to tailor the decision to their own needs 8.It works just as effectively in complex and simple daily disputes 9.It can be used for resolving a dispute or making a deal
Page 96 ANSWER QUESTION 4 Cash discount, seasonal discount and trade discount are among the types of discounts offered in price determination process. Diskaun tunai, diskaun bermusim dan diskaun perdagangan adalah antara jenis diskaun yang ditawarkan dalam harga proses penentuan (a) Explain TWO (2) basic approaches to price determination Jelaskan DUA (2) pendekatan harga [8 marks] Answer 4a) 1.Negotiating a Price -Negotiation should be used when: The purchase involves a significant amount of money or requires an ongoing effort. In these situations, negotiation may be used in conjunction with a bid. -The number of suppliers available is too limited to create competition via a bid. New technologies or processes are required for which a selling price has yet to be determined. -The supplier is required to make a substantial financial investment or other resources. There is not enough time available to seek competitive bids. -When negotiating a price, it is important to consider all of the opportunities that exist. Find out as much as possible about the company. Be sure you understand your requirements fully and how these might affect prices. Investigate the costs associated with providing the service or materials you are requiring. -Develop your own strategy for the negotiation and try to anticipate the strategy of the supplier. Make sure the person you are negotiating with has the authority to make offers and commit the supplier. Finally, remember that a successful negotiation is a win-win for both parties. You must allow the supplier enough leeway to make supplying the goods or services attractive. 2.Competitive Bidding -When we discussed buyer behavior, we identified the stages that organizations go through to make a purchase decision. When it comes to pricing consideration, two of these stages are especially relevant: proposal solicitation and supplier selection. -These proposals are submitted to the buying organization, which will review them during the supplier-selection stage of the process. -During this stage the buyer completes a thorough review of the proposals submitted, scores the proposals, and often narrows down the list of vendors to the highest-scoring proposals. This short list is marked for “further negotiation, ” which may include negotiating product quantity, specifications, pricing, timing, delivery, and other terms of sale. This process is called a competitive bid process. -A competitive bid is a procurement process in which bids from competing suppliers are solicited. -The competitive bid process generally advertises the requirements and specifications of solutions and invites suppliers to provide a proposal about how they will meet the need and at what price. -Together, the steps of requesting proposals from multiple vendors, evaluating the proposals by comparing them against one another, and negotiating the terms constitute a competitive bid process.
Page 97 ANSWER (b) Illustrate using suitable examples FOUR (4) price analysis techniques in procurement Illustrasikan beserta contoh EMPAT (4) teknik analisis harga yang digunakan di dalam perolehan [10 marks] Answer 4b) 1.Comparison of Competitive Bids One of the best means for validating price. By asking three or more suppliers of their prices for the same product, we can determine if a particular price is reasonable. However, this does not preclude total cost analysis. The lowest bid may not always represent the lowest cost. The total cost of acquisition must be analyzed. There may be cost associated with making the lower cost product perform to standards, the additional cost of early replacement or the cost of redesign and/or testing required to make the lower cost product applicable. This "total cost of acquisition" is the real cost that must be compared. A brief statement as to why a particular quotation is selected is required. 2.Comparison of Prior Quotations In some circumstances, it may be most effective to compare recent (with the past 24 months) quotations for the same product or service to determine the viability of the current quotation. This is particularly helpful when timing of the acquisition is critical and solicitation of the competitive quotes would delay the procurement. An explanation of why comparison of prior quotations was used must accompany this procedure. 3.Comparison of Published Price List This method should only be used for materials that are sufficiently similar to items or services are available to the general public and whose price would appear in a published price list. However, when comparing these price lists, it is important to consider standard industry discounts for the items or services. As an example, most electrical supply houses will offer standard discounts to purchasers doing a particular dollar or quantity volume. Such discounts must be considered when comparing list prices and noted in the procurement documentation. 4. Prices Set by Law or Regulation Sometimes, prices are set by a law or regulation. When this occurs, there is usually a "pronouncement" of some form type that references the pricing structure. This must be referenced when procuring such items.
Page 98 ANSWER (b) Illustrate using suitable examples FOUR (4) price analysis techniques in procurement Illustrasikan beserta contoh EMPAT (4) teknik analisis harga yang digunakan di dalam perolehan [10 marks] Answer 4b) 1.Comparison of Competitive Bids One of the best means for validating price. By asking three or more suppliers of their prices for the same product, we can determine if a particular price is reasonable. However, this does not preclude total cost analysis. The lowest bid may not always represent the lowest cost. The total cost of acquisition must be analyzed. There may be cost associated with making the lower cost product perform to standards, the additional cost of early replacement or the cost of redesign and/or testing required to make the lower cost product applicable. This "total cost of acquisition" is the real cost that must be compared. A brief statement as to why a particular quotation is selected is required. 2.Comparison of Prior Quotations In some circumstances, it may be most effective to compare recent (with the past 24 months) quotations for the same product or service to determine the viability of the current quotation. This is particularly helpful when timing of the acquisition is critical and solicitation of the competitive quotes would delay the procurement. An explanation of why comparison of prior quotations was used must accompany this procedure. 3.Comparison of Published Price List This method should only be used for materials that are sufficiently similar to items or services are available to the general public and whose price would appear in a published price list. However, when comparing these price lists, it is important to consider standard industry discounts for the items or services. As an example, most electrical supply houses will offer standard discounts to purchasers doing a particular dollar or quantity volume. Such discounts must be considered when comparing list prices and noted in the procurement documentation. 4. Prices Set by Law or Regulation Sometimes, prices are set by a law or regulation. When this occurs, there is usually a "pronouncement" of some form type that references the pricing structure. This must be referenced when procuring such items.
Page 99 ANSWER (c ) Identify THREE (3) fundamental types of competition in the market under pricesetting strategy Kenalpasti TIGA (3) jenis asas persaingan dalam pasaran di bawah strategi penetapan harga [3 marks] Answer 4c) The three major and most common pricing strategies: Cost-Based Pricing. Value-Based Pricing. Competition-Based Pricing.