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IMPACT OF EFFICIENT NEGOTIATION IN PURCHASING FUNCTION IN MANUFACTURING COMPANY

CHAPTER ONE

INTRODUCTION

1.1 GENERAL OVERVIEW OF THE STUDY

Negotiation is seen as a vital element as well as one of the most interesting topic in purchasing and supply chain management. It applied in purchasing so as to arrive at a fair and reasonable business contract. Consequently, upon recent shortages of materials, high prices and galloping inflation, general unfriendly supply market as well as the get-rich quick syndrome of some supplied it will be suicidal for a business firm and indeed government agencies to ignore negotiation exercise in its purchasing activities making process of planning, reviewing and analyzing used by the buyer and seller to reach acceptable agreement or compromise on all aspects of the business transaction. (Lee In purchasing of material, some measures of trust exist between the buyer and the seller when negotiation begins identically, there would be equally of information on cost and estimates between parties involved, as a basis for negotiation, but this is rarely attained except in government’s research and development (R and D). The negotiation is thus usually a dialogue between the buyer and seller to produce a contract, which is at least acceptable to both parties.

1.1.1 BRIEF HISTORY OF THE COMPANY

The name of the company is Rokana Industries Plc Nekede and it as incorporated on September 1978 as a private limites liability company.  The nature of the business is manufacturing and it was founded by Engr. Charles Ugwu, a British trained industrialist/Engineer in 1978. The managing-Director is Chief Ekemma Geophry now while Engineer Charles Ugwu is the Chief Executive of the company. The factory is divided into three basic areas namely: Administration, Marketing/sales and promotion. It has a branch in Lagos as their registered street off 52 Ogundana street Allen Avenue Ikeja Lagos. Over 80% of the raw materials for the production of the product are imported. They also have sales outlets in Abuja, Kaduna, and Lagos. The company is hundred percent Nigerian owned while Union Bank Nigeria Plc own 40% shares of the company product produce. Rokana currently maintains four existing manufacturing units. 1. The Cosmetic Units: This unit undertakes the production of the tooth paste, baby-care cosmetics, skin lotions, cream and oiltment. 2. The Plastic Units: This unit produces tooth brush, dental stick, plastic folders, plagues for the Areosol production. 3. Aerosol Unit: This unit produces insecticide air fresheners, perfumes, furniture polish, deodrant etc. 4. The LPG Unit: This unit refills domestic cooking gas cylinder, provides unstauncheal gas,as propellant to the aerosol production line.

1.5 STATEMENT OF PROBLEM

Strictly, this project is a case study of the impact for efficient negotiation in purchasing function in manufacturing company at Rokana Industries Limited Nekede Owerri Imo State. The impact for efficient negotiation in purchasing function in manufacturing company can not be over stated. This is because when fairly in contract management result from poor negotiation.  The problem of the study therefore are as follow: 1. Firms or organization fair to see the element of pricing and negotiation as a vital element in contract management. 2. Most firms adopt the concept of I will” when you loose attitude this result into poor project execution. 3. Most people involving in purchasing of capital and mangement do not possess the right skill and knowledge of negotiation. 4. The economic situation of the country has serious effect on the quality of negotiation purchasing function in manufacturing company firm attempt. 5. There is no serious attempt on the part of firms to empower negotiation contract managers.

1.3 PURPOSE

In the light of the statement of problem this study aims at achieving the following objectives.

1. To create serious awareness in the mind of firms and their employees on these serious impact for effective contract negotiation, pricing and contract implementation.

2. To make people appreciate the importance of effective negotiation which emphasizes win-win negotiation.

3. To create the necessary awareness on the importance of empowering those who are involved in contract negotiation pricing and management through treating seminars etc.

4. To investigate the impact of the economic on contract negotiation pricing and execution.

5. To see whether negotiation contract management and pricing can be improved through empowerment.

6. To suggest other ways of improving negotiation contract pricing and management.

1.4 SCOPE OF THE STUDY

This study would have taking the researcher to all firms that are engaged in contract negotiation, pricing and management in Nigeria but for obvious reason the researcher is constraint to concentrate on the negotiation activities of Rokana industrial limited Owerri. The researcher beliefs that this would give her a fair situation position in other similar organizations. However, the researcher will concentrate on the following department or units within the organization:-

1. The cosmetic unit 

2. The plastic unit

3. The Aerosol unit 

4. The LPG unit

1.5 RESEARCH QUESTIONS

One important thing a researcher of this nature impact s to achieve is to provide the subject matter of the study. It therefore become necessary to formulate research questions on which the answer would be based and are as follows:

1. Are negotiation and pricing basic element of contract.

2. Is poor contract administration tractable to poor pricing and negotiation.

3. Does your organization attach importance in carrying adequate negotiation before placing orders.

4. Does your organization achieve any efficient age as a result of effective and efficient negotiation via efficient purchasing.

1.7 SIGNIFICANCE OF THE STUDY

The primary significance of this study is for partial fulfillment of the requirements for the award of Higher National Diploma (HND) in purchasing and supply. The secondary significance is also geared towards exploring the academic relationship between classroom theory and what is practically attainable in industries and government establishment thus the carefulness in choosing the research topic. The third significance of the project is to help and guide the younger ones on what to do when writing project or carrying out any research. The fourth significance of the project is to guide industrial purchasing s to effective and efficient negotiation to enable them to obtain the “best buy which is the ultimate goal of the purchasing function.

1.8 LIMITATION OF THE STUDY

Infact, there cannot be any successful research of this magnitude without encountering some difficulties. This project work is surrounded by some limitation, which indicated that it was not hitch free.

The following were some problem that was encountered in carrying out the following work.

1. Difficulties in securing some vital documents containing some valid information relating to the subject matter of the research.

2. The lukewarm attitudes of some offices who were supposed to attend and give reasonable response. Some of those interviewed failed to give adequate information believing that it will reveal their lapses and loopholes.

3. The degree of time consumed at the expenses of lectures and other important assignments. This cannot be over emphasized.

4. Finally, finance was another constraint for the researcher. Normally, a considerable amount of money for the gathering of information, typing of manuscripts.

1.9 DEFINITION OF TERMS

The terms here are some of the terms used in this project work necessary because these terms have their own professional meanings in purchasing other than the grammatical definition.

1. Purchasing: It’s a continuous management process that is responsible for the anticipation, identification, and the provision of goods and services that are required by an organization with the objective of helping its profitability or service provided.

2. Negotiation: Is a process of planning reviewing and analysis used by a buyers and seller to reach acceptable agreements or compromise includes all aspects of the business transaction not just price.

3. Negotiator: Is a person authoritatively appointed to represent his/her organization for negotiation. He must be skillful and broad business experience.

4. Vendor: An outside supplier or raw materials suppliers equipment or service impact ed in the operation of an organization.

5. Procurement: This includes duties perform by purchasing a well as additional function materials supervision and management, inventory control, receiving inspection and salvage operation.

6. Price: This may includes all the sacrifice made to acquire a given product both monetary and non monetary. 

7. Pricing :- This is the activities involved in setting the price for which a product will be said. or deciding how much to change for something. ie we say that it is an on going activities that can hardly be completed. 

8. Strategy:- It is the determination of the basic longterm objectives of an enterprises and adaptation of course of action and allocation of resources necessary to achieve these goals on the organization presented mean or approach to achieving it’s objectives. 

9. Purchasing :- It us that function of management, lease or other legal means equipment materials supplies and services required by an undertaking for use of production.

10. Cost:- The total amount of money that impact to be spent by a business. it is also the amount of money that you impact in order to buy, make or do some things. 

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