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CIPS L4M5 Commercial Negotiation Assignment Sample UAE

Formalizing agreements is a critical part of the success for any organization. Those involved in procurement and supply activity will undoubtedly be able to effectively negotiate with stakeholders or suppliers, but it’s important that they understand how these negotiations can go from successful outcomes into poorly negotiated contracts if not prepared properly beforehand by being knowledgeable as possible about what techniques are associated with each type of negotiation.

This module has been designed for those who may find themselves negotiating soon – learn about approaches used during actual deals so you know what options might work best! 

Negotiation is a vital aspect in any business or organizational setting. This module will help you to understand the techniques for negotiating agreements with external parties, how it can be prepared for and what tools are available when facing tough negotiations .

This course provides an introduction on preparing yourself before engaging into commercial discussions that may lead up towards reaching successful outcomes By taking this course, you will be able to successfully negotiate with potential and actual commercial partners.

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Assignment Brief 1: Analyse the application of commercial negotiations in the work of procurement and supply 

Commercial negotiation is the process of bargaining with a supplier to get the best possible price and terms for a product or service. In order to make the most of this process, it’s important to understand what commercial negotiations are, and what they’re not.

Commercial negotiations are not about winning or losing. They’re about reaching an agreement that works for both parties. The goal is to come to an agreement that meets the needs of both sides, rather than forcing the other party to give in to your demands.

Commercial negotiations involve two main elements: price and terms. Price is how much you’ll pay for the product or service, while terms are the specific conditions of the agreement, such as delivery time , payment terms, and return policy.

There are a few things to keep in mind when negotiating price and terms: 

  1. It’s important to keep the cost of the product or service in mind. If the price of the product is high enough, the supplier might not be willing to offer a good deal. 
  2. It’s also important to make sure the terms of the agreement are reasonable. If the terms are too low, the supplier might not be willing to offer a good  deal. 
  3. It’s important to have a good relationship with the supplier. if the supplier is not happy with the terms of the deal, they might not be willing to agree to it. 

When negotiating price and terms, it’s important to keep the cost of the product or service in mind. If the price of the product is high enough, the supplier might not be willing to offer a good deal. 

Commercial negotiations are a key part of the procurement and sourcing process. They take place at different stages in the process, and can have an impact on how suppliers perform in relation to each other.

Negotiation typically starts when a company is looking for new suppliers or products, and ends when contracts are being signed with one or more selected supplier/producers. The negotiation stage includes activities such as:-

  • Assessing competition identifying preferred solutions from those offered by competitors.
  • Deciding which suppliers best meet customer requirements based on criteria such as price, quality, delivery time frame etc.
  • Agreeing terms & conditions including payment terms (e.g., 30 days net against invoice)
  • Negotiating discounts that will be offered if certain volume objectives are met; reviewing warranties.

There are a number of factors that can influence a supplier’s willingness to provide a good deal, including the cost of the product or service, supplier reputation, and whether the company has a good relationship with the supplier. In some cases, it may be worth considering the cost of the product before negotiations begin.

Assignment Brief 2: Differentiate between the types of approaches that can be pursued in commercial negotiations 

There are three types of approaches that can be pursued in commercial negotiations:

  1. Positional approach – where each party puts forward their best argument and tries to convince the other party that they are right. This is a “win-lose” approach, where both parties come away feeling like they’ve lost something. The positional approach assumes that there’s no way for either side to change the other’s mind, so it doesn’t matter what position you take or how strong your argument is; if one side fails then it’s all for nothing.
  2. Constructive negotiation – which looks for areas of agreement between both sides and builds on them; this leads to finding solutions that satisfy everyone  on both sides. This type of negotiation is often more successful than the positional approach because it doesn’t rely on toppling someone’s position or convincing them that they’re wrong.
  3. Negotiation by consensus – where everyone in the group determines the best way to go forward and then work together to make it a reality. This approach is often more  successful than the positional approach because it allows everyone to have a say and doesn’t rely on the other side’s position being accepted.

Both the positional and constructive negotiation approaches are important, but the final decision should be made by someone who is familiar with the situation and has a clear plan. The positional approach is often better because it tries to get  someone to change their position, but the constructive negotiation approach is more successful because it allows everyone to have a say and build on agreements.

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Assignment Brief 3: Explain how the balance of power in commercial negotiations can affect outcomes

Commercial negotiations are about achieving an outcome that is best for both parties involved. The balance of power in commercial negotiations can affect outcomes by influencing which party has the stronger negotiating position. For example, if one company has more money than another, it may be able to outbid its competitor and gain control over a contract or deal that would have otherwise gone to the other company. In this case, even though neither company gains complete victory over the other, one might argue that “balance of power” influenced how deals were made because it determined who had access to certain contracts based on their financial strength. 

Commercial negotiations are not always about achieving an outcome that is best for both parties involved. The balance of power in commercial negotiations can affect outcomes by influencing which party has the stronger negotiating position.

The balance of power in commercial negotiations can be greatly affected by the organization’s power. Organizational power is the ability of an organization to get what it wants, regardless of the wishes of others. It can be broken down into two types: market power and supplier power.

Market power is the ability to raise prices or reduce quantities without impacting demand. Supplier power, on the other hand, is the ability to influence buyers by affecting their costs or profits. In most cases, market power is stronger than supplier power. However, when there are few substitutes for a product or service, supplier power can become more important in negotiations.

It’s important for negotiators to understand and assess both forms of organisational power before beginning any commercial negotiations. If an organisation has a market power advantage, it can easily coerce or intimidate the other party into giving them what they want. On the other hand, if an organisation has supplier power, it can easily influence or bribe the other party into giving them what they want. It’s important to be aware of both types of power in order  to ensure that negotiators are getting the best deal for their company.

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Assignment Brief 4: Identify the different types of relationships that impact on commercial negotiations

There are types of relationships that impact commercial negotiations: 

Transactional relationships are based on a purely business-like exchange of goods or services, with no personal connection between the parties involved. This type of relationship is often found in large corporations, where the buyer and seller have little interaction and do not need to trust or like one another in order to conduct business.

Relational relationships are built on trust and mutual respect, and typically involve regular interactions between the parties involved. In a relational negotiation, both sides are willing to give a little bit in order to get something back from the other party. This type of relationship is common in small businesses and among family members.

The relationship spectrum is from cold to warm. At one end, you have a purely commercial relationship with no personal connections – for example, where people do business with each other because they know that the other person will provide a certain quality of service or product at a fair price.

On the other hand, if someone has been doing business with you over time they will develop what’s known as ‘reputation’ – this could be positive or negative but either way it reflects how reliable someone is as a supplier/service provider in terms of meeting agreed standards and delivering what was promised.

In order to build relationships based on reputation two things are important: firstly that both parties need good information about each other so they can accurately

assess the relationship, and secondly that the relationship is beneficial to both parties.

Assignment Brief 5: Describe the types of costs and prices in commercial negotiations

There are two types of costs in commercial negotiations: direct costs and indirect costs. Direct costs are those that are easily identifiable and can be directly attributed to a particular transaction or project. Indirect costs, on the other hand, are not as easily identified and cannot be directly linked to a particular transaction or project.

There are also two types of prices in commercial negotiations: variable prices and fixed prices. Variable prices change depending on how much of a product or service is purchased. Fixed prices, meanwhile, remain unchanged regardless of how much of a product or service is purchased.

The final two types of costs are price and non-price. Price is what one is willing to pay for a good or service, while non-price considerations include things such as delivery time or terms of payment.

When pricing and cost analysis is done in commercial negotiations, the goal is to arrive at a price that will result in a break-even point for the business. This means that the total costs of producing and selling a good or service will be equal to the total revenue generated by sales of that good or service.

To calculate break-even point, you need to know three things: total fixed costs, total variable costs, and sales volume (or number of units sold). Once you have these figures, you can use this formula: Break-Even Point = Fixed Costs / (1 – (Unit Selling Price – Variable Costs))

When it comes to commercial negotiations, the pricing of products and services is always a key component. And, in order to negotiate effectively, both parties need to have a clear understanding of the costs that have gone into producing those products and services.

There are a few different costing methods that are typically used in commercial negotiations: absorption costing, marginal or variable costing and activity-based costing. Each method has its own strengths and weaknesses, so it’s important for both parties to understand which method is being used before entering into any negotiation.

Absorption costing is the most common method for calculating product costs. Under this method, all manufacturing expenses (direct materials, direct labour and fixed factory overheads) are allocated to each unit of product. This is followed by a calculation of the profit margin required to make the product profitable. 

The main advantage of absorption costing is that it’s a very simple method to use, and it’s also the most accurate method when it comes to calculating product costs. However, it can be difficult to estimate the necessary profit margin when it comes  to various products.

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Assignment Brief 6: Contrast the economic factors that impact on commercial negotiations 

In commercial negotiations, economic factors can impact on the negotiation in a number of ways. For example, if there is a sudden increase in the cost of raw materials or energy, this will have an effect on companies who rely on those prices to make profits. In addition, changes to government policies may also affect how businesses operate and their negotiating positions with clients, customers etc. Furthermore economic conditions can create long-term problems for business by affecting things like customer confidence and investor sentiment – both key elements for effective business operation.

 Finally economic conditions can sometimes act as a “threat” by creating uncertainty about future profitability which forces management into more desperate measures such as reducing costs or increasing market share at any cost.

In all of these cases, it is important for negotiators to be aware of the different economic factors that could influence the negotiations in their field and to be prepared to act on those factors.

Microeconomics is the study of consumer and producer interactions in a market. The different types of markets include perfect competition, imperfect competition, monopoly and oligopoly. Commercial negotiations are often affected by these factors which can impact on price, quantity or quality. Microeconomic theory states that when allocative efficiency is not achieved through competitive markets then there will arise what is known as disequilibrium or excess supply for certain goods/services leading to under-employment equilibrium unemployment . This leads to social costs that need to be taken into account when formulating policy decisions e.g taxation etc.

Assignment Brief 7: Analyse criteria that can be used in a commercial negotiation

There are a number of criteria that can be used in a commercial negotiation, including:

– Price: This is often the most important criterion for both parties involved in the negotiation. It’s important to remember that price is not always the most important factor, and it’s important to be strategic when negotiating on price. Sometimes it can be advantageous to lowball the initial offer, while other times it may be better to ask for a higher price.

– Terms and Conditions: These can be very important to both parties, as they can affect the business relationship moving forward. It’s important to come to an agreement on terms and conditions as early in the negotiation process as possible.

– Delivery Dates: These are also important, as they can affect how much money a company may be willing to offer. It’s important to have a good understanding of how long it will take for the products to arrive, and how soon the company may be able to start shipping.

The bargaining mix is a term used in industrial relations to describe the balance between concessions and demands made by each side during a negotiation.

It’s important to be aware of your own strengths and weaknesses when negotiating, as well as those of your counterparties. It helps if you can identify what kind of negotiation you’re involved in – for example, whether it’s an issue-based negotiation where one person has all the information they need about the problem at hand, or a time-based negotiation where there is limited knowledge about deadlines and other constraints on progress. 

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Assignment Brief 8: Identify the resources required for a negotiation

When choosing a location for the negotiation, it is important to consider any allergies or sensitivities of the people involved in the negotiation. It can also be helpful to choose a location that offers privacy and comfort for all parties involved.

Involving appropriate colleagues during negotiations helps create an environment where everyone is on board with what’s happening, which will make it easier to reach a conclusion. Rooms should be designed so that there is plenty of space without being too big or small – this will allow individuals from different backgrounds and cultures to feel comfortable while still getting their needs met. Surroundings such as windowsills can provide an extra dimension by adding natural light into dark rooms where discussions are taking place late into night hours after office hours ended!

The resources required for a negotiation are choice of location, involving appropriate colleagues, room layout and surroundings.

The resources required for a negotiation can vary depending on the type of negotiation. Generally, a negotiation will require some type of communication medium in order to allow each party to share information and ideas. This could be a telephone call, teleconference or web-based meeting. If the negotiation is taking place in person, then access to a room or space where both parties can meet is necessary. In some cases, documents or other materials may need to be shared between the parties, in which case electronic transmission or delivery would be required.

Assignment Brief 9: Identify the stages of a commercial negotiation

A negotiation is a discussion between two or more people, groups, organizations or governments that involves an exchange of proposals. The term can refer to peaceful negotiations and peace talks, as well as the more aggressive process of winning battles through force.

There are many different types of negotiations that range from local community-level discussions all the way up to international conflicts. Some common steps in any type of negotiation are: 

  • Preparation  This includes research on what you want from your negotiation and how your counterparties will view these requests. Opening Lines can also be practiced beforehand so both sides have something prepared if they need it during their opening statements. 
  • Testing This is where both sides try to see if they can get what they want by playing off of each other. If one side is being contradictory or unrealistic, the other side can try to force a change in their position.
  • Comparing and contrasting  This allows both sides to see the other’s requirements in a more objective way . This can also help to figure out how to improve on what they are offering.
  • Negotiating  This is where negotiators try to come up with a solution that both parties will be happy with. Oftentimes, this involves trying to find middle ground and compromising on what the other side wanted.
  • Deliberation  This is where both  negotiators and participants try to come up with a solution that is both reasonable and fair. It can be difficult to do this, but it is important in order to get a good deal.

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Assignment Brief 10: Appraise the key methods that can influence the achievement of desired outcomes

There are many key methods that can influence the achievement of desired outcomes. Some of these include:

  • Evaluating progress and making adjustments as needed 
  • Creating a supportive work environment 
  • Providing adequate resources and training opportunities 
  • Encouraging lifelong learning habits, such as taking courses online or in person, attending conferences, reading books about your industry or profession, etc. 

There are many different ways to achieve goals, but one of the most important aspects is to evaluate progress and make adjustments as needed. Additionally, supporting your work environment is essential to maintain a positive environment and encourage lifelong learning. Lastly, providing adequate resources and training opportunities can help you take your industry to the next level.

The use of persuasion methods is one of the key ways to achieve desired outcomes. Persuasion methods can be used to change people’s attitudes or behaviours by appealing to their emotions, reason, or both.

Some of the most common persuasion methods include fear appeals, positive reinforcement, social proof, and scarcity. However, there are many other persuasion methods that can be used depending on the situation and the audience. It is important to know your audience and what will work best to get them to take the desired action.

There are many tactics that can be used in order to influence the achievement of desired outcomes. Some common tactics include: reasoning, appealing to authority, using threats or promises, and using positive or negative reinforcement.

Each of these tactics can be effective in certain situations, but it is important to consider the other party’s needs and motivations in order to select the most appropriate tactic. For example, if the other party is motivated by self-interests, then reasoning may be the most effective tactic. If the other party is motivated by fear or greed, then threats or promises may be more effective. And if the other party is motivated by a desire to help others, then positive reinforcement may be more effective.

Assignment Brief 11: Compare the key communication skills that help achieve desired outcomes

The key communication skills that help achieve desired outcomes are effective listening, push and pull behaviours, nonverbal communications.

Effective Listening- The ability to hear someone without interrupting them or talking over them. This includes not only hearing what they say but also sensing their energy during the conversation.

Push/Pull Behaviour- A push behaviour is when you try to get your partner into doing something that you want by applying pressure on them with either an argumentative tone or physical force.

Nonverbal Communications- Body language such as touch can be very powerful in communicating messages about trustworthiness or aggressiveness 

The list goes on but these are some of the most common ones .

Overall, listening is one of the most important communication skills because it allows you to understand what someone is saying, and allows for a smooth flow of the conversation. However, it is also important to be aware of push and pull behaviours, as these can help to keep a conversation moving in the right direction or force the other person to take  a stand. Additionally, nonverbal communications can be very powerful in conveying trustworthiness or aggressiveness. By paying attention to these things, you can improve the flow of your conversation and ensure that it remains productive and civil.

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Assignment Brief 12: Analyse how to assess the process and outcomes of negotiations to inform future practice

Reflecting on performance, Opportunities for improvement and development

A negotiation is an interaction between two or more parties in which each party seeks to influence the others with the goal of reaching an agreement. To assess how a negotiation has performed, it is necessary to consider both what was achieved by way of agreement as well as any disagreements that arose during negotiations. It’s also important to evaluate whether there are opportunities for improvement or if this particular negotiation met its goals.

For example, if one side feels they weren’t given enough respect at some point during negotiations then that could be seen as a sign that future agreements may not go smoothly because resentment will linger over time without resolution. Evaluating outcomes can help us identify areas where we need  to beef up our negotiating skills in order to achieve better outcomes in the future.

In order to assess how a negotiation has performed, it is necessary to consider both what was achieved by way of agreement as well as any disagreements that arose during negotiations. The goal of a negotiation is always to reach a settlement that is fair, beneficial to both parties, and reached quickly. 

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