role of negotiation in cost reduction in manufacturing firms in kenya. a case study of kisii bottlers limited

Topics: Negotiation, Dispute resolution, Negotiation theory Pages: 5 (1285 words) Published: October 8, 2014
CHAPTER ONE

1.0 INTRODUCTION
This chapter discusses the background to the study, statement of the problem, the objectives, and research question, significance of the study, scope and limitations.

1.1 Background to the study

A negotiation is an interactive communication process that takes place whenever we want something from someone else or another person wants something from us. Most of us negotiate with one another frequently. Once we realize this, theoretically, we have two choices; first, to accept the fact that negotiation is a way of life in our culture and improve our skills so that we can negotiate with confidence and secondly, to do nothing about it. Some may argue that negotiation is an art, that it is initiative; or, that we all know how to negotiate, learning basic skills on the playgrounds of life. Perhaps there are naturally gifted negotiators.but, negotiating settlements, negotiating transactions for clients, and negotiating personal transactions, can attest to the fact that a lot of negotiators are not naturally gifted.

Negotiations commonly follow a four step path; preparation, information exchange, explicit bargaining, and commitment. Negotiation is, in short, a kind of universal dance with four stages or steps. And it works best when both parties are experienced dancers. One of the interesting aspects to negotiation theory is that even the fundamental elements of the process are subject to varying opinions.

According to (Raiffah,1982) Purchasing management professionals must be good negotiators, understand technical product information, have good mathematical ability, and understand marketing methodology and outstanding decision makers. Increased responsibility in purchasing management requires good leadership skills.

The ability to negotiate successfully is of the most basic business person skill sets. Significant positive or negative impacts are made to every organizations bottom line from the results of the negotiators conducted by their impacts by their employees with outside firms.

It is therefore essential for the continued success of any organization that employees are well trained and experienced in the strategy, planning and conducting of negotiation.

In the early 80s the bottlers limited was the leading manufacturing activity in Kenya both in terms of size and employment. About 30% of the labour force in the national manufacturing sector. Only that the organization have an in definite life span, they keep on changing because they are open system susceptible to changes because they are in constant interaction with their environments through input of the material, energy and information. Contemporary managers argue that the change or transience in structure and operations of organizations over a period of time are necessary in order to circumvent obstacles such as employment, inflation, deflation, squeezed profit, energy shortage among which are experienced in global world business. These harsh externalities demands dictate that constant change is inventible (Byarrs 2004)

1.2 Statement of the Problem

The aim of this study is to assess the role of negotiation approaches used by manufacturing firms in cost reduction and in particular Kisii Bottlers. Firms which have embraced cost reduction strategies have always underperformed or are faced with sustainability crisis, price negotiations at the purchasing level are one important cost reduction strategy that has not been fully exploited by business firms. Previous research has highlighted the “importance of information sharing to the effectiveness of buyer –supplier relationships [Bensaou,1999]. However due to the reluctance of people involved to share the information necessary for inter-firm cost minimization, firms may not realize all gains from buyer-supplier negotitiation . Research is therefore needed to entangle the interplay between the need to share information to optimize the...
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