- TWO key negotiation fundamentals that you will employ and explain why these fundamentals are essential for this pending Subcontract negotiation (from the section 1 reading).
A successful negotiation process will aim at addressing the new changes in price, a situation that is likely to affect the terms of the main contract existing with the government. The current prime contractor (government) has already fulfilled the original set payment agreement which involves several years and if the price of the spare part increases by 25 percent, it means the negotiator has to make a counter offer to the prime contractor yet the contract is already signed. This means negotiating for a fair price with the spare parts subcontractor is the best move so as to fix a new fair price and at the same time ensure that the subcontractor delivers the parts at an earlier delivery time so as to fulfill the terms of the prime contract. The contractor will have to incorporate two main contract negotiation fundamentals; planning and setting clearly defined goals.
Planning
The negotiator has to prepare a new plan which covers the new negotiation issues that must be addresses in the negotiation process. This is necessary for the negotiator to identify the new critical issues that should be resolved in the negotiation process (Garret, 2005). Some of the critical issues in the new plan should include a price reduction on the Simulator Controller Devices (SCD) spare parts. This is because, the abrupt new prices for the spare parts have a subsequent increase in price for the whole product and the already paid amount does not cover for the price changes. A detailed plan on the expected negotiation duration and how to execute various sun-processes in the actual process is necessary as a preparation for this critical negotiation.
Defining the expected goals
The main goals for this negotiation process are to reduce the subcontractor’s new price margin and to reduce the delivery time to a shorter deadline. These goals are essential as they determine the new argument the customer will present to the prime contractor explaining the cause of any delays in delivering the SCD devices. This fundamental preparation should define the expected Best Alternative to a Negotiated Agreement (Fisher et al, 1991). At the same time, it is important to understand the market of the spare parts so as to base the argument in fairness by determining whether the subcontractor has set too high or recommendable price for the product.
- TWO Negotiation sub-processes that will potentially help ensure a successful negotiation with your Subcontractor and explain why you feel this is so. (From the section 2 reading).
The process of negotiation requires a situation where both involved parties reach to an agreement which is satisfactory to both sides. The current situation indicates that the price of the items the subcontractor is supposed to supply are relatively high and this made them make a counter offer which should be considered during the negotiation. In the case scenario the original offer and the counter offer have conflicting materials (new price and time of delivery) which the two contractors have to resolve. The two main sub-processes of negotiation applicable for the negotiation are distributive bargaining and integrative bargaining sub-processes to arrive at an agreement for the subcontract.
Distributive bargaining
This is a sub-process in negotiation that negotiators use to manipulate and influence the other party to change their mind for the benefit of the contractor (Fisher, 1991). The distributive method is essential in this case since the counter offer is likely to affect the contractor’s expected returns or prompt for search of a new subcontractor who is likely to supply the spare parts at a lower price. This may result in a conflicting argument but as the process of negotiation is about resolving conflicts, the process of negotiation can use a peaceful yet convincing manner to reach to a fair deal. The involved person in this case can use strategies that will make the subcontractor understand the urgency of the spare part as it is the vital part of the Controller simulator Devices as well as the urgency in which the devices are needed by the main contractor (government). In addition, the negotiator should withhold the information on the total payment they are getting from the government or quote a smaller amount so as to influence the subcontractor in reducing the new price addition percentage to a fair amount probably a fifteen percent increase.
Attitudinal structuring
This sub-process involves the application of perceptions the parties have on each other to arrive at a conclusive agreement (Garret, 2005). The two have worked together whereby subcontractor has supplied the spare parts before and this has created a sense of trust between the two. The subcontractor is also familiar on the frequency in which the CSD devices are delivered to the prime contractor. Subsequent application of attitudinal structuring by use of perception, emotions and cognitive ways will aid in convincing the subcontractor to reduce the price margin as well as reduce time of delivering the supplies from six months to a close range maybe three months or less. This sub-process is essential in this form of negotiation as it the new agreement is set to last for a long period of time as the subcontractor will continue supplying the parts until the expiry of the prime contract. There is need to build a sense of trust based on the perceptions of negotiation as they strive to accomplish a win-win deal for the two companies particularly focusing on the due diligence and capability to observe the terms of the subcontract in the future.
References
Fisher, R. Et al (1991). Getting to Yes: Negotiating Agreement without Giving In. Houghton Mifflin Harcourt
Garret, G. A. (2005). Contract Negotiations: Skills, Tools, and Best Practices. CCH Incorporated.
