Goals and Priorities
The following report is based on the business expansion negotiation agreement between ‘Retailer 4’ and Sydney shirts with an aim of reviewing the terms of business. the report thus discusses the negotiation process and decision making in order to review the relationship between the supplier and the retailer. The report is aimed at reassessing the non-binding agreement between the two firms. Based on several business areas that will enable two company increase their marketing share and profit margins.
This negotiation process aimed at meeting the following goals:
- To attract new customers to Sydney Brands
- Decrease likelihood of substitution of Sydney brand when they are short in supply.
- Review price for products in order to retain customers.
- Increase the retailer’s net margin by 5%
The negotiation with Sydney shirts progressed very well and achieved good results. The fact that retailer 4 and Sydney were implementing a collaborative business strategy was aimed at coming up with a pleasant and beneficial negotiation for the two parties. And even through the results were not completely towards the target of 5 % increase in the market, it was above the set BATNA and the negotiation resistance point (Cheng, et al., 2016). In this manner, each of the party was pleased with the new strategies of working together, is all the items discussed were aimed at coming up with a strong relationship with Sydney Shirts which was successful at the end of the day.
It is also important to note that all the items were discussed during the negotiations, one at a time so as to reach the outcome that was agreed upon by both parties. Due to the fact that each party was allowed to share information and their motivation to achiever particular results made it even much easier to work together to achieve a particular agreement over each of the issue discussed. Also each of the agreement that was agreed by the two parties was documented (Fells, et al., 2015). This result achieved our goals to increase the market share, increase the supplies from the Sydney shirts and also expand the new line to include other fashion wear in order to attract new customers in the markets.
During negations, the integrative bargaining approach was used to resolve some of the marketing issues. The approach was also important as it enabled organisations to pursue cooperation and respond to some of the business challenges (Peleckis, 2014). As a negotiator for Retailer 4, I was able to ensure that all the issues in the agreement were reassessed with minimum disagreements. Each party was given time to discuss their points on issues and bring up any concerns over the new agreements. The following are the proceedings:
The first agenda on the negotiation was to find ways in which retailer 4 and Sydney partnership could reassess their business collaboration to attract new customer to the Sydney brand. some of the issues that came by included the issue of product diversity. This is because the firm had specialized in selling one particular popular brand which only attracted a particular set of customers. It was thus seen as important that Sydney should come up with diverse products to enable the come explore new types of customers in the markets. This was also important as it would enable the retailer to increase competition in the markets. One of the missing areas in the product markets were fashion knit shirts which would be branded as ours. In this manner , retailer 4 would benefit from a 2.4% of the current volume sold by Sydney.
Negotiation Approach
According to Aleksandrovich & Timurovich, (2013), people like to belong to something, in this manner, having to brand the Sydney products with our company logo would provide a sense of belonging in the business. it is possible for a company to survive in the market when it has a strong brand in place, this is because consumers buy products that they are aware of. When organisations fail in strategic marketing, they may not be able to sell their products , especially when they do not know to be present. Branding and product ownership thus enhances the attraction to the business and the merchandise for the seller and also for the consumer to a larger extent.
The main issue under discussion here was to find ways in which order would be sent to us earlier that was the case before. In this manner, Sydney will not have to wait for the recommended 10 days so that they send new order. We proposed that orders be sent after every 7 days and not the usual 10 days. If this was done well, then the firm will be able to meet the ever growing demand in the market. Also it would be advantageous to Sydney since the firm will not have to go to other firms to purchase stock when orders run short. In this manner, the company will also be able to increase is profit margin to a larger extent due to constant supply of products. According to Porter substation happens when a product from another industry which offers the same benefits to the customer as the product by the firm in the industry (Allio & Fahey, 2012). when this becomes a habit, it is bound to affect the competitive environment for the firm is it would eventually affect the profit margin. It was thus important that order are sent 7 days earlier in order to close the gap of substitution.
One of the main challenge the firm has been facing was due to product pricing of Sydney products. In order for the two companies to have an increase in revenue, then the current prices had to be reviewed. According to Allio & Fahey, (2012), the perceptions that customer have on the prices of products will eventually influence their satisfaction judgments. In this manner, fairness in pricing will make the firm also sell the products in a reasonable, justifiable and acceptable amount. This will also help the firm to develop customer satisfaction and increase loyalty to Sydney products. With a fair price the product will also circulate in a faster pace increasing turnover in the organisation and their profit margin will also widen with regard to other competitors.
The net margin is usually the amount of money that the firm will be able to keep after paying off Sydney and other operating expenses. This is the bottom line and is usually the last line of any business income statement (Peleckis, 2014). With an increase in the company’s net margin, the company will also be able to determine its position in terms of profits and loss. In this regard, it was important that Sydney decreases its cash discount period to 15 days and not 10 days at it currently stood.
Consumer perception is very important for any business operation. For the firm to increase the way it is perceived by consumers, it was important that Sydney comes up with a new packaging for 10% of the current volume at no extra costs, when order for three months. This is meant to honor the firms 25th anniversary. During this time, customer will also realize the business partnership and be able to increase their loyalty to the firm.one of the reason this is important is that customers often like to be associated with a winning brand (Peleckis, 2014). by doing this, customer relationship with the firm will also increase.
During the negotiations there were a lot of agreement and disagreements on the terms that where laid on the table. However at the end of the day some of the terms were agreed up and the following were the results, that:
- To attract new customers to Sydney Brands- Sydney agreed to share in the advertising and marketing budget of which they would contribute 30% of all advertising costs that are done in regard to their product. It was also agreed that a new product line would be launched in the next half financial year of which our firm will be the only one selling the new line of products.
- Decrease likelihood of substitution of Sydney brand when they are short in supply- It was agreed that filling of new product will be delivered after every seven days from the previous 10 days. Faulty products will also be replaced at no extra cost, this was important as it will increase customer loyalty.
- Review price for products in order to retain customers – price would be reviewed in regard to quality and the economies of the country at large. It was also agreed that the firm should conduct market research in order to determine the new prices.
- Increase the retailer’s net margin by 5%- This would be done through allowing the firm to brand some of the products to represent ownership. It was also agreed that intense advertising would be done in the coming half financial year to enable awareness of the product. If the net margin is increased by 5% then the firm would be in a better position to beat retailer 5 who currently enjoys the net margin of 7%. Our sales product volume will also increase to 540,000 which will in turn affect the general profits. In this regard brand loyalty will also be maintain as the customers will not switch to other equal competitors.
Conclusion
In conclusion the negotiation process was successful as most of the items in the negotiation were discussed and agreed upon. The increase of the retailer’s net margin was as a result of all the other factors. Due to the fact that the company agreed to reduce the number of filling orders, it is also likely that the firm will enjoy an increase in brand loyalty and sales volume.
References
Aleksandrovich, R. & Timurovich, B., 2013. Singularities of marketing activities of small businesses: attracting and retaining customers. Modern Management Technology.
Allio, F. & Fahey, L., 2012. Joan Magretta: what executives can learn from revisiting Michael Porter. Strategy & Leadership, 40(2), pp. 5-10.
Cheng, J., Huang, Y. & Su, Y., 2016. Relationality in Business Negotiations. Contemporary Management Research, 12(4), p. 497.
Fells, R., Rogers, H., Prowse, P. & Ott, U., 2015. Unraveling Business Negotiations Using Practitioner Data. Negotiation and Conflict Management Research, 8(2), pp. 119-136.
Peleckis, K., 2014. International Business Negotiations: Innovation, Negotiation Team, Preparation. Procedia – Social and Behavioral Sciences, Volume 110, pp. 64-73.
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