Documente Academic
Documente Profesional
Documente Cultură
NAME
INDEX NO
CONTACT
SAMUEL O.ACQUAH
6814011
0208611666
JOSEPH NGOSWINI
6882811
0249351710
ROSELYN SINTIM-GYIMAH
6900411
0243327840
6887111
0274395646
CHAPTER ONE
GENERAL INTRODUCTION
1.0
Introduction
This chapter deals with the Background of the study, the Statement of the problem,
Objectives of the study, Research Questions, the Methodology, and Scope of the study
and Organization of the study.
1.1
Negotiations and bargaining are an integral part of the lives of nearly all people, and
people negotiate about almost all aspects of life. For example at work place, employees
negotiate for increase in salary, in business people negotiate to make a contract. Business
negotiations most commonly take the form of buyer-seller negotiations. According to
Spangle and Isenhart (2003), Negotiation process precedes almost every important
decision and it plays a significant part in the business world and this has led to
negotiation and bargaining becoming a core activity of buyers, consultants, salespeople,
brokers, administrators, and all people who are involved in the business sector.
Steele and Beasor (1999) defined negotiation as a process through which parties move
from their initially divergent positions to a point where agreement may be reached. It is a
type of communication which enables two parties to reach an agreement in the situations
when people have different opinions. Negotiations take place for a great number of
reasons which, according to Lewicki, Barry and Saunders (2007) can be grouped into
three main categories namely to agree on sharing or dividing of a limited resources; to
develop something new with common efforts of the parties and finally to solve a problem
occurred. Generally, manufacturing organizations are known to have a high production
cost with raw material costs typically comprising up to 80% of the total production cost.
According to Invento Raw material survey in 2011, an average manufacturing company
has 20% of its total annual cost emanating from raw materials. Since manufacturing
companies mainly convert raw materials into finished goods, they face huge challenges in
managing their raw materials. The prices of many of the worlds key commodities are
increasing at a fast pace, and volatility across the markets are enough to create huge
problems for companies in the industrial manufacturing and consumer products
industries.
Martinot and Poot (2012) reckoned that high raw material prices are profits killer for
many companies and usually sales people are often reluctant to pass on those price
increases to their customers in fear of damaging customer relationships. Tight control of
material costs is therefore, key to ensuring best value for money and increased
profitability. By engaging suppliers of raw materials in an effective negotiation,
procurement managers are able to obtain the best value purchased material through
reduction in prices of materials. Negotiation helps to obtain the best price in other to save
3
cost, maximize returns as well as establish long term relationships with suppliers, the
importance of negotiation enables companies to thrive, grow and become leaders in their
field of business.
Ghana has few large companies in the manufacturing sector who are multinational. Such
multinational manufacturing companies include Unilever Ghana Ltd, Nestle Ghana Ltd,
Guinness Ghana Breweries Ltd, PZ Curson Ltd, Accra Breweries Ltd etc.
These
organizations convert large quantities of raw materials into finished goods annual.
1.2
Problem statement
companys direct cost keeps increasing at an average of 25% and direct cost represents
about an average of 70% of Net Turnover.
Several statistics from the Ghana Statistical Services calculates the contribution of the
manufacturing sector to Ghanas economy. However, the above statistics calculated over
the years do not show individual causes of the poor performance of the manufacturing
sector. The major gap in knowledge which motivated this study is to examine the
operational cost of GGBL through effective negotiation of its raw materials.
1.3
Research Objectives
1.4
Research Questions
1.5
This study carries much importance in view of the fact that the manufacturing sector in
Ghanas economy has performed poorly with no empirical study into the causes of the
poor performance. This study will contribute to understanding the current situation of
why such companies perform badly.
The findings of this study would draw the attention of procurement managers to the
benefits of effective negotiations in business. The study will also provide direction for
future research in Ghana and other African countries on the effective negotiation in
manufacturing companies.
1.6
The study may have some limitations as is typical of every research method. The study is
carried out in GGBL which is just one of the several manufacturing companies in Ghana.
This case study may make the findings less generalizable. In addition, GGBL is a bigger
multinational company and so may create bias in the applicability and generalizability of
the research findings to smaller manufacturing companies in Ghana.
1.7
This thesis has been organized into five chapters. Chapter one introduced the topic,
discussed the need for the research or the research problem, the research objectives, and
establishes the various questions on which the research objectives were based, the
relevance of the study, limitation of the study and the organisation of the thesis. Chapter
two provides a comprehensive review of the literature on Negotiation. It also summarized
the related research necessary to understand the topic in the context of Ghanaian
environment. The methods employed in the study have been the subject matter of the
third chapter. Chapter four concentrated on analyzing the data and discussing the findings
of the study in the context of the literature reviewed. The fifth chapter summarized the
key findings, the main conclusions, and some recommendations and suggestions for
further studies on other related areas of concerned.