Procurement and Negotiation: Nick's Performance Analysis for Pluribus

This report analyzes the procurement negotiation conducted by Nick, a procurement manager at Pluribus, an Australian company, with SECBOT, a Singaporean company, for surveillance bots. It examines the three phases of contract negotiation: preparation, negotiation, and agreement, highlighting the importance of thorough investigation, understanding legal backgrounds, and preparing a term sheet. The report emphasizes the role of cultural factors, particularly Hofstede's cultural dimensions, in communication strategies, including power distance, individualism vs. collectivism, uncertainty avoidance, masculinity vs. femininity, long-term vs. short-term orientation, and indulgence. It also discusses the essential elements of a valid contract, including offer, acceptance, consideration, and intention, and how Nick could have improved these aspects. The report offers practical advice on communication with stakeholders, contract terms and conditions, and cross-cultural relations to enhance the procurement process and ensure compliance. The analysis aims to provide a comprehensive understanding of the challenges and opportunities in international procurement, focusing on ethical considerations and the establishment of strong, sustainable relationships.

What could have Nick done better?
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Executive Summary
This report examines different modules related to Procurement and contract negotiation
in order to explain what Nick could have done better as a procurement manager tasked with
negotiating surveillance bots for his company Pluribus in Australia from SECBOT Company
which is in Singapore. The report focuses on preparation for negotiation, negotiations, cross-
cultural negotiations, ethical issues and communication channels in order to explain how Nick
would have handled contract negotiation, communication with stakeholders, contract terms and
conditions as well as cross-cultural relations.
Introduction
There are three significant phases in the mechanism of contract negotiation in
procurement. These three phases include preparation phase, negotiation phase and agreement
phase. Preparation phase is the most important stage of procurement negotiations.1 The
preparation phase is involved with issue identification, issue information, classification of the
issue, preparation of meeting agenda and getting ready for the negotiations. The negotiation
phase involves a one-on-one meeting with the supplier.
The three negotiation phases play a significant role in expressing stakeholder’s needs and
wants. For a procurement contract to be agreed upon, all stakeholders that is the supplier and
negotiator have to ensure that their wants and needs are addressed within the contracts. Besides,
planning the terms of the contract in relation to stakeholder’s wants and needs is crucial for
establishing relevance of the contracts. According to Pareto’s 80/20 rule “Twenty percent of
what you do produces 80 percent of the results; conversely, 80 percent of what you do produces
1 Brett, Jeanne, and Leigh Thompson. "Negotiation." Organizational Behavior and
Human Decision Processes 136 (2016): 68-79. doi: 10.1016/j.obhdp.2016.06.003.

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20 percent of the results”2. This rule in contract negotiation implies that 80 percent of the results
of a contract are produced as a result of 20 percent of the contract negotiation time.
Nick is a procurement representative manager at Pluribus which is based in Australia and
his role is to establish contractual ties with a Company that is based in Singapore. The main
problem of becoming a procurement manager is Nick has to make an agreement with Singapore
yet he has no knowledge of procurement and contract negotiations plus ethical issues
surrounding procurement such as upholding integrity and transparency. Culture plays a
significant role in procurement negotiations as it helps stakeholders to determine factors such as
risk taking, team organization, emotionalism, sensitivity to time as well as communication and
negotiating attitudes.3 Cross-border trading policies also play a vital role in procurement
contracts as they assist stakeholders in evaluating the impact it would have on their contractual
relationship. In essence, the report will focus on contract negotiations, communications with
relevant stakeholders, contract terms and conditions as well as international cross-cultural
relations that are significant in enabling Nick conduct a procurement process that follows all the
rules of contract negotiations.
The Contract Negotiation
Nick can improve contract negotiations with the Singaporean company by ensuring that
he conducts a thorough investigation of SECBOT business as well as legal background of the
proposed contract. Various representatives of company should be interviewed to determine the
nature of relationships of both companies as well as existing obligation.4 Nick should take it
2 Rich, Clive. "Successful negotiation is 80 percent preparation: How to get more of what
you want by preparing properly." Strategic Direction 27, no. 3 (2011): 3-5. doi:
10.1108/02580541111109543.
3 Chakraborty, Archishman, and Rick Harbaugh. "Persuasive puffery." Marketing Science
33, no. 3 (2014): 382-400. doi: 10.1287/mksc.2013.0826.
4 Buelens, Marc, and Dirk Van Poucke. "Determinants of a negotiator's initial opening
offer." Journal of Business and Psychology 19, no. 1 (2004): 23-35. doi:
10.1023/b:jobu.0000040270.10433.54.

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upon himself to work with appropriate representatives in order to identify the steps that should
be taken to comply with the requirements of contract. Once Nick has developed a good
understanding of the proposed contractual elements, he should have all the requirements to
develop the draft of the contract. Based on the nature of complexity, ick should allocate time and
responsibility towards drafting, review, update and completion of required activities.
As a procurement manager, Nick should ensure that he participates in the negotiations
involving SECBOT representatives with an aim of discussing vital aspects of each contract by
preparing a term sheet that ensures all stakeholders agree to terms involving each vital section of
the contract5. In the event that Nick is not going to be a participant in the negotiations, he should
provide Pluribus company representatives with a list of questions that need to be satisfied during
the negotiation process for the contract to be considered for approval.6
Nick should also consider time factor in drafting and revising the process since delays
have a negative influence which may result in hindering the outcome that is anticipated by both
parties. After finalizing the documentation process, Nick should make preparations for closing
the transaction through pre-closing meetings and preparations. If certificates have to be issued
then Nick should plan for them during the pre-closing meeting. Nick should oversee the
completion of transaction by ensuring time among all other requirements of the contracts are met
and exchanged in order to determine whether the transaction has been satisfied or it can be
waived. 7Once the closing of the contract is achieved, Nick should ensure that all the documents
5 Vahidov, Rustam, Eva Chen, and Gregory Kersten. "Experimental assessment of agent-
supported electronic negotiations." International Journal of Human-Computer
Interaction 29, no. 11 (2013): 764-774. doi: 10.1080/10447318.2013.777825.
6 Dobrijević, Gordana, Jelena Đorđević Boljanović, and Ivana Brdar. “Human-Computer
Interaction in E-Negotiation.” Paper presented at Sinteza 2016 – International Scientific
Conference on ICT and EBusiness Related Resea. doi: 10.15308/Sinteza-2016-346-351.
7 Camerer, C. "Not so different after all: A cross-discipline view of trust Academy of
Management." Journal of Organizational Behavior 23 (1998). doi:
10.5465/amr.1998.926617.

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are organized, filed and copies are delivered to relevant parties. The files have to be organized
according to each transaction for purpose of easy retrieval by Pluribus in the future.
Communication with Stakeholders
The communication strategy that Nick aims to use will have to factor the Hofstede’s
cultural dimension theory that is designed to provide a systematic procedure that can be used in
managing differences between cultures and nations. The first dimension is based on Power-
Distance index which suggests that power distance relates to the extent with which less powerful
members of an institution tend to agree that power is unequally distributed. This dimension is
significant because it analyzes how people feel about power. Therefore, Nick should use low
power-distance in communicating with Singaporean counterparts by using language that enable
members to feel as equals during the negotiation.8 The second dimension relates to individualism
vs. collectivism which relates to the extent of how individuals are integrated into groups. Nick
should communicate to the stakeholders by encouraging collectivism in order to strengthen the
collective goal rather than individualistic approach which is centered on individual goals.
Representatives from both companies should be communicated that the overall objective of the
contract is for the benefit of both companies and they should work as a collective group rather
than negotiating as two entities. The communication strategy that Nick should adapt has to
consider the impacts of collectivism with respect to the contract.9
While negotiating the contract with SECBOT, there are a few factors that will be
uncertain to both parties. For instance, it is uncertain that the Singaporean company will deliver
the subsequent orders as expected. Besides, SECBOT is uncertain whether Pluribus will agree to
8 Camén, Carolina, Patrik Gottfridsson, and Bo Rundh. "To trust or not to trust? Formal
contracts and the building of long-term relationships." Management Decision 49, no. 3
(2011): 365-383. doi: 10.1108/00251741111120752.
9 Curhan, Jared R., and Alex Pentland. "Thin slices of negotiation: Predicting outcomes
from conversational dynamics within the first 5 minutes." Journal of Applied Psychology
92, no. 3 (2007): 802. doi: 10.1037/0021-9010.92.3.802.

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their terms of contract. Based on the uncertainty, Hofstede’s dimension on uncertainty-
avoidance index suggests that Nick should consider whether Singaporean have high or low score
on this principle to understand how to communicate to them. This is because low scorers are
more open to changes and might consider supplying the 100 bots required or they might not be
open to change and consider only the 75bots that it can deliver.
Moreover, Nick has to consider the right communication channel to use with respect to
Hofstede’s dimension on masculinity and femininity. Here, cultures that have high scores in
masculinity tend to be more competitive and ambitious while those with low score have less
differences and place value on building relationship.10 Therefore, Nick should communicate
using language that expresses femininity which is significant in helping both parties to develop
basis for strong relationship that is sustainable for their benefit. Also, Hofstede considers long-
term orientation vs. short-term orientation which is pegged in a society’s time framework. The
short term oriented cultures tend to take significant time in building relationships as well as view
time as circular process which implies there is always room for improvement.11 On the other
hand, cultures that are long-term oriented view time as liner which encourages them to focus into
the future. Nick should asses SECBOT representatives to understand which orientation to use
based in the goals of the company. Lastly, Nick should adopt to a communication strategy that
encourages indulgence because it is centered on the immediate needs of its members.
Contract Terms and Conditions
In order for Nick to improve the contract terms and conditions, he should firsts address
his main problem which is to understand the basic elements that are contained in a valid contract.
10 Druckman, Daniel, Ronald Mitterhofer, Michael Filzmoser, and Sabine T. Koeszegi.
"Resolving Impasses in e-Negotiation: Does e-Mediation Work?." Group Decision and
Negotiation 23, no. 2 (2014): 193-210. doi: 10.1007/s10726-013-9356-4.
11 Jones, Gareth R., and Jennifer M. George. "The experience and evolution of trust:
Implications for cooperation and teamwork." Academy of management review 23, no. 3
(1998): 531-546. doi: 10.2307/259293.

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Having a good grasp on the basics elements will help to reduce some of the challenges that led to
the termination of his predecessor.12
There are four main elements of a contract that Nick needs to familiarize with in order to
understand what is required of him as a procurement manager as well as ensuring compliance
with terms and conditions. The first element is an offer which states that one of the parties should
promise or refrain from doing a particular activity in the future. In regards to Nick’s case, he
offered to have a supplier to install 100 surveillance bots and SECBOT accepted the offer by
stating that it will provide only 75 bots. 13The second element of a valid contract is based on
acceptance. This is the point where SECBOT should accept the offer from Pluribus in words,
deeds or contract. The acceptance must agree with the terms and conditions of the offer or
otherwise the acceptance can be considered as a counteroffer which is the case between Pluribus
and SECBOT since Pluribus requires 100 bots while SECBOT is willing to offer 75 bots.
The third elements relates to consideration whereby in the event of supplying Pluribus
with surveillance bots, Pluribus will consider other aspects of the contract such as ensuring the
contract will last for a specific duration agreed by both partners. Lastly, the forth element of a
contract relates to intention. This implies that both parties have to be willing to participate in the
contract based on terms and conditions stipulated in the contract documents.14 The intention to
create a legally binding contract based on the terms and conditions of the agreement were
reached after SECBOT accepted Pluribus contract which was followed by a Memorandum of
12 Corbin, Arthur L. "Conditions in the Law of Contract." Yale LJ 28 (1918): 739. doi:
10.2307/787276.
13 Cao, Mukun, and Lifang Peng. "Enabling Computer to Negotiate with Human in E-
Commerce: A Strategy Model." In 2016 49th Hawaii International Conference on
System Sciences (HICSS), pp. 369-376. IEEE, 2016. doi: 10.1109/HICSS.2016.52.
14 Wang, Qiong, Christopher W. Craighead, and Julie Juan Li. "Justice served: Mitigating
damaged trust stemming from supply chain disruptions." Journal of Operations
Management 32, no. 6 (2014): 374-386. doi: 10.1016/j.jom.2014.07.001.

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understanding.15 The terms and conditions of the contract have to be clear by stating what should
be done when the contract comes to an end. In regards to Nick’s case study, he should provide
terms for when SECBOT will have delivered all the bots required.
There must be post-agreement securities that must be considered by both parties in case
one fails to honor their end of the contract. The most viable option to deliver the surveillance is
through the sea.16 For this reason, Nick should consider international laws between Australia and
Singapore with respect to maritime. Nick should make an effort to familiarize information
regarding insurance and risks so that other parties are conversant with the extent to which they
are expected to commit themselves.
International cross-cultural relations
Cross-cultural negotiations refers to the ability to recognize that there are cultural
differences that exist between two parties and may have an influence in the communication
strategy of an organization. Understanding the cultural differences play a significant role in
maximizing the potential of a positive outcome.17 The essence of negotiation is to close deals and
learning cultural aspects of the other party can be important for negotiations.
15 Ke, Weiling, Hefu Liu, Kwok Kee Wei, Jibao Gu, and Huaping Chen. "How do
mediated and non-mediated power affect electronic supply chain management system
adoption? The mediating effects of trust and institutional pressures." Decision Support
Systems 46, no. 4 (2009): 839-851. doi: 10.1016/j.dss.2008.11.008.
16 Nuottila, Jouko, Osmo Kauppila, and Soili Nystén-Haarala. "Proactive contracting:
Emerging changes in attitudes toward project contracts and lawyers’ contribution."
Journal of Strategic Contracting and Negotiation 2, no. 1-2 (2016): 150-165. doi:
10.1177/2055563616669738.
17 Lewicki, Roy J., and Robert J. Robinson. "Ethical and unethical bargaining tactics: An
empirical study." Journal of Business Ethics 17, no. 6 (1998): 665-682. doi:
10.1023/a:1005719122519.

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Cross-cultural negotiations are different from domestic negotiations. This is because
domestic negotiations involve people with similar cultural aspects that can influence contract
negotiations.18 Domestic negotiations have a similar understanding of conflict of interest while
international negotiations have different understanding of conflict of interest. This implies that
Nick should consider how likely a conflict is going to occur during negotiation for purposes of
reaching an agreement quickly. Based on cross-cultural negotiations, Nick has little information
regarding the Singaporean culture which might have a negative influence on the outcome of the
contract. In order for Nick to mitigate this problem, he should have a clear understanding of
cultural standards as perceived by Singaporean society. 19
Among the things to consider include the legal system which forms the basis for all
activities, the economic position because it is significant in helping the company to set prices.
Australian culture is not appropriate for mixed culture as it is practiced in Singapore.20 This is
because the Singaporean tend to encourage long-term relationships. Since both economic status
are relatively stable, it may provide basis for influencing the bargaining power during the
18 Solnick, Sara J., and Maurice E. Schweitzer. "The influence of physical attractiveness
and gender on ultimatum game decisions." Organizational behavior and human decision
processes 79, no. 3 (1999): 199-215.
19 Khalfan, Malik MA, Peter McDermott, and Will Swan. "Building trust in construction
projects." Supply Chain Management: An International Journal 12, no. 6 (2007): 385-
391. doi: 10.1108/13598540710826308.
20 Keyton, Joann, Jennifer Marie Caputo, Emily Anne Ford, Rong Fu, Samantha A.
Leibowitz, Tingting Liu, Sarah S. Polasik, Paromita Ghosh, and Chaofan Wu.
"Investigating verbal workplace communication behaviors." The Journal of Business
Communication (1973) 50, no. 2 (2013): 152-169.

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negotiation phase.21 Other areas that are vital for the negotiation process and can be influenced
by culture include cognition, emotionalism and nature of agreements.
Conclusions
All the solutions that are provided in this report are aimed at enabling Nick to have a
grasp on the requirements that are needed in order to complete a contractual agreement
successfully. For instance. Since the negotiations are going to be discussed between an
Australian and a Singaporean company, Nick should make an effort of grasping the cultural
terms that are used international trades. These are terms that are used to provide information
regarding insurance, risks as well as duties and obligation required by contractual parties within
the terms and conditions of a contract. The purpose of the terms and conditions as stipulated by a
contract aims at determining to which extent a party is liable to in case of inconsistencies that
surround breach of contract within the terms and conditions provided. 22
Nick is therefore expected to increase his knowledge with legal aspects of contract to be
able to draft a contract that values the interest of both parties. In order for Nick to increase his
bargaining power, he must understands the elements of a contract and ensure that each essential
aspect is considered.23 Understanding the whole process helps Nick to modify and follow up in
case of issues surrounding breach of contract such as delays and time sensitivity. In order for
21 Kersten, Gregory E., Rustam Vahidov, and Dmitry Gimon. "Concession-making in
multi-attribute auctions and multi-bilateral negotiations: Theory and experiments."
Electronic Commerce Research and Applications 12, no. 3 (2013): 166-180. doi:
10.1016/j.elerap.2013.02.002.
22 Aisen, Ari, and Francisco José Veiga. "How does political instability affect economic
growth?." European Journal of Political Economy 29 (2013): 151-167. doi:
10.1016/j.ejpoleco.2012.11.001.
23 Aisen, Ari, and Francisco José Veiga. "How does political instability affect economic
growth?." European Journal of Political Economy 29 (2013): 151-167. doi:
10.1016/j.ejpoleco.2012.11.001.

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Nick to realize this objective, he has to consider all dimensions of Hofstede’s cultural
dimensions which clearly stipulates the path Nick is supposed to take to accomplish the
objectives of the contract.24 For this reason, this whole process is a win-win situation where Nick
aims at winning by ensuring that he gets all the surveillance bots within the expected timeframe.
On the other hand, SECBOT expects to be satisfied by agreeing to a contract that will benefit
them financially and encourage sustainable initiatives by negotiating a long-term contract that
will strengthen their relationship.25 By adhering to all the requirements based on the four
elements of a contract, Nick will be able to improve the performance of his negotiations with
SECBOT and achieve better results rather than deciding to go into the negotiations without
adequate preparation.
24 Kalbfleisch, Pamela J. "The language of detecting deceit." Journal of language and
social psychology 13, no. 4 (1994): 469-496. doi: 10.1177/0261927X94134006.
25 Aslani, Soroush, Jimena Ramirez‐Marin, Jeanne Brett, Jingjing Yao, Zhaleh Semnani‐
Azad, Zhi‐Xue Zhang, Catherine Tinsley, Laurie Weingart, and Wendi Adair. "Dignity,
face, and honor cultures: A study of negotiation strategy and outcomes in three cultures."
Journal of Organizational Behavior 37, no. 8 (2016): 1178-1201. doi: 10.1002/job.2095.

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Bibliography
Aisen, Ari, and Francisco José Veiga. "How does political instability affect economic growth?."
European Journal of Political Economy 29 (2013): 151-167. doi:
10.1016/j.ejpoleco.2012.11.001.
Aslani, Soroush, Jimena Ramirez‐Marin, Jeanne Brett, Jingjing Yao, Zhaleh Semnani‐Azad, Zhi‐
Xue Zhang, Catherine Tinsley, Laurie Weingart, and Wendi Adair. "Dignity, face, and
honor cultures: A study of negotiation strategy and outcomes in three cultures." Journal
of Organizational Behavior 37, no. 8 (2016): 1178-1201. doi: 10.1002/job.2095.
Brett, Jeanne, and Leigh Thompson. "Negotiation." Organizational Behavior and Human
Decision Processes 136 (2016): 68-79. doi: 10.1016/j.obhdp.2016.06.003.
Buelens, Marc, and Dirk Van Poucke. "Determinants of a negotiator's initial opening offer."
Journal of Business and Psychology 19, no. 1 (2004): 23-35. doi:
10.1023/b:jobu.0000040270.10433.54.