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SITXMGT501 Establish & Conduct Business Relationships - Assignment D & F - Case Study & Task 1

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Added on 2024/07/24

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This assignment explores the negotiation process for establishing business relationships with two suppliers: Stockman Furniture and Reward Hospitality. It examines the key areas of negotiation, research required, cultural factors, objectives, concessions, and potential challenges. The assignment also includes two contracts outlining the agreements reached with each supplier.

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SITXMGT501
Establish & Conduct Business
Relationships
Assignment D- Case Study & F- Task 1
Student Name:
Student ID:
1

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Contents
Case Study....................................................................................................................................... 3
Introduction..................................................................................................................................3
Question 1: What two areas have you chosen to use as the basis for your negotiation?.............4
Question 2: What information must you research before you make initial enquiries with
potential suppliers?...................................................................................................................... 4
Question 3: Once you’ve contacted suppliers to negotiate with, research the people and the
organisation. Describe the results of your research and the cultural factors you’ll need to
consider during negotiations with two different suppliers..........................................................4
Question 4: When negotiating with both suppliers, list the following for each supplier:...........6
Question 5: What concessions are you prepared to make during negotiation to achieve your
objectives for each supplier?....................................................................................................... 8
Question 6: Where will the negotiations for each supplier take place?.......................................8
Question 7: List the internal and external issues that could affect the business negotiation as
well as any challenge you might occurring during the negotiation process for both suppliers.
Describe how you will deal with it.............................................................................................. 8
Question 8: Who will you communicate the results of negotiation to?.......................................9
Question 9: Write a meeting Agenda for Each of the Negotiations............................................9
Conclusion................................................................................................................................. 10
F – Task 1......................................................................................................................................11
Contract 1: Agreement for Supply Of Furniture Goods............................................................11
Contract 2: Agreement for Supply Of Service Equipment........................................................15
References......................................................................................................................................19
2

Case Study
Introduction
Negotiation is the process where two parties mutually consult their respective problem and try to
reach at a common and positive outcome. Negotiation is a mode under the contract law to set
aside the differences through mutual consent. There are various problems faced by parties when
contracting with each other regarding mode of acceptance, delivery of product or goods,
payment, mode of payment etc. Negotiation is a part of contract which allows parties to settle
disputes related to the contract signed between the parties on which parties think further issue
may arise. This process basically is done in the present of representatives of both the parties.
They come together and put forward their issues and expectations from the contract. Both parties
try to solve each other problems through compromise in some or other way. At the end of the
process both the parties have an option to either agree or disagree. If the parties disagree than the
agreements comes to an end at that very point of time. If the parties agree to the terms they can
finalise the terms and conditions of the contract by approval from their respective authorities.
3

Question 1: What two areas have you chosen to use as the basis for your negotiation?
Considering the immediate requirement of products and work of renovation of the hotel’s bistro
the chosen areas for the negotiation are:-
1. Furniture: tables, chairs and service stations
2. Service Equipment: glassware, cutlery, crockery, etc.
Question 2: What information must you research before you make initial enquiries with
potential suppliers?
There are a number of factors which affect the point of negotiation between suppliers.
Negotiations are done on the basis of various aspects such as reputation of the supplier in the
market, work culture of the supplier, the consequences of a previous contract or agreement (if
any) and distance as it will decide how much time it will take to actually deliver the products.
The background check of the supplier company as well as the financial background so that there
is no further issue regarding the loyalty of the supplier (Bryman, & Bell, 2015).
Question 3: Once you’ve contacted suppliers to negotiate with, research the people and the
organisation. Describe the results of your research and the cultural factors you’ll need to
consider during negotiations with two different suppliers.
The consequences of negotiations depend on how well the starting negotiations were made.
There should be a lot of care and diligence taken while starting a negotiation. If opening of
negotiation is not good than the negotiation may fail as a consequence. It is better to judge the
other side before taking to them regarding their expectations and if there any possibility that their
expectations can be fulfilled. Try not to leave too much money on the table while negotiating as
it lowers down repute in the eyes of other party and they may take you for granted in future
contracts (Hakansson, 2014).
There are more chances of acceptability of the negotiations if you try to manage the expectations
of the other party and it should start at very beginning of the negotiation talk. These talks should
be done at a moment when you are trying to take out their expectation. Management of
expectation can change the outcome of the negotiation.
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One must never let its personal feeling to get in the way of negotiation. One can be very loyal to
its company which is a human nature to expect. But in negotiations there is a sense of
professionalism which will require one to be more practical than emotional.
Legal issues are there in every negotiation. One must use a lawyer to deal with such situations.
There may be requirement to alter the mentioned terms of the agreement while doing negotiation
which may affect the outcome of the. If the legal issues persist than there is lesser chance for a
positive negotiation (Hernández, et. al., 2014).
There are chances that while dealing with two different suppliers one is required to handle
differently with other. As the people sitting on the opposite side of the table are also humans and
may vary in nature which will definitely affect the outcome of the negotiation. Depending upon
the reputation and monetary value of their businesses, decision can vary in various factors. One
may require more manipulation and attention than other in some situations.
5

Question 4: When negotiating with both suppliers, list the following for each supplier:
For Supplier 1 - Stockman Furniture:
Objective:
To get good quality furniture in less time and proper price
Negotiable Requirements:
 Must be in writing, as the order for the furniture is too big it must be in writing including
the negotiations regarding this so that no party can change claim after decided in the
contract (Johnson, 2014).
 There should not be unwanted conditions which may affect the delivery of the furniture at
any cost.
 The time of the delivery of product is the essence of a contract; ‘Australian Hotel’ may
negotiate with the Stockman Furniture to deliver the goods early as there is immediate
requirement.
 Price of the product, The number of product ordered is very high which allows the
purchaser to negotiate on the monetary value of the product (Hugos, 2018).
Non-Negotiable Requirements:
 Delivery of documents i.e. Physical invoice mentioning every detail of product delivered
including GST and number of products.
 Mode of delivery will not be negotiated as there is immediate requirement. Before
acceptance of the product, the authorised person from the Hotel will inspect and check
the quality of the product and may reject if the product is not of expected quality.
BATNA- Best Alternative Negotiable Agreement-
If both parties fail to reach at an outcome after negotiation, then there will be an alternative
agreement i.e. agreement for part supply of the product. Under this agreement there will be
delivery of a part of the product mentioned in the contract before actual delivery date decided in
the contract terms. So, both the parties can satisfy themselves on the basis of that particular
delivery (Macaulay, 2018). Parties after this can change terms and conditions of the actual
6

contract accordingly. It should be the last option to save the contract between them. There will be
no further conversation regarding terms if BATNA also fails to decide the contracts.
For Supplier 2 - Reward Hospitality
Object:
To agree to get mutual consent on supply of service equipment at an effective price and on time
delivery
Negotiable requirement:
 The documents related to the transaction as well as the physical invoice of the transaction
including GST and number of the products will be given to the purchaser.
 Sole authority of the purchaser to inspect and check the quantity and quality of the
product at the time of delivery (Scarborough, 2016).
 The price of the product should be reasonable and according to the requirement of the
product.
Non-Negotiable requirements:
 The time and quantity of the delivery of product will be according to the purchaser as
there is an urgent requirement for the continuation of the business.
 No other product other than what is mentioned in the contract and agreed between the
parties.
BATNA- Best Alternative to a Negotiated Agreement
It will be the duty of both the parties to inform the other party if not satisfied by the terms of
negotiation. In case if there is an actual failure of the negotiable talks than there will be a part
delivery of the service equipment so that purchaser can decide accordingly, and if an outcome is
still negative the purchaser will be allowed to contact another supplier (Hernández, et. al., 2014).
7

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Question 5: What concessions are you prepared to make during negotiation to achieve your
objectives for each supplier?
Negotiation is the process where every party has to compromise with their expectation to achieve
a positive outcome. In the present case ‘Australian Hotel’ wants quality product from both the
suppliers. The furniture which is to be bought should be of timber wood but if the supplier has
something better to offer at the same price than the Hotel can drop the Idea of timber wood
furniture.
Australian Hotel is more concerned about quality of product than quantity. While negotiating
with the Reward Hospitality, the main issue will be of price of the service equipment. Hotel is
ready to increase the price by 2% each dinner set but supplier will provide 10 additional sets as
backup.
Question 6: Where will the negotiations for each supplier take place?
Negotiation is the process in which parties settle their differences to reach to a positive outcome.
The place for negotiation must be a matter of mutual consent (Johnson, 2014). The meeting
between parties shall take place at the Suppliers head office respectively i.e. at the office of
Stockman Furniture and Reward hospitality.
Question 7: List the internal and external issues that could affect the business negotiation
as well as any challenge you might occurring during the negotiation process for both
suppliers. Describe how you will deal with it.
Internal issues:
 Choice of supplier: It is obvious that not everyone from the business has good image of
the supplier, there may be some negative feedback about the same. The only solution to
this problem is to generalise the issue and satisfy everyone about the quality of products
that will be supplied by the supplier.
 Price of the product: The price of the products may seem a little high to the other
members of the management of the hotel. If the members of management think that the
price is high, the price can either be negotiated or higher quality products can be asked to
be supplied by the supplier at the same price (Bryman, & Bell, 2015).
External issues:
8

 Regarding delivery: There can be issue of delivery i.e. time and place, which is to be
decided mutually by the parties.
 Regarding quality: Quality of the product may differ from what was shown as a sample at
the time of delivery. The purchaser has the option to check and inspect the products to
see if they can be replaced in case damaged.
Question 8: Who will you communicate the results of negotiation to?
The results of Negotiations will be communicated to the General Manager to obtain final
approval for all contracts (Hakansson, 2014).
Question 9: Write a meeting Agenda for Each of the Negotiations.
Meetings with Stockman Furniture’s Assistant Manager:
The meeting will take place at the head office of Stockman Furniture. The meeting will take
place between the assistant mangers of both the parties between office hours. Everything
regarding the contract terms will be decided by the parties.
Meeting with Reward Hospitality:
The meeting will take place at the head office of Reward Hospitality between the managers of
both the parties. From price to delivery everything will be negotiated between the parties in this
meeting (Macaulay, 2018).
9

Conclusion
Negotiation works as a bridge between the contracting parties to settle their disputes and work
according to what is best for both of them. It is a model through which minor problems arising
out of an agreement can be sought out by the parties. There is also an option for BANTA i.e.
Best alternative to Negotiable Agreement which is the last option after negotiable instrument.
10

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F – Task 1
Contract 1: Agreement for Supply of Furniture Goods
Between
Stockman Furniture, 26 Victoria St, Midland WA 6056, Australia
And
Australian Hotel, 1 Lady Mary Tce, Gympie QLD 4570
Whereas
A. The Supplier namely ‘Stockman Furniture’ is the supplier of timber furniture on custom
based designs.
B. ‘Australian Hotel’ wishes to purchase Furniture from the supplier on the basis of said
terms and condition under this Agreement.
As Agreed
1. Interpretation
1.1 Under this agreement words will have meaning as assigned below:
“Agreement” means this agreement only.
“Purchaser” means Australian Hotel.
“Supplier” mean Stockman Furniture
“Business Day” means standard business day in Midland WA, Australia.
“Commencement Date” means
“Order” means order placed by the ‘Australian Hotel’ with the ‘Stockman Furniture.
“Parties” mean parties to this Agreement.
“Product” means furniture under this agreement.
“Price” the price decided for the product under this agreement
2. Terms of Agreement
2.1 The agreement commences on Commencement Date 1st September 2018 and unless
extended or terminated earlier will continue till the delivery of product.
11

2.2 ‘Australian Hotel’ may renew this agreement for further purchase with mutual
consent of the parties after first delivery.
3. Placement of Order and Supply of Goods
3.1 Hotel will be requiring 50 set of timber wooden furniture which includes tables and
chairs. The delivery day and date will be specified in this agreement only.
3.2 The Supplier will be abiding by the law and regulations which apply to performance
of obligation in this agreement.
4. Risk and Delivery
4.1 The Hotel will be liable for any damage or risk after it has accepted delivery of
product.
4.2 Product purchased by the Hotel will subject to investigation, inspection and approval
by the Hotel before accepting the delivery.
4.3 If there is any product which is defective or damaged than the purchaser can
reject the product even after the acceptance.
4.4 Anytime when the Supplier thinks that it will not be able to deliver the good on the
pre-decided day and date than it will be his duty to inform in writing to the purchaser
regarding the day and date he will be able to deliver.
4.5 In case if the delay in deliver is causing substantial harm to the purchaser the
purchaser can:
 Terminate or cancel the order
 Product will be purchased from other supplier, and extra charges will be paid
by the original supplier.
5. Price and Payment
5.1 The Price for each set of table and chair (decided mutually) will be $400 i.e. for 50
set it will be paid $20,000.
5.2 It will be duty of the Supplier to provide the purchaser with a valid invoice with
mention of the product supplied, price and GST on the product.
12

5.3 It will be the final price for the product no alteration can be done by the parties
without informing the other party.
6. Relationship
The parties to this agreement are independent contracting parties and this agreement will
not make an agency between them.
13

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Executed as an Agreement
SIGNED BY AUSTRALIAN HOTEL
By the authorised signatory in the presence of:
.......................................................
Witness
.......................................................
Name (please print)
…………………………………...
Date
.......................................................
SIGNED BY STOCKMAN FURNITURE
By its Authorised Signatory who signs
In the presence of:
.......................................................
Witness
.......................................................
Name (please print)
…………………………………..
Date
.......................................................
14

Contract 2: Agreement for Supply Of Service Equipment
Between
Reward Hospitality, 391 Park Road, NS Regents Park 2143 P: 02 8717 6600
And,
Australian Hotel, 1 Lady Mary Tce, Gympie QLD 4570
Whereas
A. The Supplier namely ‘Reward Hospitality’ is the supplier of Service Equipment for hotel
businesses.
B. ‘Australian Hotel’ wishes to purchase Service Equipment from the supplier on the basis
of said terms and condition under this Agreement.
As Agreed
1. Interpretation
1.1 Under this agreement words will have meaning as assigned below:
“Agreement” means this agreement only.
“Purchaser” means ‘Australian Hotel.
“Supplier” mean ‘Reward Hospitality’.
“Business Day” means standard business day in Midland WA, Australia.
“Commencement Date” means
“Order” means order placed by the ‘Australian Hotel’ with the ‘Reward Hospitality
regarding Service Equipment’s.
“Parties” mean parties to this Agreement.
“Product” means furniture under this agreement.
“Price” the price decided for the product under this agreement
2. Terms of Agreement
2.1 The agreement commences on Commencement Date 1st September 2018 and unless
extended or terminated earlier will continue till the delivery of product.
15

2.2 ‘Australian Hotel’ may renew this agreement for further purchase with mutual
consent of the parties after first delivery.
3. Placement of Order and Supply of Goods
3.1 Hotel will be requiring Service equipment which include; 100 dinner sets which
includes 6 dinner plates, 6 small bowls, 3 big bowls, 12 tea spoon and 6 tablespoon. The
delivery day and date will be specified in this agreement only.
3.2 The Supplier will be abided by the law and regulations which apply to performance of
obligation in this agreement.
4. Risk and Delivery
4.1 The Hotel will be liable for any damage or risk after it has accepted delivery of
product.
4.2 Product purchased by the Hotel will subject to investigation, inspection and approval
by the Hotel before accepting the delivery.
4.3 If there is any product which is defective or damaged than the purchaser can reject
the product even after the acceptance.
4.4 Anytime when the Supplier thinks that it will not be able to deliver the good on the
pre-decided day and date than it will be his duty to inform in writing to the purchaser
regarding the day and date he will be able to deliver.
4.5 In case if the delay in deliver is causing substantial harm to the purchaser the
purchaser can: Terminate or cancel the order. Product will be purchased from other
supplier, and extra charges will be paid by the original supplier.
5 Price and Payment
5.1 The Price for each dinner set (decided mutually) will be $500 i.e. for 100 dinner set it
will be $50,000.
5.2 It will be duty of the Supplier to provide the purchaser with a valid invoice with
mention of the product supplied, price and GST on the product.
5.3 It will be the final price for the product no alteration can be done by the parties
without informing the other party.
16

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6 Relationship
6.1 The parties to this agreement are independent contracting parties and this agreement
will not make an agency between them.
17

Executed as an Agreement
SIGNED BY AUSTRALIAN HOTEL
By the authorised signatory in the presence of:
.......................................................
Witness
.......................................................
Name (please print)
…………………………………...
Date
.......................................................
SIGNED BY STOCKMAN FURNITURE
by its Authorised Signatory who signs
in the presence of:
.......................................................
Witness
.......................................................
Name (please print)
…………………………………..
Date
.......................................................
18

References
 Atkin, T. S., & Rinehart, L. M. (2016). The effect of negotiation practices on the
relationship between suppliers and customers. Negotiation Journal, 22(1), 47-65.
 Bryman, A., & Bell, E. (2015). Business research methods. Oxford University Press,
USA.
 Epstein, M. J. (2018). Making sustainability work: Best practices in managing and
measuring corporate social, environmental and economic impacts. Routledge.
 Hakansson, H. (2014). Corporate Technological Behaviour (Routledge Revivals): Co-
operation and Networks. Routledge.
 Hernández, J. E., Mula, J., Poler, R., & Lyons, A. C. (2014). Collaborative planning in
multi-tier supply chains supported by a negotiation-based mechanism and multi-agent
system. Group Decision and Negotiation, 23(2), 235-269.
 Hugos, M. H. (2018). Essentials of supply chain management. John Wiley & Sons.
 Johnson, P. F. (2014). Purchasing and supply management. McGraw-Hill Higher
Education.
 Lumineau, F., & Henderson, J. E. (2012). The influence of relational experience and
contractual governance on the negotiation strategy in buyer–supplier disputes. Journal of
Operations Management, 30(5), 382-395.
 Macaulay, S. (2018). Non-contractual relations in business: A preliminary study. In The
Law and Society Canon (pp. 155-167). Routledge.
 Scarborough, N. M. (2016). Essentials of entrepreneurship and small business
management. Pearson.
 Shi, Y., Zhang, A., Arthanari, T., Liu, Y., & Cheng, T. C. E. (2016). Third-party
purchase: An empirical study of third-party logistics providers in China. International
Journal of Production Economics, 171, 189-200.
 Thomas, S. P., Thomas, R. W., Manrodt, K. B., & Rutner, S. M. (2013). An experimental
test of negotiation strategy effects on knowledge sharing intentions in buyer–supplier
relationships. Journal of Supply Chain Management, 49(2), 96-113.
 Trevino, L. K., & Nelson, K. A. (2016). Managing business ethics: Straight talk about
how to do it right. John Wiley & Sons.
19

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 Wynstra, F., Spring, M., & Schoenherr, T. (2015). Service triads: A research agenda for
buyer–supplier–customer triads in business services. Journal of Operations
Management, 35, 1-20.
 Yu, C., & Wong, T. N. (2015). An agent-based negotiation model for supplier selection
of multiple products with synergy effect. Expert Systems with Applications, 42(1), 223-
237.
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SITXMGT501 Establish & Conduct Business Relationships - Assignment D & F - Case Study & Task 1

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