Charles & Keith: The impact of Negotiation on Material Purchasing

This case study examines the negotiation process in material purchasing at Charles & Keith Wong, a leading fast-fashion brand in Singapore. Through qualitative research involving interviews with purchasing department employees, the study identifies key issues such as high purchase prices and raw material shortages. The findings highlight the crucial role of negotiation in controlling organizational costs and suggest that establishing clear objectives, limiting supplier involvement, and defining contract clauses are vital for improving purchasing outcomes. The research provides insights for Charles & Keith and other organizations to enhance their negotiation strategies and overall purchasing efficiency, ultimately maximizing the value of their investments.

Role of negotiation in purchasing the material: A case study of Charles & Keith Wong,
Singapore

Contents
Abstract......................................................................................................................................4
Introduction................................................................................................................................5
Research Background.............................................................................................................5
Problem Identification............................................................................................................6
Research Purpose....................................................................................................................6
Research Questions................................................................................................................7
Research objectives................................................................................................................8
Literature Review.......................................................................................................................8
Concept of negotiation...........................................................................................................8
Role and importance of negotiation in growth of company.................................................10
Role of negotiation for organization.....................................................................................12
Strategies for negotiation process.........................................................................................13
Research Methods....................................................................................................................15
Research Approach...............................................................................................................15
Sampling strategy.................................................................................................................16
Data collection methods.......................................................................................................16
Data Analysis and Findings.....................................................................................................17
Implications and Conclusion....................................................................................................18
References................................................................................................................................20
Appendix..................................................................................................................................23
Interview questions...............................................................................................................23

Abstract
This paper focuses on the purchasing negotiation process of one of the leading companies of
Singapore, in the area of fast fashion goods and accessories. The major purpose of the paper
was to explore the negotiation process of the company and determine the major issues that
are preventing the organizations from achieving the maximum value of the purchases. In this
context, qualitative study was conducted with the help of interview and literature review. For
the interviews, 10 respondents from the purchasing department of Charles Wong and Keith
Wong were selected. The findings of the research indicate that the negotiation process is a
crucial process of the organization that affects the overall cost of the organization. Charles
Wong and Keith are facing the issue of high purchase prices, and shortage of raw material.
The paper recommends that the purchasing managers should focus on establishing clear
objectives, involving fewer suppliers in the negotiation process and establishing the clear
clauses and conditions for the suppliers. The findings of this research will help Charles Wong
and Keith and other organizations in improving their purchasing process.

Introduction
Research Background
This particular research focuses on one of the most important aspects associated with the
procurement in an organization – Negotiation. Procurement can be defined as the process or
action of obtaining or procuring something. Butter and Linse (2008) stated that suppliers can
be motivated to offer their best price with help of conversation and not competition. The
word “conversation” reflects the importance of negotiation in the procurement process.
Negotiation can be defined as the decision -making process between two parties that have
opposing interests. The negotiation process helps in dealing with the complex situation
during the process of procurement. The word ‘negotiation’ is originated from a Latin word
‘neg’ that means ‘no’ and ‘otsia’ that means ‘leisure’ that refers to the businessmen who had
no time for leisure. In the 17th century, the word ‘negotiation’ took a different meaning of a
dialogue between two or more parties or people who are intended to reach at a beneficial
outcome over an issue or issues in which conflict exists. In simple words, negotiation can be
defined as the process associated with combining the divergent positions into a joint
agreement with unanimity (Wertheim, 2018).
Negotiation is an important part of the purchasing process that is a sub part of procurement
process in an organization. Purchasing can be defined as an attempt of an organization or a
business to acquire various goods and services for achieving the organizational goals and
objectives. The negotiation covers the time period from the first communication between the
parties to the final step of contract signing. The purchasing professionals of the organization
should focus on obtaining the best prices for the supplies with the help of negotiation process.
In a broad sense, negotiation aims at achieving the maximum value of the money spent in the
purchasing process. In order to achieve the maximum value in purchasing process, the

purchasing professional should negotiate in the most effective manner (Kramer, 2009). This
particular research will focus on the role of the negotiation process, for the purpose of
purchasing materials for the company of Charles & Keith Wong based in Singapore.
Charles & Keith (styled CHARLES & KEITH) is one of the leading fast fashion brands of
Singapore. It offers the products under the categories of fast fashion accessories and
footwear. It was founded in the year 1996 by Charles Wong and Keith Wong. This brand has
its footprints across Europe, Middle East, Africa and Latin America (Charleskeith, 2018).
Problem Identification
In today’s highly dynamic and competitive environment, the process of negotiation has
become one of the ways for obtaining the maximum value (Borbely, 2016). A poor
negotiation in a business can destroy a company in terms of loss of customers and increased
cost. The economic pressures across the world are forcing the organizations to pressurize
their negotiators, to use the best negotiation practices so as to achieve the best prices for the
raw material and supplies procured from the wide range of suppliers (Hoezen & Volke,
2015). Organizations across the world including Charles & Keith Wong are in a weak
position in context of negotiating with suppliers and obtaining the best prices for the raw
material and other supplies. In this context, there is a need of some strategic approaches and
strategies that can be used for maintaining the relationships with suppliers along with
maximizing the overall value of the money spent in the purchasing process. The process of
negotiation involves a number of discussions and agreements on certain aspect (Rogers &
Fells, 2018).
Research Purpose
The overall purpose of this research is to determine the role and importance of negotiation in
the purchasing process of Charles & Keith Wong. The purchase of raw material and purchase
of supplies in the manufacturing process includes a number of issues such as the organization

do not get the best value of the money spent or the best prices in which they can purchase the
raw material (Ready & Tessema, 2011). In addition, there is also an issue associated with the
prolonged availability and supply of the raw material in a consistent manner. Apart from this,
there is an issue of shortage of raw material that can be solved with the help of an effective
negotiation process. The purpose of this research is to determine the role and importance of
negotiation process in the growth of Charles & Keith Wong along with helping the
organization in solving the issues associated with purchasing, with the help of negotiation. In
case of Charles & Keith, negotiation is one of the important concepts that have to be effective
especially during the purchase process. In this context, it is essential for Charles & Keith to
ensure that it has clearly defined conditions and clauses at the place so as to conduct the
purchasing process effectively with the help of negotiation.
Research Questions
This research has some research questions that will guide the research along with limiting the
scope of the research. These research questions are discussed below:
1. What are the major concepts related with negotiation?
2. What is the role of negotiation in the purchasing power of raw materials by the
company as well as the buyers?
3. What is the role and importance of negotiation in Charles and Keith Wong’s growth?
4. What strategies can be used in the negotiation process by Charles and Keith Wong?

Research objectives
This particular research aims at analyzing and identifying the role of negotiation in the
bargaining power of the buyers and suppliers in context of the goods manufactured by the
company Charles & Keith Wong, Singapore. The research objectives that will guide this
research in a particular direction are listed below:
 To define the concept of negotiation
 To determine the role of negotiation in the purchasing power of raw materials by the
company as well as the buyers
 To determine the strategies that can use in the negotiation process
 To determine the role and importance of negotiation in the company's growth
Literature Review
Concept of negotiation
Negotiation is considered as a method through which people settle their differences. By this
process, compromise or agreement is approached while arguments and disputes are avoided.
In case of any kind of differences, the individuals reasonably aim to achieve best possible
effect for their position within the organization. However, the principles of fairness,
maintaining the relationship and seeking mutual benefits are essential for successful
outcomes. There are various specific forms of negotiations that are utilized in various
situations i.e. for legal system, international affairs, government, industrial disputes or for
family relationships. However, there are various other common negotiation skills that could
be learnt and implemented in wide variety of activities (Ready & Tessema, 2011). The
negotiation skills could prove to be highly beneficial in resolution of various differences that
occur between people. For the purpose of achieving desirable outcomes, structured approach
is required.

The process of negotiation includes stages such as preparation, discussion, clarification of
goals, negotiation for win-win situation, agreement and implementation of a course of action
(SkillsYouNeed, 2018). On the other hand, if the process of negotiation does not succeed and
the agreement cannot be reached, the meeting could be rescheduled. There are various other
skills to make the negotiation possible such as mediation skills (Fells, 2009). There are three
elements that might affect the ultimate outcome of negotiation which are attitudes,
knowledge and interpersonal skills (SkillsYouNeed, 2018).
According to Thomas (2018), negotiation is a fundamental human action in which everyone
gets engaged. There is a highly familiar approach towards negotiation which is positional
wherein, both the parties take a certain conflicting position or relevant issues and attempts to
convince the other side to accept the preferred position of the persuader. Some people are
highly skilled in positional negotiation that they become able to achieve objectives by the use
of positional techniques. On the contrary, interest-based negotiators make every effort to turn
contentious, competitive positional bargaining sessions into mutual problem solving skills
wherein, negotiators make efforts to explore and identify creative ways to satisfy the interests
of each party. However, interest-based negotiations do not usually lead to mutual benefits;
they most probably like to achieve such gains as compared to positional negotiations
(Thomas, 2018).
According to Cheow (2016), the negotiation process requires exploration of what process
would best be suitable towards the goals for negotiation. It is essential to sit down with others
ready for negotiation, to explore and resolve the major questions that would determine that
process. The process of negotiation starts with questions but not with answers. The
negotiation might start process negotiations, to explore that negotiations are efficient and
assist both the parties to achieve what is desired. The process questions allow negotiators to
search for all the negotiation process. The initial focus on the process enables the negotiator

to anticipate and plan with unexpected and varying expectations from the other side of
negotiating party. The effective design of the negotiation process enables the negotiator to
form the process in a manner so as to obtain the desired results (Cheow, 2016).
Role and importance of negotiation in growth of company
Finkel (2018) has discussed different negotiating tactics that are highly important. It is
essential to get the negotiating goals clarified. There are three questions to be taken into
consideration that what could be the best possible outcomes, the bottom line as well as the
alternative plan. Another skill is to determine the core negotiation strategy that could move
the negotiator towards possible outcomes (Kumar & Worm, 2004). It is essential to
understand the negotiation tactic which would be best suitable in that particular situation.
Drawing out on why the other party prefers to make a deal by the process of asking questions
and developing negotiating roots. In the process of negotiation, one should play the role of a
reluctant party and the reluctance should be expressed through body language, voice and
expressions (Finkel, 2018). By mastering these negotiating skills, the business and the
individuals can resolve the issues and conflicts arising within the organizations with utmost
ease.
Negotiation is considered as essential in corporate sector to avoid the conflicts as well as to
improve the relations among the employees within the organizations. The style of negotiation
plays a significant role in corporate sector because it is important while dealing with the
dealers, customers or clients (Olekalns, Smith, & Walsh, 1996). Particularly, the people or
business persons who have to deal with external parties majorly, they should be a good
negotiator otherwise they might be disadvantageous to them. Learning to negotiate with the
superiors politely might protect one from getting into conflict and to attain win-win situation
for both the parties. In this way, conflicts must be avoided at the workplace because it only

leads to negativity and nothing else and negotiation is the best way possible. The occurrence
of conflicts due to rigid nature of the individuals or when they are not willing to compromise,
but negotiation could assist them in finding an alternative that could be beneficial for all the
concerned parties ( Management Study Guide, 2018). However, it requires good negotiation
skills to convince the people towards certain goal or motive.
It is a well-known fact that negotiation skills are considered as absolutely essential for
performing a business. The ability to negotiate is obviously important in meetings and
finalizing contracts, however, the benefits of negotiation could extend far beyond these uses.
The mind-set of negotiation is considered as beneficial for all from employees to clients to
management. The best negotiators are the ones who become able to generate win-win
situations wherein, all the concerning parties get equally benefited (Sally & O'Connor, 2004).
The motive of negotiation is to get the best possible deal for the organization but it requires
improvising the bottom line. The confidence is considered as important part of a negotiation
so it is essential to be confident while considering negotiations. Furthermore, it is also
important that the employees respect their seniors for the purpose of achieving the
productivity out of them. It is also essential that the individuals, retailers or the clients to
whom one is negotiating respect them and their decision as well for the success of the
negotiation. So, it is essential for the organization to have individuals in management who
possess excellent negotiating skills (Business Queensland, 2018). Therefore, good negotiating
skills contribute significantly to the success of the business, as it assist in developing better
relationships, delivering long-lasting and quality solutions, satisfying the needs of both the
parties as well as assist in avoiding future issues and conflicts (Business Queensland, 2018).

Role of negotiation for organization
According to the research conducted by Kharbanda & Stallworthy (1991), the negotiations
are conducted with customers, suppliers, trade unions, family and such others. In business,
the essential requirement of negotiation is management, however, there are eight stages in
negotiation which are prepare, discuss, indication, suggest, presenting package, bargain, close
and settle. During the proposal stage, it is essential to be clear about what to be achieved,
what is intended to achieve, what are the expectations to be achieved. The researchers
reviewed the approach towards competitive and constructive negotiation, role of consultation,
how to deal with deadlock and conflict, cross-cultural negotiation as well as the art of
compromising. After conducting the research, the researchers revealed that development and
utilization of teams in negotiation is also an important factor and it requires cautious
assessment of the situation (Kharbanda & Stallworthy, 1991). As per the researchers, most of
the times, negotiations involve conflict but initiatives to ensure friendly terms among the
negotiating parties can resolve the issues or conflict quite easily and effectively.
According to Zarei, Hassannejad & Ganjouei (2016), the conflict is considered as a major
behavioural barrier between individuals or groups. The managers who are aware about the
fundamental principles of conflict and negotiation can easily deal efficaciously with such
unavoidable situations arising within the organization. However, the research conducted by
the researchers aimed to describe the role of negotiation in the process of conflict
management, for which, the researchers applied analytical-correlation study upon the
participants. To achieve the purpose, the researchers utilized Robbins' Conflict Management
Questionnaire as well as PEER’s Negotiation Styles Questionnaire for the collection of the
data. The findings of the research revealed that there is a substantial relationship between the
negotiation styles as well as conflict management. However, the researchers found that there
was no relationship between the negotiation styles, in addition to the avoidance strategy, the