Negotiations are a significant part of any business arrangement. Properly organized and debates can help winning any contract. Sandra Johnson Inc. (SJI) managed to make a bid proposal for the Navy contract. The service to provide is flooring jobs. Having estimated the costs and proposed incentives, another important task to do is to discuss the profit margin. In spite of the perfection of a bid proposal its implementation and winning can be achievable through negotiations. Among many kinds of negotiations, it is necessary to choose suitable and strategy to win the contract and to reveal more preferences compared to the competitor.
According to Li, C. , Giampapa, J A. and Sycara, K. (2005), multi-attribute Negotiations are the most acceptable to the Navy, as this organization needs an elaborate conception of the conditions provided by the bidding company. As Sandra Johnson Inc. is under HUB-Zone Program, it is more likely to establish Contract, and this allows providing smaller profit margin due to the larger scope of work estimated. Therefore, the negotiated 8% profit margin will be beneficial for both the bidder and the buyer due to lower production costs and improved design of the product.
When considering a less profit margin SJI has chosen the strategy for gaining higher profits to satisfy the Navy and to obtain profit for itself. The suitable profit margin percentage accepted by SJI did not exceed 10%, but now the company is ready to offer 8% profit margin. Such an offer will be preferable for the Navy than for SJI as it concerns the bidder’s actual revenue reduction and higher income for the buyer. SJI is ready to make such a discount offer due to the scope of work estimated $180,000.
Achieving greater assets is possible after production expenses reduction. Such tactics oversee buying and using qualitative raw materials at lower prices. For this purpose, the Materials used for the production are to be affordable, but their quality should remain high. The risks of price increasing for wood raw materials are possible as during 2012-2013 the prices for hardwood rose (Chevalier, 2014). In this situation, buying of forest materials in supply in the moment of suitable prices or discount will help avoid higher prices for eady production and jobs. Laminate or carpet floors could be suitable for office buildings, but their quality is lower compared to wood. In a case of quick price growth for timber, the suppliers draw the customers’ attention by using Vinyl Luxury Tile (VLN). Vinyl production is cheaper than wood or marble, but its main advantage is water resistance. It is the universal material for different types of buildings or offices. Improved production design is another issue, which will allow reducing production expenses and ensure higher profits.
Many customers are more likely to purchase newly designed furniture of qualitative materials. The modern look of the production will allow avoiding obsolescence and will help it serve longer without repair. Implied changes in design do not require the larger scope of work, but they mean modification of the tiles and providing a wider range of colors or color themes. Sandra Johnson Inc. has an extended range of floor design offers that received positive feedback amidst many clients.
When investigating hardwood flooring market, J. Chevalier (2014) underlines that better design is preferable amid the buyers as each of them is willing to get the unique product. The mentioned profit objectives comprise suitable marketing strategy and competitive advantage of the company SJI. Further practical implementation of the suggested ideas oversees the debating of the specified business goals with the Navy representative. Besides the strategies chosen, there are several kinds of negotiations. Multi-attribute Negotiation presupposes the discussion of many issues included in the contract at the same time (Li, Giampapa, and Sycara, (2005).
Bilateral negotiations oversee the two-sided Interaction and addressing the interests and requirements of both buyer and seller (Li, Giampapa, a nd Sycara, 2003). D. Greenwood, T. Howarth, and D. Yates stress that attribute negations include providing the information of the overall chain. At these negotiations, all the participants of the production process express their opinions and cooperate equally (Greenwood, Howarth and Yates, n. d. ). Thus, Sandra Johnson Inc. has chosen holding bilateral negotiations to consider the benefits and interests of both sides.
The first point of the negotiating strategy is offering a higher percentage of the profit margin and gradually lowering this mark to less than 10%. Having analyzed the potentials of the small business market, the advantageous strategy of the company is to offer an 8% Threshold as a profit margin, which is lower than the competitor’s firm. The negotiator from SJI has to present all the winning aspects of the company as much as possible. Such a listing will include such attributes as performance, quality and design.
Due to the production effectiveness, the quick and qualitative performance of the staff and a few years marketing experience such a percentage would not be risky for the company. Besides, this rate is fixed during the whole period of the agreement. Having taken into account the lowering of raw material prices SJI may offer discounts without exceeding the required threshold. In the case of 8% margin reduction, it will be necessary to reassure the Navy negotiator not to provide the price less than the appropriate limits (Guasco and Robinson, 2007).
Secondly, it is meaningful to initiate the negotiations sooner than the opponent is. SJI’s representative will act as a cooperative negotiator and preserve the balance between cooperation and competitiveness. M. P Guasco and P. R. Robinson underline that the character of the debates depends on the initiator. The analysts are sure that cooperation is the first step of the sufficient negotiations (Guasco and Robinson, 2007). As we know, the Navy representative is rather resilient and conditional. Thus, it is necessary to preserve cooperation spirit because competitiveness will be present during all the process.
Finally, using flexibility in competitiveness and cooperation ratio displays SJI as the company that is not willing to be broken. Paying attention to the production’s quality and its modern design by providing 8% profit margin for the scope of work it is important to indicate that its price cannot below. This will help to retain the necessary percent threshold, satisfying the interests and ensuring high profits for both sides. Dealing with a small business with governmental structures requires the application of precarious marketing moves and considering the all the possible risks to avoid failures.
Negotiating tactics for assuring the profitable agreement for both sides is more important than the company’s strategy itself as the way of presentation of company’s interests determines its further cooperation with its partner-to-be. Prevailing of the cooperative tone of the negotiations is the primary factor in its success. The presence of the competitiveness at negotiations will help to understand the company’s interest by its opponent and will allow participating in decision making and managing the stages and the course of the negotiations. Lower profit margin should not reduce to the extent of 8% otherwise the company undergoes loss.
