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Solution
Executive Summary
In this formal commercial negotiation plan project, it intend to evaluate on the best practice in ROSHN organisation in a specific category of spend. The selected spend category of focus is Information Technology (IT) systems in their active operations. The data and information used in generating findings in this report have been obtained from ROSHN internal document, different models and theories and CIPS Module notes. The key findings evidence that ROSHN negotiation plan is strategic and adopts the Bailey et al negotiation approach. This is with different models being relevant in evaluation of the external and internal environment such as PESTEL, Porter’s and SWOT analysis. Another key finding is that through the strategic negotiation plan, the organisation is able to achieve a stabilised, win-win relations with all their involved stakeholders with quality prioritised. Another key finding is that through an active negotiation plan, the organisation is in a position of providing quality products and services sourced from their suppliers. This is with this report identifying various challenges and risks being encountered limiting a successful negotiation plan in ROSHN organisation. Hence, the outcomes from this negotiation plan are identified as instrumental for guiding ROSHN towards setting appropriate strategies for achieving set goals and managing the demand and supply in sourcing of IT products in their construction projects.
In this report, the key findings and conclusions have contributed to identification of gaps which could be managed by pursuing a set of recommendations which are;
- Initiate an integrated digital procurement system for their IT systems sourcing
- Capacity development program for PS&M teams for enhanced procurement process
- Pursuing quarter-based suppliers performance evaluation
- Development of risks assessment strategies for mitigating major risks in their sourcing process
Table of Contents
1.1 ROSHN Organisation Background. 3
1.2 ROSHN Procurement Supply Chain Managemt (PS&M) Background. 4
2.1 Bailey et al. Negotiation Plan/Model 7
3.0 Preparation of Negotiation Plan. 9
3.1 Analysis of Internal and External Data guiding Negotiation Plan. 9
3.2 External Environment Analysis. 11
3.2.1 Supplier Pricing Analysis. 12
3.2.2 Porter’s 5 Forces Analysis. 12
3.2.5 Team Members and Functions 17
4.0 Opening Phase of the Negotiation Plan. 21
5.0 Testing Phase of Negotiation Plan. 21
7.0 Bargaining Stage of Negotiation Plan. 23
8.0 Agreement and Post Negotiations Evaluation Stages of Formal Commercial Negotiation. 25
9.0 Conclusion and Recommendations. 27
Figure 1:ROSHN Organisation Background. 4
Figure 2:Summary of ROSHN Organisation Operations. 5
Figure 3:Main considerations in the Procurement Cycle. 6
Figure 4:Approximate spend in IT consultancy in ROSHN In past financial year. 7
Figure 5:Mendelow Matrix Analysis 11
Figure 6:Components of Porter’s 5 Forces Model 14
Figure 7:Kraljic Matrix Tool 17
Figure 8:Thomas-Kilmann Conflict Model 25
Figure 9:Kolb’s Reflection Cycle. 27
Table 1:Summary of the Negotiation Plan Stages 8
Table 2: Considerations of external environment analusis in ROSHN commercial negotiation plan 12
Table 3:Summary of PESTLE Analysis 15
Table 4:French and Raven Power Relations team roles in ROSHN Organisation. 18
Table 5:Negotiation Plan stages and agenda. 21
1.0 Introduction
1.1 ROSHN Organisation Background
In this formal commercial negotiation plan, ROSHN has been used as the organisation of focus . This is owned by the Public investment Fund (PIF) in Saudi Arabia with a mandate of developing quality residential infrastructure for the citizens of the country (ROSHN, 2024). Currently, approximately 60% of dominance in the residential construction in KSA is by ROSHN organisation ranking at the top in KSA real estate sector currently. Today, in Saudi Arabia (KSA), a government target has been established which is for achieving 70% of house ownership as of 2030. This would be achieved amongst the entire KSA populations who would own houses within their budgets. This is prioritised and supported by different sectors and partnering for increased job chances in place and growth of economies. A summary of the organisation vision and mission and objectives in KSA real estate sector is illustrated in the following;
Figure 1:ROSHN Organisation Background
Source: Summarised from ROSHN (2024)
As shown in the figure 1, the organisation has been successful in their operations guided by the set vision, mission and objectives. These are instrumental as the organisation budget approximately SAR250 Million in management of their operations. This is with involvement of consulting teams, contract management, industrial operations and procurement supply and management teams.
1.2 ROSHN Procurement Supply Chain Management (PS&M) Background
The ROSHN operations are guided by their PS&M which is tasked with a mandate of ensuring that they engage all their suppliers and facilitate negotiations. The scope of their operations are summarised in the following;
Figure 2:Summary of ROSHN Organisation Operations
Source: Summarised from ROSHN internal documents
As illustrated above, the PS&M in ROSHN play a significant role in coming up with questionnaires of pre-qualifications before initiating the negotiation plan. This is while at the same time noting the best suppliers to be involved in different spend categories. This is by use of the Procurement Supply Cycle inclusive of various stages (CIPS, 2024). These are identified in CIPS Module Notes as specification, tendering process and managing assets appropriate for PS&M professionals. In line with the results from the PS&M functions, the commercial part of this deparment analyse and break down entire costs to manage tenders, suppliers relationships for guaranteeing vendors operations. A summary of the cycle as illustrated in CIPS Module Notes is as follows;
Figure 3:Main considerations in the Procurement Cycle
Source: CIPS Module Notes
The selected spend category in this project is the IT consultants spend category. This is informed by view that Post-COVID 19 pandemic, there has been a rise in the demand of different spend categories in the IT are. This is in the areas of IT strategy, IT infrastructure, implementation, ERP Services and data analytics among others. A summary of the organisations spend is illustrated in the following;
Figure 4:Approximate spend in IT consultancy in ROSHN In past financial year
Source: ROSHN Internal documents
As illustrated in the graph, it is important noting that cumulatively, more than SAR100 million is spent in the identified spend area. The rationale of this is what Gawankar et al. (2020) identify as improving the efficient operations leading to effectiveness bottom-line hence high performance. This is manifested by achievement of Key Performance Indicators (KPIs) in ROSHN organisation. Through an effective negotiation plan, the successful sourcing of IT consultancies lead to mitigation of overall risks and hazards in health and wellbeing. This improve safety measures of the workplace in ROSHN with a facilitation of modernised operations in all their real estate projects achieved (ROSHN, 2024).
2.0 Formal Commercial Negotiation Plan
From a basic point of view, CIPS (2024a) identify a commercial negotiation as “practice which is intended to follow terms and agreements amongst consultancy providers and customers who are to be provided by the products and services”. In the case of IT spend category in ROSHN, formal commercial negotiation plan hence entail developing appropriate extent, timelines followed, deliverables core for avoidance of issues in the changing needs in the IT spend category.
Further, Madzimure (2020) note that as part of the negotiation plan, the main considerations include and not limited to payment terms either a flexible arrangement or one-off payment with the other preferences and discounts noted. Also, the security of tenure core for data management in the IT sourcing process owing to its sensitivity. Part of the negotiation include appraisal of the supplier for understanding their considerations on issues of employment and appropriateness of workplace relations. For ROSHN, being a real estate organisation, they would also put into account the conditions of the project implementation allowing for parties involvement in projects termination and implementation process.
2.1 Bailey et al. Negotiation Plan/Model
In line with this model of commercial negotiation, it identify the process as inclusive of different stages (Roy & Bailey, 2021). For ROSHN, the different stages are essential for assisting them in improving negotiation plan for their selected IT spend category. The outcome of this is having clear negotiation process. This is while achieving an improved collaboration amongst all the stakeholders in the process implementation. A summary of these stages are illustrated in the following table;
Table 1:Summary of the Negotiation Plan Stages
Source: Summarised from Bailey et al.
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