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Solution
Table of Contents
1.1 Red Sea Global (RSG) Organisation Background. 5
1.2 Rationale of the Assignment 5
2.0 Rationale of Negotiation Plan. 8
2.1 Reason/Rationale for Negotiation Plan. 8
2.2 Business Needs in Negotiation. 9
3.0 Negotiation Plan Stakeholder Analysis. 11
4.0 Negotiation Plan Implementation. 15
4.1.1 Buyers and Suppliers Involve in Negotiation. 16
4.1.2 Market Analysis in Negotiation. 17
4.3.1 Negotiation Environment. 22
4.3.2 Contract/Category Importance to RSG.. 23
5.0 Conclusions and Recommendations. 26
Figure 1:Procurement life cycle and negotiation plan. 6
Figure 2:Summary of RSG Projects. 7
Figure 3:Priority in RSG Negotiation Plan.. 8
Figure 4:RSG Organisation Objectives. 9
Figure 5:Kraljic Matrix Tool 10
Figure 6:Different Stakeholders Category. 11
Figure 7:Mendelow Matrix Analysis. 12
Figure 8:Summary of components of RACI Matrix. 14
Figure 9:Stages of Negotiation Plan.. 15
Figure 10:Suppliers Preferencing Model Components. 17
Figure 11:RSG Porter’s 5 Forces Analysis. 20
Figure 12:Persuasion Tools Model 21
Figure 14:4Rs Model Analysis. 25
Table 1:CES services suppliers sub-categories. 16
Table 2:SWOT Analysis Findings. 17
Table 3:STEEPLED Analysis factors. 18
1.0 Introduction
1.1 Red Sea Global (RSG) Organisation Background
Red Sea Global (RSG) was started in 2018 being a closed joint stock company fully owned by the Public Investment Fund (PIF) of Saudi Arabia (KSA) (Red Sea Global, 2023). The organisation was established for driving the development of Red Sea Project which is a regenerative tourism destination in Saudi Arabia’s West Coast . Also, the organisation is tasked with the responsibility of implementing one of three giga-projects under the leadership of HRH Crown Prince Mohammad bin Salman bin Abdulaziz Al- Saud in year 2017 (Red Sea Global (RSG), 2024). Being a cornerstone of Vision 2030, RSG is working in transforming the country, developing enormous economic opportunities for KSA citizens and promoting kingdom rich environment and cultural heritage. The mission of the organisation is being agents of change through partnership with international greatest minds for spearheading new innovations reimagining boundaries of the sector and coming up with better world for individuals and planet.
RSG leadership is comprised of highly experienced, multi-national teams of real developers, engineering professionals , environmental specialists, experience designers and project finance experts (Red Sea Global (RSG), 2023). The rest of the organisation is hierarchical made of 300 employees. The learner work in the organisation in management of the overall procurement process and ensuring effective coordination in the entire supply chain. Through active coordination with all the other stakeholder, they ensure that they manage the collective role of optimising procurement organisation design and governance, mindset and expertise, decision making strategy and technology (Red Sea Global (RSG), 2024a). By leverage on iSourcing for vendor registration, they are involved in suppliers registration, issuing tender, tendering and contract implementation. To ease negotiation strategy, e-Catalogue is relevant to align suppliers contracts with operational outcomes. This imply organisation is successful in modernisation of PS&M strategy.
1.2 Rationale of the Assignment
For success of organisations in contemporary environment, commercial negotiation plan is core for leverage on competitive advantage and dominate their sector. According to McGovern and Rubenstein (2020), part of negotiation is management of the various stakeholders relations, cost management, quality demands and value for money outcomes. The commercial negotiation lead to an improved interactions and stakeholder relationship. Based on this background information, the purpose of this integrated assessment is to come up with a negotiation plan which prioritise on various stakeholders interests, issues raised and their intentions. Also, CIPS (2024) has recommended the necessity to implement holistic communication through inclusion of different parties where mutually agreed results are attained. As shown in figure 1, the different factors to be prioritised in negotiation in alignment with the Key Performance Indicators (KPIs) and Service Level Agreements (SLAs) in the negotiation plan are developed (Antal & Mitrik, 2020).
Figure 1:Procurement life cycle and negotiation plan
Source: CIPS Module Notes
To achieve the intended aim of this report, it prioritise on developing a formal negotiation plan for RSG company. This is by using existing data, statistical information facts and models. Further, linking negotiation plan with the terms and conditions (contract development and sourcing essentials module), negotiation plan which is most appropriate has been developed. The rationale of this is necessity of integrating aspects of time, quality, quantity and value for money outcomes in the negotiation plan.
1.3 Spend Category
Cost Estimation Service (CES) has been selected as the service in this assessment. This is a service sourced for the purpose of achieving an approximation of what a job would most likely be costing. As evidenced in Bredehoeft Jr et al. (2019) the CES is used for predicting quantity, costs, and prices of resources required for completion of the jobs in a project scope. For RSG, since they pursue different projects, they engage various CES providers. Apart from engaging specialist consultants internally resourced, RSG also engages organisations such as Al Yousuf enterprises, Mace, and Air Products (Middle East) FZE. The CES has specifically been critical for RSG in their different recent projects as summarised in figure 2;
Figure 2:Summary of RSG Projects
Source: RSG organisation background
Hence, for all the identified projects in Figure 1, RSG sources CES to guarantee the success of these projects. This is while accruing on value for money outcomes and successfully leveraging on competitive advantage in the sector. All these projects are part of the Giga-Project by Saudi Crown Prince Mohammad bin Salman as a core area for Kingdom 2030 vision 6 years ago (Zawya, 2023).
Therefore, the context of this assessment is to evaluate the importance of RSG stakeholders in sourcing for the CES. Also, for success in achieving value for money outcomes, stakeholders relations is important. This is by evaluating strategies pursued in costs management in CES sourcing. Further, the impact of markets to secure costs savings for RSG has similarly been put into account. An appropriate CES sourcing would guarantee an appropriate management of an upward of 25,000 personnel working in their different d3estinations, the expected 50 resorts, 8,000 hotel rooms and more than 1,000 residential properties in 22 different islands and 6 inland sites which intend to be appropriately managed.
2.0 Rationale of Negotiation Plan
2.1 Reason/Rationale for Negotiation Plan
Negotiation can be defined as a strategy intended to come up with mutual-based agreement (Gates, 2022). This means that success in negotiation process is informed by gaining a mutual agreement. For example, RSG organisation, negotiations are core in areas of to secure their critical supplies, good quality materials, appropriate time management for engaging the best suppliers. The current negotiation plan is distinct from their traditional profit-based negotiation to focusing on sustainable, reputation and economic considerations (see the following figure);
Figure 3:Priority in RSG Negotiation Plan
Source: RSG (2022)
RSG as a leader in KSA tourism management an infrastructural development strategy, commercial negotiation plan would be essential to achieve their main strategy. This is in their different projects/initiatives including Go Green, Go Red Sea, Jewar App, English for Tourism, Souq Amerah, ART Competition and Red Sea Ecotecture. The commercial negotiation plan for their Cost Estimation Service (CES) ensure that the organisation identifies area for leverage in the country based on attractiveness of the tourism sites. Also, with diversification from fully oil and gas dependent economy, Naseem (2021) identify the 2030 economic diversification plans investing an upward of $800 billion. This is in new jobs creation and enhancing their input in the tourism to GDP. Hence, by active negotiation strategy, there is a possibility of RSG maintaining continuous supply of CES and their various spend areas. This is with RSG attaining competitive advantage by increasing savings in revenues and competitive market dominance.
2.2 Business Needs in Negotiation
As noted earlier, negotiation is a strategy used to achieve mutual-based agreement (Wang et al., 2021). Despite of the negotiation strategy used, best strategy include understanding and mitigating contracts-based risks, championing sustainable practices, exploring contracts management and reward strategies. This is captured in the costs incurred by suppliers and performance. The business goals for RSG are as illustrated in the following;
Figure 4:RSG Organisation Objectives
Source: RSG (2024)
For the different objectives (see figure above), by successfully pursuing negotiation, value for money outcomes is attained with the identified objectives attained. For RSG negotiations, the best practice include making sure they meet buyers and suppliers’ needs. By application of Social Exchange Theory, Tran et al. (2022) identify buyer-seller relations, suppliers-buyers relations, supplier-suppliers relations and contract negotiation. Sourcing CES services would mean high-level quality and standards they would enhance their operations hence success in the tourism sector.
Additionally, to note negotiation strategy success, negotiation for achieving RSG business needs can be analysed by application of Kraljic Matrix Analysis (CIPS, 2022). The importance of the negotiation strategy evidence on the suppliers weak areas, support of their development and reducing disruption of all suppliers.
Source: CIP Module Notes
High Profit Impact/High Supply Risk- The CES service have a substantial costs incurred owing to how they are complex and demanding the application of technologies for quality assessments and analysis. In this regard, they demonstrate immense implications on profit acquisition and risk management. The negotiation is core and important for alignment of the business bottom-line.
High Profit Impact/Low Supply Risk- In RSG, various IT tools and systems are applicable contributing to positive financial impact. With their suppliers of CES services locally operating in KSA and internationally, negotiations would not be detailed but superficially implemented.
Low Profit Impact/ High Supply Risk- RSG also source IT systems for use in their different operations. The IT systems are sourced from various vendors, hence accruing limited financial risks. Hence, the negotiation strategy priority would be for the different alternative choices. This is at the same time using negotiation to nurture a negotiation plan with alternative supply sources developed.
Low Profit Impact/Low Supply Risk– This category has lower financial and supply risks and as such negotiations would be revolving on reducing the demand and use of supplies. The negotiation would target increase in strategic decision making and improving financial relations.
3.0 Negotiation Plan Stakeholder Analysis
Stakeholder management is used in identifying the process
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