Competitive Negotiations Research Articles

Business Negotiation Strategies for Manufacturing Industries in Trade Activities

The manufacturing industry is the backbone of the country, so the development of the manufacturing industry is very critical. Increasing revenue and reducing costs in trade activities are very important for the development of the manufacturing industry. By using some business negotiation techniques correctly, the enterprise can win as much profit as possible in trade activities. There is still a research gap on how to analyze the macro perspective in an integrated manner so that the manufacturing industry can clarify the general process of conducting business negotiation and the key techniques of each process. Therefore, the research topic of this paper is business negotiation strategies for manufacturing industries in trade activities. In this paper, negotiations conducted by manufacturing industries in trade activities are classified according to whether they are competitive or not. The corresponding negotiation strategy analysis is given for competitive and non-competitive negotiations. In order to achieve the effect of negotiators in the manufacturing industry to strive for the maximum profit in the negotiation and promote the prosperous development of the manufacturing industry.

МИТИГАЦИЯ РИСКОВ ПРИ ПРОВЕДЕНИИ ЗАКУПОК В РАМКАХ ЗАКОНА № 223-ФЗ

The article is devoted to non-standard forms of procurement within the framework of Law No. 223-FZ. The general procurement structure and its advantages for the customer are described in detail. A number of non-trading procedures used by customers under this law (request for proposals, competitive negotiations, procedures for sellers of products, competitive selection, rebidding) with a description of possible risks that arise due to the framework of Law No. 223-FZ and the unsettled forms of procurement are considered. A number of measures have been proposed to significantly reduce the labor costs of all parties during procurement procedures, increase transparency and competitiveness of procurement, reduce their corruption, increase the number of participants and, as a result, increase the overall efficiency of procurement.

Pricing strategies, executive committee power and negotiation leverage in New Zealand's containment of public spending on pharmaceuticals.

This paper explores policy mechanisms behind New Zealand's remarkable track record of cost containment in public pharmaceutical spending, contrasting with most other advanced economies. We drew on a review of official policy documents and 28 semi-structured expert interviews. We found that decision making in pricing and reimbursement policy was dominated by a small group of managers at the Pharmaceutical Management Agency (PHARMAC), the country's drug reimbursement and Health Technology Assessment Agency, who negotiated pharmaceutical prices on behalf of the public payer. In formal negotiation over patented pharmaceutical prices these managers applied an array of pricing strategies, most notably, 'bundling' consisting of discounted package deals for multiple pharmaceuticals, and 'play-off tenders', whereby two or more pharmaceutical companies bid for exclusive contracts. The key pricing strategy for generic drugs, in contrast, was 'blind-tenders' taking the form of an annual bidding process for supply contracts. An additional contextual condition on bargaining over pharmaceutical prices was an indirect strategy that involved the cultivation of the PHARMAC's 'negotiation leverage'. We derived two cost containment mechanisms consisting in the relationship between pricing strategy options and various reimbursement actors. Our findings shed light on aspects of the institutional design of drug reimbursement that may promote the effective use of competitive negotiations of pharmaceutical prices, including specific pricing strategies, by specialist public payer institutions. On this basis, we formulate recommendations for countries seeking to develop or reform policy frameworks to better meet the budgetary challenge posed by pharmaceutical expenditure.

Multiple parties behind and across the table: A role-play simulation of parallel, competitive order negotiations for training B2B sales professionals

For a couple of years, customer firms have been inviting shortlisted suppliers to so-called ‘supplier days’, where they negotiate potential deal proposals in parallel with the competing suppliers. We describe these parallel, competitive order negotiations (PCONs) and thereby introduce them to the academic B2B community. Supplier salespeople are regularly overwhelmed by these practices and require more and more specific training. We review the literature on effective salespersons' skills training with a focus on sales negotiation and then present a role-play simulation of PCONs for training purposes, called “Lithium Ion Battery”, developed in close cooperation between the academic and practitioner authors. We discuss learning objectives of the simulation, closely linked to the characteristics of PCONs, and then present the simulation set-up including the cover story, negotiable issues, involved parties, and simulation procedures. We disclose our simulation development, testing, and application, and discuss challenges encountered on the way. Running the simulation in corporate and Executive MBA trainings shows a high degree of external validity and participant buy-in. Preliminary evidence of training evaluation is also positive. We conclude that the presented simulation is a valuable and suitable training device.

Public procurement in construction: a critical review

Introduction. The first article of the series addresses the main findings of the analysis of regulatory documents governing public procurement in construction in some foreign countries. Methods, that are little known in Russia and not typical for the domestic practice of contractual relations, are successfully used abroad. On the contrary, some of the rules look strange to a foreign bidder. The Auditing Chamber of the Russian Federation emphasizes the instability of competition legislation.
 Materials and methods. The authors address the Russian investment and procurement statistics and study basic principles and methods of public procurement. Basic rules governing relations between customers and contractors are analyzed. The Russian bidding legislation is compared with foreign bidding legislation systems, which are analyzed in the article.
 Results. The author have found that no thorough preparations for design and construction works are made. Little financial resources are invested into feasibility studies. Electronic document management is overemphasized, and features of the construction process are not sufficiently addressed. Competitive negotiations are not used abroad, although auctions, that do not take into account any parameters other than the price, are applied. The contact price is set in advance, without taking into account the contractor’s capabilities, and later this price remains unchanged, even if its initial value is too low. In many cases no contractors join the bidding process, which causes investment programmes to fail. The procurement legislation hardly addresses the contract implementation phase.
 Conclusions. It is advisable to draft and pass an independent federal law on public procurement in construction. At the same time, it is necessary to take into account the international experience and the capabilities of contractors operating in civil and industrial engineering. There is a need to limit indirect costs and profit margins of equipment and construction material producers in the same way as it is done in respect of construction companies within the framework of price control measures.

Public procurement in construction: international practice

Introduction. The distribution and receipt of design and construction orders is a most important element in the construction life cycle. It is of considerable interest to study the rules governing the distribution of state orders and the practice of their application in various countries. This article examines the experience of the leading world economies accumulated in the bidding for construction projects.
 Materials and methods. The authors studied original legal documents on the organization of tenders for construction works in several countries, as well as in international organizations. The tender rules of the USA, France, Germany, New Zealand, Japan, China are considered. Materials of reviews and scientific researches, conducted by other scientists, are also used and summarized.
 Results. The principal methods for organizing tenders for construction and design works were identified as a result of analysis of regulatory documents. The authors have found many common approaches and methods used to assure equal and responsible relations between the state customer and the construction contractor.
 Conclusions. It has been established that a number of methods, widely used abroad, are practically not used in Russia, for example, competitive negotiations and two stage tendering. On the contrary, a foreign reader may think that some provisions of the Russian legislation are strange, for example, initial contract price setting by the customer or electronic document management rules in the federal law.

Search and testing of robotic solutions for cleaning and condition monitoring at Prirazlomnaya OIRFP

Background. This article provides an overview and testing of existing robotic solutions, an understanding of the level of technological accessibility for the research area. A robotic solution is a device, mechanism or method for carrying out work with a high level of autonomy and with minimal human involvement in work in a hazardous area. In this case, we are talking about remote-controlled solutions, as well as completely self-managed solutions. Aim. The purpose of the study is to analyze the design and regulatory documentation that regulates the study area of work, to identify the main technical and legislative barriers and restrictions on the use of robotic solutions, as well as to conduct tests in Kingston boxes of the Prirazlomnaya OIRFP. Materials and methods. In this study, using rational-logical methods of scientific knowledge and the empirical method, namely interviewing experts in the field of robotization and maritime law, it was possible to determine and structure the information received. Results. The implementation of this goal made it necessary to analyze the market for various robotic means of local cleaning and inspection, to form a list of the most promising solutions, to rank solutions based on the evaluation matrix, to conduct technical and competitive negotiations with manufacturers on the topic of readiness to participate in pilot testing at the Prirazlomnaya OIRFP. Conclusions. In the course of this project, an extensive analysis of the market of robotic solutions was carried out, pilot tests were carried out, an act was received from RMRS and proved in practice during pilot testing in Kingston boxes with water intake pipelines and in the water area of the Kola Bay, a hypothesis about the applicability and feasibility, the usefulness of using remotely controlled underwater of uninhabited vehicles in the scope of the survey at the Prirazlomnaya OIRFP.

An Overview on Pharmaceutical Tendering Process

Objectives: World Health Organization (WHO) has implemented the Pharmaceutical tendering process for procuring the high-quality medicines from different firms to meet the needs of the countries which are having drug shortages. Materials and Methods: The main aim of the WHO is to get the quality products at low price which can be affordable by the patient. WHO constantly giving chance to different firms based on their qualification for tendering process. The pharmaceutical companies are inspected by WHO members to check whether the company is adhering with Good Manufacturing Practices (GMP) regulations and Quality Management system (QMS) requirements. Results: The WHO allows only prequalified pharmaceutical company for the tendering process (Restricted tender). By this process WHO allows the company which produces quality drugs at the affordable cost and complying with the all WHO regulations. Comparing the restricted to open tender, the direct procurement and competitive negotiations tender methods are little disadvantageous as the drugs are taken from highly reputed or single manufacturer which causes the price of the drug to be higher. In the open tender and restricted tender, the WHO can get the manufacturers who supply drug products at low prices.

Measuring Competition in M&A Negotiations

This paper provides novel insights about competition among bidders during the whole takeover process, its effect on offered deal premiums, bidder announcement returns, and post-bid dynamics. Exploiting a representative sample of 780 public U.S. transactions, extended with comprehensive hand-collected data from SEC filings, I find that takeover premiums are higher, the higher pre-announcement competition among bidders is. I measure competition during the private sales process with a ratio that relates the number of bids submitted to the target to the number of signed confidentiality agreements with the target, the Proposals-to-CA-Ratio. A one-standard deviation increase of this ratio corresponds to a statistically and economically significant 5.99% increase of the deal initiation premium (Eaton, Liu, and Officer (2020)), 0.87% lower announcement returns for the winning bidder in auctions, a 130% increased probability of receiving a rival bid prior to closing, and a 44.5% increased probability of cancelling the originally announced deal (measured relative to the unconditional probability). The latter two results are more pronounced if the announcement returns of the acquirer are positive, suggesting that competing bidders are lured by potentially value-increasing deals. By applying Heckman (1979) two-stage selection models with instrumented regressors, I show that my results are robust to endogeneity concerns, especially to target’s decision to initiate the deal as well as the decision of the subsequent selling procedure (auction vs. one-to-one negotiation). The advantages of this competition measure are that (1) it relies on data as reported in target firm’s official merger documents filed with the SEC, which creates a strong incentive to report truthfully, and (2) it takes the evolution of bidding into account, controlling for the number of submitted bids. I conclude that competitive private negotiations stay competitive during the public phase of the deal, and that target boards fulfill their fiduciary duties by selecting the highest-bidding acquirer.

Application of the marketing mix to the world export of animal products

Agricultural trade is complicated owing to perishable goods and high requirements for safety and quality, especially by animal products. Intensifying their exports is a major priority in the context of augmenting competitive negotiations and providing global food security to cover a shortage of an animal protein intake. To address such challenges, this study aimed at improving marketing performance necessary for developing the world exports of animal products. The methodological research framework was the Marketing Mix model, which included Product, Price, Place, and Promotion, and was amplified by Innovation. The model components were presented by the average export prices and indicators for Infrastructure, ICT adoption, and Innovation capability evaluated for each exporting country. For testing hypotheses about homo- and heterogeneity of top exporters, this research utilized the single factor Analysis of Variance (ANOVA) technique. The offered approach was applied to the most valuable export segments of poultry, livestock, and dairy world markets. They engaged from 75 to 140 countries and had total export values between USD 3.2 billion and USD 33.2 billion. The study outcomes captured similarities and differences of Price, Place, Promotion, and Innovation components among the First 10, Second 10, and Third 10 ranked exporters. Given the found indicators of the top world exporters, the study clarifies prospects and attainable goals on developing exports of animal products at a country level.

Progress on drug pricing negotiations in China.

On November 28th, 2019, the National Healthcare Security Administration (NHSA) and the Ministry of Human Resources and Social Security (MOHRSS) of China announced the results of drug pricing negotiations. Seventy first-negotiated drugs with 60.7% average price decrease and twenty-seven re-negotiated medicines with 26.4% average price fall, involving 11 disease categories, were successfully incorporated into National Reimbursement Drug List (NRDL). Medicines that successfully get accessed to NRDL are mostly new listings with high clinical value, and more than half of them are manufactured by Chinese enterprises. Compared to the negotiated drug list of 2017, the biggest increase in western medicines is the digestive system medications (10 drugs added), and the traditional Chinese medicine is internal medicine (17 drugs added). The negotiation follows the process including preparation, examination, negotiation, and announcement. There are several innovations in the procedure, such as the parallel calculation of the floor price, the introduction to competitive negotiations, allowing companies to apply for price confidentiality, and increasing government-enterprise communication before negotiations. Incorporating patent drugs into NRDL by negotiation not only helps patients reduce the economic burden, but also encourages pharmaceutical companies to innovate.

The U.S. Federal Procurement System: An Introduction

The U.S. procurement market is one of the largest in the world, and the procurement law which guides that market, a regulatory regime which is both complex and mature, offers important lessons for other procurement systems around the world. This article provides a modest introduction to U.S. procurement law – especially federal procurement law, which generally is more extensively developed than state or local procurement law – and suggests possible lessons learned that may be useful for other systems. The article proceeds in several parts. The article reviews the history of the federal procurement system, which can be traced to the Revolutionary War, and the separate contract administration regime that the federal government has developed. The article discusses access to the market and the leading procurement methods, with a special emphasis on the multilateral competitive negotiations which had, by the end of the twentieth century, become a mainstay of complex federal procurements.​ The article reviews the leading contract types in U.S. procurement, and explains the strategic advantage that the United States gains through an effective cost-reimbursement contracting system. Finally, the article discusses bid challenges (called “bid protests” in the United States) by disappointed bidders, and reviews other anti-corruption strategies used in the U.S. system.

Promoting Cooperation in Competitive Negotiations: Which Communication Strategies Help and Hurt?

Negotiation is a fundamental interpersonal tool and managerial skill, through which individuals and groups obtain some of their most consequential outcomes. Negotiators tend to come to the table expecting a competitive interaction, leading to a fixed-pie bias among negotiators. This symposium investigates how different communications affect negotiation conflict, and how they affect negotiation outcomes and post-agreement interactions. We present novel research studies that describe communication strategies that mitigate or exacerbate negotiation conflict, such as silence, deception, and apologies. We show the consequences of communication and negotiation conflict on negotiators' post- negotiation guilt, trust, and motivation. This set of research papers provides a broad perspective on the nature of negotiation conflict, and enhances our understanding of its consequences on behavior not only during the negotiation itself, but also after it is concluded.

Behavior Modeling and Auction Architecture of Networked Microgrids for Frequency Support

As intermittent generation profiles introduce more stress due to the sudden imbalance in supply and demand, power systems are becoming more dependent on online aggregated support of networked utility-independent private microgrids. During the aggregation process, microgrid operators’ preferences and bidding behaviors are priority. New aggregation approaches are required considering the individual behaviors of the networked and geographically dispersed independent microgrids. In this paper, we present a novel bidding behavior modeling and an auction architecture consisting of a central aggregator and networked microgrid agents. The bidding behavioral states of the microgrid agents are formalized as partially observable Markov processes for the belief updates and short-term policy determination in order to maximize the individual profit. A reverse auction model is adopted to enable competitive negotiations between the central aggregator and networked microgrid agents. The auction and aggregation processes were implemented in a power system control area along with an automatic generation control (AGC) scheme to contribute frequency control. The proposed AGC and auction mechanism were verified with an industrial multi-agent framework in a laboratory-based real-time application.

Moving Music Licensing into the Digital Era: More Competition and Less Regulation

The system for licensing music in the United States for public performances through radio, television, digital services and other distribution media is complicated, arcane and heavily regulated. Its basic structure is oriented toward transmitting music through analog channels. Although much of the pricing of music rights is supposed to be based on competitive prices, the current interdependent system of collective licensing of performing rights and widespread regulation of music prices (royalties) is inconsistent with the development of a competitive market and the associated efficiencies. Collective licensing by a handful of performing rights organizations (PROs) provides the major rationale for price regulation. However, the existence of price regulation has entrenched collective licensing and the position of those PROs. A more competitive system entails moving away from collective licensing. In this paper we review the current structure of the music licensing system and suggest ways of making it more competitive and less reliant on regulation. Central to our proposals are: a) a comprehensive, standardized database of musical compositions (including the specific sound recording version, where relevant) and their owners so that distributors and users can readily identify from whom they need to license rights, along with a “safe harbor” provision that would provide the appropriate incentives for rights owners to contribute their information to the database; b) a greater ability of intermediaries to aggregate the various categories of music ownership rights; and c) the consequent development of more competitive negotiations and transactions between music rights holders and music distributors.

Moving Music Licensing into the Digital Era: More Competition and Less Regulation

Author(s): Lenard, Thomas M.; White, Lawrence J. | Abstract: The system for licensing music in the United States for public performances through radio, television, digital services, and other distribution media is complicated, arcane, and heavily regulated. Its basic structure is oriented toward transmitting music through analog channels. Although much of the pricing of music rights is supposed to be based on competitive prices, the current interdependent system of collective licensing of performing rights and widespread regulation of music prices (royalties) is inconsistent with the development of a competitive market and its associated efficiencies. Collective licensing by a handful of performing rights organizations (PROs) provides the current rationale for price regulation. However, the existence of price regulation has entrenched collective licensing and the position of those PROs. Accordingly, a more competitive system entails moving away from collective licensing.In this paper we review the current structure of the music licensing system and suggest ways of making it more competitive and less reliant on regulation. Central to our proposals are: a) a comprehensive, standardized database of musical compositions—including the specific sound recording version, where relevant—and their owners so that distributors and users can readily identify the rights-holder from whom they need to license rights, along with a safe harbor provision that would provide the appropriate incentives for rights-owners to contribute their information to the database; b) a greater ability of intermediaries to aggregate the various categories of music ownership rights; and c) the consequent development of more competitive negotiations and transactions between music rights-holders and music distributors.

Negotiating Femininity: Gender Identity Affects Women’s Outcomes in Negotiations

Despite extensive research on gender and negotiation outcomes, the role of gender identity is less well understood. Across three behavioral studies, we demonstrate that gender identity plays an important role in women’s decisions about negotiation, and that gender identity relevant priming improves women’s performance in competitive negotiations. We show that a situational moderator (the gendered nature of the negotiation topic) affects negotiation decisions for women with strong feminine identities, but not for women with weak feminine identities. Likewise, the gender gap in the decision to negotiate about a masculine topic was driven by the difference between men versus women with strong feminine identities. Subsequently, we tested two gender identity relevant primes, one that highlighted the benefits of feminine identity and one that made masculine traits accessible. In both cases, women performed better in the prime conditions, with the male advantage typically seen ameliorated, than when no primes we...

Competitive representative negotiations worsen intergroup relations

Representative negotiation affords a unique opportunity to regulate intergroup competition and conflict. Although past research has identified factors that shape representative negotiations, little is known about how such interpersonal representative negotiations influence broader intergroup relations. Here we investigate how the representative negotiation process can affect intergroup relations, irrespective of negotiation outcomes. In Experiment 1, competitive (as opposed to cooperative or neutral) communication by the outgroup representative decreased satisfaction with the outcome and increased outgroup derogation. In Experiment 2, the timing of the competitive behavior of the outgroup representative was shown to affect ensuing intergroup relations, such that early rather than late competition led to higher outcome satisfaction because of reduced outcome expectations, but also decreased trust in and perceived closeness of the outgroup. Together, these findings show that competitive behavior, especially early rather than late in the representative negotiation process increases outcome satisfaction, but hurts intergroup relations, regardless of the actual negotiation outcome.

“Best value for money” in procurement

A gradual change on how to evaluate successful procurement, in both the private and the public sector has occurred in recent years. Indeed, in so far as economic efficiency is concerned from a price-only criterion for measuring success, decisions have shifted to a multi-criteria approach where various dimensions of quality, as well as price, are considered. The most common way to express such a shift is to say that procurement should deliver “best value for money” (BVM). That is, to award the contract, both monetary and non-monetary components of an offer are to be considered. Whether in competitive bidding or negotiations, BVM is typically formalized by a scoring formula, namely a rule for assigning dimensionless numbers to different elements of an offer, often expressed in different units of measurement. The contract would then be awarded according to the total score obtained by a bid. The main goal of this paper is to present a critical overview of some main themes related to the notion of BVM, discussing few typical forms of scoring rules as a way to formalize the procurer's preferences.

On the formulation of competitive negotiations in Web applications: The Latin-American market case

Work on electronic negotiation has motivated the development of systems with strategies specifically designed to establish protocols for buying and selling goods on the Web. On the one hand, there are systems where agents interact with users through dialogues and animations, helping them to find products while learning from their preferences to plan future transactions. On the other hand, there are systems that employ knowledge-bases to determine the context of the interactions and to define the boundaries inherently established by the e-Commerce. This paper introduces the idea of developing an agent with both capabilities: negotiation and interaction in an e-Commerce application via virtual reality (with a view to apply it in the Latin-American market, where both the technological gap and an inappropriate approach to motivate electronic transactions are important factors). We address these issues by presenting a negotiation strategy that allows the interaction between an intelligent agent and a human consumer with Latin-American idiosyncrasy and by including a graphical agent to assist the user on a virtual basis. We think this may reduce the impact of the gap created by this new technology.