The three classic types of negotiation strategies are
Options:
A) supplier evaluation, supplier development, and supplier selection
B) Theory X, Theory Y, and Theory Z
C) many suppliers, few suppliers, and keiretsu
D) cost-based price model, market-based price model, and competitive bidding
E) traditional auctions, reverse auctions, and online exchanges
The Correct Answer Is:
D) cost-based price model, market-based price model, and competitive bidding
Correct Answer Explanation: D) cost-based price model, market-based price model, and competitive bidding
The correct answer, D) cost-based price model, market-based price model, and competitive bidding, aligns with classic negotiation strategies. Cost-based price model involves setting prices based on the cost of production, ensuring a profit margin is met.
This strategy emphasizes transparency in cost breakdowns, aiding in fair negotiations and long-term partnerships. Market-based price model relies on prevailing market rates, leveraging supply and demand dynamics to determine prices. It involves analyzing market trends, competitor pricing, and consumer behavior to negotiate competitive prices.
Competitive bidding involves inviting multiple suppliers to bid for a contract, fostering a competitive environment that drives prices down and encourages suppliers to offer optimal terms.
Now, let’s explore why the other options aren’t the correct classic negotiation strategies:
A) supplier evaluation, supplier development, and supplier selection
Supplier evaluation, supplier development, and supplier selection are integral phases within the supplier management process. Supplier evaluation involves assessing potential suppliers based on various criteria such as quality, reliability, and capability.
Supplier development focuses on improving existing suppliers’ performance through training, collaboration, or process enhancement. Supplier selection is the final step where a company chooses the most suitable supplier.
While these steps are crucial in establishing robust supplier relationships, they predominantly fall under the umbrella of supply chain management rather than negotiation strategies. Negotiation strategies primarily involve the tactics and approaches used during price discussions, terms agreement, and contract finalization.
B) Theory X, Theory Y, and Theory Z
Theory X, Theory Y, and Theory Z, proposed by management theorists like Douglas McGregor and William Ouchi, pertain to differing philosophies on employee motivation, management styles, and organizational behavior.
Theory X assumes that employees inherently dislike work and need strict supervision, while Theory Y suggests that employees are self-motivated and seek responsibility. Theory Z emphasizes a collective approach to decision-making and long-term employment relationships.
These theories focus on human resource management and organizational behavior rather than negotiation strategies in business transactions.
C) many suppliers, few suppliers, and keiretsu
Many suppliers, few suppliers, and keiretsu refer more to supply chain and procurement strategies than negotiation tactics.
Many suppliers and few suppliers represent contrasting approaches to supply chain management, where many suppliers might offer flexibility but could lead to higher costs, while few suppliers might offer cost efficiencies but pose risks regarding supply disruptions.
Keiretsu, a Japanese term for a network of companies, emphasizes long-term relationships and mutual benefit. These concepts are vital in shaping supply chain strategies, influencing how companies manage their suppliers and alliances.
However, negotiation strategies specifically concern the methods and techniques used to reach favorable agreements during business transactions, focusing on aspects like pricing models, terms, and conditions.
E) traditional auctions, reverse auctions, and online exchanges
Traditional auctions, reverse auctions, and online exchanges are procurement methods used by businesses to acquire goods or services. Traditional auctions involve multiple buyers bidding on an item, with the highest bidder securing the purchase.
Reverse auctions, conversely, involve multiple sellers bidding to fulfill a buyer’s requirements, usually focusing on driving prices down.
Online exchanges serve as platforms where buyers and sellers can interact, negotiate, and conduct transactions. While these methods involve elements of negotiation such as competitive bidding, they primarily facilitate transactions rather than encompassing the comprehensive strategies used in negotiation processes.
In summary, while the concepts in options A, B, C, and E are fundamental in business management, supply chain operations, and procurement, they are distinct from classic negotiation strategies, which specifically encompass the methods and approaches used in negotiating terms, prices, and agreements during business dealings.
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MBA,BBA.
I am Smirti Bam, an enthusiastic edu blogger with a passion for sharing insights into the dynamic world of business and management through this website.
I hold a MBA degree from Presidential Business School, Kathmandu, and a BBA degree with a specialization in Finance from Apex College,
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