(Solution) CIPS PIN Effective Negotiation ROSHN Syndicate Cohort 1
The purpose of this report was to develop a commercial negotiation plan. This plan is applicable by the organisation in the identified spend category.
In this context of the assessment, ROSHN, one of the leading Saudi Arabian real estate development companies in line with the Kingdom’s Vision 2030 has been used successfully.
The key findings in this report evidence that the mission of ROSHN is to meet housing needs and have made it their goal to build 70% homes for Saudi families within the year 2030.
Another key finding is that procurement division the Vendor Management Team (VMT) and Commercial Procurement Team provides timely delivery of resources for housing projects at HDB.
The major findings in this assessment also evidence that Mendelow’s Matrix, PESTLED analysis, and Kraljic Matrix are all components of Roshn’s main strategic procurement cycle, which also places a focus on Principled negotiations when it comes to procuring for necessary resources.
Another main finding is that, as it can be seen from the above discussion, most of the choices made by ROSHN in procurement positively influence its procuring activities regarding its strategy and Vision 2030 objectives.
Nonetheless, there are opportunities for improvement about supplier analysis, risk management, stakeholder management, and the tracking of concessions, which would provide greater negotiating power and procurement performance.
Based on these key findings and generated conclusions, a set of recommendations have been generated which are relevant in this report which entail;
- Ensure that supplier evaluations reflect Vision 2030 by using innovation, sustainability, and sound supplier financials.
- Prepare a detailed risk management plan on sourcing with special reference to using alternate sources as well as pre-screened backups to replace regular suppliers.
- Improve contact with negative factors that affect company regulations.
- Evaluate the factors prevailing in the market to get better negotiation power from the supplier.
- Increase specific characteristics, for example, supplier reliability which contain qualitative elements.
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Description
Solution
Table of Contents
1.1 Background of Organisation. 4
1.1.1 Commercial / Procurement 5
2.0 Formal Commercial Negotiation Plan. 6
2.1 Definition of Negotiation. 6
2.2 Bailey et al. Negotiation Process. 6
3.0 Preparation Stages of the Bailey et al. Negotiation Model 7
3.1 Procurement Cycle and Sourcing Strategy. 8
3.2 Step 1 – Internal Data and Stakeholder Analysis 9
3.3 Step 2 – Market Analysis. 11
Team Members and Role Alignment 15
3.4.1 Negotiation Type and Approach. 17
3.4.2 Objectives and Concessions 17
3.4.3 Location and Logistics. 17
4.2 Stage 2: Open – Establishing Rapport and Setting the Tone. 18
4.3 Stage 3: Test – Probing and Gathering Information. 19
4.4 Stage 4: Propose – Presenting Offers and Testing Reactions 20
4.5 Stage 5: Bargain – Reaching Agreement through Give and Take. 20
4.6 Stage 6: Agree – Reaching a Final Agreement 24
4.7 Post-Negotiation: Review and Lessons Learned (Bailey et al.) 24
4.8 Key Learnings and Self-Reflection: 25
4.8.1 Adjustments for Future Negotiations: 25
4.8.2 Formal Communication and Approval Process: 25
5.0 Conclusion and Recommendations. 26
Figure 2:Roles of Commercial Procure teams. 6
Figure 3:Procurement Cycle model 8
Figure 4:Framework Agreement model 9
Figure 5:Porter’s Five Forces framework. 11
Figure 7:The Supplier Preferencing Matrix. 14
Figure 8:Five Forms of Power – French and Raven. 16
Table 3:Negotiation Agenda Meeting. 16
Table 4: Concession Tracker for ROSHN: 22
1.0 Introduction
1.1 Background of Organisation
Roshn was developed as one of the prominent independent real estate development companies in Saudi Arabia that focuses on achieving the objectives of the Saudi Arabia Vision 2030. Saudi Arabia Vision 2030 is an ambitious plan seeking to transform the country from an oil-dependent country to a hub for investment for the Middle East states to create more employment opportunities and improve the standard of the citizen of KSA (ROSHN, 2024). Another goal of Vision 2030 is thus to meet the housing demand and encourage homeownership besides developing efficient, compact neighborhoods. This effort is mainly spearheaded by Roshn which aims at developing contemporary advanced cities in Saudi Arabia. This company’s mission is in line with Vision 2030 as it aims to build and provide 70% homes to Saudi families by 2030, affordable homes of good quality (Vision2030.gov.sa, 2022). To this end and in response to the above-discussed need, ROSHN partnered with the Public Investment Fund (PIF) to solidify its foundation as it began with the aim of designing and delivering long-lasting housing projects all across KSA. Strategist includes developing closed and compact environments consisting of residential apartments along with places of commerce, education, health care facilities and leisure that enhances the wellbeing of the population (Figure 1).
Source: Roshn.sa. (2024).
1.1.1 Commercial / Procurement
The size and type of projects being undertaken by ROSHN means that it requires an efficient and professional procurement department. Therefore, the Procurement and Commercial function as category of spend at ROSHN is directly charged with the responsibility of delivering obtainable dependable competitive resources on time to support the firm’s strategic housing development projects. This function is divided into two main areas: the Vendor Management Team (VMT) and the Commercial Procurement Team. The VMT is concentrated primarily on supplier sourcing, solicitation, and monitoring in order for ROSHN to work with only the vendors that have sound business ethics and good compliance records. In its turn, the Commercial Procurement Team oversees typical procurement activities, including contracting,resourcing, supplying, legal and regulatory standards compliance and synchronization of purchasing with the company’s goals and objectives ensuring that all resources contribute effectively to the organization’s mission within Vision 2030 (CIPS, 2022).
Figure 2:Roles of Commercial Procure teams
Source: Overvest (2021).
2.0 Formal Commercial Negotiation Plan
2.1 Definition of Negotiation
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- Implement one AI-driven analytics platform by Q4 2024, integrating with existing systems and training staff to enhance forecasting accuracy and negotiate a 10% reduction in supplier costs, led by the IT, procurement, and finance departments. Despite potential initial costs and staff adaptation challenges, this initiative aims to achieve a 15% increase in forecasting accuracy.
- Fully deploy advanced supply chain management software by Q2 2025, partnering with a leading provider and training teams to reduce disruptions by 20%, thus increasing overall supply chain efficiency by 5%. This effort involves collaboration between supply chain management, IT, and vendor management teams, despite initial disruptions and high upfront costs.
- Establish a cross-functional compliance team by Q3 2024 to develop three new policies annually, ensuring 100% compliance with regulations and enhancing reputation metrics by 15%. Led by legal, compliance, and HR departments, this initiative aims to overcome resistance to policy changes and resource-intensive monitoring efforts.
- Implement three financial instruments (futures, options, currency swaps) by Q3 2024, collaborating with financial experts to reduce financial risks by 20% and achieve a 10% increase in financial stability. This effort, led by finance, risk management, and external advisors, addresses potential challenges in market volatility and regulatory constraints.
- Engage multiple suppliers and form five strategic partnerships by Q4 2024, increasing supplier diversity by 30% and improving supply chain reliability metrics by 10%. Led by procurement, vendor management, and supply chain analysts, this initiative aims to mitigate dependency risks and manage supplier relationships effectively. Potential challenges include maintaining consistency in product/service quality across diverse suppliers and increased administrative burden in managing multiple partnerships.
- Conduct market and competitor analyses twice a year starting Q3 2024, aiming to increase procurement cost savings by 15% through better negotiation strategies and timely market insights. This effort, involving procurement, and strategy departments, addresses challenges in data availability and competitive analysis capabilities. Potential challenges include delays in obtaining and analysing market data and difficulty in predicting competitive moves accurately.