(Solution) Negotiation Plan Red Sea Global Practitioner Corporate Award Assignment- PIN
This final assignment is integrated and intend to develop a formal negotiation plan for an organisation Procurement and Supply Management (PS&M).
The areas of focus include driving value through procurement and supply, managing expenditure, contracts development, sourcing essentials, and negotiation in PS&M.
The organisation of focus is Red Sea Global (RSG) Organisation a luxury, sustainability and innovation convergence for redefining development process. This is by focusing on the Cost Estimation Service (CES) spend category which are instrumental for RSG active practices.
In order to obtain appropriate findings in this negotiation plan, various tools including STEEPLE, Porter’s 5 Forces, SWOT analysis and Mendelow Matrix Stakeholders have been embrace for development of a negotiation plan. This is guided by the view that RSG as a development sector organisation has their priority on improving cost management efficiency and success in coming up with new developments and tourism models.
With the tourism sector slowly recovering from POST-COVID pandemic negative implication by economic slowdown, financial resources in RSG PS&M and negotiations have reduced. As such, the existing resources for RSG are not much. Therefore, the value for money outcomes in the negotiation strategy is supposed to be put into consideration.
For RCG, this is the rationale of coming up with a detailed negotiation plan for success in PS&M operations. The negotiation plan is in alignment with various sourcing approaches, terms and conditions and varying expectations.
The key findings indicate the best practice include use of different content in development of a negotiation plan. The steps followed have been identified to include preparation, test, propose, bargain, agree and close.
The key findings also highlight the essential of involving all organisation stakeholders as part of the negotiation. This is with stakeholders relationships being essential.
Another key finding is that for success in the negotiation process, leverage on BATNA and MLA is essential to obtain relevant findings.
From the findings and also conclusions obtained, various recommendations can be generated.
The recommendations inclue nee to initiate sufficient planning to involve all the stakeholders while at the same time holistically investing in technologies and managing conflicts of interest.
Another recommendation include need to customise negotiation strategy informed by market environment factors.
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Description
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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1.0 Introduction
1.1 ADNOC Organisation Background
In this report, the organisation of focus is Abu Dhabi National Oil Company (ADNOC). This is for understanding the impact of contract terms and conditions on distribution of risk and power with their suppliers. This is an organisation which began its operation in 1971 and today is ranked as the leader in diversified energy group which is owned by Abu Dhabi Government (ADNOC, 2022). The organisation network of holistically integrated business has based their operations across the entire energy value chain assisting their capacity for meeting overall demands of the consistently changing energy markets. For remaining competitive, the organisation has allocated $15 billion for advancing and accelerating lower-carbon solutions, investment in new energy solutions and decarbonisation technologies for lowering their carbon intensity with 25% by 2030 and successfully facilitating their NetZero by 2050 target. The company has a network of fully operational companies that operate throughout the entire hydrocarbon value chain, handling tasks including exploration, production, processing, storing, refinement, and supply in addition to manufacturing a wide range of petrochemical products. I work as a Contract Engineer for ADNOC Offshore, one of the company's divisions. The offshore division of ADNOC is responsible for the delivery and development of oil and gas resources in the waters surrounding Abu Dhabi. With OPEX and CAPEX, ADNOC Offshore spends over 3,000 million dollars annually. The organisation structure is as illustrated in figure 1; Figure 1: ADNOC Organisation Structure1.2 Identified Category Management
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2.1 Introduction of the Required Change Process
In its Procurement Supply and Management (PS&M) budget, ADNOC had allocated roughly 10 million UAEis before the COVID-19 epidemic. Up to 5,000 domestic and foreign providers are currently utilised in this. Because of the significant financial allocation in PS&M, the ADNOC sourcing method is crucial to their operations in this scenario. Logistics, equipment, and facility administration are all purchased separately by the organisation, all of which fall under the organisation's primary spending categories of computers and technical systems. As a result, they lack a centralised system that would allow all departments to be involved in aiding the procurement procedure (CIPS, 2020). The Burke-Litwin Model (Coruzzi, 2020) can pinpoint the internal and external factors that contributed to the identified change. This model ranks the many change drivers according to their importance and provides evidence of each one in figure 2; Figure 2:Drivers of Change Model When taking into account the ADNOC organisation and indicated change, these elements have the following effects, as stated in Table 1: Table 1:Summary of the Drivers of Change in ADNOC Organisation| Factors of change | Explanation |
| External environment | Supply chain networks have been significantly impacted since COVID-19. ADNOC's ability to replenish stock, equipment, and machinery has been affected. Therefore, ADNOC would participate in strategic alliances by including diverse actors and intermediates in the complete value chain through iSourcing |
| Individual and oganisational performance | ADNOC's investment in iSourcing would reduce PS&M turnover, everyone's performance, and supply chain network satisfaction. |
| Leadership | To ensure iSourcing success, the PS&M will lead and manage efficiently. This inspires and guides other organisations to iSourcing success. |
| Mission and strategy | The achievement of ADNOC's aim to provide high-quality oil and gas products would be ensured by the deployment of iSourcing. The justification for this is to quickly and effectively engage highly qualified vendors. |
| Organisation culture | Implementing iSourcing would promote the collaborative and teamwork-oriented organisational culture of ADNOC. This is due to the platforms offered by iSourcing that provide suitable options for teamwork and collaboration. |
| Task requirements and individual skills | Employees at ADNOC lack the knowledge and skills necessary to deploy iSourcing. This deficit might be filled by offering possibilities for professional advancement. Implementation of the change would be successful. |
| Employee motivation | This report's proposal suggests that providing monetary and non-monetary rewards is necessary to encourage people to adopt iSourcing. This is for employing remarkably contemporary systems of practice. |
Since the COVID-19 pandemic, ADNOC has struggled. Flechsig et al. (2022) say delayed service delivery and internal process automation reduce efficiency. Thus, integrating internal procedures, evaluating vendors, and monitoring the sourcing process with iSourcing will benefit ADNOC. A successful and efficient supply chain would result—in situational leadership to handle all everyday situations. Mulyana et al. (2022) define this as improving cost reduction, client satisfaction, and complex and critical processes. The ADNOC organization's automation and flexibility would improve. This involves learning, teamwork, and smart buying. Those fighting against iSourcing face massive supply chain challenges. Yevu et al. (2021) projected network security, system reliability, and persistent unauthorised access difficulties for ADNOC. This would hurt ADNOC's reputation with stakeholders, make persuading clients hard, and alienate supply chain actors. Transformational leaders may remedy this by creating enduring, positive change in their followers and moulding ADNOC PS&M followers into leaders.
2.2 Strengths, Weaknesses, Opportunities, and Threats (SWOT) of the Change Management
Additionally, it is crucial to comprehend the Strengths, Weaknesses , Opportunities, and Threats associated with the present strategy and the new category strategy for the change implementation to succeed. To do this, CIPS (2022) recognizes SWOT analysis as influential in capturing various decisions taken and would aid in guiding and educating category management. Table 3 illustrates the SWOT Analysis; Table 2:SWOT Analysis In conclusion, as shown in Table 1, while the existing strategy has strengths such as giving opportunities for comparison, transferring risks, and extensive evaluation, it is time-consuming and expensive. Using iSourcing makes it feasible to provide chances for risk transfer, pricing comparisons between suppliers, and finding the best items. Furthermore, it ignores sustainability-related aspects essential to contemporary procurement strategies (Hazaea et al., 2022). To equip staff members with the necessary abilities to use the new system, ADNOC must pursue security measures and ongoing capacity development. To handle the interference, a leader must promote the consultative approach in the sourcing process. To continuously acquire new skills and information, relevant L&D plans have been granted.2.3 Process of the Change Management
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