Negotiating in Asia - Research Proposal Example

Lecturer Negotiating in Asia Background: Literature Review Price negotiation is a general trend when buying goods or services. In the process of price negotiation there are two major components; the buyer and the seller. The main target of price negotiation entails reaching a price that is appropriate or acceptable to both the seller and the buyer. At the end of any price negotiation, either an acceptable agreement is achieved and the good or service is sold, or no sale is done. In Asia, price negotiations take place every day, for various types of products. The bargaining culture ensures development of high negotiation skills for sellers and buyers. Prices of products experience continuous pressures to illustrate the actual market demand. There are basic factors that influence price negotiations. These factors are; negotiating skills of parties, buyer type, and economic considerations (Schutt 128). Buyer types represent classes of buyers’ behavior. For instance, bargain hunter represents a person with adequate knowledge of a product. The main objective of the bargain hunter is to purchase at a lesser price, than the market value. The strategic buyer aims at reaching a low price. However, this is done in consideration with the item value, and the cost needed in effectively increasing the product value (Wang 31). Financial considerations are a major part of the price negotiation process. Other factors which are considered are the service cost, the consumable materials needed in product use, and general use life of the goods or services. Payment methods greatly affect the price negotiations, because of the effect on cash flows. The competencies of the buyer and seller negotiators greatly influence price negotiations. An effective negotiator has adequate knowledge of the high or low prices, and the products that allow for compromise situations. Delivery durations, service agreements, and payment approaches form part of negotiations. There are several negotiation rules that are applicable in Asia. The first rule entails adequate homework. This entails understanding the product that is subjected to the negotiation process. The buyer and seller must consider the prices charged by competitors. Sellers are likely to reduce price, if the buyer illustrates that competitors offer lower values. It is also important to understand the cost to the seller. Analyzing the margin between the costs incurred by the seller and the asking price, is useful to understand the lowest value the seller can accept. Product deadline enable the selling price to reduce. For example, products which are nearing expiry date can be sold or disposed off at a reduced price. The reason for selling is also analyzed. Sellers offer lower prices in some situations; for instance during closure of business or relocation (Uchendu 63). The second negotiation rule entails enabling the other party to state their price first. This enables the buyer to counter with a value that is lower. The sellers should understand the prices offered by competitors. This enables them to state a fair or reasonable product value. Stating the product price first creates limits in the negotiation process; because the counter offer will not be favorable. Buyers should wait for the seller’s value because they are usually willing to accept a lower value. The thirds rule encourages being unreasonable. If the buyer is required to state the value first, then it should be ridiculously low. This ensures that the seller becomes defensive. They hence concentrate on obtaining a relatively higher price than the offer of the buyer, and not the true selling value of the product. The end result illustrates a much reduced price, than the reasonable value. Sellers usually understand that ridiculous offers are part of negotiations; therefore, they will continue with the process through making a counter offer. The fourth negotiating rule entails understanding the limits. The buyer should evaluate the interests of the seller. If the seller expects a given value, then they will not negotiate to unreasonable levels. The seller should receive benefits from the negotiation deal. The buyer must expect the seller to get reasonable profit from the deal. The fifth bargaining rule is being quiet. Silence between parties is usually uncomfortable. The buyer can utilize this belief to his or her advantage during negotiation process. Silence prompts the seller to explain or justify the offer. The buyer must allow the seller to continue being insecure and talking. After thoughtful consideration, the buyer should express hesitation on the value offered by the seller. Asking for extras is the sixth negotiation rule. This approach is considered when the buyer feels the negotiation is not proceeding well. Extras are value added to the product. Complimentary accessories can be included in the purchase. For example, cell phone sellers can be convinced to provide purchase extras like phone cases or chargers in the negotiation process. Walking away is the seventh negotiation tactic. In the present Asian economy, very few sellers can accept lose of sales. This gives buyers extra advantage in the negotiation process. In some cases, terminating the negotiations verbally is adequate to ensure reduced price offer by the seller. If the buyer walks away, the seller can decide to call him or her back, and accept the reduce price. Several negotiation techniques are unique to South East Asia. First approach entails understanding differences in the Asian countries. The region comprises integration of cultures, communities, religion, nations and countries. The nations in the South East Asia region include; Thailand, Singapore, Cambodia, Vietnam, Philippines, Lao, Brunei and Burma. Each of the nations in Asia is unique; therefore, use several negotiation processes. Secondly, adequate negotiation measures should be put in place. Price negotiation is unavoidable in Asia because it is part of Asian culture. Buyers should understand and seek advice on the pricing strategy. Thirdly, buying organizations are required to use a pricing structure. This illustrates the pricing strategy. Buying organizations have three types of price lists. The first price list illustrates the desired value the seller wants to achieve. The second price list is acceptable because it considers the local whole sale value. The third price list illustrates the final offer value (Uchendu 51). The negotiation research is important because it illustrates the economic activities in Asia. Negotiation is an important aspect of trade. Trade is important to any economy because of several issues. Firstly, the sellers provide revenue to the government inform of Value added Tax, business income tax, license processing, and import or export duties. The economic activities also ensure sustainable livelihoods for sellers. This is because they get profit as their income. Organizations also depend on sellers to provide them with supplies like raw materials, stationery or even technology. Negotiation determines the value of these supplies. Asian countries have high and aggressive population, which is favorable for a thriving trading sector. For example, China and India each have a population of over 1 billion people. Due to inadequate formal employment opportunities in the Asian Region, many people venture into entrepreneurship to earn income. The businesses operated by entrepreneurs provide wide range of options for buyers; therefore, the price negotiation culture thrives (Wang 76). The research concentrates on negotiations in the Small and Medium Sectors (SMEs) of Asia. This is because the region depends on the SMEs to provide products and services. The sellers in the SME sector are easily accessible to buyers. There is also a lot of competition between sellers in the retail sector. This gives buyers wide range of options to choose from; therefore, buyers are enabled to purchase from sellers with superior products at prices lower than the market value (Abhinary 89). This research proposal is in line with the existing literature in the area of price negotiation. Bargaining is a key component in determining prices of commodities in the trade sector of Asia. Literature illustrates that the internal and external trade in Asia continues to rise. This is because of an ever increasing population; and the ever expanding retail sector that provides goods and services. Price negotiations take place between the internal and external buyers and sellers. For example, many tourist hotels conduct price negotiations with suppliers of foodstuff, transport services, stationery or furniture. Importers of machinery, techno logy, and motor vehicle are also flexible enough to accommodate price changes. The price negotiation literature has certain gaps. Trade among the informal sectors of the economy is not covered. The informal sector engages in economic activities valued at millions of dollars. The economic activities comprise mostly in trade in goods or services produced outside economic centers (Gill 141). For example, many people produce and sell commodities in their homes. The home business is also subjected to bargaining. The buyer and the seller agree on the most appropriate price for goods or services. Asian countries like India, China and Japan have thriving home bakery businesses. Also, people engage in agricultural practices where produce are sold at home after harvest. The sales are usually through bargaining. The literature analyzed when preparing this proposal, did not look at the price negotiation aspects in the informal sectors of economies in Asia. Industry Background In Asian countries, for example Indonesia, people haggle for products in all places, from the street markets to the tourism hotels. Price negotiations illustrate a strong cultural practice that people acquires as from childhood. Foreigners are encouraged in this tradition, so as to effectively blend with the local population and feel accepted. However, in South East Asia, bargaining for food products is discouraged and seen as an abuse. This is because food is viewed as a basic necessity, and hence not considered a tradable object. Price negotiations take place in big and complex business activities, in organizations that operate in Asia. Negotiation is divided into two areas; creating value, and also claiming value. Claiming value is the actual negotiation process. Creating value takes place before the actual negotiations. Chinese business culture requires taking adequate time to develop business relationship before beginning price negotiation (Fisher 56). This research is being conducted to understand the approached and types of price negotiations in different countries located in Asia. The research will study majorly the Small and Medium Enterprises in several regions of Asia. `The research mostly relies on secondary data sources for information. Trading information in Asia is obtained through internet sources, books, journal, magazines, and newspapers. Primary research is also conducted on accessible regions of the Asian continent. The impact intended by this research is to generate information on trading activities to people who want to visit Asian countries, for example tourists, students, and investors. This will create cultural acceptance and understanding. Research Aim, Questions, Hypothesis and Objectives The major aim of the research is to explore the negotiation process in Asian cultures and the types of price negotiation existing in the region. The research report will be used as an information source to people who intend to visit and stay in Asia. These group of individual include; students, professional, tourists, researchers and investors. The bargaining process slightly differs between nations of Asia. For instance, the negotiation practice in Japan is usually formal and legal recognized; than in Indonesia. The research study also strives to understand the theories that explain bargaining process in Asia (Gill 185). The research questions are derived from the overall aim of the research study. Two research questions will be analyzed, they are: 1. What are the major methods and processes of price negotiation in Asia? 2. How can knowledge of Price negotiations assist foreigners in Asia? Research questions guide the process of data collection and analysis. The research study is a success is the questions are appropriately answered (Hoffman 84). Answering the questions will provide explanations on the business culture of nations in Asia. The answers also ensure that foreigners in Asia are not faced with culture shock. This is because trading activities are performed differently in all the continents of the world. Being able to accept and understand the trading behaviors of other people; enables visitors to perform their purchase or other trading activities effectively. Research hypothesis explain the likely output, outcome and impact of the research process. Two hypotheses will be utilized in this research process, they are: 1. Price negotiation in Asia improves economic performance of Asian nations. 2. Understanding price negotiation approaches minimizes cultural shock of foreigners. Most likely, price negotiation is instrumental in accelerating economic activities. This is because buyers and sellers agree on appropriate value for a product. The purchased products are used in improving standards of living of people in a country, for example health products and services. Purchased products are also used as raw materials to power industries. Industries bargain prices with their suppliers, this ensures favorable profit margins. Price negotiation also ensures provision of quality products at affordable prices. Buyers will always get products from sellers willing to cut prices. Tourist and other foreign visitors in Asia will benefit for knowing how to buy products in Asia. This minimizes financial exploitation of foreigners by local traders. The research objectives are derived from research aims, questions, and hypotheses. The objectives outline the activities that must be carried out during the research process. Achievement of all objectives of the research, illustrate the success and completion of the research study. Four objectives have been formulated for this research exercise: 1. To identify price negotiation techniques of the Asian cultures. 2. To determine effects of price negotiations in Asian economies. 3. To illustrate importance of price negotiations understanding to foreigners. 4. To explain the challenges of price negotiation in Asia. The objectives are SMART. This means short, measurable, achievable, realistic, and time bound. The objective summarized the ideas for the research study. With adequate resources, these objectives will be achieved. Research Methodology The research study will apply both the qualitative and the quantitative approaches. This is the most appropriate techniques, because it ensures triangulation. Triangulation ensures supporting findings from one data collection approach, with a different data collection approach and methodology. The research study will also use both primary and secondary data collection tools. Quantitative research methodology aims at measuring variables and analyzing existing theories and hypothesis. The collected data is usually used to develop new hypothesis according the results collected on the different variables. Qualitative research methodology is conducted with the aims of understanding meanings, experiences, values and beliefs (O’Sullivan, 86). Secondary data collection, in this research study, will use both quantitative and qualitative approaches. Secondary data represents information collected by a different person, not the researcher. The secondary research materials used in this research will be electronic material obtained through internets sources; for example, e-books, e-magazines and e-journals. Secondary data is used to minimize data collection duration. Secondary data analysis is appropriate for this research because, it is not possible to have a new survey that effectively analyzes past developments. Primary data will be collected for the first time in this research study. The data will be collected by the researcher. The two primary data collection methods used in this study are; direct personal observation and indirect oral interviews. In direct observation, the researcher directly collects the data. In indirect oral interview, information is collected through interviewing person closely associated to the research problem (McCaston 17). The internet, as an example of secondary data collection tool, is very instrumental in this research. This is because it has a lot of learning materials in electronic form. This data collection instrument is effective because it is cheap and utilizes minimal time. The tool also gives a very wide range of information sources. Trading in Asia is a topic that is highly illustrated in electronic material like e-books, e-journal and e-magazines. The topic covers several issues like; history of trading in Asia, forms of trading practices, methods of payments, and current issues in Asian trade. Electronic materials provide adequate sources for both qualitative and quantitative data. Several Asian universities have administered questionnaires in regards to price negotiation. The questionnaires provide quantitative data on the percentage of goods purchased through bargaining in several Asian countries. The questionnaires also illustrate the economic indicators like Gross National product, or Per Capita Incomes in Asian countries. These indicators illustrate the impact of price bargaining on nation’s economy. Qualitative data are also well illustrated in the electronic learning materials. Several e-books discussing forms of payments in trade, has greatly explained price negotiations. The material also explains the form of negotiations existing in different Asian nation. For example, the price negotiation approach in the Chinese economy is slightly different from the bargaining approaches employed in Japan, South Korea, or Singapore. Each Asian nation has research institutions that post research findings in the area of trade payments. The electronic materials also explain the advantages and the disadvantages of the price negotiation payment approach. One benefit of this payment approach is that it encourages positive information that focuses on affordable and superior quality products in the economy. One disadvantage of this payment method is that it minimizes the profit margins of sellers. The two data collection approaches employed in the study are effective. I will conduct the direct observations because I reside in Singapore, an Asian country. I will participate in observation by paying visit to the trading places like markets, malls, shops and stores. This will give me first hand understanding of the payment approaches, particularly bargaining procedures and styles (Gorard 188). Singapore is a thriving economic hub in the continent; therefore, it has many foreign traders who participate in the import and export business. Observation will give me the understanding of the cultural challenges that the foreign traders experience in the trading process. Observation mainly generates qualitative data. For example, creating understanding on the pattern and methods of haggling. To a minimal extend, direct observation generates quantitative data; for example, monitoring the frequency of negotiation payments in a trading place. Also, quantitative data is got by calculating the percentage of total negotiated value to the total cost of products. Indirect interview will be done by asking questions to the traders operating in other Asian countries. Information collected will either be qualitative or quantitative. Qualitative information sought in indirect interview include; the differences in haggling approaches in the nations of Asia, the challenges experienced during the bargaining process, the advantages and the disadvantages of price negotiation, and the effectiveness of the alternative payment methods. The information collected in the interview is recorded by the researcher through methods like note taking, voice recording and video recording (Baronov 61). The qualitative information generated by the indirect interview can include; approximate negotiating duration, the common negotiation range, and the expected negotiation value of both sellers and buyers. The indirect interview will also aim at asking the traders and buyers, the government view on price negotiation. This is through asking if the governments feel the impact of accelerated price negotiation payment method in the economy. Primary data collection method ensures original and unique information concerning trading practices like price negotiation. Timescale The allocated time for this research exercise is three months. This is from November 1, 2014 to January 31, 2015. The process is divided into six phases, having two weeks each. The first phase is used for organizing resources required for the research exercise. These resources include; research proposal for guideline, financial resources, transport, computers, note books, approval from authorities, and stationery. The second phase will be used entirely for secondary research. This is done through internet searches. The secondary research gives an overview of the research topic. The third phase will be used for collecting original information. Potential witnesses will be conducted; and their views recorded by the researcher. The fourth phase is used in compiling the collected information. The researcher integrates the data collected from several sources. Compilation is done using the software statistical package, like spreadsheet. The fifth stage will be used for data analysis and presentation. Data analysis is done using statistical measures like dispersion and central tendencies. Dispersion tool like range is used o analyze the differences between the cost price and the selling price of the product. This illustrates profit got by customer after negotiation. The last phase is used for making last minute changes on the research report before it is presented to the appropriate authority. Resources Several resources will be utilized during the research process. The resources include; financial, stationery, telecommunication and time. Financial resources cater for travelling costs, communication bills, and purchases costs. Travelling is required when visiting the trading places. Internet bundles are also purchased. Stationery used during research includes; note books, pens and rulers. The stationery is needed for noting down data received in the field. Telecommunication resources include; computers and internet connection. These are very useful for conducting secondary research through the internet. Computers are also used for data analysis and presentation. Time resource allocated for this research exercise is adequate. This is illustrated in a time schedule. Bibliography Abhinay, Muthoo. (1999). Bargaining Theory with Applications. NY: Cambridge University Press. Baronov, David. (2013). Conceptual Foundations of Social Research. NY: Paradigm Publishers. Fisher, Roger. (2001). Getting to yes: Negotiating agreement without giving in. NY: Penguin Group. Gill, David. (2009). “The impact of bargaining on markets with price takers: Too many bargainers spoil the broth.” Economic Review Gorard, S. (2013). Research Design: Robust approaches for the social sciences. London: SAGE, Hoffman, A. (2003). Research. London: A&C Black Publishers Limited. McCaston, Katherine. (2008). “Tips for Collecting, Reviewing, and Analyzing Data”. Partnership & Household Livelihood Security Unit (PHLS). OSullivan, E. (2009). Research Methods. NJ: Longman. Schutt, R. (2006). Investigating the Social World. London: Sage Publications. Uchendu, Victor. (2001). "Some Principles of Haggling in Peasant Markets." Economic Development and Cultural Change. Wang, Ruqu. (2005). “Bargaining versus posted-price selling.”Economic Review. Read More