Answer to Question #203090 in Management for nhlaphu

Question

ESKOM’S SUPPLIER PROBLEMS.

question:

1. Wet coals have also been identified as one of the issues causing load shedding in the country(South Africa). Eskom have not been happy with the current supplier for some time. Discuss how should Eskom go about a negotiation process with a prospective new supplier.(30 marks)

Answer 1

Eskom should maintain a good solid communications with the new coal suppler as a leverage in the future negotiations. They should be responsive and attentive to issues presented by the new supplier. Eskom entrepreneurs can also build a rapport with their prospective suppliers therefore, a gain of upper hand in the future negotiations.

Eskom should research the actual cost of making the prospective supplier's product hence a better of how much ESKOM has in regards to their prior negotiations.

ESKOM should also talk to different suppliers and learn the jargon to have a deeper understanding of their prospective supplier. Thus, the consumers in south Africa to enjoy a sufficient and efficient electricity supply.

ESKOM should pitch the suppliers dream by thinking like their prospective supplier; they have the product and want to sell as much as possible. They should present themselves as a resource with a proven track record of selling. Trust and the credibility built will determine their partnership at a favourable rates.

ESKOM should discover the areas of mutual gain. If the prospective supplier will not budget on the price, ESKOM should focus instead on other areas such as amount of the down payment, period of warranty, discount in bulkpurchase that may provide an even grater benefits for the both parties.

ESKOM should quote the services of atleast other three suppliers to let the supplier know that ESKOM will only go for the best services quoted hence creating a competitive pricing from different prospective suppliers.

ESKOM to inform the prospective supplier that they will oder very high quality coal and get their price. ESKOM should also ask the prospective supplier by how much for an amount less as compared to the other suppliers. This will help to inform the prospective supplier that ESKOM will be getting the their product at a cheaper price from the competitor hence their intended supplier will offer a reasonable price.

ESKOM should reference the prospectives supplier's customers to be aware of the quality product or service they offer. Therefore, ESKOM to ask the prospective supplier a list of customers they can get a review from.

ESKOM should give the supplier a reason that they are their customer of choice. This helps in building a long-term profitable relationship with the new suppliers.

ESKOM should create a leverage by willing to make a deposit of 50% to 70% and the higher it goes the negotiation power is on overall rate. ESKOM will be able to address upfront concerns that shows evidence they are easy to work with therefore, shaping the current negotiation.

ESKOM should have a backup supplier ready incase of a deadlock. Therefore, they will be confident in any negotiation and not afraid to walk away.

ESKOM should think of how they can work with their new suppliers to make their lives better by understanding their business model. Thus, ability to make oders in an efficient manner hence lowering the cost of purchase.

ESKOM should challenge the prospective supplier to utilize the limits of their authority. This let's the prospective supplier to know that they are not the only ones they are working with. Hence getting a quality dry coal as a product.