Answer to Question #203245 in Management for @bridget

Question

Wet coals have also been identified as one of the issues causing load shedding in the 

country. 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

Answer 1

Eskom should focus on negotiating and establishing a performance framework early in the supplier relationship to achieve satisfactory operations. The first step to accomplish this is by the managers understanding the mission and drivers of their business. This way, it would be easy to develop a negotiation strategy that complements the objectives of the company and the operational goals. Additionally, Eskom’s board should understand the goal of the supplier and their business drivers. Having this information will enable Eskom understand the pressures of the supplier and determine if they would deliver coal of the required quality. The client should work towards a positive outcome for both parties in the supply agreement. Thus the negotiation should be made fair by both parties compromising so that each side gets some level of value. Finally the company should create a plan for evaluation and assessment. Performance of the supplier should be reviewed often to avoid conflicts in the future. Key performance indicators should be established in the contract to form basis for the supply agreement.