Supply Chain Glossary

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Bargaining


Source: Procurement Glossary
Author: Paul Rogers
Institute: CIPS - UK

Courtesy of


 

Bargaining is a particular style of negotiation in which the parties try to reach a mutually acceptable agreement.  Some authorities equate bargaining with haggling, where the parties simply try to claim value.  The seller may quote a price of $100, the buyer may offer $90 and the parties will reach an agreement somewhere between the two values.  Other sources see bargaining in terms of an exchange of ‘tradeables’ in which the parties may actually create value. For example the seller may quote a price of $100 and the buyer may offer a price of $90 with payment in 14 days.  In this case, there are two separate issues being traded, the price and the payment terms.  This interpretation of bargaining is implicit in ‘Win:Win’ commercial relationships, as each party creates value for the other, rather than one party claiming value at the expense of the other, which is a ‘Win:Lose’ relationship.  See also Negotiation and Supplier Relationship Management.

 

 




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