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The existence of a healthy buyer supplier relationship is considered to be an important metric to ascertain a competitive and a dynamic existence for an organisation in its prevailing industry. In order to ascertain the buyer and supplier relationship between two major organisations, examination of the current and future business trends is considered to be a vital component along with identifying the critical aspects of contracting and tendering. Key aspects of the negotiation process in the organisation as well as the industry are further considered to be important attributes of a healthy buyer and supplier relationship for which suitable discussion shall be conducted as follows.
The “current and future business trends” of tracing healthy “buyer and supplier relationships” can be attributed to the basic nature of duties involving both the parties. Initially, buyer and supplier can be assumed as two major corporate entities or organisations, where the primary obligation of a seller is to provide high quality products or services. As per narrations of Ikegwuonu and Ndibe (2022), obligation of a buyer can be primarily deemed as facilitation of prompt payment for services received from a seller. The current and future business trends involving two major organisations acting as a buyer and a seller are further discussed as follows.
The current business trends involving the facilitation of a healthy buyer and seller relationship are defined by rising prices of commodities, robust credit facilitations as well as major financial implications. Wilmers (2018), expressed that both the parties would perhaps like to be in a win-win situation both financially and operationally. Hence, the emphasis for creating a greater interpersonal bond between both the parties is necessary for ensuring streamlined sustainability for both the organisations. An example of current business trends can be cited between BP and Shell, where both parties mutually agree to be buyer-supplier for controlling higher fuel pricing in the global market as well as maintain sustainability in a sophisticated and inflated global petroleum market.
In order to ascertain a healthy buyer-supplier relationship between two major organisations, the additional emphasis is needed to be provided for harmonising future expected business trends. Future expected business trends are an important consideration needed to be vitally strategized by both parties to enable long run sustainability. According to Hofacker et al. (2020), future business trends have high potential to be influenced by the higher attraction of online marketing, which enables major organisations to have a wider reach. An example of future business trends can be considered between Asda and Morrisons, where both the parties act as buyer and seller respectively, while also encouraging increased attention towards online and digital marketing.
Process of contracting and tendering is also considered to be an important attribute, existing in the business paradigms of buyer-supplier relationships between two major corporate organisations. A detailed review and discussion on the contracting and tendering process happening in a buyer-supplier relationship is discussed with respect to increasing commercial competition as follows.
Contracting is generally termed as a mutual process where both parties agree to fulfil and execute a particular work in exchange of a consideration. The consideration aspect usually prevailing in a buyer-seller relationship can be measured on financial basis as well as on non-financial basis. As opined and illustrated by Chuang et al. (2020), primary essence in contract relations existing between two parties are further measured by commitment. Hence, it is perennially important for both parties to develop clarity in understanding as well as maintain parity of commitments needed to be fulfilled within stipulated contracting deadlines. However, the critical aspect of contracting could potentially lead to conflict of interest, which in turn can hamper fruitful contracting propositions.
The aspects of contracting can be further recognised as the tendering process existing between two parties in a buyer-supplier negotiation process. Tendering process is usually deemed to be the preliminary stage before contracting, where buyers and suppliers mutually agree for a consideration after the supplier has been selected appropriately. As critically explained by Pavithra et al. (2018), the onus of tendering is a major responsibility for the buyer to fulfil and chances of business conflicts remain high. Moreover, the major issue concerned with tendering is related with time related constraints as appointing a suitable buyer can cause larger time intervals, thereby reducing the financial and non-financial bhold of the buyer. Alternatively, this could hamper the sustainability prospects, leading to reduced competitive advantage and organisational instability.
“Key aspects of the Negotiating Process” in the organisation can be further described based on elements including interests and commitments. Suitable discussion on all three elements is conducted as follows.
Primary component of defining the organisation based negotiation process can be considered as the interests. As opined by Orr and Buhr (2020), interests generally consider the mutual obligation of two parties in lieu of monetary or other major considerations. This is considered to be the elementary driver of the negotiation process, where needs and demands of both the parties to negotiation can be identified credibly.
The second key element of the negotiation process involves the commitment on part of both the organisations. Commitments usually comprise of mutual obligations between two parties to fulfil and execute the agreed terms and conditions of the contract. As explained and narrated by Swedland and Lierl (2020), establishing a healthy communication channel is also an important aspect to ensure harmonious upholding of commitments made by parties involved in a negotiation process.
The “key aspects of negotiating process” in the industry can be further objectivised based on the following elements
As opined by Eva and Claudia (2018), valuation is considered to be a major quality in the industry-oriented negotiation process, which comprises the holding of higher integrity to comply with plausible business tactics. Application of plausible business tactics in the negotiation process can simultaneously generate higher competitiveness for the industry to attain domestic and global sustainability
Second Attribute of the negotiation process is considered to be the industry’s capability to deal with complex situations. Jang, Elfenbein and Bottom (2018), explained that complex industrial situations can arise out of economic disbalance or increasing competition in the sophisticated commercial environment.
The critical examination for SPV projects is further deemed to be a critical aspect of the financial obligations required to be met for SPV and other ancillary infrastructure based projects. Necessary funding requirements needed to facilitate movement for SPV projects can be further categorised based on identifying key features and describing the sustainability qualities required to be fulfilled. Funding requirements can be further classified based on critical review of decision-making and resolution strategies as well as determining the procurement and acquisition management. Suitable discussion on all the above points is further detailed as follows.
The Key features and characteristics applicable for SPV and infrastructural projects are further highlighted based on features such as securitisation and asset transfer. Suitable discussion on securitisation and asset transfer applicable for Special Purpose Vehicle (SPV) and infrastructural projects are further discussed as follows.
Securitisation is widely recognised as a key SPV feature, where financial institutions are empowered to safeguard their financial instruments for funding infrastructure projects. As explained and narrated by Zhao (2019), securitisation also allows Banks to form separate legal entities concerned with mortgage facilitation of SPV to ensure that payments are made and received on time by the project executioner as well as the Bank.
The second key feature of SPV and infrastructure projects is attributed to transfer of assets by a project executing company. Soleimani and Shadab (2020), illustrated that asset transfer usually encourages a contract executioner to facilitate a higher liquidity by selling a part of the project asset to external sources.
In order to review the sustainability qualities applicable for SPV and infrastructural projects, the larger emphasis by an organisation needs to be provided on quality assurance as well as design. Suitable discussion on quality assurance as well as design is further detailed as follows.
The primary sustainability qualities applicable for SPV and infrastructure projects is largely attributed to ensuring top-notch quality assurance. According to Nyakala, Pretorius and Vermeulen (2019), maintenance of high quality assurance is generally considered to be an obligation of the SPV execution company, which also requires reviews and alterations to justify project aesthetics. Adherence to meeting project completion deadlines should also be viewed importantly by an organisation as it can further proper financial bhold and simultaneously encourage top-notch infrastructure and SPV quality assurance.
The second key aspect of the sustainability qualities is widely recognised as drawing out a suitable project design to ensure sustainability of SPV. As per views of Collao et al. (2021), necessary provisions are also needed to be included by the SPV executing company to comply with the best project design. Adherence to a high quality design shall further allow the company to complete the SPV and infrastructural project on time, attain financial incentives as well as enjoy an increased market competitiveness in the domestic as well as international market.
The critical evaluation of decision making as well as resolution strategies are further considered to be vital aspects for a SPV and an infrastructural project to attain full flight. The critical evaluation of decision making can be further exemplified by financial constraints as well as regulatory related issues. Following is a key discussion on the various decision-making implications and how they could be resolved.
Financial constraints may restrict for short selling, or using the margin, rand trade option. Moreover, it can be said that the financial constraints may help in decision making of capital spending. As opined by the author Sachs et al. (2019), On the other hand, it can be said that Regulatory decision relate to the regulatory responsibility, power and duty which the council of the company has been given by the legislation. Regulatory is one of the most used key by the companies which help in the decision making process in the company.
Resolution is consider a key part of decision making process. Also it can be said that the resolution is depends on the skills such as leadership traits of decision maker. As per the view of Ahenkan et al. (2019), There are five methods that are consider as resolution which are “collaborating, competing, avoiding, accommodating, and compromising”.
Procurement management can be define as a strategy of management, furthermore, it can be side that the procurement is help to managing and minimizing the company’s expenses. Through this strategy the company can easily allocate the resource and make strategy in order to maximizing the profitability by minimizing the expenses and providing the better quality of products and services to its customers. As per the view of the author Govindasamy et al. (2020), some steps that are directory involved in the procurement management which are “recognition, purchase requisition, Requisition review, solicitation process, evaluation and process, order management, invoice, approval and dispute”.
Acquisition management is kind of process of acquiring. On the other hand, it can be said that the acquisition management is seek out the potential purchase. It can be said that the acquisition manager should have substantial knowledge of acquisition procedure in order to prevent the legal repercussion for the company in the near future as well as long run. Moreover, it has been identified that it easily diversify the risk related to the acquisition and through this the company can increase the market share. As expressed by the author Tishchenko et al. (2020), the acquisition help to reduce the entry barriers in the existing market.
“The project financing of Stralsund Road tunnel”, and the project involves in the road tunnel under the “Breiterfluss River” in the center of “Stralsund” and the “surrounding access roads”. The project finance is a process of development of project in the three phases which are “per bid stage, contract negotiation, and fund-raising stage”. As stated by the author Baschieri et al. (2020), It has been observed that the company has three types of sources of funds which are state grant, equity, and project debt. It has been evaluated that the “total cost” of the project is € 500 million. In context the company has raise approx. € 100 million state grant, € 60 million form the equity and € 340 million from the project debt. Furthermore it has been evaluated that the project debt is approx. 68 % of total cost of the tunnel.
Financial molding represent in number of companies operation in past present and future. In order to, it has been seen that the Richmond Bank Infrastructure Project Finance (IPF) gained funds approx. € 340 million from the debt and approx. € 60 million from the equity. As per the view of the author Das et al. (2020), it has been identified that the Abu is an old and well established “German contractor” who have long term corporate finance and project finance relationship. Also, the sponsors and traffic adverts for cats that “25000 vehicles per day” and it increasing by “3.5 %” per annum.
The project financial attractiveness can be measure through two variables which are “expected return and riskiness”. As illustrated and narrated by Fan et al. (2018), In order to expect return, it is a financial concept of return on investment. It can be said that the investors attract on the return on investment, higher return on investment can able to attract the more investor. On the other hand risk on the investment is another key matric that help to make the finance project more attractiveness. Lower risk on investment can attract the investors. In order, it has been seen that the company has finance the project approx. 68 % through the debt which € 340 million and approx. 12 % of through the equity which is approx. € 60 million. The interest rate of Debt financing is quite higher as compared to the equity financing. The banks’ “traffic advisor” has forecast just over “22,000” vapid in the banks’ base case increasing with national GDP and 19,000 vapid in the bank downside case. In order to guidance in financially the company should try to rains funds from the equity as compared to the debt funds. Also it has been observed that the banks’ “traffic advisor has forecast just over 22,000” vapid in the banks’ base case increasing with national GDP. it has been observed that the tunnel will cut approx. cut 15 minutes of current journey by using the bridge, and Abu is a one of the biggest German contact companies who have long term corporate finance and finance relationship. Hence the SPV will be readily examined by undertaking public-private partnership with isolating the financial risk of assets and ventures in a large manner.
As per the view of author Adjei-Bamfo et al. (2019), Consideration is key term of contract, where the two parties are agree, Richmond Bank Infrastructure Project Finance (IPF) has been approached by GmbH “Bau” as the potential lead arranger for the project financing of the Stralsund Road Tune.
Mutual obligation is required to takes and activity agree to do. In this project Richmond Bank Infrastructure Project Finance (IPF) and Abu are mutuality work on this project where they making the road and tunnel which cut the approx. 15 minutes of current journey. it has been identified that that the Abu is try win the mandate as a leader arranger (Sönnichsen and Clement. 2020).
Stipulated timeline is a time that determine in accordance with schedule. In order it has been identified that the project will takes approx. 25 years to compilation and it has completed the five years of construction phase. The total budget for the project is approve € 500 million, and it will be raised through the state grant, equity, and debt funds.
In order, there are six type of principles in the contractual aspect which are “Agreement, Consideration, Intention, capacity, genuine consent, Legality”. As per the view of author Naumenkova et al. (2020), the offer and acceptance in two particle can be define as an agreement. Also, it can be said that the one part has must clear offer and one party must accept those offer. Consideration is a second part of principal of contractual aspect, consideration is an exchange of promise in the `two parties which called agreement or contract. Intention is next process of principal of contractual aspect. Genuine consent is an essential element of legal contract. Legality is one of the most important aspects of principal of contract and the contract must be legal with consideration of both the parties under standard terms and conditions.
Negotiating Process in the organization can be further described based on elements including interests and commitments. The issues in the negotiation process arise when the persona are not ready to understand the persona. Interests generally consider the mutual obligation of two parties in lieu of monetary or other major considerations. As illustrated and narrated by Moro Visconti and Morea (2020), the second key element of the negotiation process involves the commitment on part of both the organizations. Commitments usually comprise of mutual obligations between two parties to fulfil and execute the agreed terms and conditions of the contract. It has been seen that Richmond Bank Infrastructure Project Finance (IPF) has been approached by GmbH “Bau” as the potential lead arranger for the project financing of the Stralsund Road Tunnel. Legal issues can be raised in terms of supplier customer relationship such as issues in maintain CSR and meeting compliance requirement with management of cost largely.
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