Unit 4 Assignment 2: Purchasing Plan and Negotiation

Unit 4: Assignment 2

Task 1

    In this assignment, I will be producing a plan of all purchases I will need to start my own business as well as procure them using negotiation techniques with justification for my key purchases. I will also develop a negotiation plan.

    To begin, we will produce a list of all purchases needed to start my business and I shall include a price I am willing to pay. The items listed without a price will be because they’re not needed to start and operate my business but will be advantageous to have should I be able to afford them after procuring the items I do need. Below, is a list of expenses.

Item	Cost	=Actual Price/Most Willing To Pay (MWTP)	Essential?
Public Liability Insurance	Up to £100 per year.	MWTP.	Yes
Tracking Devices	Up to £40 each.	MWTP	Yes
Geomapping software: Streetfinder + Tracking Module	£2495+vat per year	Actual Price.	Yes
Storage	£1500	MWTP	Yes
Tablet PC	£180	MWTP	Yes
Other Items That May Be Useful But Aren’t Required To Start Trading
Trademark Registration	.	.	No
Companies house registration	.	.	No
Van	.	.	No
Van Insurance	.	.	No
Van MOT	.	.	No
Personalised bibs	.	.	No
Business Cards	.	.	No
Leaflets	.	.	No
Quickbooks Subscription	.	.	No
Mobile Phone + Plan	Up to £58 a month	MWTP	No, I shall use my personal mobile phone for the short term.

    I shall justify why I need public liability insurance, tracking devices, a tablet PC and geomapping software provided by the company called Geoplan.

Public Liability Insurance:

    I have decided that Public Liability Insurance is the first thing I should purchase when I have registered my business and ready to begin trading. This is because it will mitigate any risk from those injured as a result of my business’ operational activities. I have chosen to use AXA as my insurance provider because once I employ staff, I can take out additional cover for employer’s liability. The cost of the insurance will be from £55 a year as we can see in the screenshot below, I have called and ran through the basic screening required to provide me a quote of £55 (as I have no employees and a result of currently being a small operation) which will increase depending on growth and optional covers taken out in the future:

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Tablet PC:

    I will need a tablet PC that will enable me to carry out administration and accounting activities without using my main laptop. This will prevent confusion between documents and workspaces and will allow me to give access to other trusted individuals to the tablet PC where I wouldn’t give anybody permission to use my main, home laptop. I have already purchased this at a price of £119.99 from Argos on eBay.co.uk as you can see below:

Geomapping software:    

    The technology we will need to sustain trusting relations between ourselves and our customers is one which will track those distributing leaflets. GPS tracking minimises the risk of refund requests because of a poor response rate to their marketing campaign as often, if the distribution campaign doesn’t have the required outcome the customer will question whether or not their leaflets were fully distributed. We can avoid this by having a record of distributors GPS tracking.

    A company which is used by most distribution companies is called GeoPlan who offer a GPS tracking module plus geomapping software which provides the amount of houses and for an extra fee, GPS tracking. To obtain a quote, I had to call them and was informed that the price would be £2000 per year for the StreetFinder Software (see below) and an extra £500 per year for the tracking module.

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Tracking Devices:

    We will need tracking devices to actually utilise the GPS tracking software, however, if we do not pay the extra fee for the GPS tracking and instead used a free app called MapMyWalk, we can then minimise costs whilst still having an idea of how many houses are on each street but we will have no cover for losses should the MapMyWalk app not work or become unreliable. The cost of these GPS modules will be up to £40 each, as can be seen in the screenshot below. We wouldn’t need live GPS tracking so this will bring the cost down because we won’t need to pay for a data plan. The price of each device will cost £39.99. We will only need one GPS tracker in the beginning.

Unit 4: Assignment 2

Task 2

Negotiation/Procurement Plan.

    In this section, I will discuss my negotiation plan. This will include the table used in Task 1 to remind us of the most we are willing to pay for each item. This table can be seen below, we have omitted Storage as we aren’t currently looking to purchase that straight away as we will be using my flat as storage until alternative arrangements are made.

Item	Cost	=Actual Price/Most Willing To Pay (MWTP)	Essential?
Public Liability Insurance	Up to £100 per year.	MWTP.	Yes
Tracking Devices	Up to £40 each.	MWTP	Yes
Geomapping software: Streetfinder + Tracking Module	£2495+vat per year	Actual Price.	Yes
Tablet PC	£180	MWTP	Yes

Objectives

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Review.

    Negotiation/Procurement Outcomes

Public Liability Insurance Negotiation:

    I called Marsh & Co., an independent insurance broker in Leicester, and asked for a quote for my business for Public Liability Insurance, they informed me that they do not provide this cover alone and instead I would have to take a combined liability insurer. AXA provide a much more attractive offer as I do not require the public indemnity and employer’s liability insurance right away however, they may be an alternative option to consider in the future. I did not continue to the negotiation as it was not the right product for me. I feel I may have been tripped up here and spent more money than what would be required had I not known what insurance product it is that I need, because I know what I want, it makes it easier for me to find the best deal. I feel the outcome of this call was a success because I walked away without purchasing the product and therefore avoiding a negative impact on the financial condition of my business.

    Next, I called Allsop Kanabar, an independent insurance provider in Leicester, who advised me that they could provide the cover I need but they quoted me £65 per year for basic cover based on being a start-up and therefore likely to be able to afford any excesses that come with the cover. Because AXA pay for legal costs up to £250 per day, I feel even with excess, AXA’s deal was better, I explained this to the person I was speaking with and I was transferred to a manager to see if we could negotiate a better price. The manager was very stern and would not move because of the stage my business is in, therefore I walked away from the deal. This negotiation was a failure because the insurers would not move on their price, I feel I could have handled this differently by going to visit them once I had a positive cashflow to provide a bit of a guarantee at least. On the other hand, I feel that this company may be more attractive than AXA, even at the higher price, because they are local and I will be able to have a one-to-one relationship with them which I wouldn’t be able to with AXA however, because of the importance to keep costs low and because of the added benefits AXA provide for the lower cost, I shall be sticking with this insurer.

Geomapping Software from GeoPlan

    I called GeoPlan and explained the needs of my business and firstly defined whether or not there were any alternative products that they provided which would suit my needs. Unfortunately, there wasn’t except for Streetfinder and the tracking module. I did try to negotiate the price but was informed, because of the amount they have to pay to the Office of National Statistics and the Census Bureau, it would not be feasible for them to lower their price. They did, however, inform me that their product may be unsuitable for such a small operation currently which is unfortunate as I really thought they’d be perfect. The person I spoke to was very helpful and I could have improved my interaction with them buy carrying out better research into what software is right for me.

    As a result of this conversation, I have decided to not go ahead with this purchase at all until I have scaled my business and instead, I will be using the MapMyWalk app until a better alternative becomes available. I shall also be enquiring with a friend of mine who has recently graduated from university studying a bachelor’s degree in Computer Science if they would be able to make me a tracking app that can be downloaded to smartphone using the Google API like Uber do, Google currently allow free use of their API under a certain number of users; both of these will cause me great savings.

    I would say this negotiation was a success albeit not procuring the product I wanted because I have decided to implement an alternative tracking strategy which no longer requires the tracking modules until the future.

Tracking Modules

    Because these aren’t required anymore, I do not need to procure them, however, I have still looked around for a lower priced device and I have found one quite easily by scrolling down the list of results presented to me on Amazon when I searched “GPS tracker”, the item I have found is a packet of three GPS trackers at the cost of £16.99, as can be seen below:

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Summary

To summarise, I think my overall negotiations were a success because I walked away with a better outcome than what I either wanted or expected. I was able to easily walk away from purchases that were unsuitable and able to find a cheaper alternative to what I initially intended to purchase after I had already made the, what I thought was essential, purchase redundant by opting to not go ahead with the products I initially intended to purchase from GeoPlan. I have benefitted financially as a result and shall still be able to provide GPS tracking. For customers who absolutely need a house count, I can charge extra and make a Freedom of Information request to the Royal Mail or land registry to find out how many homes are on each street, this may be unattractive to customers but if it is really important to them then it is a price they must be willing to pay. I can then reuse these FOI request responses to better facilitate future customers and inform them of how many houses are on each street, therefore enabling me to lower the cost. An FOI request to the land registry will not give me details of how many letterboxes there are in a block of flats whereas the Royal Mail will so it would be unlikely that I would make an FOI request from the land registry. Royal Mail will be able to give me the number of occupancies which will better suit the customer than number of buildings/houses and FOI requests cost just £10.

I would definitely do more research before entering another negotiation as even though I thought I knew what I wanted, it was quite easy to change my mind and go ahead with an alternative (in reference to my decision to not go ahead with purchasing Streetfinder and the tracking module).

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    Finally, I will mention the purchase of the tablet PC. I initially set a budget of £180 and this was to purchase a tablet PC that I could use a mouse and keyboard with should I require it. My initial idea was to purchase a 1^st generation Apple iPad but I wanted to continue to use the Windows operating systems as these are easier to sync with one another than it is an Apple-made operating system and a Windows operating system. I could have managed with a Chrome operating system but cannot justify using a Chrome operating system as they do not typically support a lot of physical memory which is something I would like.

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    I thought about purchasing a new Acer Aspire Switch, with detachable keyboard but this would have meant increasing the budget for this purchase by £19.99 (if I purchased from Argos which is whom I hoped to negotiate with), something I certainly did not want to do. I decided, because I have been a regular Argos customer for some time and never making a complaint even when items have arrived late or had to be sent back, that I am entitled to a discount and upon calling customer services, I was advised this is impossible because they cannot alter the price of an online purchase, this made me decide to approach the manager of the Gallowtree Gate store in Leicester and negotiate with her instead. It was impossible to negotiate for that item as it was out of stock so instead, she looked at alternative options; perhaps she could have it delivered to my home or her store from another store? It was during this time that she happened upon the refurbished items that they had for sale which were not available to be sent to other stores, there was an Acer Aspire Switch One 10 but my address was too far away from the store that had this in stock to be eligible for home delivery. However, being a regular Argos customer, I knew that sometimes there is a better deal on their eBay store and I headed over. Sure enough, I found a very similar refurbished Acer Aspire Switch in blue, it was the previous version to the Aspire Switch One 10 (my version is the Acer Aspire Switch 10) which I purchased and it was delivered to my address. This “negotiation”, for lack of a better word, was a success but hasn’t been included above as it wasn’t so much a negotiation as it were a work-around the official Argos delivery terms.

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    In conclusion, I have been able to precure all essential purchases required to start my business with the exeption of Public Liability Insurance as this is not required until I have received my first order as the only person at risk of injury, currently, is myself. I shall purchase this once my business has been registered with HMRC.

    I was successful in procuring the other purchases for my business. You can see to the right evidence of my procurement of MapMyWalk which replaced the purchase of the software from GeoPlan and also the purchase of tracking modules. This will allow me to repay any business loans faster and scale in line with available finances without having to worry about repaying as much debt as we originally expected as a result of good negotiation and procurement strategy.