This document discusses negotiation in sourcing. It identifies three important factors in negotiation: the negotiators, the negotiating situation, and time. Any aspect of a purchase agreement is subject to negotiation, including quality, price, transportation, and support. The negotiation process falls into three phases: pre-negotiation, actual negotiation, and post-negotiation. The document outlines various strategies, tactics, behaviors, and stages that take place within each phase of the negotiation process.
1. SOURCING MANAGEMENT (KMB OM 04)
Negotiation in Sourcing (Unit 4)
Part 4 of 5
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AKTU,LUCKNOW 1
2. Factors in Negotiation
Three important factors in negotiation are:
1. The Negotiators:
• Personality
• Negotiators as Representatives
2. The Negotiating Situation
• The Buyer’s Negotiating Position
• The Supplier’s Negotiating Position
3. Time
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Dr. PARUL AGARWAL, ABESEC,
AKTU,LUCKNOW
3. Any Aspect of the Purchase
Agreement is Subject to Negotiation
• Quality
• Price
• Transportation
• Support
• Supply
Dr. PARUL AGARWAL, ABESEC,
AKTU,LUCKNOW
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4. Model of the Negotiation Process
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AKTU,LUCKNOW
5. Phases/ Stages of Negotiation- (Contd.)
A Negotiation Process Falls Into Three Distinct Phases
1. Pre-Negotiation
2. Actual Negotiation
3. Post-negotiation
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Dr. PARUL AGARWAL, ABESEC,
AKTU,LUCKNOW
6. Phases/ Stages of Negotiation-
1. PRE NEGOTIATION
Points to be considered in Pre Negotiation stage
include:
a) Who is to negotiate
b) The Venue
c) Intelligence Gathering
d) Negotiation Objectives
e) Strategy & Tactics
f) Dummy Runs
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Dr. PARUL AGARWAL, ABESEC,
AKTU,LUCKNOW
7. Negotiation Strategies
Strategy is the overall plan that aims to achieve, as
nearly as possible, the objectives of negotiation.
1. Collaborate
2. Compete
3. Accommodate
4. Avoid/ Withdraw
5. Compromise.
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Dr. PARUL AGARWAL, ABESEC,
AKTU,LUCKNOW
8. Negotiation Tactics
A tactic is a position, manoeuvre or attitude to be
taken or adopted at an appropriate point in the
negotiation process. Some tactics are:
• The order in which issues will be discussed
• Whether to speak first or allow the other side to
open the negotiation
• Whether to build in recess for discussion
• What concessions to make should the need arise
• What issues can be linked
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Dr. PARUL AGARWAL, ABESEC,
AKTU,LUCKNOW
9. Phases/ Stages of Negotiation-
2. THE ACTUAL NEGOTIATION
1. Stages:
• Stage 1- Introductions, agreement of agenda, rules
• Stage 2- Ascertaining the ‘negotiation range’
• Stage 3- Agreement of common goals
• Stage 4- Identification and removal of barriers
• Stage5- Agreement and closure
2. Techniques
3. Deadlocked Negotiations
4. Negotiating Behaviour
5. Ploys
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Dr. PARUL AGARWAL, ABESEC,
AKTU,LUCKNOW
10. Types of Behaviour & Response
Behaviour Likely response
Proposing – shall we ….? Development in form of support or
reasoned negative identifying difficulty
Development – building on
or supporting other’s
proposals
Further development or seeking further
information
Reasoned negative –
explaining areas of difficulty
Can invoke similar negative behaviour,
try to remain reasonable, seek more
information
Emotional negative –
attacking or defensive,
critical, ‘rubbish’
Tends to evoke similar response, hard to
return to constructive behaviour
Clarifying – checking for
understanding, summarising
Supportive development or can lead to
disagreement if situation misunderstood
Seeking information – facts
opinions, ideas, what if?
Usually results in information being given
Giving information – open Can be in response to seeking 10
Dr. PARUL AGARWAL, ABESEC,
AKTU,LUCKNOW
11. Phases/ Stages of Negotiation-
3. POST NEGOTIATION
• Document - draft agreement or contract, circulate, confirm
• Sell agreement to key stakeholders
• Implement the agreement
• Monitor the implementation of agreements
Negotiation Post mortems: Many organizations hold post
negotiation meetings for the purpose of discussing:
• Negotiation Strategies & Tactics
• Negotiating Costs
• Negotiating Methods
• Any other issues
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Dr. PARUL AGARWAL, ABESEC,
AKTU,LUCKNOW
