Agenda• Negotiation ‘What It’s Not’.• Negotiation ‘What It Is’.• Phase One – Preparation• Phase Two – Bargaining
Negotiation – What It’s Not • Negotiation is one of the more abused words in the English language. • Some believe negotiation is a code for: – Manipulation – Lying
What people say about Negotiation • ‘The old idea of a good bargain was a transaction in which one man got the better of another. The new idea of a good contract is a transaction which is good for both parties to it’ Judge Louis D. Brandeis
What people say about Negotiation • ‘I’ll make him an offer he can’t refuse.’ Mario Puzo (Don Corleone, The Godfather) • ‘Diplomacy is the art of letting someone else have your way’. Daniel Vare (Italian Diplomat)
Negotiation – A Definition Negotiation is – ‘conference and bargaining for mutual agreement’.
For Negotiation to take place 1. Both Parties must have some level of commitment to do a Deal.
For Negotiation to take place 2. Both Parties must have the authority and the will to vary the terms of the agreement.
Negotiation • Phase One - Preparation • Phase Two - Bargaining
ObjectiveUs Them• To secure major retail • To find a supplier who can account representing $5 supply product to meet our million in new business immediate price objectives p.a. and customer requirements.
Preparation Step 2 – Decide our Fallback Position Imagine Total Failure Decide Best Alternative
FallbackUs Them• To secure $1 million of • To find another supplier. business for high margin niche products only.
Preparation Step 3 – Prioritise your Tradeables What are the Tradeables? What are the Priorities?
Prioritise Tradeables Us Them?Product High Low?RangeRebates Low High?Catalogue Low High?fundingProduct High Low?training
Preparation Step 4 – Set Best and Worst Trading Limits. Best = Best allowing Win – Win Worst = Walkaway to Review
Best and Worst Limits Us Them B W B WProduct Range 10 Range only 3 ? ?range product lines product linesRebates 1.0% to sales 2.5% to ? ? salesCatalogue $60,000 p.a $150,000 p.a ? ?fundingProduct 15 Training 5 training ? ?Training workshops workshops
Preparation Step 5 – Plan ‘What If…’ Strategies and Supporting Arguments. Plan Options around Tradeables Plan Creative Solutions
Bargaining Step 1 – Get the Issues on the Table. Start the Process Don’t Show your priorities.
Bargaining Step 2 – Ask Questions For Information and Motives To create movement
Bargaining Step 4 – Trade Concessions If … then …
Bargaining Step 5 – Conclude Summarise Write it Down
Negotiation Mistakes 1. Neglecting the other sides problem 2. Letting price bulldoze other interests 3. Letting positions drive out interests 4. Searching to hard for common ground 5. Neglecting BATNAs (“best alternative to a negotiated agreement”) 6. Failing to correct a skewed vision Source: HBR Six Habits of Merely Effective Negotiators by James K. Sebenius April 2001
Bibliography 1. Do We Have a Deal? Gavin Kennedy, Gower 1991 2. Negotiation Skills, Baden Eunson, John Wiley & Sons 1994 3. Getting to Yes, Roger Fisher and William Ury, Penguin 1981. 4. Account Strategies for Major Sales, N. Rockham, Gower 1988. 5. It’s a Deal – A Practical Negotiation Handbook, P. Steele, J. Murphy, R Russil, McGraw Hill 1989. 6. Negotiating: Everybody Wins, V. Helps, BBC Books 1992. 7. Planning for Behaviours for Win – Win Negotiations, Research papers available from Huthwaite Research Group Ltd
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