Trade Management

Module 8.

Main Topics: Negotiation Process

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NegotiationProcess

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Importance of Preparation Defining your ‘ideal’ and ‘ fallback’ position (objectives)

What I must have –essential and not conceded What I aim to have – good to have but not absolutely

essential What would be nice to have- icing on the cake

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Perspective Taking (tactics) Knowledge of the other party (intelligence)

Research

Build a picture of what might be important to them and what their position might be

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Identify possible trade- offs Prioritise the issues involved

Budget Scope Specifications Support & Services Warranty Invoice/payment Terms and Conditions

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Problem Definition Negotiation involves the solution to a

‘problem’

Need to find a compromise solution

Need to define ‘problem’ or ‘goal’

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Problem solving and creativity in negotiation

Key to effective problem solving in negotiation Keep agreed problem in mind and refer back to it Establish a detailed understanding of all issues Stay close to your ideal position Keep an open mind and be prepared to offer or accept a

new ideas Recognize and acknowledge as and when parts of the

problem are solved Summarize regularly to ensure progressive agreement

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Completion

Completion= closing a sale Know when to complete as below:

Knowing when we have reached our limit beyond which we will be accepting a bad deal

Knowing when we have got what we want Judging how close the other party is to their limit Being fully aware of what concessions have been given

and received Reading and assessing the reactions of the party

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Completion (cont)

Number options to complete negotiation Summarsing Alternative approach(either/or) Very last concession Consequences Postponement

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Completion (cont)

Before walking away Agree what has been agreed Summarize each issue Record what we have agreed in an acceptable way Confirm in writing the agreed issues Decide and record an agreed action plan

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Negotiation Process

Setting up process Ensure right people will attend ( influence, expertise,

authority) Build common trust and get an early agreement to

reach a settlement Avoid perception of game playing Use an agenda

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Negotiation Process

Control the process Keep people focused on problem Keep exploring the other party’s position to solve issues Ensure agreed facts are clear

Stay focused on limits and goals Avoid premature compromise Be open about how one negotiates but rigid about what Demonstrate willingness to co-operate, but slow to offer concessions Avoid loss of face and show of emotions

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Choose a strategy

Hard ( winning at all cost) (adversary)

Soft ( conceding everything necessary to reach agreement) (friend)

Principled (giving and receiving concessions to achieve a mutually beneficial agreement) (joint problem-solver)

Remember you can modify the strategy as the negotiation proceeds

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Choose a strategy

Techniques Salami

Use small consistent steps to reach a goal Good cop/bad cop Act surprised Walk away Develop power

Competition Legitimacy Knowledge

Identify negotiations

issues & objectives

Determine overall

negotiation approach

Assess bargaining

strengths and weaknesses of

the parties

Tailor Team

InputRFP

Technical

Reports

Establish negotiation priorities &

potential trade offs

Identify sellors/purchas

ers likely approach

Prepare negotiation

plan Identify sellors/purchas

ers likely approach

Execute

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Communicating effectively

Building and maintaining rapport

Questioning Establish needs of others use open questions Use closed questions to check agreement and understanding

Listening Keep attention speaker Maintain eye contact Ask questions to check your understanding Take notes of key points

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Communicating effectively (cont)

Stating our case Continuous basis to set parameters of the negotiation

Body language

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• Goal• Attitudes- Win/Win ( collaborative) Win/Lose (confrontational)• Personal styles – high impact from culture• Communication• Time sensitivity (high:low)• Emotionalism• Agreement form- contract• Agreement building- detailed (a deductive process) /specific (an inductive

process)• Team organization- know how the other side is organized ( commitments,

decisions made, leader)• Risk Taking

Inter-cultural negotiations (sales, purchases, alliances)Salacuse (2005) lists 10 ways that culture can impact negotiation

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Games that people play

Stalling/delaying Emphasis the costs of delay

Making threats Stay principled and refuse to react

Bringing in suprises Admit ignorance and challenge surprises

Deliberate lies- challenge facts on information you know

Personal insults- avoid getting personal