Unit 5 Subject background

Making deals
There are often two misconceptions about negotiating. The first is: ‘Negotiating is all about making offers and finding compromises.’ The typical image is buying a carpet in the bazaar. But, in fact, this is really the stage of ‘bargaining’, and negotiating also includes the earlier stages of establishing rapport, information gathering, stating needs, etc. Even in the bazaar the serving of mint tea is an essential part of the process — a chance to get a sense of the other person as an individual before the hard bargaining begins. The second is: ‘Negotiating is all about supplier-customer situations.’ But, in fact, the textbook negotiation of a purchasing manager buying materials from a supplier is a specialized situation in business. The same language maybe used when negotiating with colleagues and bosses about day-to-day work procedures.
In negotiation roleplays in the classroom, another common mistake that is made, especially amongst those with little or no work experience, is trading concessions and finding compromises issue by issue. In real business, negotiators often leave everything open right up to the end, at which point everything falls into place as a whole.
Issues that might be subject to negotiation include: price, minimum order, discount, delivery, quality standards, payment terms, extras, penalty clauses, other contract details, procedures, documentation, after-sales service, timing, guarantees, etc.
There is always a good deal of preparation before a negotiation. This might consist of:

· Setting broad objectives for what you want to achieve. What are your main priorities?

· Identifying the other person’s needs. Initial contact by phone and email will allow you to do this — ask lots of questions.

· Listing all possible variables. Divide them into quantifiable (price) and unquantifiable (design). For each variable, write down i) your best possible outcome, ii) a realistic outcome and iii) the worst position you will accept (beyond this point you walk away).

· Deciding on possible concessions. What are you prepared to give?

In the negotiation itself, there is a psychological element to the trading of concessions.
1. Maximize your concessions:

· stress the costs to you (Well, I could do that, but it would involve ...)

· refer to a major problem your concession will solve (Well, if I agreed to that it would remove the need for you to ...)

· imply that the concession is exceptional (I really don’t know what my boss would say.).

2. Minimize their concessions:

· acknowledge a concession briefly without putting any value on it (Right, let’s do it that way)

· devalue their concession (Right, that’s a small step forward I guess.)

· amortize their concession into smaller units (Well, at least that saves me X per month.) rather than quoting the total figure.

Other key techniques during the negotiation include:
3. Summarize frequently.
4. Take notes.
5. Use silence. It gives you time to think and — you never know — the other person might fill it with a concession.
6. Where agreement is easy, use this to promote good feeling (That’s a good suggestion / Yes, let’s do it that way).

Date: 2016-01-03; view: 2110