As described above, the negotiation process is a discussion involving the presentation of proposals and counter-proposals.
3.1 Objectives and variables
Successful negotiation begins with preparation. It is particularly important to have clear objectives.
Planning should be detailed enough to produce the equivalent of a route map to help shape the negotiation. This should provide an ideal route through while also recognising that things might not go exactly to plan.
The core of the negotiation process revolves around what are called variables. For example, in negotiating price, the price itself is clearly a variable, but discussion may involve associated matters such as payment terms, extras (e.g. with a product such might range from delivery to service arrangements to credit) and other factors such as timing, staffing or other services.
The overall rules here include:
● aiming high – going for the best deal possible
CHAPTER 7 Negotiation 83
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Putting the case
7.1
Take the distributors’ view of the product launch. What if one the most important of Spare Parts’ distributors is unsure about sending a
representative to the launch. What factors give them power and how can these factors be used? Negotiation demands empathy: you have to see things from the other side’s point of view. Spare Parts wants to use the product launch to encourage its distributors to champion the new product in their local markets. The distributors may be more circumspect: they need to be convinced that the new product is worth the effort of sending a representative to the launch, followed by the marketing effort on their return. The fact that Spare Parts needs the cooperation of its distributors gives the distributors a possible advantage in this negotiation. The product launch
organisers need to be aware of this potential power and make sure that the motivations and business needs of their distributors are taken into account, and that the case for attending – and subsequently endorsing the new product – is well made. Precedent may well be a significant factor in the negotiation; if the distributors have attended successful product launches in the past, they are much more likely to attend this time around. The distributors’ power over attendance or non- attendance must also be balanced by whether or not they wish to secure a long-term relationship with Spare Parts and how important working with the manufacturer is to their business profile in their markets. The prospect of non-attendance may be a useful bargaining position, but actual non-attendance may not ultimately be in the distributors’ own interests.
What is meant by the phrase ‘win-win negotiation’?
Testyourself
7.2
objectives
A clear
specification of the
result you want
from the
negotiation: what it is, its timing.
variables
Those factors that can be varied and arranged in different ways to create different potential deals.
● discovering the full list of variables the other person has in mind ● treating everything as a potential variable
● dealing with detail within the total picture (rather than one point at a time without reference to others).
Variables can be used in various ways. You can gain attention by offering the reward of something you are prepared to give. Conversely, you can offer punishment by showing your intention to withhold something. Your case is strengthened, given power or legitimacy, by being linked to authority or supported by factual evidence. Similarly the use of bogeys (e.g. statements such as ‘That’s beyond our control’, aiming to stop questioning in its tracks regardless of its truth) can add power.
Variables have to be ranked, both in preparation and during the negotiation, when some fine-tuning may be necessary. There will be some things that are:
● essential: a deal cannot be reached unless these are met
● ideal: what you really hope to achieve (and these need to be prioritised, because there may be more of these than can realistically be achieved)
● tradable: those things that you are prepared to concede to help create a workable deal.
The concept of trading variables is key to the whole process of negotiation. It is important never to give anything away. Concessions must be traded.
The trading of variables often involves a process of ‘if you will do this I will do that’ which must take place for an acceptable balance to be reached. This is often prompted by ‘what if’ questions.
In this trading, the value of every given concession must be maximised and every accepted concession minimised, so that the trading drives the balance in the direction you want.
PART THREE Verbal communication 84 legitimacy A case has legitimacy if is supported by factual evidence: the better the evidence, the higher the legitimacy and the stronger the case.
bogeys Red herrings, elements apparently a significant part of the negotiation, which are introduced only to distract or confuse the issue. trading variables The process of deciding how factors are decided and agreed in relation to each party to the negotiation.
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Putting the case
7.2
To organise the product launch, Michael James has had to make the crucial decision of where the event should be held, which has meant creating a shortlist of suitable hotels and then negotiating a deal which balances the overall cost with the importance of creating the right impression. What variables will be in play in these negotiations? The deal will include the following variables:
● Facilities: The right facilities in terms of the
launch itself and accommodation, hospitality and recreation. For example, would a nearby golf course provide opportunities for informal networking with international representatives?
● Timing: The hotel has to be available at the
right time.
● Location: Is the hotel easily accessible for the
international representatives?
● Price: Can Michael James negotiate a good
price without compromising the essentials?
● Extras: Perhaps the quality of the rooms, or the
catering.
● Ongoing relationship: The prospect of future
business might be used to negotiate a better deal for this event.