Name 5 benefits of having a negotiation strategy
- Outcomes expected from the negotiation are clearly defined with targets
- Process to achieve desired outcomes is clearly articulated, for example MIL and tactics
- Negotiation boundaries are clearly defined, for example the BATNA
- Suppliers position and objectives are understood or estimated
- Concessions that can be traded in the negotiation are identified in advance
Name the 4 key activities involved in negotiation plans/strategies
- Developing and prioritising your objectives and limits
- Seeking to understand the other party’s objectives
- Developing concession plans
- Planning the resources and logistics required and agreeing team roles
What are two early considerations of setting objectives?
- Trust
- The importance of the relationship with the other party
What should you when developing specific negotiation strategies in areas where risk or spend is high?
Analyse a wide range of objectives and variables within the context of the organisations business requirements
Name the 5 ‘Getting to Yes’: Fisher and Ury’s preparation stages
- Set your overall objectives
- Try to establish their objectives
- Identify your tradeables/negotiation issues and set ‘must, intend, like’ (MIL) limits for each
- Determine your fallback/BATNA
- Develop scenarios around possible options
What 3 things are involved in step 1 of the negotiation strategy framework
- Identify the overarching objectives and the organisational objectives that have necessitated the negotiation process
- Develop specific objectives that will support the achievement of the overarching objectives
- Agree the roles of the team
Must/Intend/Like (MIL)
The strategic position of the negotiation team towards specific variables that are being considered
Least desirable outcome (LDO)
The lowest level of expectation for the buyer or seller
Most desirable outcome (MDO)
The optimal solution for the buyer or seller
Bargaining mix
All the issues in a project - each with different targets - that are up for negotiation
What 4 things are involved in step 2 of the negotiation strategy framework
- Define the position you would like to be in at the end of the negotiation process
- Consider a wide range of outcomes or options that you would like to achieve from the negotiation
- Identify the preferred outcomes and prioritise in order of importance - MIL
- Set objectives in terms of upper and lower limits and not just a fixed point
Name 8 things you should be aware of in terms of the supplier and the product/service in focus
- Cost factors and components that determine supplier prices
- The financial strength of the company
- The company’s reputation in the marketplace
- The company’s share of the market
- The share of a supplier’s turnover the buyer would represent
- The importance a supplier attaches to the business that they are doing with you
- The type of organisational culture evident
- Who will be on the negotiating team
What 4 things are involved in step 3 of the negotiation strategy framework
- Identify major negotiation issues (the bargaining mix) in achieving desired position and identify a plan for each issue separately
- The areas in which the parties’ current position differs from their desired position will form the negotiation
- Focus your planning on areas of common ground and not just on areas of potential conflict
- Be creative and thorough in preparing this list
What 6 things are involved in step 4 & 5 of the negotiation strategy framework
- Review existing research and insight on external influences, industry forces, macroeconomic issues and supplier positioning
- Understand current contract(s) and performance on them by engaging with business stakeholders if the supplier is incumbent or an ex-supplier
- Understand the suppliers capabilities to meet objectives and the level of investment/effort they need to accommodate objectives
- Understand the supplier’s representatives incentives (if any) and objectives
- By anticipating potential provider issues, effective counter-responses can be prepared to negate their concerns
- Ask yourself ‘What if the other party says/does/acts’ questions to create scenarios that will help you prepare as far as possible for any surprises or unexpected approaches or responses in the negotiation
What is one of the most common reasons for an unsuccessful negotiation?
Failing to understand the other party’s needs
What are the two levels of need?
The organisation and the individual
Name 8 benefits of preparing for an important commercial negotiation
- A robust and comprehensive plan allows you to be in control of the situation
- It prepares you for alternative negotiation outcomes
- It gives confidence in the meeting and provides a plan to achieve success
- It makes you think about all that you want to achieve from a negotiation rather than just one aspect
- By planning, it gives you time to think through your negotiation plan and the tactics you are going to employ
- It also provides a framework that brings together all aspects of negotiating in a planned and determined way
- It anticipates the strategies and tactics which the supplier(s) may employ
- It requires you and your stakeholders to create a contingency plan together
Best alternative to a negotiated agreement (BATNA)
The fallback or backstop position if the negotiation fails to result in an agreement/no deal is agreed
In a negotiation environment, what should target setting also include?
Establishing and locking down your walk away points for each variable - the minimum you can accept
What should you have established if you cannot achieve your objectives
A BATNA
Name 10 potential tradable in a negotiation
- Price
- Payment terms
- Length of contract
- Minimum quantities
- Lead time
- Contract terms and conditions
- Publicity and reference site permissions
- Exclusivity of supply
- Intellectual property rights
- Added value services
What must you bring for every objective and variable/tradeable
a MIL
Must achieve
Intend to achieve
Like to achieve
Name 3 steps to establish your BATNA
- List everything you could do if you do not reach an agreement
- Explore the best of your options and try to improve on them. the better you BATNA, the stronger you will be in negotiation
- Finally, choose your best option. This is your BATNA
Walk-away point
A position from which you cannot concede any more ground and must ‘walk away’/decline a deal
