The early phases of negotiation consist of both sides finding out more information before talking about a specific deal or set of alternatives. For example, if you find out the other side has a time deadline that only your company can meet, it may give you the chance to negotiate a more favourable price. If you know that the other side has recently expanded their production capacity, you may be able to negotiate more favourable terms in return for a commitment to buy certain volumes over an agreed time period.
By spending time as part of your preparation in listing what you already know and what you need to know, you will give yourself a better chance to negotiate well on your company's behalf.
Negotiation is a process of bargaining by which agreement is reached between two or more parties. It is rare in negotiation for agreement to be reached immediately or for each side to have identical objectives. More often than not, agreements have to be worked out where concessions are given and received and this is the area where the profitability of the final outcome will be decided.
When preparing for negotiation, it is advisable to write down a realistic assessment of how you perceive the final outcome. Find out the limits of your authority within the negotiation and decide what you are willing and able to concede in order to arrive at an agreement, which satisfies all parties.
Concessions have two elements; cost and value. It is possible during negotiations to concede issues that have little cost to you but have great value to the other side. This is the best type of concession to make. Avoid, however, conceding on issues that have a high cost to you irrespective of their value to the other side.
When preparing for negotiations, ask yourself the following questions:
• What is the best deal I could realistically achieve in this negotiation?
• What is the likely outcome of the negotiation?
• What is the limit of my authority?
• At which point should I walk away?
• What concessions are available to me?
• What is the cost of each concession and what value does each have to either side?
Planning your strategy is important in negotiation. Once you know your objectives, you need to work out how you are going to achieve them. It is also useful to try and see the negotiation from the other side and try and work out what their strategy will be.
During the negotiation there will be opportunities to use various tactics and you need to decide which of these you feel comfortable with and at the same time recognise the tactics being used by the other side.
Ask yourself the following questions:
• How am I going to achieve my objectives in this negotiation?
• What is the strategy of the other side likely to be?
• What tactics should I use within the negotiation?
• What tactics are the other side likely to use?
And Finally - Tasks:
If you go into negotiation with a colleague or colleagues, you need to decide during the preparation phase:
• What role will each team member take in the negotiation?
• How can we work together in the most effective way?
Some teams of negotiators appoint team leaders, note takers, observers and specialists, each with their own clearly defined authority and roles to perform. Having a clear understanding of roles within the negotiation will make the team approach much more effective.
Today's News: Two very good friends in the news today: First up Paul McCord has launched a very specialist and in my view, much needed blog, about CRM and associated topics. I will be guesting for him frequently and you can discover it for yourself here
Tomorrow: Well, I am working on a brand new project, which is going to be quite simply, mega Am I going to share it with you? No, not yet, due to confidentiality agreements etc but I will, within the next four weeks, maybe sooner.
As ever, wherever you are in this rapidly shrinking world of ours, have a great w/e and be sure to join me and my guests next week. - JF
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