In any kind of negotiation the planning stage is probably the most important. Too often we go in badly prepared and end up giving concessions that reduce the overall profitability of the final deal. The importance of planning is in having a very clear idea before entering into the negotiation i.e.
o What are my objectives?
o What does the other side wish to achieve?
o What information will influence the final outcome of the negotiation?
o What concessions can I make?
o How am I going to achieve my objectives?
o What part will other people play in the negotiation?
Generally, the more time that is spent in planning and preparing for the negotiation,
the more beneficial will be the final outcome.
Objectives:
Before entering into the negotiation, you need to have a clear idea of your objectives
and try to work out those of the other side. Ask yourself the following questions:
o What exactly do I wish to achieve from this negotiation?
o Which of my objectives:
– Must I achieve?
– Do I intend to achieve?
– Would I like to achieve?
o What options or alternatives would be acceptable to me?
o What are the other sides. objectives?
o How does the other side see the negotiation?
Information:
It has often been said that information is power. In any negotiation, there will be four types of information that is important to the final outcome.
o What information do I have that the other side has also?
o What information do I have that the other side does not have?
o What information do I need to have before negotiating with the other side?
o What information does the other side need before it can negotiate with me?
This can be particularly important when negotiating with people who concentrate
on price issues.
o What other things are important to this person?
o What pressures does he have on him to conclude the deal?
o How well is his company doing at the moment?
o How important is it that he deals with my company? etc.
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 on 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.
Concessions :
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:
o What is the best deal I could realistically achieve in this negotiation?
o What is the likely outcome of the negotiation?
o What is the limit of my authority?
o At which point should I walk away?
o What concessions are available to me?
o What is the cost of each concession and what value does each have to either side?
Strategy:
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:
o How am I going to achieve my objectives in this negotiation?
o What is the strategy of the other side likely to be?
o What tactics should I use within the negotiation?
o 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:
o What role will each team member take in the negotiation?
o 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.
Copyright © 2007 Jonathan Farrington. All rights reserved
