The Negotiating Process

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Strategic Negotiation A Rational Process for
Business Negotiation
Brian Menzies Oct 14th, 2003
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Objectives

• Review two fundamental principles of negotiation
• Consequence of No Agreement
• Trades
• Introduce the Think! Process for Negotiation

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Common Negotiating Mistakes

• Failure to consider the strategy of the other
  side
• Emotional escalation to the wrong objective
• Planning for one round of a multiple round
  negotiation tactical vs. strategic thinking

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Negotiation Case Exercise

• Audit existing strengths and weaknesses
• No inventing data
• 5 minutes to read and plan
• 10 minutes to negotiate
• Seller report deal results for recording

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Who Had the Power in This Negotiation?

• Buyer CNA
• (Consequences of No Agreement)
• Analysis

Seller CNA (Consequences of No
Agreement) Analysis

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Define the Agreement Zone
Seller CNA
Buyer CNA
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25
____ M
____ M
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Negotiation Structure For Sellers
Us(Seller)
Them (Buyer)
TheirCNA
real perceived
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Negotiation Structure For Buyers
Us (Buyer)
Them (Seller)
TheirCNA
real perceived
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CNA Consequences of No Agreement
Key Points Review

• For each negotiation and both sides, analyze
  hard / soft, costs / benefits, short / long term
• Other side sees your offer as a gain or loss
  depending on their perception of their CNA
• Know their CNA better than they do and then
  diplomatically educate them
• Power comes from CNAimprove yours

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What Was the Main Item Being Negotiated?

• Main Buyer item/range
• Other Buyer items/ranges

• Main Seller item/range
• Other Seller items/ranges

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Expand the Agreement Zone
Plant Only
7 M
25 M
18 M to divide
11 M
32 M
21 M to divide
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Creating Value by Trading Two Rules

• Never concede always Trade
• Never negotiate one thing by itself

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Creating Value by Trading
Key Points Review

• For each negotiation and both sides, analyze
  Trades and ranges
• Never concede always Trade
• Never negotiate one thing by itself
• Trading items of different rankings creates true
  business value
• Items must be measurable

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Applying these principles

• Focus on the essential data
• Execute a systematic process

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Think! Strategic Negotiation Worksheet
Goal Create joint value divide it given
concerns for the ongoing relationship
Our Side
Their Side

What are the consequences to US if we DO NOT
reach an agreement?
What are the consequences to THEM if we DO NOT
reach an agreement?
CNA

What would make a GREAT DEAL for THEM?
What would make a GREAT DEAL for US?
Trades
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Think! Strategic Negotiation Process
Goal Create joint value divide it given
concerns for the ongoing relationship

• Confirm and adjust estimates

• Exceed CNAs
• Look for Trades

• Both sides
• CNAs
• Prioritized Trades
• Prepare questions

• Anchor on MEO
• Overcome impasse
• Trading
• Claim value

MEO Multiple Equal Offers
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Objectives Review

• Review two fundamental principles of negotiation
• Consequence of No Agreement
• Trades
• Introduce the Think! Process for Negotiation

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Think! Inc. Strategic Negotiation

• There are no silver bullets
• however, a well executed process improves the
  chances that we do better over time.
• Max Bazerman, Ph.D.
• Think! Inc. Partner
• Harvard Business School Professor

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For Further Information

• www.e-thinkinc.com

Brian Menziesbrian.menzies_at_e-thinkinc.com
310-399-0924