ISQA 454

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ISQA 454

• On-Line Negotiation Results
• Negotiation Planning

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Abraham Lincoln

• When I am getting ready to reason with a man, I
  spend one-third of my time thinking about myself
  and what I am going to say, and two thirds
  thinking about him and what he is going to say.

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Ten Biggest Negotiating Crimes

• 1. Inadequate Planning Time
• 2. Weak Information Gathering
• 3. Failing to Negotiate Internally First
• 4. A Rigid Mindset
• 5. Giving Concessions Too Early
• 6. Responding Too Quickly to Each Demand

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Ten Biggest Negotiating Crimes

• 7. Not Calling Time-out
• 8. Not Putting Yourself in the Customers Shoes
• 9. Letting Egos Interfere
• 10. Inattentive Follow-through
• Source Kellar, Sales Negotiation Skills That
  Sell, Amacom, 1997, pp. 17-20.

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Negotiation Planning

• What is Fundamental Goal of This Transaction?
• How Will This Transaction Create Competitive
  Advantage?
• Assess Buying Position
• Assess Selling Position
• Assess Situational Issues
• Set Targets
• Plan Concessions

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Negotiation Success Planning

• Planning Must Be Systematic
• What Kind of Transaction?
• One-Time
• Repetitive Requirements
• Distributive Bargaining
• Integrative Bargaining

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Positional vs Interest-Based Negotiation

• Positional
• Initial Demand
• Focus Largely on Price
• Contest of Wills
• Limited Resource Situations
• Typically One-Time Transactions
• Distributive Method

• Interest-Based
• Answer Why
• Multiple Ways to Meet Needs of Both
• Look for Common Interests
• Strives for Mutual Gain
• Typically Longer Term Relationships
• Integrative Method

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Distributive Bargaining

• Competitive
• Win/Lose
• Goals in Direct Conflict
• Confrontational
• Information is Guarded
• Usually Focused on Price or Money Issues

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Integrative Bargaining

• Focus on Common Interests, Not Differences
• Address Needs, not Positions
• Address Needs of All
• Exchange Information and Ideas
• Pursue Options for Mutual Gain
• Abundance Mentality

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Win-Win Goals

• Win-Win Does Not Mean Equal Gains
• The Other Side is NOT the Enemy
• Goal Mutually Satisfactory Agreement
• Long Term Relationship
• Conflict Resolution Mechanism
• Mutual Dependence
• Trust
• Collective Goals

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Leverage

• Leverage is any Information Used to Create a
  Perception in the Other Partys Mind of
  Negotiation Strength on Your Part
• Leverage is an Increased Means of Accomplishing a
  Purpose

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Elements of Negotiation Planning

• Facts
• Both Sides Agree
• Needs/Interests
• Internal and External
• What Are Our Differences? Why?
• What if on Other Side
• Alternatives
• Win-Win or Win-Lose
• Options
• BATNA

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Elements of Negotiation Planning

• Legitimacy
• Why is Your Position Proper
• Be Careful of Standards, Benchmarks
• Communication
• Three Basic Rules
• Reframe What You Say
• Relationships
• Unconditionally Constructive
• Smile - Its All in How You Start
• Good Way Even if Other Side Doesnt Reciprocate

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Negotiation Planning

• Use Internal Resources
• What Exactly - Do We Need
• Complete, Detailed Specifications
• Past Volumes
• Projected Volumes
• Research Total Commodity Purchases for Last Three
  Years
• Define Performance Requirements/Specifications
• Set Priorities
• Develop Price or Cost Estimates

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Other Planning Issues

• Dont Assume Everyone Knows
• What Are Real Goals of Meeting
• Contract?
• Action Plan?
• Information Exchange and Next Meeting Date?
• The Importance of the Agenda and Ground Rules
• Operationalizing the Agreement
• Commitment What are Next Steps

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Negotiation Planning

• From Whom Do We Want Bids
• Research All Suppliers in Last Three Years
• Use Trade Directories, Yellow Pages, Internal
  Users, etc. to Explore Supply Base
• What Form of Supplier Response
• Sealed Bids With Non-Price Negotiation
• Two Step Bidding
• Negotiation

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Negotiation Planning

• Availability Issues
• Lead Time Commitments
• Suppliers Inventories
• Quality Issues
• Warranties
• SPC
• Pricing
• Target Pricing (Why)
• Acceptable Range

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Setting Targets

• Needs
• Price Range
• Quality Requirements
• Delivery Requirements
• Wants
• Payment Terms
• Extended Warranties
• AM Deliveries

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Setting Targets

• Like-tos
• Purple Color
• Right of First Refusal of New Technology
• Weekly Donuts
• The Opening Position
• Have High Aspirations
• Temper With Realism

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What Happens If We Dont Agree?

• Walk Away Point
• What Will It Cost to Change Suppliers?
• What Will It Cost If We Dont Agree?
• Immediate Cost
• Future Cost
• Future Interaction
• Relationship
• Credibility
• BATNA
• Best Alternative
• Contingency Plans?

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Assess Suppliers Motivation

• Quick Sale
• Unload Inventory
• Quota Time
• Tide Over Business
• Long Term Relationship
• Foot-in Door
• Market Penetration

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Negotiation Planning Frank

• What Do We Know About Other Party
• What Do They Want
• What About The Individuals
• What Information to Present
• To Whom Shall We Present Information
• How to Present the Information
• Get Point Across in 30 Seconds

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Negotiation Planning

• Concession Planning
• Our Opening Position
• The Negotiating Team
• How Will This Agreement Look to the Other Sides
  Boss

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Concessions

• Another Element of Planning
• Issues to be Avoided
• MUST HAVE Issues
• Priorities of Other Issues
• Alternative Approaches
• Concession Ammunition
• Concession Timing

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Types of Transactions

• Industry Standard
• Custom
• Straight Rebuy
• Modified Rebuy
• New Purchase

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Completeness of the Agreement

• Amendments
• Acceptance Tests
• Assignment
• Service Bulletins, Modifications
• Confidentiality
• Contract Renewal Option
• Delivery
• Emergency Support
• Installation, Set Up

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Completeness of the Agreement

• Insurance
• Liquidated Damages
• Maintenance
• Packaging
• Payment Terms
• Price Change
• Spare Parts Availability
• Service Support

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Completeness of the Agreement

• Taxes
• Technical Publications
• Technology
• Training
• Termination
• Value Analysis
• Warranties

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The Negotiating Team

• Composition
• Rank
• Numbers
• Duties
• Conduct
• Observation
• Scribe
• Social Activities