M.M.

S (I SEMESTER)

SELLING & NEGOTIATION SKILLS

PRESENTED BY PROF. RAMA MANTHA

INTRODUCTION Selling always comes before negotiation. The simple difference between them is timing. With selling you inform people what you’ve got, what its going to for them and how much it costs. Negotiation follows when prospective customers like what they see, but want to bargain about the prices. So negotiation begins when the prospect wants to buy and you want to sell, but you still have a few details to share regarding terms and conditions. Negotiation is playing an ever increasing role in the commercial world. So, its becoming increasingly important now for sales people, to be both skillful salespeople and negotiators. They also need to match confidence and self esteem, for there are various reasons why a sales person might be anxious to sell. THE PROCESS: The sales process if we examine is a typical interview with seller and buyer interacting with one another ,we get an insight into both parties needs. The sales persons needs will be revealed by their opening statement, presentation of product features and benefits and close of the sale.

THE SALES SKILLS: The following are few sales skills which are required to excel in this field.

Ability to Listen
Along with speaking, a great salesperson knows when to stop talking and listen. They never cut someone off while they are talking, because in doing so they would fail to hear a key element in identifying what that person's needs might be.

Asks Great Questions Problem Solver

Salespeople are naturally inquisitive and know that in order to isolate what the real need or desire is in the buyer, they need to ask questions that will lead them to the answer. They naturally ask questions because they have a desire to help solve their problem. Another natural skill is the desire and ability to solve problems. Great salespeople are always solving problems. The ability to hone in on what the buyer's problem is and offering suggestions that will effectively solve the problem with respect to what products or services you sell, generally results with a sale.

Well Organized
I am not necessarily speaking of your personal surroundings, but more with your thoughts and methods of planning. Sales people have a keen ability to break things down into smaller steps and organize a plan of action. They know how to analyze what their goal is and in what order the steps need to be in in order to reach that goal.

Self-Starter and Self-Finisher
A successful sales person moves forward on their own. They never need anyone to tell them when it is time to go to work because they know that if they do not work they will not earn. They are also very persistent to finish what they start. They achieve their goals, even if they are small ones.

Positive Self Image
Having the attitude that they can do just about anything that they put their mind to is usually very common among sales people. They do not cower from meeting or talking to people or trying something new. They rarely allow negatives that are either spoken to them or about them to effect what they are trying to accomplish because they know who they are and what they are capable of doing.

Well Mannered and Courteous

The best sales people are very well mannered. You may not realize it, but good manners is a way of showing respect for others. People are attracted to those that respect them and mutual respect is fundamental in building lasting relationships with people..including buyers.

Naturally Persuasive
Another very common inherent skill with great salespeople is that they are very persuasive or know how to get what they want. They focus on what they want and they are persistent to keep chipping away until they get what they want. They almost never give up or give in.

Person of Integrity

A salesperson without integrity will have many struggles which will often include hopping from job to job. Honesty in sales is so important and it is almost impossible for this skill to be taught. You or the person you are looking to hire is either a person of integrity or are not. Be as analytical as possible on the evaluation of this skill.

7 Sales Skills to Improve On
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Sales Skill #1: Qualifying Fast to Avoid Wasting Sales Time
Do you chase after your prospects until they tell you yes or no? Do you ever tell your prospects "No", as in "No, I am not going to sell to you"? There are many things in selling that you do not and will not be able to control. The one thing that you do have control over is your time and how you choose to use it. To qualify fast you must have a set of criteria describing who you will and will not sell to. You want to sell to the prospects likely to buy your products, and drop the prospects unlikely to buy (so that you can find more good prospects). Sounds simple, but too many salespeople let sludge buildup in their pipeline, constricting the total revenue that flows out. KEY TIP: Develop a list of sales qualifying criteria that prospect's must meet in order for you to invest your sales time with them.

Sales Skill #2: Motivating Prospects
Qualifying goes beyond budget, authority, and need. You want to sell to prospects who *want* to buy from you. Finding prospects that need our products usually is not difficult. Finding those who really want our products though can be very hard if we wait for them to come to us. Products sold by professional salespeople are more complex and offer more value than commodity products offered through stores, catalogs and brokers. Prospects generally do not know they need such products, until they first discover that they have a problem. This process can take seconds or years depending on the nature of the problem (and the

KEY TIP: Determine which problems that you eliminate or solve for your prospects. With 70% of your prospecting calls going to voicemail. When prospecting.prospect!). it is time to make friends with it. . Sales Skill #3: Selling to People Outside Your Comfort Zone Most salespeople who are "people persons". already think that they are good at this. One is to close more of the prospects you do contact. Although you will never get even close to getting every voicemail returned. Each message should focus on a single unique customer-focused benefit. KEY TIP: Match speech patterns with people to gain rapport outside of your typical sports or weather conversation. Let me ask you a question. When you last lost a sale. you can look at voicemail as either your friend or your enemy. you can get a significant number of your messages returned when treat them as a one-on-one commercials. Prospects get motivated to work with you when you help them to discover that you solve their problem better than anyone does else. how was your rapport with the key person who decided against you? You can't afford to look away and ignore people that you don't have natural rapport with. The other is to get more prospects into the pipeline. Sales Skill #4: Reaching Decision-Makers Through Voicemail There's two ways to make more sales. Plan and ask questions to uncover and agitate those problems. KEY TIP: Prepare 3-5 separate benefit-focused voicemail messages that you can leave over a period of days or weeks for a single decision-maker before you give up on her. The good news is that people like people like themselves. All you have to do to gain rapport is stretch your behavior outside or your comfort zone until you become like another person.

and the pressure to make the sale will be gone. Sales Skill #6: Gaining Commitments Instead of Closing Eliminate "Closing Cheese" from Your Vocabulary. KEY TIP: Shift the responsibility back to the prospect to solve his own problems. Lines like these are why salespeople are down on the bottom of society's respect list somewhere near lawyers. Selling is miserable when you are under pressure to close business. KEY TIP: Study 1-3 of your best customers and develop detailed customer success stories that will put emotional power into your presentations.Sales Skill #5: Delivering "I Gotta Have That" Presentations Let's face it. Prospects don't relate to this. and the history of their company. Sales Skill #7: Have More Fun Sales is fun when you are in control and closing deals. pain. Stories rich in descriptive detail get the prospect picturing them using your product and evoke that "I Gotta Have That" reaction. Salespeople talk about why their product is great. It is not an easy shift to make. . Take the pressure off yourself to close and instead focus on qualifying and motivating your prospects. information or resources. Learn the power of asking for incremental commitments from the beginning of your sales cycle. Focus on selling at your best only to qualified prospects and you'll close more and have fun doing it. a lot of business presentations are really boring. You know what I am talking about: "Would you like that in gray or in black?" or "If I can show you how this will help you will you buy today?". or desire. The best way to involve the imagination is through storytelling. Great presentations get the prospect's imagination involved. First you got to get the prospect to show you what they most want (Hint: See Skill #2 above). Then you can negotiate incremental commitments in return for more of your time. KEY TIP: Practice asking for simple commitments once someone has expressed a clear want. why their company is great. That's why they look so bored.

You don't have to win all nor even most of the battles to win the war. why should I care?". One reason is the way we view cold calling. and do as little of it as possible. selling on the telephone or one-on-one in your prospect's office. There are a number of reasons why most of us don't like it. picture your prospect as having the words SO WHAT stamped on his forehead. People who don't like cold calling view each call as do or die. The answer to this question is always what your product does for them (benefits). prospects only care about how what you are selling can eliminate a problem that they have or help make their business or life better. A sales rep who is poor at cold calling is a sniveling wimp. Remember. not what your product is (features). . The reality about cold calling is much different. Imagine that for everything you say. Cold calling is not where the sale happens. I said that you are doing advertising when you are cold calling. Cold calling is simply advertising done by sales reps. Cold calling is the reconnaissance before any battle begins. They think of cold calling as a war in which they have to win most of the battles in order to win the war. COLD CALLS Cold Calling Pressure ReductioWho likes cold calling? Most salespeople don't like cold calling. the prospect is asking "so what. Yes. A sales rep good at cold calling is considered a sales god.Bonus Sales Tip When you are giving a presentation.

cold calling is too far removed from the actual close to directly influence such a goal.in other words to generate leads. If your cold calling goal is set as "To Make $300. that's OK. you can backwards plan how many cold calling "advertisements" you need to run in order to make $300. And the purpose of advertising is to identify or attract potential prospects . Judge the quality of your calls by how well you stick to a cold calling formula that you have defined in advance. you are just setting yourself up. Look at cold calling as one-to-one advertising and focus on the number of dials you have to make and you'll find cold calling a lot easier to do. What you can control is how many cold calls you make. Every time you make a cold call.000 in sales next month. Then you can determine the time period needed to make 1000 dials worth of cold calling advertisements in order to make your sales goals. you should focus your cold calling goals a little differently. Just like a newspaper ad or a billboard. real cold calling is more involved than pressing their nose up to your ad. cold calling should be mostly about asking questions rather than a sales pitch monologue. With your new view of cold calling as advertising in mind. But in professional businessto-business selling. One of the surest ways to get frustrated in sales (and an ulcer) is to take responsibility for things that are beyond your control as a sales rep.Cold calling is a means of identifying potential prospects for your sales efforts. shoved a billboard ad for your product in their face. You really cannot control whether the person you are cold calling needs or wants your product. Use your own or other sales reps activity numbers to figure out how many sales will result *on average* if you make 1000 dials when cold calling.000 in Sales Next Month". and said "Do you want to buy this?" Obviously. Think of cold calling this way. Instead. And if they don't want or need what you are offering right now. all you are trying to do when cold calling is to get someone's attention. and the quality of your techniques while cold calling. Set your cold calling targets and define your success criteria around the number of calls or dials that you will make. it is as if you grabbed your prospect by the shirt. . This kind of cold calling goal might be useful if you are a tele*sales* person responsible for actually closing business by phone. Specifically.

resources and hard work. is the art of compromise. It depends on the perceived BATNA. 9. There are many reasons why you may want to negotiate and there are several ways to approach it. Negotiation skills are vital to the success or failure of your interactions. Remember. Communication is always the link that will be used to negotiate the issue/argument whether it is face-to-face. personal knowledge. 7. your goals are likely to differ. It changes over time. And these viewpoints form the basis of our goals and objectives. 5. it can involve several members from two parties. It is relative between the parties. or in writing. in essence. It can be either real or apparent. It is enhanced by legal support. 4. It exists to the extent which it is accepted. Each time you communicate with a potential client. 8. on the telephone. It relates to the ability to punish or benefit. 3. It is always limited. 10. skill. 2. Negotiation is usually considered as a compromise to settle an argument or issue to benefit ourselves as much as possible.Negotiation Skills Qualities of Negotiating Power 1. . your goals. Negotiating is one of the key tools you can use to accomplish your goals. Negotiation. and ultimately. you exchange ideas and information. negotiation is not always between two people. The exercise of negotiation power has both benefits and costs. We all have our own point of views. 6. It is increased by the ability to endure uncertainty and by commitment. However. 11. It is enhanced by a good negotiating relationship. vendor or employee.

Learn whether the people at the bargaining table have the capacity to keep the promises they make. or can our interests be better served by thinking out of the box? If our ideas are the only ones worth taking seriously. but to be a good negotiator. We may have choices of parties with whom to negotiate or may be better off relying on ourselves. 5. We communicate best by listening. We should keep asking ourselves whether the negotiation process is being used as a successful way of communicating information. the parties who stand to gain or lose depending on the negotiation's outcome? 2. BATNAs can change during negotiation each time we learn a new piece of information. 4. Commitment Negotiations can only be called successful if they lead to agreements the parties are committed to fulfill. 6. BATNA Our Best Alternative To a Negotiated Agreement (BATNA) may be derived from resources we control or influence. By considering which of these deserves more attention in a given negotiation before the negotiation process begins. Relationship What impact will this negotiation have on our personal relationship with other negotiators or our constituents. Fairness Do we feel as if we are being treated fairly? How do other parties feel? If a negotiator feels he or she is not being dealt with in a fair manner. Creativity Are we to be governed by standard operating procedure. The recent past may have presented some shocks. Communication Information is the fundamental asset in negotiation. but may walk away without having bought into the agreement.the decision-making process. Interests What are the reasons that drive our pursuit of particular objectives. Keep .The Seven Pillars of Negotiation Wisdom 1. he or she may agree for purposes of bringing the bargaining to a close. it is hard to justify bringing additional parties into a negotiation-. and can another party's ideas or resources help serve our interests better than what we bring to the table? 3. you have to accept that things may not always go the way you expect. we are likely to do a better job.

work out what you would be prepared to walk away with if you are not successful. even if you disagree with them. do not use that time to plan your next line of attack. and rehearse it. Keep that in mind when you are talking and. Five Basic Principles 1. They will take you more seriously if you do. 2. Have an Alternative When you are discussing specifically what you want. it is important to have an idea of what the other party would like the outcome to be. trust yourself. 3. Believe you are worth it You have to believe that you deserve your desired outcome.. Knowing what you want. Know what “you” want Think through exactly what you want. Keep it Friendly Negotiating is not about confrontation. Be inventive about options. 7. 6. 4. view it as good practice for the future. Be specific and have valid reasons for why you need it. It is about two parties reaching an amicable. the moment your client or boss questions you. not positions. Believe it. Consider outcomes that would address more of what you both want.g. Where possible. Essentials of a Successful Negotiation 1. mutually beneficial agreement. So think it through why do they need what you are offering/asking for? And do your research on how can you make them feel like they have got a good deal? 3. your argument will fall apart because you do not have enough confidence in it. 2. Be Fair If what you are asking for is fair and justifiable.the “seven pillars” in mind. e. It is more important that you listen to them and see their point of view. Listen Carefully When your boss/client is talking to you during negotiations. you would like to earn as much as someone you work equally as hard as. as well as what they want. Commit yourself to a win-win approach. 5. then you are much more likely to get what you want. even if tactics used by the other person seem unfair. and you should be able to respond wisely to the circumstances you face. too. 5. Consider what your needs are and what the other person's are. Be hard on the problem and soft on the person. even if you do not get what you want this time. Be . Make clear agreements. 4. will help you to be clearer and more confident. Emphasize common ground. If you do not. Focus on needs. and why. Know what “they” want Before you start negotiating. prepare in advance.

Roberta and James have become focused on meeting their own needs with little regard for the needs of the other."Everyone Wins" People resolve disagreements in many ways.understanding. Work and family roles have left them with little time to spend together and have increased their areas of disagreement. you cannot have good understanding without good . Negotiation helps to create a healthy balance between "giving" and "getting." Everyone becomes a "winner" through negotiation. This approach can result in constant personal stress which can lead to illness or poor general health. Instead of confronting and resolving problems. Until recently. dissatisfaction and conflict are all they seem to share any longer.Marital Conflict Roberta and James have the "perfect" marriage. Example 2-. annoying his employer.clear that your task will be to steer the negotiation in a positive direction. The one-sidedness of this "solution" increases the odds of more conflict. You cannot have one skill work without the others. How can Everyone Win? The key to effective negotiation is clear communication.Parent-Child Conflict It is Friday.m. If disagreements are not resolved. demanding a meeting the next day. Communication involves three important skills-. Mrs. Problems seldom improve on their own. The conflict becomes a "win-lose" situation in which one person "wins" at someone else's expense. Brown has grown increasingly distressed by her son's continuing resistance to the 11 p. motivated and highly productive. They have "made it." Effective negotiation is a two-way process that encourages both sides to actively participate in making decisions. "Losers" will defy.Workplace Conflict Mr." And they are miserable. two children and a lovely home. He has failed to turn in several important project outlines on time without explanation or apology. curfew she has set. Steve has been late for work several times in recent weeks. and John and his mother are arguing once again about the teenager's weekend curfew. Both work in professions that provide personal satisfaction as well as a comfortably secure income. Steve’s recent behavior has been so uncharacteristic that his employer decides to confront him. test. listening and speaking. The Goal of Negotiation-. To do so you may need to do some of the following: Example 1-. It also provides a way for people to learn to understand each other better and to grow in their relationships. Some tend to deal with potential conflict by denying it or trying to avoid it altogether. Solutions are selfishly sought with little regard for the other person. For example. the possibility for more intense conflicts at some later date is increased. people may let their anger and resentment build while they remain silent. resist and retaliate against the "winners. Resentment. Both become so angry and frustrated that they storm off to separate areas of the house to avoid each other and further conflict. John insists that this is unfair. Example 3-. Conflict can also be motivated by ego. Steve’s attendance and performance at work had been consistent.

listening and speaking. hand gestures and degree of eye contact. plan ahead to meet at a time and place convenient to everyone. It is important to pay close attention to what someone says as well as to how he or she behaves. Communication between people will go more smoothly when statements such as "I become very upset when you " are used rather than more aggressive statements such as "You make me mad when you. a common understanding should be reached. Thinking ahead or anticipating the course of the discussion are distractions that interferewith listening. giving feedback on what has been heard. using "I" statements. ethnic backgrounds or perspectives. concise explanation of the problem as each person sees it. The ability to listen actively supports open. Understanding Before two sides can look for solutions. Listening Listening is an active process of concentrating all of one's attention on the other person. accepted and respected. Taking time to listen and to ." which blames the other person and puts him or her in a defensive position. If two people do not understand each other's problems and concerns. and maintaining eye contact are skills that show you are interested in understanding what he or she has to say. A quiet. beliefs. educational experiences. Negotiation is most effective when people are able to clearly identify and discuss their sources of disagreement and misunderstanding. Body language. Facts and feelings are presented in a rational manner from the individual's perspective. and to promote understanding and interest in the other person without necessarily agreeing to his or her viewpoint. Speaking Negotiation begins with a clear. Active listening encourages understanding. When possible. Negotiation permits you to examine a problem from all sides. The negotiation process will be most effective when people take time to think through what they will say. Active listening assures the other person that he or she is heard. Encouraging the other person to share thoughts and feelings. Show Respect Success rests in accepting the other person despite differences in values. Poor attention and listening can lead to misunderstandings. including facial expressions. inappropriate solutions and continuing conflict. Shared concerns rather than individual issues remain the focus of discussion throughout negotiation. then the process of negotiation will either be broken off or will end with solutions that do not work. ongoing negotiation. can provide clues about the other person's thoughts and feelings. neutral spot where there are few distractions or interruptions is perfect for open discussion.

Separate personality from the issue involved. 2. A foundation of trust also eases future efforts to solve problems." Negotiation is based on equality. Solutions are mutually agreed upon. Brainstorming It is one way to gather many creative ideas rapidly. 4. Show consideration and acceptance of each other's perspectives. every suggestion has value and is accepted. Participate actively in the process. attitudes. The basic assumption is that all people negotiate “face. 5. At this stage. values and objectives are recognized and respected as legitimate. Our identity can always be called into question. Recognize the value of a relationship and have a mutual desire to continue it. and to uphold and honor face gain. 2." "bad guys. Face is a metaphor for our public self-image." or "winners/losers. Considering different perspectives will increase the range and variety of possible solutions. beliefs and goals. they are reviewed to determine whether they might coincide or overlap with each other. There are no "good guys. Cross-Cultural Communication Theory . values. The individual's ideas. Work together to develop a solution everyone can accept. 3. personal goals should not take priority over shared goals. Face work refers to specific verbal and non-verbal messages that help to maintain and nrestore face loss. When is Negotiation Successful? Negotiation is most successful when both sides do the following: 1. Genuine interest in other people and in their contribution to finding solutions builds trust. Trust provides a foundation for continuing a relationship.” 1. Negotiation then becomes a matter of choosing a solution to which no one has an objection. No one wields more power or control than another. This process allows everyone to openly make suggestions without the fear of criticism. which inevitably leads to conflict and vulnerability. Face Negotiation Theory Stella Ting-Toomey's “face negotiation theory” helps to explain cultural differences in response to conflict. people will try to preserve valued relationships. Preserve the Relationship In general. Negotiation is a nonadversarial approach to resolving conflict in those relationships. Facework and corresponding styles of handling conflict vary from culture to culture.ask questions makes it easier to learn more about someone's perspectives. After all suggestions have been shared. Remember.

Summary As life becomes more complex and the world more diverse. Successful negotiators usually set very high goals. Concessions are normally viewed as a sign of weakness in the party making them. Negotiations should be left to highly experienced personnel. There are certain items. True False 7. True False 10. By practicing the negotiation strategies and skills suggested in this lesson. at work and in the community. True False 4. True False 8. True False 12. which cannot be negotiated." which is their public self-image. The personal needs of the negotiators are as important as the "objective" issues.It assumes that persons of all cultures are continually negotiating "face. True False 11. Negotiation requires time and patience. In all negotiation situations. you can make conflict resolution a regular part of your approach to managing relationships at home. Ultimatums should be used only as a last resort. but also to continually strengthen and improve them. Negotiation Questionnaire 1. such as merchandise in a one-price store. True False 5. Consequently. True False 2. the type of face maintenance. As a negotiator. Deadlocks and impasses are sure-fire signs that one or both parties are being . The person doing the selling or persuading has the distinct advantage over the buyer in most negotiation situations. you can never go wrong by assuming the other party is out to get the best possible deal for himself at your expense. then communication and conflict styles will likewise vary. True False 6. Face negotiation theory analysis focuses on the type of culture. True False 3. when face is managed differently. someone wins and someone loses. It is always best to negotiate on your own "territory. This theory also contends that "facework" from cultures that are lowcontext or individualistic such as the United States is quite different from cultures that are collectivistic such as Japan or Korea. and the type of conflict management. Negotiation can serve not only to preserve relationships." True False 9. your ability to use negotiation skills becomes more important. Most negotiation issues boil down to the price of the object or service to be performed.

True False 20. True False 28. In labor relations. True False 18. negotiating activity should be confined to the bargaining table in order to preserve confidentiality. You should develop a negotiation strategy and stick to it. it is best for you to write it. Knowing what your options are is essential to effective negotiations. Probably the best test of a successful negotiator is his skill in employing a wide variety of negotiation tactics.unreasonable. When a written document is necessary to finalize an agreement. It is best to keep the number of people to minimum in a major contract negotiation. The negotiator who asks a lot of questions is demonstrating that he or she hasn’t done his or her homework thoroughly. the organization always loses. the more I know about you than you know about me. True False . True False 16. True False 23. Deadlocks are to be avoided at all costs. The effective negotiator spends more time listening than talking during negotiations. Negotiators usually overdo their sensitivity to cues. True False 15. True False 26. It is always best to keep a negotiation on a rational. True False 25. True False 24. True False 27. I have a distinct advantage if I know your deadline and you don’t know mine. True False 14. Managers demonstrate weakness when they negotiate with subordinates. True False 22. When there is a lot of competitive negotiation taking place in an organization. Establishing the agenda of the negotiation is probably the most routine phase of the negotiation process. Negotiators often mean something different from what they say. True False 29. True False 13. True False 17. True False 19. issue-oriented level. In negotiations. True False 21. the better I can control the negotiation.

13. T. some issues have developed over time and there are repeated conflicts among a few of the members. Either. T. T. 29. 2. Challenge Can you get the team to manage conflict more effectively so that morale and productivity are not affected? . T.Answers 1. F. 11.Conflict Management Problem We have a product team that does high quality work. 14. T. Either. F. 16. T. 15. 28. 25. 7. 8. F. F. 6. T. I am afraid that the recurring conflicts will cause morale to drop. 10. T. 17. 12. F. 20. Case Study-. 27. F. T. Everyone in the team is competent and highly committed to the success of the company. F. 5. 24. 18. 9. T. There has been arguing and heated debate. T. F Give yourself one point for each response that matches those provided by professional negotiators. 21. F. 19. The higher your score. 22. 23. 26. Yet. 4. F. F. F. the more you reflect the mindset and behavioral patterns of professional negotiators. and subsequently result in decreased commitment and productivity. Either. 3. T. F. F.

Management 1. Government 2. 3. All this requires entering into negotiations with the parties internal to the organization. It is in regards to the working relationship between the groups of employees. 1.TYPES OF NEGOTIATION IN ORGANIZATIONS Depending upon the situation and time. Adhereing to the laws of the local and national government. internally. Government 2. the superior needs to allot job responsibilities. Public 3. Day-to-day/ Managerial colleagues 2. Basically the types can be divided into three broad categories. 1. maintain a flow of information. Day-to-day / Managerial Negotiations Such types of negotiations are done within the organization and are related to the internal problems in the organization. Trade unions goods to be 6. Increasing productivity. 7. the way the negotiations are to be conducted differs. direct the record keeping and many more activities for smooth functioning. The skills of negotiations depends and differs widely from one situation to the other. In between conditions. 4. Suppliers with the customer. Management terms and working 2. . Customers price and quality of 5. Trade unions and fixation of responsibility. Usually. Legal advisors purchased. the manager needs to interact with the members at different levels in the organization structure. 1. Negotiation for pay. Customers 1. For conducting the day-to-day business. Legal advisers 3. Management Legal Negotiations 3. Striking a contract 2. Types Parties Examples Involved 1. Description of the job Negotiations 3. Different levels of 1. Negotiations with financial institutions as regarding the availability of capital. Negotiations for the Commercial Negotiations 4.

They are based on a give-and-take relationship. is to skip negotiation and proceed immediately to some form of third – party intervention. It relates to foregoing of one resource to get the other. at times can be a lengthy and cumbersome process. time may sometimes be saved and unnecessary compromise avoided. An alternative to a simple yes or no when a difference of view occurs is to skip negotiation and proceed immediately to some form of third – party intervention. Commercial Negotiations Such types of negotiations are conducted with external parties. Why waste time negotiating if the other party has a good case and there are no adverse consequences in conceding ? Unnecessary negotiation. Commercial negotiations successfully end up into contracts. making a decision rather than negotiating about it may be the best tactic. They are also contractual in nature and relate to gaining legal ground. will lose all the advantage that might be gained with a quick unexpected yes. this might imply a decision to take a dispute to court : informally. The driving forces behind such negotiations are usually financial gains. If a manager has the undoubted authority to act. By asking whether it is necessary. two managers who quickly realize that they cannot reach agreement about a working problem may jointly agree to stop wasting time in argument and refer the matter to a senior manager for resolution. IS NEGOTIATION NECESSARY ? Negotiation. a request to negotiate may best be met by pointing out that the party making the request has no standing in the matter. On occasions. 3. Alternatively. followed. perhaps. there are cases in which the best response to a request or a claim is to concede it without argument. Legal Negotiations These negotiations are usually formal and legally binding. Disputes over precedents can become as significant as the main issue. The Negotiations Process The Difference Between Integrative and Distributive Negotiation . by a grudging concession of the other party’s claim. On the most formal basis. An alternative to a simple yes or no when a difference of view occurs.2.

and usually good feelings are not plentiful when the negotiation is over. and honestly trying to "expand the pie" rather than divide it." This type of negotiating does not lead to good long-term relationships.There are two types of negotiation: "integrative" and "distributive." If you walk away feeling like you paid too much money. Anyone who imagines that they might see or do business with their fellow negotiator in the future should be attempting to negotiate in this way. one wanted to eat the orange. Integrative vs. you "won. or the dealership does. Distributive negotiations. The girls were engaged in distributive negotiations (though . They involve looking at the issues being negotiated from multiple angles. considering multiple issues at once (thus allowing for trade-offs). As it turns out. They went back and forth. and the other wanted the peel for an art project she was working on. on the other hand. they were able to "split" the orange in such a way that both got exactly what they wanted. The parties’ interests are often opposed (or seem to be opposed – this may not prove to be the case once you start getting creative)." Integrative negotiations are those typically referred to as "win/win" negotiations: all sides are looking for a solution that maximizes joint gain and allows everyone to walk away feeling like they won something. not just one. Integrative negotiations foster trust and good working relationships. They were about to agree on cutting the orange in half when their aunt walked in and realized what was going on. Distributive Negotiations Characteristic Outcome Motivation Interests Relationship Issues Integrative Negotiations Win / win Joint gain Congruent Long-term Multiple issues Distributive Negotiations Win / lose Individual gain Opposed Short-term Single Issue Here’s a story (probably familiar to many of you!) that demonstrates the difference between integrative and distributive negotiations: Two sisters were fighting over the last orange in the fruit bowl. you "lost. If you feel you got a good deal (and squeezed that salesman). and the other party gives something up. are typically described as "win/lose" negotiations – one party gets what they want. She turned to the girls and asked them each why they wanted the orange. Once they realized this. and leave all parties feeling good. Think of negotiating for your car – you either get that extra $1000. each girl insisting that she should get it and both refusing to give up.

As you might have guessed by now. and you want this to be a good relationship. The goal in any partnership should be maximizing all parties’ abilities to advance their collective mission. Most importantly. One organization should not want to "win" at the expense of the other. the spirit behind your interests should be congruent. It is important to know how to negotiate for a number of reasons: Effect on Profits During the negotiation course. and while your specific motivations for pursuing the partnership may be different.it probably felt like bickering to them). performance. and to enable both to better serve the community. The importance of negotiation to your business is vital and the impact of good or bad negotiating can be shown as follows: COMPANY A COMPANY B SALES £10m £10m COSTS 8m 8m PROFITS £2m £2m Assume Company A has sales people and buyers who by improved negotiating techniques increase sales by 5% and reduce costs by 5%.9m. partnership negotiations should always be integrative. you are entering into a long-term relationship with your prospective partner(s). we will explore why negotiating skills are important for you to be successful in business and in life. You want joint gain. This represents a 45% increase over the previous profit figure. You must do this from the beginning. as you establish a dynamic of competition and distrust. Once you start down the "distributive path" it is hard to change directions. The moral of the story: be integrative! NEGOTIATION SKILLS WHAT NEGOTIATION IS AND WHY IT IS IMPORTANT Negotiation: can be defined as a process of bargaining by which agreement is reached between 2 or more parties.9m £2m By achieving relatively modest improvements in buyers. not just individual gain. the effect is an increase in profits of £0. The only way to build trust and expand the pie (or the orange) in a negotiation situation is be integrative.6m 8m PROFITS £2. and sellers. .5m £10m COSTS 7. while their aunt was suggesting an integrative solution. COMPANY A COMPANY B SALES £10. deal effectively with their economic obligations and pressures. We all negotiate every day in a wide range of work and social situations. etc.

mutually beneficial relationships ! Neither side asks enough questions. for it to work. or lose-lose ! The more aggressive negotiator usually does best ! This style does not encourage long term. but can also lead to greater customer satisfaction. For example. or misrepresented ! The outcome is often win-lose. you are buying a second car and you see a car advertised in the paper for £14. however certain rules have to be followed by both parties. I could have done better 2. there is a danger the other side will use this apparent sign of weakness to their advantage.000 and they accept your offer immediately. You offer £11. You decide to make an ambitious offer to see how they react. STYLES OF NEGOTIATION. If both sides are adversarial. There must be something wrong with the car Think of this next time you are negotiating for your business with a customer or supplier. if one side decides to be co-operative. or to pay the minimum price possible for your supplies.Effect on Customers Successful negotiations can lead to increased profits. in order to give room for manoeuvre ! Movement is small or non-existent until later on in the negotiation ! Tactics are used to gain short term advantage ! Too much emphasis is placed on trust. ADVERSARIAL VERSUS CO-OPERATIVE BARGAINING Our style of negotiation will be influenced by the style of the other party.  ! Clients and suppliers who are happy to do business with you.This really is my best price!.being fair. Co-operative bargaining has the advantage of being a more efficient style of negotiation. How do you feel? Most people feel two things in quick succession: 1. there will be little trust between the two parties. . or explores alternatives in sufficient depth Features of co-operative bargaining ! Each side recognises that the other has needs and feelings and accepts implicit . Let us look at the 2 styles of bargaining and their features: Features of adversarial bargaining ! Each side takes up a position and defends it ! Opening bids are set at unrealistic levels. ! Information is withheld. by offering your best price first time? What impact has your action had on the way the other side feels? The objective of successful negotiation is not necessarily to charge the highest possible prices for your products. but to creatively put together solutions to problems that ensure:  ! The best possible outcome for your business. too high or too low. however.  ! A reputation for being a tough negotiator while earning the respect of those with whom you negotiate. Are you .500.

Must I achieve? b. Do I intend to achieve? c. Would I like to achieve? 3. mutually profitable relationships ! Each side asks more questions and explores alternatives. What part will other people play in the negotiation? Generally. What are my objectives? 2.: Napoleon PLANNING THE NEGOTIATION In any kind of negotiation the planning stage is probably the most important. the more beneficial will be the final outcome. What information do I have that the other side has also? 2. but not soft. you need to have a clear idea of your objectives and try to work out those of the other side. What concessions can I make? 5. Objectives Before entering into the negotiation. How does the other side see the negotiation? Information It has often been said that information is power. Ask yourself the following questions: 1. rather than taking up fixed positions ! The usual outcome is win-win . What exactly do I wish to achieve from this negotiation? 2. There is a willingness to trade concessions ! There is a clear. What information will influence the final outcome of the negotiation? 4. 1. What information do I have that the other side does not have? 3.rules ! Objective measures are taken of what is fair and reasonable ! Trust is not an issue as either side is willing to share information ! This style is friendly. there will be 4 types of information that is important to the final outcome. communicable strategy ! Bad behaviour is punished ! This style involves creative problem solving ! It encourages long term. The importance of planning is in having a very clear idea before entering into the negotiation. the more time that is spent in planning and preparing for the negotiation.The objective of negotiation should not be a dead opponent. What information do I need to have before negotiating with the other side? 4. How am I going to achieve my objectives? 6. objectives? 5. What does the other side wish to achieve? 3. 1. In any negotiation. What options or alternatives would be acceptable to me? 4. Too often in negotiations we go in badly prepared and end up giving concessions that reduce the overall profitability of the final deal. Which of my objectives: a. What information does the other side need before it can negotiate with me? . What are the other sides.

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. What is the limit of my authority? At which point should I walk away? 4. What other things are important to this person? What pressures does he have on him to conclude the deal? How well is his company doing at the moment? How important is it that he deals with my company? etc. it may give you the chance to negotiate on more favourable price. How am I going to achieve my objectives in this negotiation? 2. When preparing for negotiation. It is rare in negotiation for agreement to be reached immediately or for each side to have identical objectives. you may be able to negotiate more favourable terms in return for a commitment to buy certain volumes over an agreed time period. It is also useful to try and see the negotiation from the other side and try and work out what their strategy will be. Ask yourself the following questions: 1. if you find out the other side has a time deadline that only your company can meet. What is the strategy of the other side likely to be? . If you know that the other side has recently expanded their production capacity. What is the likely outcome of the negotiation? 3.s behalf. This is the best type of concession to make. The early phases of negotiation consist of both sides finding out more information before talking about a specific deal or set of alternatives. ask yourself the following questions: 1. Once you know your objectives. cost and value. Concessions Negotiating is a process of bargaining by which agreement is reached between two or more parties. you will give yourself a better chance to negotiate well on your company. conceding on issues that have a high cost to you irrespective of their value to the other side. it is advisable to write down a realistic assessment of how you perceive the final outcome. 8 When preparing for negotiations. What is the best deal I could realistically achieve in this negotiation? 2. you need to work out how you are going to achieve them. During the negotiation there will be opportunities to use various tactics and you need to decide on which of these you feel comfortable with and recognise the tactics being used by the other side. however. What concessions are available to me? What is the cost of each concession and what value does each have to either side? Strategy Planning your strategy is important in negotiation.This can be particularly important when negotiating with people who concentrate on price issues. Concessions have two elements. which satisfies all parties. 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. By spending time as part of your preparation in listing what you already know and what you need to know. It is possible during negotiations to concede issues that have little cost to you but have great value to the other side. For example. Avoid. More often than not.

What is the best deal I could realistically achieve in this negotiation? 2. What role will each team member take in the negotiation? 2. What is the strategy of the other side likely to be? 3. What tactics are the other side likely to use? Tasks If you go into negotiation with a colleague or colleagues. Must I achieve? 3. Having a clear understanding of roles within the negotiation will make the team approach much more effective. What information do I need to know about this negotiation? 2. What information does each side have that will influence the outcome of the negotiation? Concessions 1. What options would be acceptable to me? 4. each with their own clearly defined authority and roles to perform. note takers. What is the limit of my authority? At what point should I walk away? 4. What tactics should I use within the negotiation? 4. 9 PREPARATION CHECKLIST Questions to ask prior to entering into negotiations Objectives 1. observers and specialists. Which of my objectives: a. what is the cost of each concession and what value does each concession have to either side? 10 Strategy 1. What is the likely outcome of the negotiation? 3. LIKE. INTEND AND MUST POSITIONS . How am I going to achieve my objectives in this negotiation? 2. What tactics are the other side likely to use? Tasks (Team Negotiations Only) 1. How can we work together in the most effective way? 11 PREPARING FOR NEGOTIATIONS. What tactics should I use within the negotiation? 4. How does the other side see the negotiation? Information 1. you need to decide during the preparation phase: 1. How can we work together in the most effective way? Some teams of negotiators appoint team leaders. What role should each team member take in the negotiation? 2. Would I like to achieve? b. What information does the other side need to find out? 3. objectives? 5. What concessions are available to me.3. What are the other sides. Do I intend to achieve? c. What exactly do I wish to achieve from this negotiation? 2.

must: 1 2 3 4 7 8 9 10 . like: 1 2 3 4 5 6 7 8 9 10 11 12 The acceptable deal.The best deal. intend: 1 2 3 4 5 6 7 8 9 10 11 12 The worst deal.

inclusive of: ! Stock. Describe your Like.5 6 11 12 DEVELOPMENT EXERCISE 1.goodwill. What information must you find out about Sr. A better alternative would be to agree a deal with Sr. 4 years. opposite a busy shopping mall and 800 metres away from its.000. Assuming Sr. so long as the businesses you acquire are the right price and in the right location. strict financial controls. Franconi £25. You could just about finance the deal yourself but this will probably cause you cashflow problems. You cannot finance the deal yourself. Your current restaurants are making good money and you believe you have the right formula for success . You are looking at another restaurant in town in addition to Sr. Franconi. Last year he had an audited turnover of £193.000 ! Kitchen Fittings worth.750. Before you have your meeting with Sr. Franconi. 3. One problem you have is with finance. CASE STUDY Questions 1. McDonalds. Franconi. CASE STUDY Sr.s business before you begin to negotiate? 4.000 when new 18 months ago.s which seems to meet your requirements.) ! Restaurant Fittings costing £19. Intend and Must positions. producing a net profit after tax of £36. What concessions are available to each side? 5. of the business You own 2 Pizza fast food restaurants in the area and you wish to build your business through acquisition. Franconi where you pay 50% of the money up front and pay the balance over 2. Think of your objectives for the forthcoming negotiation. To help you in this process answer the following questions below: DEVELOPMENT EXERCISE 1. Sr.000 (These cost him £35. What should your strategy be for the forthcoming meeting? . plus pizzas that your customers like. or preferably. You have tried to buy other fast food restaurants but the deals fell through because their owners would not agree your best price. worth on average £5. according to Sr. Luigi Franconi owns a fast food Pizza Parlour just outside of London.750. The shop has been trading for seven years and is located in a good position.000 3 years ago ! The freehold valuation of the restaurant ! The. Franconi wants to sell the business as a going concern and has advertised it at a price of £175. Franconi you need to plan and prepare for the negotiation which will ultimately take place. what must you not do and why? 2. nearest rival.s price seems to be relatively cheap for a profitable pizza business in this location.

It could be.s point of view. depending on the necessary legal requirements being met. however tempting it may appear.000. CASE STUDY Questions 1. say. They worry it may cause deadlock. Agreement could be reached to speed up the timing of the deal.000 up front and the balance over 2 years at £43. Describe your Like. What information must you find out about Sr. Intend and Must positions. Your intend position. Your like position could be an offer of £168. What are they? Issues are likely to include:  Overall asking price  Valuation of stock  Valuation of fixtures and fittings (Kitchen and restaurant)  Goodwill  Timing of the purchase  Payment terms  Non-competition clause Your must position is probably where you would agree to pay the asking price. You may be willing to forget the noncompetition clause and seek to close the deal within a month. Franconi. accepting Sr. financed by paying £86. What concessions are available to each side? 5. financed by paying £84. Look at it from Sr. Franconi agrees not to open up a similar restaurant locally within the 4-year period. However. 2. That is part of the skill of negotiating. A skilled negotiator can challenge the other side. beware of agreeing to the asking price.000 per year. This would include a non-competition clause whereby Sr. He must have a reason for wanting to sell the business and is likely to have some leeway on price. A negotiator should and will always challenge an opening bid. an agreed price of £172. 3. Franconi. Information would need to include: . Despite the asking price looking good. There are no right and wrong answers to this question. Assuming Sr.000 up front and the balance over 4 years at £21. the first step in the planning process is to identify the issues being negotiated. Some people fear annoying. or upsetting the other party by challenging their opening bid.000. will be somewhere between the must and like positions. then a win-win outcome is the result. There may be scope for a shorter non-competition clause of say 2 years and some flexibility on the timing of the deal. financed by yourself. Franconi.s valuations. Franconi.DEVELOPMENT EXERCISE 1. If agreement is reached and both parties are satisfied.s terms and conditions without antagonising the other side. what must you not do and why? 2.s price seems to be relatively cheap for a profitable pizza business in this location. Think of your objectives for the forthcoming negotiation. 3. What should your strategy be for the forthcoming meeting? Suggested answers 1.000 per year.s business before you begin to negotiate? 4.

Concessions relate to the key issues being negotiated. Franconi needs to complete the sale  What interest other potential purchasers have shown  Sr.s help with financing the business it is probably best to approach the negotiation in a positive. stock and fixtures  The costs of any necessary repairs  How valuations on stock and fixtures were calculated  Any local development plans that could affect future revenue and profit  The quality and accuracy of the financial information on the business?  How quickly Sr. How long the business has been up for sale  The reasons for Sr. Establish the issues ! Begin by agreeing an agenda for the negotiation. Franconi. Your strategy is your decision. are well prepared. Find out more about the location and future development plans. self confident and structure the negotiation.s attitude to part funding the purchase 4. You may wish to visit. or have the restaurant visited by someone else to get a feel for the quality of service and food and possibly feedback from other customers. HOW TO STRUCTURE NEGOTIATIONS People who are successful negotiators have a well thought out strategy before going into the negotiation. \friendly way. Prepare your opening bid and the arguments you need to back it up. Franconi. Franconi. If you are looking for Sr.s decision to sell what appears to be a profitable business  The physical state of the premises. Likely concessions will include:  Price  Payment structure  Timing of purchase  Non-competition clause 5. The recommended structure for negotiations is: • ESTABLISH THE ISSUES BEING NEGOTIATED • GATHER INFORMATION • BUILD A SOLUTION Stage 1. Do your homework prior to your meeting and prepare your list of questions carefully. so that they remain in control of the negotiating process. What needs to be discussed and agreed? Who will be involved and what will be their role? What timescales are we working towards? What are the major issues that need to be agreed? ! Many negotiators make the mistake of negotiating too quickly ! Skilled negotiators spend 20% more of their time asking questions and looking for alternatives ! Professional negotiators will want to gain your commitment on issues. such as .

length of contract etc. Information you have that you are unwilling to give to the other side 3. payment terms. before the negotiation. hopefully. in order to conclude the deal ! Skilled negotiators will often ask the other side for their . but defensible ! You should always challenge an opening bid and refuse to let an unacceptable bid on the table ! There will then be a process of bargaining and concessions will be traded and movement take place. or opening bid ! The opening bid should be ambitious. quality of product. packaging. Information the other side has that they are willing to give you 4. how much you are willing to share information and what your own information requirements are ! This will set the climate for negotiation and will determine the amount of trust that exists between both parties ! Skilled negotiators are able to ask a range of open. concession. when you are vulnerable and likely to agree to a . Build a solution ! Having gathered information the next stage is to begin to put together a solution ! Usually this will take the form of the selling side putting forward a proposal. Gather information This is a vital part of the negotiation There are 4 kinds of information 1. Information the other side has that they are unwilling to give you ! You need to decide.price. Information you have that you are willing to give to the other side 2. ! At this stage issues are kept general and no concessions are made or agreements reached Stage 2. agreement is reached ! Concessions should not be given away for free and you should be wary about conceding on issues for which you are not prepared PERSONAL POWER AND HOW TO INCREASE IT . before beginning the negotiation and refuse to accept any last minute additions to the list ! Issues will include things like price. early on in the negotiation ! You should never commit yourself to anything until you have established everything that is being negotiated ! Negotiators will often bring up an issue at the end of the negotiation. one sided . closed and follow up questions and are able to listen effectively ! Skilled negotiators wait until they have all their information requirements. until. shopping list . before making concessions Stage 3. delivery schedule.

PERSONAL POWER Looking at the sources of power. In most negotiating relationships the power balance moves with time as the negotiation progresses. Planning and research can increase our information power. Expertise power Expertise power comes from having a particular skill which you can apply and which can influence the outcome of the negotiation. In the eighties. or the power a salesperson has to give good service and solve problems Coercive power Coercive power is the power to punish. Having an effective network and keeping in touch with what is happening can increase your situation power. Improving negotiation skills helps you win better deals. Personal power comes from many sources. Referent power Referent power comes from being consistent over time. It could be the power a buyer has to give place an order for goods and services. the more successful will be the outcome of our negotiations. but can be a feature of other types of negotiation. above. Here are some typical sources of power: Information power Information power comes from having knowledge that will influence the outcome of the negotiation. To build up and increase our confidence as negotiators we need to step back and analyse the sources of our personal power and compare them with those of the people with whom we are negotiating. as can asking the right questions before we reach the bargaining phase of the negotiation.One of the main differences between negotiators is how confident they feel when negotiating. If people see you as having a clear consistent strategy as a negotiator. write down where you feel you have strengths in your negotiating relationships and write down your areas of weakness. but was respected by many for being consistent in her views and behaviour. and the better we are prepared. the more confident we feel. Typically. Having done this. Situation power Situation power is the power that comes from being in the right place at the right time. Having standards that you stick to and being consistent will help to increase your referent power. Margaret Thatcher wasn. This is seen most commonly in the buyerseller relationship. DEVELOPMENT EXERCISE 2. Power is not absolute. Other areas of expertise could also help the outcome of the negotiation. you will increase your referent power. In the end she failed because her approach was too rigid and she was unable to adapt to changing circumstances. A customer is desperate to place an order and you are the only source ofsupply in the short term.t universally popular. write down ways you can maximise your strengths and minimise . Reward power Reward power comes from having the ability to reward the other party to the negotiation.

To begin this process we will look at 2 aspects of buyer behaviour. STRENGTHS WEAKNESSES Ways to maximise your strengths and minimise your weaknesses BEHAVIOURAL ANALYSIS People negotiate differently and behave differently during the negotiation process. Some buyers are very loyal. There are times . They are not afraid of conflict and will be more than happy to argue their case. some people negotiate quickly and take risks. People who are assertive are confident and know what they want. People who are highly assertive can be seen as being aggressive while people who lack assertiveness are often passive and get taken advantage of. To negotiate with all these different buyer types we need to be able to adapt our behaviour and be flexible in our approach. Some negotiators can be quite intimidating to the point of being rude. others take their time and try to avoid risk. They are not afraid to put forward opinions and are willing to listen to the opinions of others. This makes selling and negotiating a real challenge. In commercial negotiations. others will automatically shop around. We can observe different styles of negotiation and how different types of behaviour can affect the outcome of negotiations. others are quite passive and easily manipulated.your weaknesses. assertiveness and responsiveness.

An example of this is during negotiations. decisions spontaneous. . Salespeople tend to be quite responsive. often in a hurry. poor listener. When customers put us under pressure to reduce prices or give discounts we find it difficult and uncomfortable and worry about damaging the relationship with the buyer. Assertive and responsive. Others are unwilling or unable to respond in this way and we see these people often as being negative or difficult. stable relationships. Decisive and determined.people.. oriented. tough. rather than .when it is appropriate to be more or less assertive and we need to recognise when these times are. their problems and needs. There are four basic styles of behaviour and these are determined by the way. EXPRESSIVE . Some people are highly responsive and will give lots of information about themselves. impulsive. Set on efficiency and effectiveness. in which people relate to one another. but sometimes we lack assertion. . We are all different and some of us are naturally assertive and some of us are not. Reactive. Low ANALYTICAL High DRIVER High AMIABLE low EXPRESSIVE DRIVER . Inflexible. Likes control. Controlled emotions.The Director. .The Socialiser.Task. Assertive. . Responsiveness means the extent to which people are willing to respond to us and our questions. Firm. but not responsive. intuitive. Stubborn. Impatient.

Group builder. easily loved. Not goal orientated. Motivated by logic and facts. Precise. Not quick to make decisions. ! Keep it business-like. supportive. better to provide options and facts. aloof. Emotionally expressive. HOW TO DEAL WITH BEHAVIOUR STYLES Some ideas for dealing with the different types DRIVERS ! Plan to ask questions about and discuss specifics. actions and results. Like things in writing and detail. efficient and to the point.The Clinician. Excellent problem solver. work out specifics on points of agreement. Low risk taker. disagree with facts rather than opinions.. ! Use facts and logic. Respectful.The Supporter. likes security. sometimes dramatic. . Everyone. Over sensitive. fast moving experience stories. Likes rigid timetables. ! Try short. willing and agreeable. ! Remember to discuss the future as well as the present. soft-hearted. EXPRESSIVES ! Seek opinions in an area you wish to develop to achieve mutual understanding. . ! Discussion should be people as well as fact oriented. Not assertive. Critical. Emotionally expressive. Flexible agenda. Rational and co-operative. AMIABLE .impulse buy. ! Personal guarantees and testimonials are least effective . ! Keep summarising . ! Do not invade personal space. Distrusts persuasive people. . Not assertive but responsive. short attention span. Security conscious. Be assertive.s friend. not responsive. orderly and business-like. Dependent on others.Placing more importance on relationships than tasks. ! When necessary. . sceptical. ! Look out for the . ! Make sure to pin them down in a friendly way. ANALYTICAL . Self-controlled and serious.

DEVELOPMENT EXERCISE 3. ! Their decisions are based on facts and logic and they avoid risk. There are many tactics available to negotiators. and can be used by you ! once they are recognised as tactics. ! They can often be very co-operative. ! Become less responsive and less assertive yourself. Pre-conditioning This can begin before you even get together.how. jointly. Here are some you may recognise.t take advantage of their good nature. You.t do . questions. You may refer back to your notes during the exercise NEGOTIATING TACTICS Most successful negotiators recognise that the way people involved in negotiations behave does not always reflect their true feelings or intentions.tactics. ! Focus discussion on . ! Consider telling them what the product won. it is vital to understand 3 things: ! these tactics work ! they can be being used on you. or eliminated You may feel that there is no need in your particular case to negotiate or resort to . ! Demonstrate low risk solutions. Let us take a sales example: You telephone for the appointment and the other side says. answer the following questions: ! How would you recognise each behavioural style? ! How would you sell to them? 2. tactics are used to gain a short-term advantage during the negotiation and are designed to lower your expectations of reaching a successful conclusion.AMIABLES ! Work. ! Don. ! Find out about personal interests and family. analyticals expect salesmen to overstate. ! Be patient and avoid going for what looks like an easy pushover. ! Stick to specifics .ll be wasting your time and I will be forced to speak to your competitors. We are going to look at negotiating tactics that may be used by you or on you.t bother coming if you are going to tell me about price increases. ! Discuss reasons and ask . Whether or not you choose to use these tactics. In general. BEHAVIOURAL STYLES 1. without . This is a matter of personal choice. aggressively: Don. they will respect you for it. Analyse each behavioural style and for each. ANALYTICALS ! Take action rather than words to demonstrate helpfulness and willingness. their effects are reduced.. and they will have spotted the deficiencies anyway. ! Use personal assurance and specific guarantees and avoid options and probabilities. ! Take time to be agreeable. When you do arrive you are kept waiting in reception for half an hour. but established relationships take time. or start your negotiations with the other party. seek common ground.why?. in negotiation.

000 that is not a tactic but the truth. you must try to look for an alternative that meets your needs as well as theirs. I need to have this agreed by my Board of Directors. This is the monkey on their back that they want you to carry around for them. As you walk through the door into the other person.being told why. this does include free delivery. You are given an uncomfortable low chair to sit in that happens to be directly in line with the sun. Oh.t significantly affect the final outcome. If the objection is genuine and the budget figure is correct. shining into the office.t show it to you? The monkey is now on the other person. A classic example is the person who says I have only got £10. but don. is there any reason you would not give me your decision today? If the other side still wishes to resort to higher authority appeal to their ego by saying Of course.s brochure. If they agree to the terms we have discussed. As the point draws near when an agreement is likely. won. by the way. look worried. by the way. The use of higher authority This can be a most effective way to reduce pressure in the negotiation by introducing an unseen third party and can also be effective in bringing the negotiation to a close. doesn. One way of countering this tactic is to say before the bargaining begins If this proposal meets your needs. ignoring your efforts to make conversation.000 in my budget. This is often used tactically to force a price reduction. In dealing with tactics the first decision you must make is whether it is a tactic or a genuine situation. You are very vulnerable as the other side reaches for their pen to sign the order form or contract to concede items that don. rather than a tactic to overcome. Say something like: That is a problem. both sides exhibit a psychological need to reach agreement and get on with something else. you would rather I didn. Does that mean that if one of our systems has everything you are looking for. the price of the car does include a full tank of petrol? 30 . making authority yourself. you have a problem to solve.000 in budget. Here is what you can do. As you are no doubt aware.000. but costs £20.000 and I really want to help you choose the best system that meets your needs. they sit leafing through your competitor. At this stage.t look up. in silence.s office they indicate for you to sit down. the cost of our systems can be anything up to £20.t it? or Oh. do we have a deal? Be careful to use this device sparingly so that the other side does not begin to feel you have no decision . they will go along with your recommendations.t they? Will you be recommending this proposal? Nibbling Negotiations can be a tiring process. When one side says I have only £10. If they genuinely can only spend £10. If it is genuine. how confident do you feel? The monkey on the back Some negotiators have the irritating habit of handing their problems to you so that they become your problems. Instead.s back and they have to make a choice.

stand firm and insist on dealing with the bad guy.want list. bad guy. 31 Body language It is important in negotiation to react verbally and visually when offers are made. but my manager refuses to let me agree terms of this nature without referring back and he refuses to talk to salespeople. is well and truly over. This tells . bad guy.d love to do a deal with you on that basis. I.relationship.. I would like to help you renew your contract. You. but he really will not consider the price you have suggested. He is under a lot of pressure. One way of combining . If you show no reaction. they may be tempted to ask for more and more and you will lose the initiative in the negotiation. Good negotiators will often keep back certain items on their . News readers.s sit down and discuss the proposal realistically . Ensure the next time you are in a negotiation that you react to the other party.Nibbles work best when they are small and asked for at the right psychological moment. is by saying things like Well. Watch out for this.t I go and talk to him for you and see if we can agree a compromise? What is the bottom line on the contract? If you give me your very best price.good guy.m terribly sorry about that. Like peanuts. it is important that you show this with your body language. You may have seen the more theatrical negotiators hang their heads in despair or accuse you of being unfair and souring a perfectly good relationship when you present your proposal..higher authority. Also. The good guy and the bad guy You may have come across this tactic before or else seen it used in films or on television. You may be able to say something like: Come off it. have a habit of picking up their script and tidying up their papers. If you reach the point below which you will not go. Give me your best price and I will see what I can do . This is a tactic designed to soften you up in the negotiation. Human nature is such that we can believe and accept these outbursts against us and our negotiating position becomes weaker as a result. If you don. I will see what I can do.s offer. to the very last minute when the other party is vulnerable. or else bluff yourself and give a figure that is within your acceptable range of alternatives. eat enough of them and they get fattening. but let. The best way of dealing with this tactic is to recognise the game that is being played and assess exactly what the quality of the relationship is.re a superb negotiator. you are using good guy.. it is almost certain that their opening offer is higher than the figure for which they are prepared to settle.t have this kind of relationship. you are negotiating the renewal of your service contract with the Buying Director and his Finance Director. You present your proposal and the Buying Director suddenly gets angry and walks out in disgust muttering to himself about how unfair you have been and how the .. when they have finished reading the news. so it is important that you clearly signal your unwillingness to accept the opening position. For example. with . Why don. You pick up your briefcase and are being shown the door when the Finance Director smiles at you sympathetically and says I.

This can be very difficult to handle and often signals . the other party will disregard what you say and keep negotiating. it may not be exactly what I.m looking for but I may be interested if the price is right 33 MOVEMENT AND CONCESSIONS . Whatever you do. Just as nature abhors a vacuum. The low key approach Don. I really like the alloy wheels.t appear too enthusiastic during negotiations. The vice A common technique used by negotiators when presented with a proposal is to say You. When presented with a price tag in a shop. We all assume that if a thing is printed or written down. 32 The power of legitimacy People believe what they see in writing. if you are buying a car avoid saying to the seller things like: This is exactly what I. so silence induces the need in people to talk. Develop a low-key approach.m looking for. make it and ask the other side how he. sit back in your chair and remain silent.t weaken your negotiating position in response to the vice by giving anything away. The most powerful way of dealing with this is to ask them to be more specific. especially when used with broken record. Similarly. don. Put your pen away. This will only encourage repeat behaviour.t change your offer as this could seriously weaken your position. Over-enthusiasm during negotiations can encourage skilled negotiators to review their strategy and demand more.the world that they have finished their task and are preparing to leave. If you have a proposal to make. Whatever you do. you may make a proposal and find the other party remains silent. If you are in a negotiation and the other side is not responding to your proposal. For example. it is non-negotiable. If your voice says final offer but your body is saying let. when you make your final offer. show something in writing such as an office memo from your boss announcing the increase. This will have a far greater impact than just saying your prices are about to go up. Salespeople like to be liked and will often give money away in a negotiation. if the other side appears unhappy. If you have to present a customer with a price increase or you wish to encourage an early order to beat a price increase. too easily. sit back and wait for the answer. ask to speak to the manager and make him an offer. or she feels about it.ll have to do better than that. Say things like: Well. You could be surprised at the results.disapproval.s keep talking. to the inexperienced negotiator. The use of silence During the negotiation. This is what can make price lists so powerful. Look concerned and keep quiet. it can be very powerful to collect your papers together and indicate with your body that it really is your final offer. don. This can be a very powerful statement. recognise this could be a tactic and avoid giving concessions just to cheer them up. Having asked the question.

Negotiators should avoid making one-sided concessions which will severely weaken his final position and could affect the overall profitability of the deal. The first phase of negotiation involves both parties in agreeing the background to the negotiation and . it begins slowly. ! Adjournment to review positions. trying to get the other side to agree to these without offering anything in return. and trying to force the other person to concede on a major issue. the negotiator is attempting to dominate the interview. Many excellent negotiators are low reactors who will move very slowly in negotiation. starting with the smaller. . to discuss extra demands. ! Agree to a concession. When an offer does come. but hold sufficient back so that you are able to move. Some of these are: ! Period of silence. This is a difficult period in the negotiation process and a professional negotiator will often use silence or other pressure techniques to solicit information from the other party. then there has to be movement and concessions if a deal is to be struck. They will be reluctant to give information or will defer decisions in order to increase the pressure on the other person. giving him room to manoeuvre. at first. at this stage. given that the opening position of each party differs. Movement does tend to be discontinuous with either party moving and the other holding up the agreement at any one time. ! The use of the relationship with the other side to break the deadlock. The skilled negotiator will ask the other side for a complete list of all his. 34 When movement comes. it can be in the interest of each side to keep asking questions and raising objections. as this allows the negotiator to retreat to his initial position if necessary. Identify areas of common agreement. The opening offer will probably be at or just about the level of the negotiator. Wait for the other party to speak.s maximum expectation. it will often be on the basis of a quotation based on the minimum quantity at the lowest possible price. It is often better to present the opening demand or offer in terms of a hypothetical question. This leads to short periods of deadlock. Do not attempt to . Always trade concessions by saying If I do this. Negotiators will tend. if necessary. but not so high that the offer lacks credibility. you do that. ! Agree to leave certain issues to one side for later and concentrate on the rest.win. However. In all this. He will then begin to trade concessions. pressing for maximum advantage. Further Movement and Concessions During negotiations. for the opening demand or offer.Making the First Move Asking questions and listening effectively are important skills both in selling and negotiating.fishing. or her requirements. and will not concede on a single issue until he knows the nature of the whole package. then can be very rapid as both parties sense a deal being on the cards. which can be brought to an end in different ways. less important aspects of the package. at a later stage.

! Uses .. well 2 years may be possible.Okay.I. ! Appeals to the other side.000 .ll need to agree a 2 year contract Remember. but to do that we.? or uses hypothetical examples ! Summarises the position to date and asks Where do we go from here? ! One side calls for adjournment.I.. when you bargain. For example: SCENARIO 1.. Once you have stated your price.crowding. Here are some notes to help you deal with price: ! Be specific. SCENARIO 2.Okay.m willing to reach some sort of deal. thanks for the 10% but the 1 year contract we have already agreed will have to stand. Demand: .ll need to agree a 2 year contract.Well. we discussed the different . The use of concessions enables negotiators to build a mutually profitable deal that is not one-sided in the other side. In the first scenario an offer of 10% was made. stop talking and wait for the other side to speak. Demand: . We need to deal with the price issue confidently. Earlier. that could constitute the final deal.Okay.m willing to reach some sort of deal... threatens use of competition.. 35 Bargaining When it comes to bargaining try to get the other side to commit themselves first. One side uses words like What would you say if . Response: . offer vague. Responding to a specific demand like this we need to be vague.Signals to be aware of that could mean the other side wishes movement to take place could include: ! Trial movement. but I want a 10% discount. but with an understanding of the needs of the other side.well. It makes you look confident ! Make your tone of voice confident and your body language confident and relaxed ! Use silence. we may be able to look at our discount structure. 36 DEALING WITH PRICE Overcoming the price objection Price is an issue in most negotiations. but I want a 10% discount. The use of concessions is a vital part of building a profitable relationship for both parties in the negotiation. sets deadlines and time limits..s better nature.s favour. aggressive behaviour. ! Keep eye contact. but can we go to the full 10%?. Give them time to think . but we. Offer: .ll agree a 10% discount. Response: . Say the exact price rather than . ask specific. Offer: .elements. techniques to force movement. I. but positive: Okay. ! Asks for more information. we may be able to look at our discount structure.. but what was asked for was vague.ll have to look at a longer-term agreement. it will be about £3. and our counter demand needs to be specific: but to do that we. e.g.

If one side avoids making these decisions. given the other side a concession that is one-sided. and silence can be a powerful tool in convincing them you mean what you say. the other must probe to fine out the reason and deal with it effectively. you have. 6. compare arguments and objections. There will come a time when both parties can sense an outcome is possible. if you negotiate for 1 hour the last 3 minutes are when you are most vulnerable. Forgetting the other side has things to gain from agreement as well as . It has been shown that the majority of concessions are given or traded in the last 5% of the time allocated for negotiation.splitting the difference.. Simply gathering up your papers. If you offer to split the difference. Assuming the other party knows your weaknesses and strengths. in effect. You have said you are prepared to move without asking for commitment in return. 3. either party may define outstanding issues. review the position to date and agree a deadline for agreement. That way there will be no unexpected comeback in the inevitable post-negotiation period when either side reviews how well or badly he has done. Be wary of . this will be minimised if the solution you have arrived at benefits both parties. The closing stages need to be approached with caution.t over argue your case ! Close down your body language ! Focus on price and benefit differences ! Begin the bargaining phase THE CLOSING STAGES The closing stages of any negotiation are vital to the overall success of the final deal. Concentrating on your problems rather than those of the other party. Underestimating your own power.! Deal with price objections and defend your price. 5. 4. Once a likely outcome is seen. That means. If you have made your final offer. and each negotiator needs to be careful not to be too eager to close or else the other party will be tempted to hold back for further concessions. Again. This is often called a win-win solution. look as if it is your final offer. 38 THE 40 MOST COMMON MISTAKES IN NEGOTIATION 1. Once either side feels they have arrived at the final deal. Body language can say as much about what you are thinking as speech. looking at the other side directly in the eye and saying That is my final offer can do this. The best solution to aim for is one where both parties feel they have done well despite having to concede on certain issues. but don. Failing to prepare effectively for negotiation. Being intimidated by the status of the person with whom you are negotiating. 2. it is important to signal this to the other party. Negotiators must be careful at this stage to identify tactical delay which deliberately attempts to force further concessions. Record the details and agree with the other parties involved that your interpretation of events matches theirs. The final consideration is when you have done the deal and both parties are in agreement.

Responding to a high demand with a counter offer instead of challenging the validity of the high demand. Offering to . . 39 20. Trying to be liked during the final stages. 17. 19. 29. 30. 14. Making assumptions about what the other side wants. Taking things personally. Making concessions too easily and raising the other sides. demands. Losing sight of the overall agreement when deadlock is reached over minor issues.hand. Being intimidated by rules set by the other side. Conceding an important issues too quickly. 18. Feeling deadlock is only unpleasant for you and not the other party. your competition etc.value. ENVIRONMENTAL PRODUCTS LTD. Aiming too low with your opening bid. Giving too much credence to time deadlines set by the other side. Making concessions before knowing all the other sides. Being intimidated by This is my final offer! 39. too early. 12. 24. 22. Carrying out a . 21. Failing to make concessions conditional on final agreement being reached.Head Office. Being forced into discussing price too early in the negotiation. Revealing your . 35.. Being inflexible.yourself. 25. Believing everything the other side says about you.split the difference. 26. break the team into 2 groups and hand each group a copy of one of the role-play briefs. 40. Bluffing without having a strategy ready should your bluff be called. Making concessions of equal size to those on offer. 38. 28. A role playing exercise for a team meeting To carry out the role-play. expectations.post-mortem. 13. Misunderstanding tactics used by the other side. Paying too much attention to . 15. with the other side. 33. 40 DEVELOPMENT EXERCISE 4. your service. Giving away concessions for nothing. 23. 9.price. Assuming the other side is aware of the short and long-term benefits of reaching agreement.. 34. 8. Having low aspirations for yourself. for the possibility you may need to walk away. Not preparing . 31. 32. Accepting the first offer. Discussing issues for which you are not prepared. 27. rather than . Assuming deadlock means agreement is not possible. Failing to listen effectively. 10. 11. Talking too much. 36. 37. 7. Feeling guilty about asking for a concession. 16.

who have as a byproduct of their production process. so this could be an important contract for you personally. You would expect to negotiate a price of between £45 and £54 per tonne. which you sell to major retailers throughout Europe. ! When they have prepared. . You estimate they can probably supply you with around 15 to 20 tonnes of waste paper per week. bring the whole group back together and review their results ! Carry out a discussion on the styles of negotiations used and the positive and negative effect of their behaviour on the eventual outcome ! Encourage the team to produce an action plan for use in their future negotiations. part-rolls of newsprint. it costs you £3 per tonne less to collect 12 tonne loads. ! Refer the teams to the preparation checklist. ! The average market price for this kind of product is currently £49 per tonne. however. earlier in this book. so would need some flexibility to renegotiate price. which gives you not less than 30 days to pay for the waste paper you purchase. You need this business because you have recently invested heavily in new plant and machinery. This paper is very high quality and much sought after by companies like your own. Commercial Director. in order to develop their skills further. ! You have contracts with several other Newspaper Publishers. you are concerned that the price of this material will fall over the next few months.s Brief ! You are the Commercial Director for Environmental Products Ltd. You buy waste paper and convert it into recycled paper products. so you would seek to ensure this is the case. 60 days would be even better. You have the capability of collecting the waste paper in 5 or 12 tonne loads. and have a good deal of excess capacity.! Separate the teams and allow 40 minutes preparation time. Your company needs regular supplies of this paper and you are given a performance-related bonus based on the tonnage you are able to buy. pair off individual group members and allow them 40 minutes to come to some sort of agreement ! Their objectives are to reach agreement if possible. ! Your company has recently had cashflow problems and therefore you must try to negotiate a deal. as well as your company. ! You are aware that the owners of The Yorkshire Gazette. depending on the quality of the product and the regularity of supply. however. Failure to achieve good payment terms could create problems with your Finance Director. ! Your transport costs are quite high. ! You have 40 minutes in which to conclude the negotiation. are looking for a buyer for their waste newsprint and you know the quantities are likely to be substantial. a Leeds based newspaper. ! You need to try and get their commitment to a long term agreement. 42 ENVIRONMENTAL PRODUCTS LTD. 41 ENVIRONMENTAL PRODUCTS LTD. a waste paper company. built into any agreement you make. based on the information in their briefs ! After 40 minutes.

which are printed. a year. Set yourself objectives and review dates. ! You were recently let down by your current contractor and had to dispose of 30 tonnes of paper because they failed to pick up the waste paper on time. leaving you with an average 20 tonnes of waste paper. depending on quality and regularity of supply. 20% of each roll of paper cannot be used and has to be disposed of.000 tonnes of newsprint a year.740 in revenue. ! Cashflow in your business is vital. but this may prove difficult. ! Your current contractor has been paying you £58 per tonne. as the price of paper is falling. say. You have sufficient space in your warehouse to store no more than 34 tonnes of waste paper at a time. per week. You are aware that prices of between £49 and £54 per tonne are being paid for paper at the moment. You have an immediate problem in that your only choice of supplier for the foreseeable future is Environmental Products Limited. but unfortunately you didn. You have been paid weekly in the past.s Brief ! You are the Production Director for the Yorkshire Gazette and several other regional newspapers. ! Because of your production process. Storage space is at a premium. up to 5. Your company had to pay £1. to dispose of. ! You have 40 minutes in which to conclude the negotiation.200 to dispose of the excess waste and you lost £1. You would hope not to have to agree to less than £51 per tonne under current market conditions. from your production plant in Leeds. which is a good. you have to pay £40 per tonne to have the waste paper disposed of. ACTION PLAN Working with your manager.Production Director. ! With hindsight it would have been better if you had negotiated some sort of penalty clause with your current contractor. prepare an action plan to cover a 3 month period from completing this manual. . and you would like this to continue. If it is not collected on time and your storage capacity is full. You use. This paper is clean and contains no contamination.t. so is much sought after by waste paper companies who re-pulp it and convert it into other paper products. Your Managing Director has made it clear he does not want this to happen again. Also. typically. so you need another contractor and quickly. with whom you are negotiating. You currently have 18 tonnes of paper in your warehouse. and therefore you need to demand weekly payment for the waste paper. you have just been informed that he has gone bankrupt. DEVELOPMENT EXERCISE 5. It would be good if you could agree a fixed price for. ! You use around 100 tonnes of paper per week. and you would like to have the paper removed once per week.

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