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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.
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.
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
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
Although you will never get even close to getting every voicemail returned. With 70% of your prospecting calls going to voicemail. The other is to get more prospects into the pipeline. 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. 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. When you last lost a sale. you can get a significant number of your messages returned when treat them as a one-on-one commercials. When prospecting. already think that they are good at this. you can look at voicemail as either your friend or your enemy.prospect!). Plan and ask questions to uncover and agitate those problems. KEY TIP: Determine which problems that you eliminate or solve for your prospects. Prospects get motivated to work with you when you help them to discover that you solve their problem better than anyone does else. All you have to do to gain rapport is stretch your behavior outside or your comfort zone until you become like another person. Each message should focus on a single unique customer-focused benefit. . Sales Skill #3: Selling to People Outside Your Comfort Zone Most salespeople who are "people persons". Let me ask you a question. The good news is that people like people like themselves. Sales Skill #4: Reaching Decision-Makers Through Voicemail There's two ways to make more sales. KEY TIP: Match speech patterns with people to gain rapport outside of your typical sports or weather conversation. One is to close more of the prospects you do contact. it is time to make friends with it.
Lines like these are why salespeople are down on the bottom of society's respect list somewhere near lawyers. Great presentations get the prospect's imagination involved. pain. Take the pressure off yourself to close and instead focus on qualifying and motivating your prospects. Salespeople talk about why their product is great. and the history of their company. The best way to involve the imagination is through storytelling. KEY TIP: Practice asking for simple commitments once someone has expressed a clear want. KEY TIP: Shift the responsibility back to the prospect to solve his own problems. Sales Skill #7: Have More Fun Sales is fun when you are in control and closing deals. and the pressure to make the sale will be gone. KEY TIP: Study 1-3 of your best customers and develop detailed customer success stories that will put emotional power into your presentations. It is not an easy shift to make. a lot of business presentations are really boring. Learn the power of asking for incremental commitments from the beginning of your sales cycle. Selling is miserable when you are under pressure to close business. . information or resources. 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?". Prospects don't relate to this. First you got to get the prospect to show you what they most want (Hint: See Skill #2 above). That's why they look so bored. why their company is great. Then you can negotiate incremental commitments in return for more of your time. Sales Skill #6: Gaining Commitments Instead of Closing Eliminate "Closing Cheese" from Your Vocabulary.Sales Skill #5: Delivering "I Gotta Have That" Presentations Let's face it. Focus on selling at your best only to qualified prospects and you'll close more and have fun doing it. or desire. Stories rich in descriptive detail get the prospect picturing them using your product and evoke that "I Gotta Have That" reaction.
picture your prospect as having the words SO WHAT stamped on his forehead. I said that you are doing advertising when you are cold calling. You don't have to win all nor even most of the battles to win the war.Bonus Sales Tip When you are giving a presentation. Imagine that for everything you say. There are a number of reasons why most of us don't like it. The reality about cold calling is much different. One reason is the way we view cold calling. selling on the telephone or one-on-one in your prospect's office. The answer to this question is always what your product does for them (benefits). A sales rep good at cold calling is considered a sales god. Cold calling is the reconnaissance before any battle begins. prospects only care about how what you are selling can eliminate a problem that they have or help make their business or life better. why should I care?". the prospect is asking "so what. . A sales rep who is poor at cold calling is a sniveling wimp. People who don't like cold calling view each call as do or die. 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 calling is simply advertising done by sales reps. Remember. not what your product is (features). Cold calling is not where the sale happens. COLD CALLS Cold Calling Pressure ReductioWho likes cold calling? Most salespeople don't like cold calling. and do as little of it as possible. Yes.
Cold calling is a means of identifying potential prospects for your sales efforts. Set your cold calling targets and define your success criteria around the number of calls or dials that you will make. This kind of cold calling goal might be useful if you are a tele*sales* person responsible for actually closing business by phone. What you can control is how many cold calls you make. You really cannot control whether the person you are cold calling needs or wants your product. real cold calling is more involved than pressing their nose up to your ad. you should focus your cold calling goals a little differently.000 in Sales Next Month". Just like a newspaper ad or a billboard. cold calling is too far removed from the actual close to directly influence such a goal. Judge the quality of your calls by how well you stick to a cold calling formula that you have defined in advance. 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. you are just setting yourself up. Every time you make a cold call. . With your new view of cold calling as advertising in mind. Instead.000 in sales next month. it is as if you grabbed your prospect by the shirt. 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. And if they don't want or need what you are offering right now. shoved a billboard ad for your product in their face.in other words to generate leads. that's OK. Then you can determine the time period needed to make 1000 dials worth of cold calling advertisements in order to make your sales goals. 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. all you are trying to do when cold calling is to get someone's attention. Think of cold calling this way. If your cold calling goal is set as "To Make $300. and said "Do you want to buy this?" Obviously. and the quality of your techniques while cold calling. cold calling should be mostly about asking questions rather than a sales pitch monologue. you can backwards plan how many cold calling "advertisements" you need to run in order to make $300. Specifically. But in professional businessto-business selling. And the purpose of advertising is to identify or attract potential prospects .
it can involve several members from two parties. 8. personal knowledge. or in writing. It is increased by the ability to endure uncertainty and by commitment. It depends on the perceived BATNA. It changes over time. Communication is always the link that will be used to negotiate the issue/argument whether it is face-to-face. It is always limited. your goals are likely to differ. negotiation is not always between two people. you exchange ideas and information. Negotiating is one of the key tools you can use to accomplish your goals. your goals.Negotiation Skills Qualities of Negotiating Power 1. and ultimately. in essence. on the telephone. 6. Negotiation. 2. is the art of compromise. It is enhanced by a good negotiating relationship. 9. It can be either real or apparent. 3. 7. Negotiation skills are vital to the success or failure of your interactions. We all have our own point of views. It relates to the ability to punish or benefit. There are many reasons why you may want to negotiate and there are several ways to approach it. Each time you communicate with a potential client. 5. Negotiation is usually considered as a compromise to settle an argument or issue to benefit ourselves as much as possible. It exists to the extent which it is accepted. vendor or employee. The exercise of negotiation power has both benefits and costs. resources and hard work. 10. It is enhanced by legal support. 11. 4. However. skill. Remember. . And these viewpoints form the basis of our goals and objectives. It is relative between the parties.
By considering which of these deserves more attention in a given negotiation before the negotiation process begins. We should keep asking ourselves whether the negotiation process is being used as a successful way of communicating information. we are likely to do a better job. The recent past may have presented some shocks. Interests What are the reasons that drive our pursuit of particular objectives. We communicate best by listening. We may have choices of parties with whom to negotiate or may be better off relying on ourselves. Keep . or can our interests be better served by thinking out of the box? If our ideas are the only ones worth taking seriously. it is hard to justify bringing additional parties into a negotiation-. Relationship What impact will this negotiation have on our personal relationship with other negotiators or our constituents. the parties who stand to gain or lose depending on the negotiation's outcome? 2. Creativity Are we to be governed by standard operating procedure. 5. 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. Learn whether the people at the bargaining table have the capacity to keep the promises they make.The Seven Pillars of Negotiation Wisdom 1. and can another party's ideas or resources help serve our interests better than what we bring to the table? 3. but may walk away without having bought into the agreement. 6. 4. but to be a good negotiator. Commitment Negotiations can only be called successful if they lead to agreements the parties are committed to fulfill. you have to accept that things may not always go the way you expect. BATNA Our Best Alternative To a Negotiated Agreement (BATNA) may be derived from resources we control or influence. BATNAs can change during negotiation each time we learn a new piece of information.the decision-making process. Communication Information is the fundamental asset in negotiation. he or she may agree for purposes of bringing the bargaining to a close.
g. Consider outcomes that would address more of what you both want. Believe you are worth it You have to believe that you deserve your desired outcome.the “seven pillars” in mind. Knowing what you want. Keep it Friendly Negotiating is not about confrontation. will help you to be clearer and more confident. then you are much more likely to get what you want. 5. Essentials of a Successful Negotiation 1. It is more important that you listen to them and see their point of view. you would like to earn as much as someone you work equally as hard as. 4. trust yourself.. your argument will fall apart because you do not have enough confidence in it. as well as what they want. even if you disagree with them. work out what you would be prepared to walk away with if you are not successful. 7. Have an Alternative When you are discussing specifically what you want. mutually beneficial agreement. and rehearse it. even if tactics used by the other person seem unfair. 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. not positions. If you do not. Listen Carefully When your boss/client is talking to you during negotiations. Commit yourself to a win-win approach. Be . prepare in advance. view it as good practice for the future. and you should be able to respond wisely to the circumstances you face. Emphasize common ground. too. Consider what your needs are and what the other person's are. it is important to have an idea of what the other party would like the outcome to be. Be Fair If what you are asking for is fair and justifiable. Be inventive about options. Be hard on the problem and soft on the person. Know what “they” want Before you start negotiating. even if you do not get what you want this time. Make clear agreements. 5. and why. Keep that in mind when you are talking and. Where possible. do not use that time to plan your next line of attack. It is about two parties reaching an amicable. 4. 2. Five Basic Principles 1. the moment your client or boss questions you. Believe it. e. 3. Focus on needs. 2. They will take you more seriously if you do. Be specific and have valid reasons for why you need it. Know what “you” want Think through exactly what you want. 6.
The Goal of Negotiation-.Marital Conflict Roberta and James have the "perfect" marriage. To do so you may need to do some of the following: Example 1-. Solutions are selfishly sought with little regard for the other person. Steve’s recent behavior has been so uncharacteristic that his employer decides to confront him.Workplace Conflict Mr. Mrs. Both work in professions that provide personal satisfaction as well as a comfortably secure income. You cannot have one skill work without the others. Negotiation helps to create a healthy balance between "giving" and "getting." And they are miserable. Steve’s attendance and performance at work had been consistent. demanding a meeting the next day. They have "made it. He has failed to turn in several important project outlines on time without explanation or apology. Conflict can also be motivated by ego." Effective negotiation is a two-way process that encourages both sides to actively participate in making decisions. motivated and highly productive. Work and family roles have left them with little time to spend together and have increased their areas of disagreement. Example 3-. resist and retaliate against the "winners."Everyone Wins" People resolve disagreements in many ways. listening and speaking. the possibility for more intense conflicts at some later date is increased. Roberta and James have become focused on meeting their own needs with little regard for the needs of the other. How can Everyone Win? The key to effective negotiation is clear communication. dissatisfaction and conflict are all they seem to share any longer. It also provides a way for people to learn to understand each other better and to grow in their relationships. Until recently. people may let their anger and resentment build while they remain silent.Parent-Child Conflict It is Friday. John insists that this is unfair. Instead of confronting and resolving problems. annoying his employer. Problems seldom improve on their own. Example 2-.clear that your task will be to steer the negotiation in a positive direction. Brown has grown increasingly distressed by her son's continuing resistance to the 11 p. Resentment. For example. test. curfew she has set. two children and a lovely home. Both become so angry and frustrated that they storm off to separate areas of the house to avoid each other and further conflict. you cannot have good understanding without good . The one-sidedness of this "solution" increases the odds of more conflict.understanding.m. If disagreements are not resolved. Communication involves three important skills-. Steve has been late for work several times in recent weeks." Everyone becomes a "winner" through negotiation. "Losers" will defy. The conflict becomes a "win-lose" situation in which one person "wins" at someone else's expense. Some tend to deal with potential conflict by denying it or trying to avoid it altogether. and John and his mother are arguing once again about the teenager's weekend curfew. This approach can result in constant personal stress which can lead to illness or poor general health.
concise explanation of the problem as each person sees it. Active listening encourages understanding. educational experiences. Negotiation is most effective when people are able to clearly identify and discuss their sources of disagreement and misunderstanding. neutral spot where there are few distractions or interruptions is perfect for open discussion. Active listening assures the other person that he or she is heard. Facts and feelings are presented in a rational manner from the individual's perspective. A quiet. Encouraging the other person to share thoughts and feelings. The ability to listen actively supports open. and to promote understanding and interest in the other person without necessarily agreeing to his or her viewpoint. hand gestures and degree of eye contact. giving feedback on what has been heard. plan ahead to meet at a time and place convenient to everyone. a common understanding should be reached. then the process of negotiation will either be broken off or will end with solutions that do not work. Shared concerns rather than individual issues remain the focus of discussion throughout negotiation. accepted and respected. Body language. ongoing negotiation. If two people do not understand each other's problems and concerns. The negotiation process will be most effective when people take time to think through what they will say. using "I" statements. can provide clues about the other person's thoughts and feelings. inappropriate solutions and continuing conflict. ethnic backgrounds or perspectives. When possible. 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. including facial expressions. Thinking ahead or anticipating the course of the discussion are distractions that interferewith listening. Listening Listening is an active process of concentrating all of one's attention on the other person.listening and speaking. Negotiation permits you to examine a problem from all sides. beliefs." which blames the other person and puts him or her in a defensive position. Speaking Negotiation begins with a clear. Understanding Before two sides can look for solutions. Show Respect Success rests in accepting the other person despite differences in values. Poor attention and listening can lead to misunderstandings. It is important to pay close attention to what someone says as well as to how he or she behaves. and maintaining eye contact are skills that show you are interested in understanding what he or she has to say. Taking time to listen and to .
After all suggestions have been shared. This process allows everyone to openly make suggestions without the fear of criticism. The basic assumption is that all people negotiate “face." "bad guys. Facework and corresponding styles of handling conflict vary from culture to culture. Considering different perspectives will increase the range and variety of possible solutions. At this stage. There are no "good guys. Show consideration and acceptance of each other's perspectives. A foundation of trust also eases future efforts to solve problems. values and objectives are recognized and respected as legitimate. personal goals should not take priority over shared goals. Preserve the Relationship In general. Cross-Cultural Communication Theory . Negotiation is a nonadversarial approach to resolving conflict in those relationships. Genuine interest in other people and in their contribution to finding solutions builds trust. Recognize the value of a relationship and have a mutual desire to continue it." Negotiation is based on equality. Negotiation then becomes a matter of choosing a solution to which no one has an objection.” 1." or "winners/losers. 3. Work together to develop a solution everyone can accept. Our identity can always be called into question. they are reviewed to determine whether they might coincide or overlap with each other.ask questions makes it easier to learn more about someone's perspectives. 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. attitudes. Trust provides a foundation for continuing a relationship. every suggestion has value and is accepted. people will try to preserve valued relationships. 5. Separate personality from the issue involved. Face is a metaphor for our public self-image. When is Negotiation Successful? Negotiation is most successful when both sides do the following: 1. The individual's ideas. 2. 4. Face work refers to specific verbal and non-verbal messages that help to maintain and nrestore face loss. values. Solutions are mutually agreed upon. and to uphold and honor face gain. 2. Remember. Participate actively in the process. Brainstorming It is one way to gather many creative ideas rapidly. beliefs and goals. No one wields more power or control than another.
The person doing the selling or persuading has the distinct advantage over the buyer in most negotiation situations. Negotiation requires time and patience. True False 4.It assumes that persons of all cultures are continually negotiating "face. True False 7. True False 5. As a negotiator. Negotiations should be left to highly experienced personnel. In all negotiation situations." which is their public self-image. Ultimatums should be used only as a last resort. True False 8. Deadlocks and impasses are sure-fire signs that one or both parties are being . True False 2. Most negotiation issues boil down to the price of the object or service to be performed. Face negotiation theory analysis focuses on the type of culture. Negotiation can serve not only to preserve relationships. True False 12. then communication and conflict styles will likewise vary. and the type of conflict management. Summary As life becomes more complex and the world more diverse. when face is managed differently. The personal needs of the negotiators are as important as the "objective" issues. but also to continually strengthen and improve them. There are certain items. True False 6. Concessions are normally viewed as a sign of weakness in the party making them. Negotiation Questionnaire 1. the type of face maintenance. True False 3. Consequently. someone wins and someone loses. Successful negotiators usually set very high goals. at work and in the community. you can never go wrong by assuming the other party is out to get the best possible deal for himself at your expense. It is always best to negotiate on your own "territory. True False 11. you can make conflict resolution a regular part of your approach to managing relationships at home." True False 9. By practicing the negotiation strategies and skills suggested in this lesson. such as merchandise in a one-price store. your ability to use negotiation skills becomes more important. 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. True False 10. which cannot be negotiated.
I have a distinct advantage if I know your deadline and you don’t know mine. It is best to keep the number of people to minimum in a major contract negotiation. True False 23. True False 16. Deadlocks are to be avoided at all costs. True False 19. True False 21. True False 17. Probably the best test of a successful negotiator is his skill in employing a wide variety of negotiation tactics. True False 15. the organization always loses. It is always best to keep a negotiation on a rational. In labor relations. Negotiators usually overdo their sensitivity to cues. the better I can control the negotiation. When there is a lot of competitive negotiation taking place in an organization. it is best for you to write it. The effective negotiator spends more time listening than talking during negotiations. True False . True False 18. True False 28. When a written document is necessary to finalize an agreement. the more I know about you than you know about me. True False 27. True False 25. True False 26. True False 13. True False 24. negotiating activity should be confined to the bargaining table in order to preserve confidentiality. issue-oriented level. Negotiators often mean something different from what they say. Managers demonstrate weakness when they negotiate with subordinates. In negotiations. True False 22. True False 14. Establishing the agenda of the negotiation is probably the most routine phase of the negotiation process. True False 29. You should develop a negotiation strategy and stick to it. Knowing what your options are is essential to effective negotiations.unreasonable. True False 20. The negotiator who asks a lot of questions is demonstrating that he or she hasn’t done his or her homework thoroughly.
Either. 3. 18. T. 2. T. 20. T. T. T. F. T. 13. 9. F. 23. 16. some issues have developed over time and there are repeated conflicts among a few of the members. Challenge Can you get the team to manage conflict more effectively so that morale and productivity are not affected? . I am afraid that the recurring conflicts will cause morale to drop. 24. Yet. 15. 22. T. T. 11. 25. There has been arguing and heated debate. F. T. F. The higher your score. F. 10. 28. 17. T. F. 21. F. 26. F Give yourself one point for each response that matches those provided by professional negotiators. Everyone in the team is competent and highly committed to the success of the company. 14.Answers 1. 6. 5. F. F. F. the more you reflect the mindset and behavioral patterns of professional negotiators. Either. 12. 27. 7.Conflict Management Problem We have a product team that does high quality work. Either. and subsequently result in decreased commitment and productivity. T. 19. T. 29. 8. F. 4. F. F. Case Study-.
the manager needs to interact with the members at different levels in the organization structure. Day-to-day / Managerial Negotiations Such types of negotiations are done within the organization and are related to the internal problems in the organization. Public 3. 1. 3. Types Parties Examples Involved 1. Customers price and quality of 5. Usually. Government 2. Government 2. the way the negotiations are to be conducted differs. internally. For conducting the day-to-day business. Customers 1. Trade unions and fixation of responsibility. Striking a contract 2. Legal advisors purchased. the superior needs to allot job responsibilities. Trade unions goods to be 6. Negotiation for pay. Legal advisers 3. Negotiations for the Commercial Negotiations 4. 1. 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. 1. Day-to-day/ Managerial colleagues 2. Management Legal Negotiations 3. Basically the types can be divided into three broad categories. Increasing productivity. . Description of the job Negotiations 3. Different levels of 1. 4. Negotiations with financial institutions as regarding the availability of capital. Management terms and working 2. Management 1. Adhereing to the laws of the local and national government. 7. It is in regards to the working relationship between the groups of employees.TYPES OF NEGOTIATION IN ORGANIZATIONS Depending upon the situation and time. In between conditions. maintain a flow of information. Suppliers with the customer. All this requires entering into negotiations with the parties internal to the organization.
On occasions. Alternatively. On the most formal basis. An alternative to a simple yes or no when a difference of view occurs. making a decision rather than negotiating about it may be the best tactic. Commercial Negotiations Such types of negotiations are conducted with external parties. It relates to foregoing of one resource to get the other.2. at times can be a lengthy and cumbersome process. By asking whether it is necessary. by a grudging concession of the other party’s claim. 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. this might imply a decision to take a dispute to court : informally. time may sometimes be saved and unnecessary compromise avoided. 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. followed. Why waste time negotiating if the other party has a good case and there are no adverse consequences in conceding ? Unnecessary negotiation. perhaps. a request to negotiate may best be met by pointing out that the party making the request has no standing in the matter. The Negotiations Process The Difference Between Integrative and Distributive Negotiation . 3. They are also contractual in nature and relate to gaining legal ground. They are based on a give-and-take relationship. IS NEGOTIATION NECESSARY ? Negotiation. The driving forces behind such negotiations are usually financial gains. Commercial negotiations successfully end up into contracts. Disputes over precedents can become as significant as the main issue. If a manager has the undoubted authority to act. Legal Negotiations These negotiations are usually formal and legally binding. there are cases in which the best response to a request or a claim is to concede it without argument. will lose all the advantage that might be gained with a quick unexpected yes. is to skip negotiation and proceed immediately to some form of third – party intervention.
you "won. and usually good feelings are not plentiful when the negotiation is over. They went back and forth. they were able to "split" the orange in such a way that both got exactly what they wanted." If you walk away feeling like you paid too much money. not just one. Think of negotiating for your car – you either get that extra $1000. or the dealership does. If you feel you got a good deal (and squeezed that salesman). As it turns out. The girls were engaged in distributive negotiations (though . 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." 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. She turned to the girls and asked them each why they wanted the orange. are typically described as "win/lose" negotiations – one party gets what they want." This type of negotiating does not lead to good long-term relationships. and leave all parties feeling good. on the other hand. and the other party gives something up. They were about to agree on cutting the orange in half when their aunt walked in and realized what was going on. considering multiple issues at once (thus allowing for trade-offs). Once they realized this. Integrative vs. one wanted to eat the orange. Integrative negotiations foster trust and good working relationships. 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. The parties’ interests are often opposed (or seem to be opposed – this may not prove to be the case once you start getting creative). and the other wanted the peel for an art project she was working on. and honestly trying to "expand the pie" rather than divide it. Distributive negotiations. They involve looking at the issues being negotiated from multiple angles.There are two types of negotiation: "integrative" and "distributive. each girl insisting that she should get it and both refusing to give up. you "lost.
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.9m. . the spirit behind your interests should be congruent.6m 8m PROFITS £2. Most importantly. The goal in any partnership should be maximizing all parties’ abilities to advance their collective mission. 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%. etc. Once you start down the "distributive path" it is hard to change directions. you are entering into a long-term relationship with your prospective partner(s). You must do this from the beginning. performance. while their aunt was suggesting an integrative solution. as you establish a dynamic of competition and distrust.5m £10m COSTS 7. You want joint gain. partnership negotiations should always be integrative.9m £2m By achieving relatively modest improvements in buyers. and to enable both to better serve the community. deal effectively with their economic obligations and pressures. we will explore why negotiating skills are important for you to be successful in business and in life. As you might have guessed by now. and you want this to be a good relationship. It is important to know how to negotiate for a number of reasons: Effect on Profits During the negotiation course.it probably felt like bickering to them). This represents a 45% increase over the previous profit figure. and while your specific motivations for pursuing the partnership may be different. 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. We all negotiate every day in a wide range of work and social situations. One organization should not want to "win" at the expense of the other. not just individual gain. and sellers. COMPANY A COMPANY B SALES £10.
Co-operative bargaining has the advantage of being a more efficient style of negotiation. too high or too low. STYLES OF NEGOTIATION. or to pay the minimum price possible for your supplies. You offer £11. ! Information is withheld. but to creatively put together solutions to problems that ensure: ! The best possible outcome for your business. You decide to make an ambitious offer to see how they react. or explores alternatives in sufficient depth Features of co-operative bargaining ! Each side recognises that the other has needs and feelings and accepts implicit . . if one side decides to be co-operative.This really is my best price!. mutually beneficial relationships ! Neither side asks enough questions. but can also lead to greater customer satisfaction. I could have done better 2. or lose-lose ! The more aggressive negotiator usually does best ! This style does not encourage long term.500. however. however certain rules have to be followed by both parties. How do you feel? Most people feel two things in quick succession: 1. there will be little trust between the two parties. For example.Effect on Customers Successful negotiations can lead to increased profits. ! A reputation for being a tough negotiator while earning the respect of those with whom you negotiate. there is a danger the other side will use this apparent sign of weakness to their advantage. Are you . for it to work. ADVERSARIAL VERSUS CO-OPERATIVE BARGAINING Our style of negotiation will be influenced by the style of the other party. If both sides are adversarial.000 and they accept your offer immediately. you are buying a second car and you see a car advertised in the paper for £14. 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. 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.being fair. ! Clients and suppliers who are happy to do business with you. or misrepresented ! The outcome is often win-lose. There must be something wrong with the car Think of this next time you are negotiating for your business with a customer or supplier. 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.
Which of my objectives: a. mutually profitable relationships ! Each side asks more questions and explores alternatives. What exactly do I wish to achieve from this negotiation? 2. What options or alternatives would be acceptable to me? 4. What does the other side wish to achieve? 3. the more time that is spent in planning and preparing for the negotiation. What information will influence the final outcome of the negotiation? 4. Must I achieve? b. Objectives Before entering into the negotiation. What part will other people play in the negotiation? Generally.: Napoleon PLANNING THE NEGOTIATION In any kind of negotiation the planning stage is probably the most important.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. communicable strategy ! Bad behaviour is punished ! This style involves creative problem solving ! It encourages long term. objectives? 5. The importance of planning is in having a very clear idea before entering into the negotiation. Ask yourself the following questions: 1.The objective of negotiation should not be a dead opponent. What information do I have that the other side has also? 2. What information does the other side need before it can negotiate with me? . What are the other sides. How does the other side see the negotiation? Information It has often been said that information is power. Do I intend to achieve? c. you need to have a clear idea of your objectives and try to work out those of the other side. 1. Too often in negotiations we go in badly prepared and end up giving concessions that reduce the overall profitability of the final deal. In any negotiation. What information do I have that the other side does not have? 3. but not soft. the more beneficial will be the final outcome. There is a willingness to trade concessions ! There is a clear. What concessions can I make? 5. How am I going to achieve my objectives? 6. there will be 4 types of information that is important to the final outcome. What are my objectives? 2. What information do I need to have before negotiating with the other side? 4. Would I like to achieve? 3. 1. rather than taking up fixed positions ! The usual outcome is win-win .
What is the limit of my authority? At which point should I walk away? 4. cost and value. More often than not. agreements have to be worked out where concessions are given and received and this is the area where the profitability of the final outcome will be decided. 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. Once you know your objectives. What is the likely outcome of the negotiation? 3. which satisfies all parties. 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. 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? . What is the best deal I could realistically achieve in this negotiation? 2. It is rare in negotiation for agreement to be reached immediately or for each side to have identical objectives. It is possible during negotiations to concede issues that have little cost to you but have great value to the other side. 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. By spending time as part of your preparation in listing what you already know and what you need to know. Concessions have two elements.This can be particularly important when negotiating with people who concentrate on price issues. 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 know that the other side has recently expanded their production capacity. however. Ask yourself the following questions: 1. 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 is the best type of concession to make. you need to work out how you are going to achieve them. The early phases of negotiation consist of both sides finding out more information before talking about a specific deal or set of alternatives.s behalf. 8 When preparing for negotiations. conceding on issues that have a high cost to you irrespective of their value to the other side. it may give you the chance to negotiate on more favourable price. Avoid. you may be able to negotiate more favourable terms in return for a commitment to buy certain volumes over an agreed time period. Concessions Negotiating is a process of bargaining by which agreement is reached between two or more parties. When preparing for negotiation. you will give yourself a better chance to negotiate well on your company. For example. How am I going to achieve my objectives in this negotiation? 2. it is advisable to write down a realistic assessment of how you perceive the final outcome.
LIKE. observers and specialists. 9 PREPARATION CHECKLIST Questions to ask prior to entering into negotiations Objectives 1. How does the other side see the negotiation? Information 1. What is the strategy of the other side likely to be? 3. you need to decide during the preparation phase: 1. What is the likely outcome of the negotiation? 3. what is the cost of each concession and what value does each concession have to either side? 10 Strategy 1. What information does each side have that will influence the outcome of the negotiation? Concessions 1. What exactly do I wish to achieve from this negotiation? 2. What tactics are the other side likely to use? Tasks If you go into negotiation with a colleague or colleagues. Having a clear understanding of roles within the negotiation will make the team approach much more effective. What role will each team member take in the negotiation? 2.3. What information do I need to know about this negotiation? 2. Do I intend to achieve? c. note takers. What tactics are the other side likely to use? Tasks (Team Negotiations Only) 1. What information does the other side need to find out? 3. Which of my objectives: a. What options would be acceptable to me? 4. Would I like to achieve? b. What tactics should I use within the negotiation? 4. What tactics should I use within the negotiation? 4. objectives? 5. INTEND AND MUST POSITIONS . How am I going to achieve my objectives in this negotiation? 2. What is the limit of my authority? At what point should I walk away? 4. What are the other sides. What role should each team member take in the negotiation? 2. each with their own clearly defined authority and roles to perform. What is the best deal I could realistically achieve in this negotiation? 2. Must I achieve? 3. How can we work together in the most effective way? Some teams of negotiators appoint team leaders. What concessions are available to me. How can we work together in the most effective way? 11 PREPARING FOR NEGOTIATIONS.
The best deal. 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. intend: 1 2 3 4 5 6 7 8 9 10 11 12 The worst deal.
You have tried to buy other fast food restaurants but the deals fell through because their owners would not agree your best price. Your current restaurants are making good money and you believe you have the right formula for success . Franconi.750. A better alternative would be to agree a deal with Sr. Franconi. What information must you find out about Sr.000 when new 18 months ago. of the business You own 2 Pizza fast food restaurants in the area and you wish to build your business through acquisition. according to Sr. To help you in this process answer the following questions below: DEVELOPMENT EXERCISE 1. so long as the businesses you acquire are the right price and in the right location. 3.000 (These cost him £35. One problem you have is with finance. or preferably.s which seems to meet your requirements.) ! Restaurant Fittings costing £19. Franconi wants to sell the business as a going concern and has advertised it at a price of £175. what must you not do and why? 2. Franconi where you pay 50% of the money up front and pay the balance over 2. strict financial controls. McDonalds.000 ! Kitchen Fittings worth.s price seems to be relatively cheap for a profitable pizza business in this location. CASE STUDY Questions 1. Last year he had an audited turnover of £193. Describe your Like. Think of your objectives for the forthcoming negotiation. nearest rival. Franconi £25. opposite a busy shopping mall and 800 metres away from its. CASE STUDY Sr. Luigi Franconi owns a fast food Pizza Parlour just outside of London. You could just about finance the deal yourself but this will probably cause you cashflow problems.000. You cannot finance the deal yourself.750. Intend and Must positions. The shop has been trading for seven years and is located in a good position.goodwill. worth on average £5. What concessions are available to each side? 5. Before you have your meeting with Sr. You are looking at another restaurant in town in addition to Sr. What should your strategy be for the forthcoming meeting? .000 3 years ago ! The freehold valuation of the restaurant ! The. 4 years.5 6 11 12 DEVELOPMENT EXERCISE 1. inclusive of: ! Stock. plus pizzas that your customers like. Assuming Sr. Sr. Franconi.s business before you begin to negotiate? 4. Franconi you need to plan and prepare for the negotiation which will ultimately take place. producing a net profit after tax of £36.
DEVELOPMENT EXERCISE 1. What information must you find out about Sr.000 per year. Franconi. accepting Sr. What concessions are available to each side? 5. Franconi.s price seems to be relatively cheap for a profitable pizza business in this location. 2. financed by yourself. This would include a non-competition clause whereby Sr. 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.000. Agreement could be reached to speed up the timing of the deal. however tempting it may appear. Your like position could be an offer of £168. Describe your Like. There may be scope for a shorter non-competition clause of say 2 years and some flexibility on the timing of the deal. an agreed price of £172. A negotiator should and will always challenge an opening bid. beware of agreeing to the asking price. Think of your objectives for the forthcoming negotiation. However. say. That is part of the skill of negotiating.000 up front and the balance over 4 years at £21. It could be. A skilled negotiator can challenge the other side. Franconi. Your intend position. Intend and Must positions. then a win-win outcome is the result. They worry it may cause deadlock. will be somewhere between the must and like positions. He must have a reason for wanting to sell the business and is likely to have some leeway on price.000 up front and the balance over 2 years at £43. 3.s terms and conditions without antagonising the other side.000. what must you not do and why? 2. Information would need to include: . depending on the necessary legal requirements being met. There are no right and wrong answers to this question. or upsetting the other party by challenging their opening bid. If agreement is reached and both parties are satisfied.s valuations. You may be willing to forget the noncompetition clause and seek to close the deal within a month. What should your strategy be for the forthcoming meeting? Suggested answers 1. financed by paying £84. Assuming Sr. 3. Despite the asking price looking good. Franconi. CASE STUDY Questions 1. financed by paying £86.000 per year. Look at it from Sr. Some people fear annoying. the first step in the planning process is to identify the issues being negotiated.s point of view. Franconi agrees not to open up a similar restaurant locally within the 4-year period.s business before you begin to negotiate? 4.
Establish the issues ! Begin by agreeing an agenda for the negotiation. 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. 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. Find out more about the location and future development plans.s decision to sell what appears to be a profitable business The physical state of the premises. so that they remain in control of the negotiating process. Prepare your opening bid and the arguments you need to back it up.s attitude to part funding the purchase 4. Franconi. Your strategy is your decision. \friendly way. self confident and structure the negotiation. Franconi. Likely concessions will include: Price Payment structure Timing of purchase Non-competition clause 5. You may wish to visit. How long the business has been up for sale The reasons for Sr. 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. Concessions relate to the key issues being negotiated. Franconi. 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. HOW TO STRUCTURE NEGOTIATIONS People who are successful negotiators have a well thought out strategy before going into the negotiation. are well prepared. such as . If you are looking for Sr. 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.
in order to conclude the deal ! Skilled negotiators will often ask the other side for their . ! 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 making concessions Stage 3. or opening bid ! The opening bid should be ambitious. packaging. Information the other side has that they are willing to give you 4. before beginning the negotiation and refuse to accept any last minute additions to the list ! Issues will include things like price. closed and follow up questions and are able to listen effectively ! Skilled negotiators wait until they have all their information requirements. 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. 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. when you are vulnerable and likely to agree to a . one sided . until. hopefully. Information you have that you are unwilling to give to the other side 3. length of contract etc. Information you have that you are willing to give to the other side 2. delivery schedule.price. payment terms. Information the other side has that they are unwilling to give you ! You need to decide. shopping list . 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. Gather information This is a vital part of the negotiation There are 4 kinds of information 1. before the negotiation. quality of product. 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.
the more successful will be the outcome of our negotiations. above. Reward power Reward power comes from having the ability to reward the other party to the negotiation. Personal power comes from many sources. Other areas of expertise could also help the outcome of the negotiation. you will increase your referent power. write down ways you can maximise your strengths and minimise . or the power a salesperson has to give good service and solve problems Coercive power Coercive power is the power to punish. Having done this. A customer is desperate to place an order and you are the only source ofsupply in the short term. In the end she failed because her approach was too rigid and she was unable to adapt to changing circumstances. the more confident we feel. DEVELOPMENT EXERCISE 2. but can be a feature of other types of negotiation. In most negotiating relationships the power balance moves with time as the negotiation progresses. In the eighties.t universally popular.One of the main differences between negotiators is how confident they feel when negotiating. Having an effective network and keeping in touch with what is happening can increase your situation power. PERSONAL POWER Looking at the sources of power. Having standards that you stick to and being consistent will help to increase your referent power. It could be the power a buyer has to give place an order for goods and services. 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. and the better we are prepared. This is seen most commonly in the buyerseller relationship. but was respected by many for being consistent in her views and behaviour. Planning and research can increase our information power. write down where you feel you have strengths in your negotiating relationships and write down your areas of weakness. Improving negotiation skills helps you win better deals. If people see you as having a clear consistent strategy as a negotiator. Margaret Thatcher wasn. Power is not absolute. Referent power Referent power comes from being consistent over time. as can asking the right questions before we reach the bargaining phase of the negotiation. Typically. Expertise power Expertise power comes from having a particular skill which you can apply and which can influence the outcome of the negotiation. Here are some typical sources of power: Information power Information power comes from having knowledge that will influence the outcome of the negotiation. Situation power Situation power is the power that comes from being in the right place at the right time.
some people negotiate quickly and take risks. They are not afraid to put forward opinions and are willing to listen to the opinions of others.your weaknesses. others will automatically shop around. This makes selling and negotiating a real challenge. assertiveness and responsiveness. They are not afraid of conflict and will be more than happy to argue their case. In commercial negotiations. Some negotiators can be quite intimidating to the point of being rude. 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. 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. There are times . others take their time and try to avoid risk. Some buyers are very loyal. People who are assertive are confident and know what they want. 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.
but not responsive. . . Likes control. 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.when it is appropriate to be more or less assertive and we need to recognise when these times are.The Socialiser. . Stubborn. decisions spontaneous. Firm. Salespeople tend to be quite responsive. in which people relate to one another. oriented. impulsive. Controlled emotions. tough. poor listener. There are four basic styles of behaviour and these are determined by the way.Task. Assertive and responsive..people. intuitive. Low ANALYTICAL High DRIVER High AMIABLE low EXPRESSIVE DRIVER . Impatient. Reactive.The Director. Set on efficiency and effectiveness. Decisive and determined. EXPRESSIVE . often in a hurry. stable relationships. but sometimes we lack assertion. Others are unwilling or unable to respond in this way and we see these people often as being negative or difficult. . rather than . An example of this is during negotiations. Inflexible. We are all different and some of us are naturally assertive and some of us are not. Some people are highly responsive and will give lots of information about themselves. Responsiveness means the extent to which people are willing to respond to us and our questions. their problems and needs.
! Keep summarising . . Motivated by logic and facts. ! Use facts and logic. ! Look out for the . fast moving experience stories. better to provide options and facts. work out specifics on points of agreement. ! Discussion should be people as well as fact oriented. Self-controlled and serious. Emotionally expressive. ! Try short. Not assertive but responsive. Flexible agenda.The Clinician. AMIABLE . likes security. Not assertive. Precise. Excellent problem solver. EXPRESSIVES ! Seek opinions in an area you wish to develop to achieve mutual understanding. Rational and co-operative.Placing more importance on relationships than tasks. ! Make sure to pin them down in a friendly way. ! When necessary. Distrusts persuasive people. . Dependent on others. aloof. Everyone. not responsive. disagree with facts rather than opinions. Emotionally expressive. ! Keep it business-like. Security conscious. willing and agreeable. Low risk taker.impulse buy. Respectful. easily loved.s friend. orderly and business-like. ! Remember to discuss the future as well as the present. ! Personal guarantees and testimonials are least effective . . Be assertive. Group builder.The Supporter. ANALYTICAL . short attention span. efficient and to the point. sceptical. supportive. Over sensitive. Likes rigid timetables. HOW TO DEAL WITH BEHAVIOUR STYLES Some ideas for dealing with the different types DRIVERS ! Plan to ask questions about and discuss specifics. Like things in writing and detail. Not quick to make decisions. ! Do not invade personal space. soft-hearted. . Critical.. actions and results. Not goal orientated. sometimes dramatic.
! Don.why?. BEHAVIOURAL STYLES 1.AMIABLES ! Work. ! Their decisions are based on facts and logic and they avoid risk.t do . There are many tactics available to negotiators. Analyse each behavioural style and for each. We are going to look at negotiating tactics that may be used by you or on you. Pre-conditioning This can begin before you even get together. ! Find out about personal interests and family. ! Discuss reasons and ask .. tactics are used to gain a short-term advantage during the negotiation and are designed to lower your expectations of reaching a successful conclusion. ! Demonstrate low risk solutions. DEVELOPMENT EXERCISE 3. or eliminated You may feel that there is no need in your particular case to negotiate or resort to .t bother coming if you are going to tell me about price increases. ! Use personal assurance and specific guarantees and avoid options and probabilities.t take advantage of their good nature.how. aggressively: Don. Here are some you may recognise. they will respect you for it. When you do arrive you are kept waiting in reception for half an hour.tactics. ANALYTICALS ! Take action rather than words to demonstrate helpfulness and willingness. in negotiation. and they will have spotted the deficiencies anyway. ! They can often be very co-operative. ! Consider telling them what the product won. Whether or not you choose to use these tactics. or start your negotiations with the other party. You. questions. and can be used by you ! once they are recognised as tactics. This is a matter of personal choice. ! Be patient and avoid going for what looks like an easy pushover. seek common ground. ! Stick to specifics .ll be wasting your time and I will be forced to speak to your competitors. without . answer the following questions: ! How would you recognise each behavioural style? ! How would you sell to them? 2. analyticals expect salesmen to overstate. In general. 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. it is vital to understand 3 things: ! these tactics work ! they can be being used on you. ! Focus discussion on . jointly. Let us take a sales example: You telephone for the appointment and the other side says. their effects are reduced. but established relationships take time. ! Take time to be agreeable. ! Become less responsive and less assertive yourself.
One way of countering this tactic is to say before the bargaining begins If this proposal meets your needs.t significantly affect the final outcome. Here is what you can do. shining into the office. ignoring your efforts to make conversation.000 in budget.s brochure. In dealing with tactics the first decision you must make is whether it is a tactic or a genuine situation. If it is genuine. You are very vulnerable as the other side reaches for their pen to sign the order form or contract to concede items that don. you have a problem to solve. When one side says I have only £10. 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. 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. by the way.being told why. you would rather I didn.t they? Will you be recommending this proposal? Nibbling Negotiations can be a tiring process. This is often used tactically to force a price reduction. look worried. rather than a tactic to overcome. but don. 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.000 in my budget. they sit leafing through your competitor. 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. you must try to look for an alternative that meets your needs as well as theirs. If the objection is genuine and the budget figure is correct. You are given an uncomfortable low chair to sit in that happens to be directly in line with the sun. 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 . both sides exhibit a psychological need to reach agreement and get on with something else. the price of the car does include a full tank of petrol? 30 . As you are no doubt aware.000 and I really want to help you choose the best system that meets your needs. Oh. At this stage. doesn.s office they indicate for you to sit down. this does include free delivery. making authority yourself. but costs £20. they will go along with your recommendations.t show it to you? The monkey is now on the other person. won.s back and they have to make a choice.t look up. in silence. Say something like: That is a problem.000. Does that mean that if one of our systems has everything you are looking for.000 that is not a tactic but the truth. Instead. If they agree to the terms we have discussed.t it? or Oh. A classic example is the person who says I have only got £10. If they genuinely can only spend £10. by the way. As you walk through the door into the other person. the cost of our systems can be anything up to £20. As the point draws near when an agreement is likely.
want list. If you reach the point below which you will not go. I. 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 . have a habit of picking up their script and tidying up their papers. 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.re a superb negotiator. This tells . You. eat enough of them and they get fattening. He is under a lot of pressure.. bad guy. or else bluff yourself and give a figure that is within your acceptable range of alternatives. This is a tactic designed to soften you up in the negotiation.higher authority. but my manager refuses to let me agree terms of this nature without referring back and he refuses to talk to salespeople.. For example.s sit down and discuss the proposal realistically . You pick up your briefcase and are being shown the door when the Finance Director smiles at you sympathetically and says I.. when they have finished reading the news. it is almost certain that their opening offer is higher than the figure for which they are prepared to settle. Watch out for this. you are using good guy. 31 Body language It is important in negotiation to react verbally and visually when offers are made.relationship.m terribly sorry about that. Give me your best price and I will see what I can do . is well and truly over.Nibbles work best when they are small and asked for at the right psychological moment. I would like to help you renew your contract. If you show no reaction. Human nature is such that we can believe and accept these outbursts against us and our negotiating position becomes weaker as a result.d love to do a deal with you on that basis.t have this kind of relationship. I will see what I can do. You may be able to say something like: Come off it.s offer.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. to the very last minute when the other party is vulnerable.. it is important that you show this with your body language. News readers. bad guy. 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. Also. they may be tempted to ask for more and more and you will lose the initiative in the negotiation. Like peanuts. is by saying things like Well. One way of combining . If you don. with .good guy. stand firm and insist on dealing with the bad guy. 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. Why don. Ensure the next time you are in a negotiation that you react to the other party. so it is important that you clearly signal your unwillingness to accept the opening position. but he really will not consider the price you have suggested. Good negotiators will often keep back certain items on their . but let. you are negotiating the renewal of your service contract with the Buying Director and his Finance Director.
Whatever you do. You could be surprised at the results.disapproval. ask to speak to the manager and make him an offer. the other party will disregard what you say and keep negotiating. This is what can make price lists so powerful. Develop a low-key approach. too easily. sit back in your chair and remain silent. make it and ask the other side how he.s keep talking. Say things like: Well.t weaken your negotiating position in response to the vice by giving anything away. you may make a proposal and find the other party remains silent. Over-enthusiasm during negotiations can encourage skilled negotiators to review their strategy and demand more. If you have to present a customer with a price increase or you wish to encourage an early order to beat a price increase.the world that they have finished their task and are preparing to leave. to the inexperienced negotiator. This will have a far greater impact than just saying your prices are about to go up. For example. If you have a proposal to make. Salespeople like to be liked and will often give money away in a negotiation. especially when used with broken record. don. when you make your final offer. if the other side appears unhappy.t appear too enthusiastic during negotiations. If your voice says final offer but your body is saying let. or she feels about it. it can be very powerful to collect your papers together and indicate with your body that it really is your final offer. Similarly. This will only encourage repeat behaviour. Just as nature abhors a vacuum. This can be a very powerful statement.m looking for. Put your pen away.ll have to do better than that. Whatever you do. The low key approach Don. Having asked the question. The most powerful way of dealing with this is to ask them to be more specific. sit back and wait for the answer.t change your offer as this could seriously weaken your position. it is non-negotiable. This can be very difficult to handle and often signals . it may not be exactly what I. if you are buying a car avoid saying to the seller things like: This is exactly what I. I really like the alloy wheels. don. If you are in a negotiation and the other side is not responding to your proposal. so silence induces the need in people to talk. 32 The power of legitimacy People believe what they see in writing. When presented with a price tag in a shop. The vice A common technique used by negotiators when presented with a proposal is to say You. The use of silence During the negotiation.m looking for but I may be interested if the price is right 33 MOVEMENT AND CONCESSIONS . show something in writing such as an office memo from your boss announcing the increase. We all assume that if a thing is printed or written down. recognise this could be a tactic and avoid giving concessions just to cheer them up. Look concerned and keep quiet.
you do that. at a later stage. it begins slowly. but hold sufficient back so that you are able to move.s maximum expectation. ! Agree to a concession. or her requirements.win. Do not attempt to . 34 When movement comes. Always trade concessions by saying If I do this. Further Movement and Concessions During negotiations. trying to get the other side to agree to these without offering anything in return. In all this. starting with the smaller. Movement does tend to be discontinuous with either party moving and the other holding up the agreement at any one time. They will be reluctant to give information or will defer decisions in order to increase the pressure on the other person. for the opening demand or offer. 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. given that the opening position of each party differs. However. ! The use of the relationship with the other side to break the deadlock. Identify areas of common agreement. Negotiators should avoid making one-sided concessions which will severely weaken his final position and could affect the overall profitability of the deal. as this allows the negotiator to retreat to his initial position if necessary. ! Adjournment to review positions. it can be in the interest of each side to keep asking questions and raising objections. which can be brought to an end in different ways.Making the First Move Asking questions and listening effectively are important skills both in selling and negotiating. at first. it will often be on the basis of a quotation based on the minimum quantity at the lowest possible price. . When an offer does come. at this stage. less important aspects of the package. The first phase of negotiation involves both parties in agreeing the background to the negotiation and . He will then begin to trade concessions. pressing for maximum advantage.fishing. the negotiator is attempting to dominate the interview. giving him room to manoeuvre. then can be very rapid as both parties sense a deal being on the cards. and trying to force the other person to concede on a major issue. and will not concede on a single issue until he knows the nature of the whole package. Wait for the other party to speak. if necessary. Many excellent negotiators are low reactors who will move very slowly in negotiation. Some of these are: ! Period of silence. Negotiators will tend. ! Agree to leave certain issues to one side for later and concentrate on the rest. then there has to be movement and concessions if a deal is to be struck. to discuss extra demands. This leads to short periods of deadlock. It is often better to present the opening demand or offer in terms of a hypothetical question. but not so high that the offer lacks credibility. The opening offer will probably be at or just about the level of the negotiator. The skilled negotiator will ask the other side for a complete list of all his.
ll need to agree a 2 year contract Remember. Demand: .crowding.. Offer: .elements.Okay.s favour. ! Asks for more information.. We need to deal with the price issue confidently. Responding to a specific demand like this we need to be vague. but we. aggressive behaviour.I.. but positive: Okay. stop talking and wait for the other side to speak. The use of concessions is a vital part of building a profitable relationship for both parties in the negotiation. Response: . ! Appeals to the other side.. 35 Bargaining When it comes to bargaining try to get the other side to commit themselves first... but can we go to the full 10%?. Earlier. well 2 years may be possible. but I want a 10% discount. ! Keep eye contact.ll need to agree a 2 year contract. The use of concessions enables negotiators to build a mutually profitable deal that is not one-sided in the other side.Signals to be aware of that could mean the other side wishes movement to take place could include: ! Trial movement. we may be able to look at our discount structure. but to do that we. Say the exact price rather than . when you bargain. Offer: .s better nature.well. but what was asked for was vague. and our counter demand needs to be specific: but to do that we.Okay.Okay. it will be about £3. 36 DEALING WITH PRICE Overcoming the price objection Price is an issue in most negotiations. ! Uses . In the first scenario an offer of 10% was made. sets deadlines and time limits.I. It makes you look confident ! Make your tone of voice confident and your body language confident and relaxed ! Use silence. Response: .g. I. Give them time to think . techniques to force movement. e.Well.000 .. thanks for the 10% but the 1 year contract we have already agreed will have to stand. Here are some notes to help you deal with price: ! Be specific. Demand: . but with an understanding of the needs of the other side.. we discussed the different . that could constitute the final deal.m willing to reach some sort of deal. offer vague. we may be able to look at our discount structure. For example: SCENARIO 1.m willing to reach some sort of deal. One side uses words like What would you say if .ll agree a 10% discount.ll have to look at a longer-term agreement. SCENARIO 2.? or uses hypothetical examples ! Summarises the position to date and asks Where do we go from here? ! One side calls for adjournment. Once you have stated your price. ask specific. but I want a 10% discount. threatens use of competition.
Being intimidated by the status of the person with whom you are negotiating.. 4. Again. 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. Failing to prepare effectively for negotiation. The closing stages need to be approached with caution. either party may define outstanding issues. this will be minimised if the solution you have arrived at benefits both parties. 6. Underestimating your own power. 2. 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. If one side avoids making these decisions. looking at the other side directly in the eye and saying That is my final offer can do this. compare arguments and objections. 38 THE 40 MOST COMMON MISTAKES IN NEGOTIATION 1. Assuming the other party knows your weaknesses and strengths. in effect. and silence can be a powerful tool in convincing them you mean what you say. There will come a time when both parties can sense an outcome is possible. Simply gathering up your papers.! Deal with price objections and defend your price. Once either side feels they have arrived at the final deal. The final consideration is when you have done the deal and both parties are in agreement. if you negotiate for 1 hour the last 3 minutes are when you are most vulnerable. That means. Concentrating on your problems rather than those of the other party. you have. given the other side a concession that is one-sided. 3. look as if it is your final offer. Negotiators must be careful at this stage to identify tactical delay which deliberately attempts to force further concessions. If you offer to split the difference. Record the details and agree with the other parties involved that your interpretation of events matches theirs. 5. It has been shown that the majority of concessions are given or traded in the last 5% of the time allocated for negotiation. The best solution to aim for is one where both parties feel they have done well despite having to concede on certain issues. Forgetting the other side has things to gain from agreement as well as . but don. This is often called a win-win solution. it is important to signal this to the other party. Be wary of . Once a likely outcome is seen. Body language can say as much about what you are thinking as speech.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. the other must probe to fine out the reason and deal with it effectively. If you have made your final offer. You have said you are prepared to move without asking for commitment in return.splitting the difference. review the position to date and agree a deadline for agreement.
25. Paying too much attention to . Accepting the first offer.. too early.hand. Failing to listen effectively. 23. Making concessions of equal size to those on offer. rather than . Feeling guilty about asking for a concession. Assuming the other side is aware of the short and long-term benefits of reaching agreement. 9. 8. demands. Bluffing without having a strategy ready should your bluff be called. Discussing issues for which you are not prepared. ENVIRONMENTAL PRODUCTS LTD. 38. for the possibility you may need to walk away.Head Office. 28. 21. Being intimidated by This is my final offer! 39. 12. expectations. Responding to a high demand with a counter offer instead of challenging the validity of the high demand. Talking too much. break the team into 2 groups and hand each group a copy of one of the role-play briefs.split the difference. 35. Assuming deadlock means agreement is not possible. Offering to . 24. 37. 13. Giving too much credence to time deadlines set by the other side. 39 20. Conceding an important issues too quickly. 40 DEVELOPMENT EXERCISE 4. 30. your service. Aiming too low with your opening bid. 27. 26. Revealing your . . Feeling deadlock is only unpleasant for you and not the other party.yourself. Making assumptions about what the other side wants. Trying to be liked during the final stages. Being forced into discussing price too early in the negotiation. Giving away concessions for nothing. Misunderstanding tactics used by the other side. Having low aspirations for yourself. 34. 14. Failing to make concessions conditional on final agreement being reached. 22. 36. 7. Taking things personally. Not preparing . Being inflexible. A role playing exercise for a team meeting To carry out the role-play. 15. Being intimidated by rules set by the other side.post-mortem. Believing everything the other side says about you. 11. 17. 29. Carrying out a . Making concessions before knowing all the other sides.. 31. Losing sight of the overall agreement when deadlock is reached over minor issues. 32. with the other side.price. 40. 10. 19. 33. 16. 18. your competition etc. Making concessions too easily and raising the other sides.value.
however. 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. 42 ENVIRONMENTAL PRODUCTS LTD.! Separate the teams and allow 40 minutes preparation time. a Leeds based newspaper. . ! You need to try and get their commitment to a long term agreement. ! You are aware that the owners of The Yorkshire Gazette. based on the information in their briefs ! After 40 minutes. ! Refer the teams to the preparation checklist. so you would seek to ensure this is the case. so would need some flexibility to renegotiate price.s Brief ! You are the Commercial Director for Environmental Products Ltd. built into any agreement you make. 60 days would be even better. it costs you £3 per tonne less to collect 12 tonne loads. 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. You buy waste paper and convert it into recycled paper products. You estimate they can probably supply you with around 15 to 20 tonnes of waste paper per week. earlier in this book. ! You have 40 minutes in which to conclude the negotiation. ! Your transport costs are quite high. however. who have as a byproduct of their production process. in order to develop their skills further. as well as your company. Commercial Director. ! You have contracts with several other Newspaper Publishers. so this could be an important contract for you personally. ! When they have prepared. part-rolls of newsprint. depending on the quality of the product and the regularity of supply. which you sell to major retailers throughout Europe. you are concerned that the price of this material will fall over the next few months. You would expect to negotiate a price of between £45 and £54 per tonne. 41 ENVIRONMENTAL PRODUCTS LTD. ! Your company has recently had cashflow problems and therefore you must try to negotiate a deal. are looking for a buyer for their waste newsprint and you know the quantities are likely to be substantial. You have the capability of collecting the waste paper in 5 or 12 tonne loads. Failure to achieve good payment terms could create problems with your Finance Director. which gives you not less than 30 days to pay for the waste paper you purchase. a waste paper company. ! The average market price for this kind of product is currently £49 per tonne. and have a good deal of excess capacity. 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. 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.
typically. ! You use around 100 tonnes of paper per week. but this may prove difficult. up to 5. and you would like this to continue. you have to pay £40 per tonne to have the waste paper disposed of.000 tonnes of newsprint a year. If it is not collected on time and your storage capacity is full. prepare an action plan to cover a 3 month period from completing this manual. from your production plant in Leeds. Your Managing Director has made it clear he does not want this to happen again. a year.s Brief ! You are the Production Director for the Yorkshire Gazette and several other regional newspapers.Production Director. Also. ! Your current contractor has been paying you £58 per tonne. ! 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. ! Cashflow in your business is vital. which are printed. You currently have 18 tonnes of paper in your warehouse. and you would like to have the paper removed once per week. ! Because of your production process. You would hope not to have to agree to less than £51 per tonne under current market conditions. depending on quality and regularity of supply.200 to dispose of the excess waste and you lost £1.t. and therefore you need to demand weekly payment for the waste paper. . ! With hindsight it would have been better if you had negotiated some sort of penalty clause with your current contractor. which is a good. DEVELOPMENT EXERCISE 5. as the price of paper is falling. ! You have 40 minutes in which to conclude the negotiation. you have just been informed that he has gone bankrupt. This paper is clean and contains no contamination. leaving you with an average 20 tonnes of waste paper. but unfortunately you didn. Your company had to pay £1. to dispose of. You have an immediate problem in that your only choice of supplier for the foreseeable future is Environmental Products Limited. ACTION PLAN Working with your manager. per week. 20% of each roll of paper cannot be used and has to be disposed of. so is much sought after by waste paper companies who re-pulp it and convert it into other paper products. with whom you are negotiating. so you need another contractor and quickly. Set yourself objectives and review dates.740 in revenue. It would be good if you could agree a fixed price for. You have been paid weekly in the past. say. You are aware that prices of between £49 and £54 per tonne are being paid for paper at the moment. You use. Storage space is at a premium. You have sufficient space in your warehouse to store no more than 34 tonnes of waste paper at a time.