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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
Plan and ask questions to uncover and agitate those problems. With 70% of your prospecting calls going to voicemail. it is time to make friends with it. how was your rapport with the key person who decided against you? You can't afford to look away and ignore people that you don't have natural rapport with. The good news is that people like people like themselves. When you last lost a sale. Each message should focus on a single unique customer-focused benefit. KEY TIP: Determine which problems that you eliminate or solve for your prospects. Let me ask you a question. KEY TIP: Match speech patterns with people to gain rapport outside of your typical sports or weather conversation. All you have to do to gain rapport is stretch your behavior outside or your comfort zone until you become like another person. . Although you will never get even close to getting every voicemail returned. Sales Skill #3: Selling to People Outside Your Comfort Zone Most salespeople who are "people persons". 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 prospecting. One is to close more of the prospects you do contact. you can get a significant number of your messages returned when treat them as a one-on-one commercials. Prospects get motivated to work with you when you help them to discover that you solve their problem better than anyone does else.prospect!). The other is to get more prospects into the pipeline. you can look at voicemail as either your friend or your enemy. Sales Skill #4: Reaching Decision-Makers Through Voicemail There's two ways to make more sales. already think that they are good at this.
Stories rich in descriptive detail get the prospect picturing them using your product and evoke that "I Gotta Have That" reaction. KEY TIP: Study 1-3 of your best customers and develop detailed customer success stories that will put emotional power into your presentations. Salespeople talk about why their product is great. and the pressure to make the sale will be gone. Prospects don't relate to this. KEY TIP: Practice asking for simple commitments once someone has expressed a clear want. It is not an easy shift to make.Sales Skill #5: Delivering "I Gotta Have That" Presentations Let's face it. pain. Learn the power of asking for incremental commitments from the beginning of your sales cycle. information or resources. KEY TIP: Shift the responsibility back to the prospect to solve his own problems. . The best way to involve the imagination is through storytelling. That's why they look so bored. Selling is miserable when you are under pressure to close business. Great presentations get the prospect's imagination involved. and the history of their company. Sales Skill #6: Gaining Commitments Instead of Closing Eliminate "Closing Cheese" from Your Vocabulary. a lot of business presentations are really boring. Sales Skill #7: Have More Fun Sales is fun when you are in control and closing deals. 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?". why their company is great. Lines like these are why salespeople are down on the bottom of society's respect list somewhere near lawyers. Then you can negotiate incremental commitments in return for more of your time. or desire. First you got to get the prospect to show you what they most want (Hint: See Skill #2 above). Focus on selling at your best only to qualified prospects and you'll close more and have fun doing it. Take the pressure off yourself to close and instead focus on qualifying and motivating your prospects.
Remember. One reason is the way we view cold calling. selling on the telephone or one-on-one in your prospect's office. . I said that you are doing advertising when you are cold calling. A sales rep who is poor at cold calling is a sniveling wimp. 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 the reconnaissance before any battle begins. not what your product is (features). Cold calling is simply advertising done by sales reps. and do as little of it as possible. COLD CALLS Cold Calling Pressure ReductioWho likes cold calling? Most salespeople don't like cold calling. The reality about cold calling is much different. picture your prospect as having the words SO WHAT stamped on his forehead. You don't have to win all nor even most of the battles to win the war. the prospect is asking "so what. why should I care?".Bonus Sales Tip When you are giving a presentation. Yes. prospects only care about how what you are selling can eliminate a problem that they have or help make their business or life better. There are a number of reasons why most of us don't like it. A sales rep good at cold calling is considered a sales god. The answer to this question is always what your product does for them (benefits). People who don't like cold calling view each call as do or die. Cold calling is not where the sale happens. Imagine that for everything you say.
cold calling should be mostly about asking questions rather than a sales pitch monologue. Think of cold calling this way. Specifically. and said "Do you want to buy this?" Obviously. This kind of cold calling goal might be useful if you are a tele*sales* person responsible for actually closing business by phone. Just like a newspaper ad or a billboard. Then you can determine the time period needed to make 1000 dials worth of cold calling advertisements in order to make your sales goals. And if they don't want or need what you are offering right now. And the purpose of advertising is to identify or attract potential prospects . You really cannot control whether the person you are cold calling needs or wants your product. that's OK. Instead. With your new view of cold calling as advertising in mind. you should focus your cold calling goals a little differently. 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.Cold calling is a means of identifying potential prospects for your sales efforts. real cold calling is more involved than pressing their nose up to your ad. shoved a billboard ad for your product in their face. What you can control is how many cold calls you make. 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. it is as if you grabbed your prospect by the shirt. all you are trying to do when cold calling is to get someone's attention. cold calling is too far removed from the actual close to directly influence such a goal. Every time you make a cold call. you can backwards plan how many cold calling "advertisements" you need to run in order to make $300.000 in sales next month. Set your cold calling targets and define your success criteria around the number of calls or dials that you will make. Judge the quality of your calls by how well you stick to a cold calling formula that you have defined in advance.in other words to generate leads. 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. But in professional businessto-business selling.000 in Sales Next Month". If your cold calling goal is set as "To Make $300. and the quality of your techniques while cold calling. you are just setting yourself up. .
your goals are likely to differ. your goals. It relates to the ability to punish or benefit. It is enhanced by legal support. skill. It is relative between the parties. vendor or employee. 3. And these viewpoints form the basis of our goals and objectives. It is always limited. is the art of compromise. It changes over time. Negotiation. 8. It is enhanced by a good negotiating relationship. It depends on the perceived BATNA. personal knowledge. However. 6. Negotiating is one of the key tools you can use to accomplish your goals. . it can involve several members from two parties. you exchange ideas and information. 4. It is increased by the ability to endure uncertainty and by commitment. It exists to the extent which it is accepted. We all have our own point of views. 5. It can be either real or apparent. Negotiation is usually considered as a compromise to settle an argument or issue to benefit ourselves as much as possible. and ultimately. Communication is always the link that will be used to negotiate the issue/argument whether it is face-to-face.Negotiation Skills Qualities of Negotiating Power 1. negotiation is not always between two people. 9. Each time you communicate with a potential client. The exercise of negotiation power has both benefits and costs. in essence. There are many reasons why you may want to negotiate and there are several ways to approach it. 10. Remember. or in writing. 11. resources and hard work. on the telephone. Negotiation skills are vital to the success or failure of your interactions. 2. 7.
the decision-making process. Keep . the parties who stand to gain or lose depending on the negotiation's outcome? 2. but may walk away without having bought into the agreement. or can our interests be better served by thinking out of the box? If our ideas are the only ones worth taking seriously. and can another party's ideas or resources help serve our interests better than what we bring to the table? 3. We communicate best by listening. it is hard to justify bringing additional parties into a negotiation-. but to be a good negotiator. Creativity Are we to be governed by standard operating procedure. BATNA Our Best Alternative To a Negotiated Agreement (BATNA) may be derived from resources we control or influence. 5. The recent past may have presented some shocks. We may have choices of parties with whom to negotiate or may be better off relying on ourselves. we are likely to do a better job. 6. Relationship What impact will this negotiation have on our personal relationship with other negotiators or our constituents. you have to accept that things may not always go the way you expect. he or she may agree for purposes of bringing the bargaining to a close. Learn whether the people at the bargaining table have the capacity to keep the promises they make. By considering which of these deserves more attention in a given negotiation before the negotiation process begins. BATNAs can change during negotiation each time we learn a new piece of information.The Seven Pillars of Negotiation Wisdom 1. We should keep asking ourselves whether the negotiation process is being used as a successful way of communicating information. 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. Commitment Negotiations can only be called successful if they lead to agreements the parties are committed to fulfill. 4. Interests What are the reasons that drive our pursuit of particular objectives. Communication Information is the fundamental asset in negotiation.
6. 5.the “seven pillars” in mind. even if tactics used by the other person seem unfair. as well as what they want. Know what “you” want Think through exactly what you want. do not use that time to plan your next line of attack. even if you do not get what you want this time. Listen Carefully When your boss/client is talking to you during negotiations. 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. too. view it as good practice for the future. not positions. Commit yourself to a win-win approach. Focus on needs. Be . mutually beneficial agreement. will help you to be clearer and more confident.g. Make clear agreements. then you are much more likely to get what you want. Believe it. Consider what your needs are and what the other person's are. Be specific and have valid reasons for why you need it. Where possible. Consider outcomes that would address more of what you both want. work out what you would be prepared to walk away with if you are not successful. Keep that in mind when you are talking and. the moment your client or boss questions you. 4. Be hard on the problem and soft on the person. prepare in advance. If you do not. Essentials of a Successful Negotiation 1. Be Fair If what you are asking for is fair and justifiable. and rehearse it. it is important to have an idea of what the other party would like the outcome to be. e. 4. even if you disagree with them. They will take you more seriously if you do. 3. It is more important that you listen to them and see their point of view. Be inventive about options. Have an Alternative When you are discussing specifically what you want. 2. Emphasize common ground. trust yourself. It is about two parties reaching an amicable. and you should be able to respond wisely to the circumstances you face. your argument will fall apart because you do not have enough confidence in it. 7. you would like to earn as much as someone you work equally as hard as. Know what “they” want Before you start negotiating. 5. Knowing what you want.. Believe you are worth it You have to believe that you deserve your desired outcome. Keep it Friendly Negotiating is not about confrontation. Five Basic Principles 1. and why. 2.
Marital Conflict Roberta and James have the "perfect" marriage. Mrs. Solutions are selfishly sought with little regard for the other person. To do so you may need to do some of the following: Example 1-. resist and retaliate against the "winners. Roberta and James have become focused on meeting their own needs with little regard for the needs of the other. This approach can result in constant personal stress which can lead to illness or poor general health. How can Everyone Win? The key to effective negotiation is clear communication. listening and speaking. Until recently. For example.understanding." And they are miserable. Steve’s attendance and performance at work had been consistent. the possibility for more intense conflicts at some later date is increased."Everyone Wins" People resolve disagreements in many ways. Example 2-. The conflict becomes a "win-lose" situation in which one person "wins" at someone else's expense. John insists that this is unfair. Resentment.clear that your task will be to steer the negotiation in a positive direction.m. dissatisfaction and conflict are all they seem to share any longer. two children and a lovely home." Effective negotiation is a two-way process that encourages both sides to actively participate in making decisions. They have "made it. Some tend to deal with potential conflict by denying it or trying to avoid it altogether. you cannot have good understanding without good . The one-sidedness of this "solution" increases the odds of more conflict. Steve’s recent behavior has been so uncharacteristic that his employer decides to confront him. Problems seldom improve on their own. He has failed to turn in several important project outlines on time without explanation or apology. annoying his employer.Parent-Child Conflict It is Friday. demanding a meeting the next day. Negotiation helps to create a healthy balance between "giving" and "getting.Workplace Conflict Mr. and John and his mother are arguing once again about the teenager's weekend curfew. The Goal of Negotiation-. Both work in professions that provide personal satisfaction as well as a comfortably secure income. Communication involves three important skills-. You cannot have one skill work without the others. Steve has been late for work several times in recent weeks. Work and family roles have left them with little time to spend together and have increased their areas of disagreement. It also provides a way for people to learn to understand each other better and to grow in their relationships. motivated and highly productive. If disagreements are not resolved. curfew she has set. Instead of confronting and resolving problems. test. Example 3-." Everyone becomes a "winner" through negotiation. people may let their anger and resentment build while they remain silent. "Losers" will defy. Brown has grown increasingly distressed by her son's continuing resistance to the 11 p. Conflict can also be motivated by ego. Both become so angry and frustrated that they storm off to separate areas of the house to avoid each other and further conflict.
Negotiation permits you to examine a problem from all sides. It is important to pay close attention to what someone says as well as to how he or she behaves. Taking time to listen and to . Show Respect Success rests in accepting the other person despite differences in values. hand gestures and degree of eye contact. When possible. Facts and feelings are presented in a rational manner from the individual's perspective. educational experiences. accepted and respected. neutral spot where there are few distractions or interruptions is perfect for open discussion. Understanding Before two sides can look for solutions. including facial expressions. Speaking Negotiation begins with a clear. giving feedback on what has been heard. can provide clues about the other person's thoughts and feelings. inappropriate solutions and continuing conflict. Thinking ahead or anticipating the course of the discussion are distractions that interferewith listening. Shared concerns rather than individual issues remain the focus of discussion throughout negotiation. ongoing negotiation. using "I" statements. beliefs." which blames the other person and puts him or her in a defensive position. The ability to listen actively supports open. Body language. plan ahead to meet at a time and place convenient to everyone. Active listening encourages understanding. Negotiation is most effective when people are able to clearly identify and discuss their sources of disagreement and misunderstanding. and maintaining eye contact are skills that show you are interested in understanding what he or she has to say. The negotiation process will be most effective when people take time to think through what they will say. Listening Listening is an active process of concentrating all of one's attention on the other person. ethnic backgrounds or perspectives. then the process of negotiation will either be broken off or will end with solutions that do not work. If two people do not understand each other's problems and concerns. Active listening assures the other person that he or she is heard. Poor attention and listening can lead to misunderstandings. a common understanding should be reached. concise explanation of the problem as each person sees it. A quiet.listening and speaking. Encouraging the other person to share thoughts and feelings. and to promote understanding and interest in the other person without necessarily agreeing to his or her viewpoint. 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.
values and objectives are recognized and respected as legitimate. beliefs and goals. Negotiation then becomes a matter of choosing a solution to which no one has an objection. This process allows everyone to openly make suggestions without the fear of criticism. At this stage." "bad guys. values. 4. Solutions are mutually agreed upon. Trust provides a foundation for continuing a relationship. There are no "good guys. Negotiation is a nonadversarial approach to resolving conflict in those relationships. Face is a metaphor for our public self-image. personal goals should not take priority over shared goals." or "winners/losers. Considering different perspectives will increase the range and variety of possible solutions. Face work refers to specific verbal and non-verbal messages that help to maintain and nrestore face loss. Brainstorming It is one way to gather many creative ideas rapidly. Work together to develop a solution everyone can accept. and to uphold and honor face gain. Recognize the value of a relationship and have a mutual desire to continue it. Show consideration and acceptance of each other's perspectives. Participate actively in the process. 2. every suggestion has value and is accepted. 3. 2. Face Negotiation Theory Stella Ting-Toomey's “face negotiation theory” helps to explain cultural differences in response to conflict. Facework and corresponding styles of handling conflict vary from culture to culture. No one wields more power or control than another.ask questions makes it easier to learn more about someone's perspectives." Negotiation is based on equality.” 1. Cross-Cultural Communication Theory . The basic assumption is that all people negotiate “face. attitudes. they are reviewed to determine whether they might coincide or overlap with each other. which inevitably leads to conflict and vulnerability. Preserve the Relationship In general. people will try to preserve valued relationships. Our identity can always be called into question. Genuine interest in other people and in their contribution to finding solutions builds trust. Separate personality from the issue involved. The individual's ideas. After all suggestions have been shared. 5. Remember. A foundation of trust also eases future efforts to solve problems. When is Negotiation Successful? Negotiation is most successful when both sides do the following: 1.
" which is their public self-image. Ultimatums should be used only as a last resort. The person doing the selling or persuading has the distinct advantage over the buyer in most negotiation situations. True False 4. Negotiation can serve not only to preserve relationships. Successful negotiators usually set very high goals. True False 5. 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. your ability to use negotiation skills becomes more important. True False 3. which cannot be negotiated. Consequently. True False 6.It assumes that persons of all cultures are continually negotiating "face. then communication and conflict styles will likewise vary. By practicing the negotiation strategies and skills suggested in this lesson. at work and in the community. Negotiations should be left to highly experienced personnel. There are certain items. It is always best to negotiate on your own "territory. Negotiation requires time and patience. Face negotiation theory analysis focuses on the type of culture. In all negotiation situations. but also to continually strengthen and improve them. when face is managed differently. True False 11. True False 8. As a negotiator. you can make conflict resolution a regular part of your approach to managing relationships at home. Negotiation Questionnaire 1. True False 12. True False 2. True False 10. such as merchandise in a one-price store. someone wins and someone loses. Deadlocks and impasses are sure-fire signs that one or both parties are being . you can never go wrong by assuming the other party is out to get the best possible deal for himself at your expense." True False 9. Most negotiation issues boil down to the price of the object or service to be performed. The personal needs of the negotiators are as important as the "objective" issues. the type of face maintenance. True False 7. Summary As life becomes more complex and the world more diverse. Concessions are normally viewed as a sign of weakness in the party making them. and the type of conflict management.
True False 14. Probably the best test of a successful negotiator is his skill in employing a wide variety of negotiation tactics. Establishing the agenda of the negotiation is probably the most routine phase of the negotiation process. When a written document is necessary to finalize an agreement. True False 22. it is best for you to write it. True False 16. When there is a lot of competitive negotiation taking place in an organization. Knowing what your options are is essential to effective negotiations.unreasonable. True False 17. True False . The effective negotiator spends more time listening than talking during negotiations. True False 18. In labor relations. It is always best to keep a negotiation on a rational. It is best to keep the number of people to minimum in a major contract negotiation. In negotiations. issue-oriented level. True False 29. True False 13. True False 15. True False 27. True False 20. True False 28. True False 19. the better I can control the negotiation. True False 23. True False 21. True False 26. the organization always loses. Negotiators often mean something different from what they say. The negotiator who asks a lot of questions is demonstrating that he or she hasn’t done his or her homework thoroughly. You should develop a negotiation strategy and stick to it. Managers demonstrate weakness when they negotiate with subordinates. Deadlocks are to be avoided at all costs. Negotiators usually overdo their sensitivity to cues. True False 24. True False 25. I have a distinct advantage if I know your deadline and you don’t know mine. the more I know about you than you know about me. negotiating activity should be confined to the bargaining table in order to preserve confidentiality.
F Give yourself one point for each response that matches those provided by professional negotiators. 29. Challenge Can you get the team to manage conflict more effectively so that morale and productivity are not affected? . 12. 6. F. 9. F. F. T. the more you reflect the mindset and behavioral patterns of professional negotiators. F. F. 14. T. 5. 13. 4. T. F.Answers 1.Conflict Management Problem We have a product team that does high quality work. 8. Either. F. 17. Either. 16. 19. F. 10. T. T. 3. Case Study-. T. T. The higher your score. 11. 18. 22. 20. F. T. 25. 2. F. I am afraid that the recurring conflicts will cause morale to drop. F. F. 24. T. T. Either. T. There has been arguing and heated debate. and subsequently result in decreased commitment and productivity. 28. F. some issues have developed over time and there are repeated conflicts among a few of the members. 7. Everyone in the team is competent and highly committed to the success of the company. T. 23. 27. 26. 15. Yet. 21.
Different levels of 1. Increasing productivity. the way the negotiations are to be conducted differs. Types Parties Examples Involved 1. Trade unions and fixation of responsibility. . 4. Negotiations for the Commercial Negotiations 4. It is in regards to the working relationship between the groups of employees. Legal advisers 3. Customers 1. Public 3. direct the record keeping and many more activities for smooth functioning. Negotiation for pay. For conducting the day-to-day business. Description of the job Negotiations 3. Striking a contract 2. The skills of negotiations depends and differs widely from one situation to the other. Usually. Government 2. 1. All this requires entering into negotiations with the parties internal to the organization. 7. internally. the superior needs to allot job responsibilities. Trade unions goods to be 6. Legal advisors purchased. Management terms and working 2. maintain a flow of information. Basically the types can be divided into three broad categories. Suppliers with the customer. In between conditions.TYPES OF NEGOTIATION IN ORGANIZATIONS Depending upon the situation and time. Management 1. 3. Customers price and quality of 5. Day-to-day / Managerial Negotiations Such types of negotiations are done within the organization and are related to the internal problems in the organization. the manager needs to interact with the members at different levels in the organization structure. 1. Government 2. 1. Adhereing to the laws of the local and national government. Day-to-day/ Managerial colleagues 2. Negotiations with financial institutions as regarding the availability of capital. Management Legal Negotiations 3.
time may sometimes be saved and unnecessary compromise avoided. Commercial negotiations successfully end up into contracts. 3. Legal Negotiations These negotiations are usually formal and legally binding. making a decision rather than negotiating about it may be the best tactic. will lose all the advantage that might be gained with a quick unexpected yes. The Negotiations Process The Difference Between Integrative and Distributive Negotiation . followed. It relates to foregoing of one resource to get the other. An alternative to a simple yes or no when a difference of view occurs. The driving forces behind such negotiations are usually financial gains. perhaps. If a manager has the undoubted authority to act. this might imply a decision to take a dispute to court : informally.2. They are also contractual in nature and relate to gaining legal ground. They are based on a give-and-take relationship. there are cases in which the best response to a request or a claim is to concede it without argument. By asking whether it is necessary. 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. On occasions. IS NEGOTIATION NECESSARY ? Negotiation. 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. by a grudging concession of the other party’s claim. On the most formal basis. Disputes over precedents can become as significant as the main issue. Why waste time negotiating if the other party has a good case and there are no adverse consequences in conceding ? Unnecessary negotiation. is to skip negotiation and proceed immediately to some form of third – party intervention. Alternatively. at times can be a lengthy and cumbersome process. Commercial Negotiations Such types of negotiations are conducted with external parties. a request to negotiate may best be met by pointing out that the party making the request has no standing in the matter.
each girl insisting that she should get it and both refusing to give up. and honestly trying to "expand the pie" rather than divide it. They were about to agree on cutting the orange in half when their aunt walked in and realized what was going on. not just one. She turned to the girls and asked them each why they wanted the orange. on the other hand. If you feel you got a good deal (and squeezed that salesman)." This type of negotiating does not lead to good long-term relationships. They involve looking at the issues being negotiated from multiple angles. Integrative vs. Distributive negotiations. and usually good feelings are not plentiful when the negotiation is over. The parties’ interests are often opposed (or seem to be opposed – this may not prove to be the case once you start getting creative). As it turns out. or the dealership does. Once they realized this. Think of negotiating for your car – you either get that extra $1000. The girls were engaged in distributive negotiations (though . are typically described as "win/lose" negotiations – one party gets what they want. and leave all parties feeling good. and the other party gives something up. They went back and forth. Integrative negotiations foster trust and good working relationships." If you walk away feeling like you paid too much money. one wanted to eat the orange. 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.There are two types of negotiation: "integrative" and "distributive. they were able to "split" the orange in such a way that both got exactly what they wanted." 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. and the other wanted the peel for an art project she was working on. Distributive Negotiations Characteristic Outcome Motivation Interests Relationship Issues Integrative Negotiations Win / win Joint gain Congruent Long-term Multiple issues Distributive Negotiations Win / lose Individual gain Opposed Short-term Single Issue Here’s a story (probably familiar to many of you!) that demonstrates the difference between integrative and distributive negotiations: Two sisters were fighting over the last orange in the fruit bowl. considering multiple issues at once (thus allowing for trade-offs). you "won. you "lost.
It is important to know how to negotiate for a number of reasons: Effect on Profits During the negotiation course. and you want this to be a good relationship. You must do this from the beginning. etc. 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%. . We all negotiate every day in a wide range of work and social situations.9m. and sellers. The only way to build trust and expand the pie (or the orange) in a negotiation situation is be integrative. while their aunt was suggesting an integrative solution.9m £2m By achieving relatively modest improvements in buyers. we will explore why negotiating skills are important for you to be successful in business and in life.5m £10m COSTS 7. performance. and while your specific motivations for pursuing the partnership may be different. The goal in any partnership should be maximizing all parties’ abilities to advance their collective mission. partnership negotiations should always be integrative. the effect is an increase in profits of £0.it probably felt like bickering to them). you are entering into a long-term relationship with your prospective partner(s). the spirit behind your interests should be congruent. Once you start down the "distributive path" it is hard to change directions. One organization should not want to "win" at the expense of the other. As you might have guessed by now. 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. not just individual gain. Most importantly. and to enable both to better serve the community. as you establish a dynamic of competition and distrust. COMPANY A COMPANY B SALES £10. You want joint gain. deal effectively with their economic obligations and pressures.6m 8m PROFITS £2. This represents a 45% increase over the previous profit figure.
mutually beneficial relationships ! Neither side asks enough questions.500. however certain rules have to be followed by both parties.being fair. or misrepresented ! The outcome is often win-lose. but can also lead to greater customer satisfaction. there is a danger the other side will use this apparent sign of weakness to their advantage. There must be something wrong with the car Think of this next time you are negotiating for your business with a customer or supplier. if one side decides to be co-operative. 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. ! Information is withheld. ! A reputation for being a tough negotiator while earning the respect of those with whom you negotiate.Effect on Customers Successful negotiations can lead to increased profits. 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. I could have done better 2. however. . 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 both sides are adversarial. or lose-lose ! The more aggressive negotiator usually does best ! This style does not encourage long term. STYLES OF NEGOTIATION. Are you . but to creatively put together solutions to problems that ensure: ! The best possible outcome for your business. You offer £11. ADVERSARIAL VERSUS CO-OPERATIVE BARGAINING Our style of negotiation will be influenced by the style of the other party. too high or too low. or to pay the minimum price possible for your supplies. For example.000 and they accept your offer immediately. Co-operative bargaining has the advantage of being a more efficient style of negotiation. ! Clients and suppliers who are happy to do business with you. 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. You decide to make an ambitious offer to see how they react. for it to work.This really is my best price!. there will be little trust between the two parties. How do you feel? Most people feel two things in quick succession: 1.
What are the other sides. Would I like to achieve? 3. the more beneficial will be the final outcome.The objective of negotiation should not be a dead opponent. What information do I have that the other side has also? 2. What information do I need to have before negotiating with the other side? 4. there will be 4 types of information that is important to the final outcome. 1. What concessions can I make? 5.: Napoleon PLANNING THE NEGOTIATION In any kind of negotiation the planning stage is probably the most important. but not soft. Ask yourself the following questions: 1. What are my objectives? 2. What information does the other side need before it can negotiate with me? . What information will influence the final outcome of the negotiation? 4. Do I intend to achieve? c. the more time that is spent in planning and preparing for the negotiation. mutually profitable relationships ! Each side asks more questions and explores alternatives. communicable strategy ! Bad behaviour is punished ! This style involves creative problem solving ! It encourages long term. In any negotiation. There is a willingness to trade concessions ! There is a clear. Too often in negotiations we go in badly prepared and end up giving concessions that reduce the overall profitability of the final deal. How does the other side see the negotiation? Information It has often been said that information is power.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. How am I going to achieve my objectives? 6. What does the other side wish to achieve? 3. you need to have a clear idea of your objectives and try to work out those of the other side. Must I achieve? b. What exactly do I wish to achieve from this negotiation? 2. What part will other people play in the negotiation? Generally. rather than taking up fixed positions ! The usual outcome is win-win . Objectives Before entering into the negotiation. What information do I have that the other side does not have? 3. 1. The importance of planning is in having a very clear idea before entering into the negotiation. What options or alternatives would be acceptable to me? 4. objectives? 5. Which of my objectives: a.
What is the likely outcome of the negotiation? 3. It is also useful to try and see the negotiation from the other side and try and work out what their strategy will be. More often than not. cost and value. ask yourself the following questions: 1. What is the limit of my authority? At which point should I walk away? 4. What is the best deal I could realistically achieve in this negotiation? 2. 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. you may be able to negotiate more favourable terms in return for a commitment to buy certain volumes over an agreed time period. you need to work out how you are going to achieve them. which satisfies all parties. conceding on issues that have a high cost to you irrespective of their value to the other side. Concessions have two elements. When preparing for negotiation. it may give you the chance to negotiate on more favourable price. It is possible during negotiations to concede issues that have little cost to you but have great value to the other side. The early phases of negotiation consist of both sides finding out more information before talking about a specific deal or set of alternatives. 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. If you know that the other side has recently expanded their production capacity. What is the strategy of the other side likely to be? . Concessions Negotiating is a process of bargaining by which agreement is reached between two or more parties. Once you know your objectives. you will give yourself a better chance to negotiate well on your company. It is rare in negotiation for agreement to be reached immediately or for each side to have identical objectives. Avoid. Ask yourself the following questions: 1. 8 When preparing for negotiations. How am I going to achieve my objectives in this negotiation? 2. 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. 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. For example.This can be particularly important when negotiating with people who concentrate on price issues.s behalf. however. 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. if you find out the other side has a time deadline that only your company can meet. By spending time as part of your preparation in listing what you already know and what you need to know. it is advisable to write down a realistic assessment of how you perceive the final outcome. This is the best type of concession to make.
Must I achieve? 3. objectives? 5. Which of my objectives: a. What is the strategy of the other side likely to be? 3. What information does the other side need to find out? 3. What role will each team member take in the negotiation? 2. 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. INTEND AND MUST POSITIONS . you need to decide during the preparation phase: 1. What tactics should I use within the negotiation? 4. What options would be acceptable to me? 4. How can we work together in the most effective way? 11 PREPARING FOR NEGOTIATIONS. How can we work together in the most effective way? Some teams of negotiators appoint team leaders. How am I going to achieve my objectives in this negotiation? 2. What concessions are available to me. Do I intend to achieve? c. What is the limit of my authority? At what point should I walk away? 4. What information do I need to know about this negotiation? 2. What role should each team member take in the negotiation? 2. LIKE. Would I like to achieve? b. How does the other side see the negotiation? Information 1. What tactics are the other side likely to use? Tasks If you go into negotiation with a colleague or colleagues. What is the likely outcome of the negotiation? 3. What tactics should I use within the negotiation? 4. what is the cost of each concession and what value does each concession have to either side? 10 Strategy 1. observers and specialists. What are the other sides. What is the best deal I could realistically achieve in this negotiation? 2. 9 PREPARATION CHECKLIST Questions to ask prior to entering into negotiations Objectives 1.3. note takers. What tactics are the other side likely to use? Tasks (Team Negotiations Only) 1. Having a clear understanding of roles within the negotiation will make the team approach much more effective. each with their own clearly defined authority and roles to perform.
must: 1 2 3 4 7 8 9 10 . intend: 1 2 3 4 5 6 7 8 9 10 11 12 The worst deal.The best deal. like: 1 2 3 4 5 6 7 8 9 10 11 12 The acceptable deal.
s which seems to meet your requirements. according to Sr. plus pizzas that your customers like.000 3 years ago ! The freehold valuation of the restaurant ! The. worth on average £5. producing a net profit after tax of £36. One problem you have is with finance. To help you in this process answer the following questions below: DEVELOPMENT EXERCISE 1. What concessions are available to each side? 5. Franconi where you pay 50% of the money up front and pay the balance over 2. Franconi wants to sell the business as a going concern and has advertised it at a price of £175. You cannot finance the deal yourself. Think of your objectives for the forthcoming negotiation. McDonalds. Franconi you need to plan and prepare for the negotiation which will ultimately take place.750. You have tried to buy other fast food restaurants but the deals fell through because their owners would not agree your best price.000. Last year he had an audited turnover of £193. or preferably. strict financial controls. nearest rival. what must you not do and why? 2.750. opposite a busy shopping mall and 800 metres away from its. You could just about finance the deal yourself but this will probably cause you cashflow problems. 3.s price seems to be relatively cheap for a profitable pizza business in this location. 4 years. inclusive of: ! Stock. CASE STUDY Sr. CASE STUDY Questions 1. The shop has been trading for seven years and is located in a good position. Franconi £25.goodwill. of the business You own 2 Pizza fast food restaurants in the area and you wish to build your business through acquisition. A better alternative would be to agree a deal with Sr.s business before you begin to negotiate? 4. You are looking at another restaurant in town in addition to Sr.000 (These cost him £35. Assuming Sr. Franconi. Intend and Must positions. Before you have your meeting with Sr.000 ! Kitchen Fittings worth. Your current restaurants are making good money and you believe you have the right formula for success . Franconi. so long as the businesses you acquire are the right price and in the right location.5 6 11 12 DEVELOPMENT EXERCISE 1. Describe your Like.000 when new 18 months ago. Sr. What should your strategy be for the forthcoming meeting? . What information must you find out about Sr. Franconi. Luigi Franconi owns a fast food Pizza Parlour just outside of London.) ! Restaurant Fittings costing £19.
s point of view. accepting Sr. CASE STUDY Questions 1. Franconi. 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. There are no right and wrong answers to this question.s valuations. What information must you find out about Sr. There may be scope for a shorter non-competition clause of say 2 years and some flexibility on the timing of the deal.000 up front and the balance over 2 years at £43. Despite the asking price looking good. Franconi. Franconi. Agreement could be reached to speed up the timing of the deal. 3. what must you not do and why? 2.000 up front and the balance over 4 years at £21. Look at it from Sr. Assuming Sr.s business before you begin to negotiate? 4.s price seems to be relatively cheap for a profitable pizza business in this location.000. This would include a non-competition clause whereby Sr. Franconi agrees not to open up a similar restaurant locally within the 4-year period. Franconi. however tempting it may appear. financed by paying £86. or upsetting the other party by challenging their opening bid. depending on the necessary legal requirements being met. They worry it may cause deadlock.DEVELOPMENT EXERCISE 1. the first step in the planning process is to identify the issues being negotiated. Describe your Like. However. financed by yourself. beware of agreeing to the asking price. It could be. Your intend position. Intend and Must positions. 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. A skilled negotiator can challenge the other side. Information would need to include: . If agreement is reached and both parties are satisfied. an agreed price of £172. Your like position could be an offer of £168. That is part of the skill of negotiating. say.000.s terms and conditions without antagonising the other side. financed by paying £84. Some people fear annoying. What concessions are available to each side? 5.000 per year.000 per year. 2. He must have a reason for wanting to sell the business and is likely to have some leeway on price. then a win-win outcome is the result. A negotiator should and will always challenge an opening bid. Think of your objectives for the forthcoming negotiation. 3. will be somewhere between the must and like positions.
Franconi. Prepare your opening bid and the arguments you need to back it up. HOW TO STRUCTURE NEGOTIATIONS People who are successful negotiators have a well thought out strategy before going into the negotiation.s decision to sell what appears to be a profitable business The physical state of the premises.s help with financing the business it is probably best to approach the negotiation in a positive. \friendly way. 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. If you are looking for Sr. Find out more about the location and future development plans. self confident and structure the negotiation. The recommended structure for negotiations is: • ESTABLISH THE ISSUES BEING NEGOTIATED • GATHER INFORMATION • BUILD A SOLUTION Stage 1. Likely concessions will include: Price Payment structure Timing of purchase Non-competition clause 5. so that they remain in control of the negotiating process. What needs to be discussed and agreed? Who will be involved and what will be their role? What timescales are we working towards? What are the major issues that need to be agreed? ! Many negotiators make the mistake of negotiating too quickly ! Skilled negotiators spend 20% more of their time asking questions and looking for alternatives ! Professional negotiators will want to gain your commitment on issues. Franconi. Franconi needs to complete the sale What interest other potential purchasers have shown Sr. such as . Franconi. Concessions relate to the key issues being negotiated. Do your homework prior to your meeting and prepare your list of questions carefully. How long the business has been up for sale The reasons for Sr. You may wish to visit. 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. Your strategy is your decision.s attitude to part funding the purchase 4. are well prepared.
length of contract etc. 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 . delivery schedule. before making concessions Stage 3. 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. shopping list . until. one sided . closed and follow up questions and are able to listen effectively ! Skilled negotiators wait until they have all their information requirements. Information the other side has that they are willing to give you 4. packaging. hopefully. Gather information This is a vital part of the negotiation There are 4 kinds of information 1. 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. Information the other side has that they are unwilling to give you ! You need to decide. before beginning the negotiation and refuse to accept any last minute additions to the list ! Issues will include things like price. 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. before the negotiation. 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 .price. or opening bid ! The opening bid should be ambitious. 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. payment terms. quality of product. Information you have that you are unwilling to give to the other side 3. Information you have that you are willing to give to the other side 2. concession.
Improving negotiation skills helps you win better deals. Expertise power Expertise power comes from having a particular skill which you can apply and which can influence the outcome of the negotiation. In the eighties. Margaret Thatcher wasn. In most negotiating relationships the power balance moves with time as the negotiation progresses. but can be a feature of other types of negotiation. and the better we are prepared. write down where you feel you have strengths in your negotiating relationships and write down your areas of weakness. 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.One of the main differences between negotiators is how confident they feel when negotiating. It could be the power a buyer has to give place an order for goods and services. Typically. Having standards that you stick to and being consistent will help to increase your referent power. write down ways you can maximise your strengths and minimise . above. the more successful will be the outcome of our negotiations. the more confident we feel. Power is not absolute. Having an effective network and keeping in touch with what is happening can increase your situation power. but was respected by many for being consistent in her views and behaviour. Other areas of expertise could also help the outcome of the negotiation. PERSONAL POWER Looking at the sources of power. Reward power Reward power comes from having the ability to reward the other party to the negotiation. you will increase your referent power. DEVELOPMENT EXERCISE 2. Referent power Referent power comes from being consistent over time. or the power a salesperson has to give good service and solve problems Coercive power Coercive power is the power to punish. Planning and research can increase our information power. Having done this. A customer is desperate to place an order and you are the only source ofsupply in the short term. as can asking the right questions before we reach the bargaining phase of the negotiation. Situation power Situation power is the power that comes from being in the right place at the right time. If people see you as having a clear consistent strategy as a negotiator. Here are some typical sources of power: Information power Information power comes from having knowledge that will influence the outcome of the negotiation. Personal power comes from many sources. This is seen most commonly in the buyerseller relationship.t universally popular. In the end she failed because her approach was too rigid and she was unable to adapt to changing circumstances.
some people negotiate quickly and take risks. assertiveness and responsiveness. In commercial negotiations. others will automatically shop around. Some negotiators can be quite intimidating to the point of being rude. They are not afraid to put forward opinions and are willing to listen to the opinions of others. Some buyers are very loyal.your weaknesses. To negotiate with all these different buyer types we need to be able to adapt our behaviour and be flexible in our approach. To begin this process we will look at 2 aspects of buyer behaviour. We can observe different styles of negotiation and how different types of behaviour can affect the outcome of negotiations. People who are assertive are confident and know what they want. others take their time and try to avoid risk. STRENGTHS WEAKNESSES Ways to maximise your strengths and minimise your weaknesses BEHAVIOURAL ANALYSIS People negotiate differently and behave differently during the negotiation process. There are times . People who are highly assertive can be seen as being aggressive while people who lack assertiveness are often passive and get taken advantage of. They are not afraid of conflict and will be more than happy to argue their case. This makes selling and negotiating a real challenge. others are quite passive and easily manipulated.
Low ANALYTICAL High DRIVER High AMIABLE low EXPRESSIVE DRIVER .when it is appropriate to be more or less assertive and we need to recognise when these times are. . tough. but sometimes we lack assertion. Salespeople tend to be quite responsive. but not responsive.The Socialiser. Responsiveness means the extent to which people are willing to respond to us and our questions. Assertive and responsive. stable relationships. intuitive. decisions spontaneous. rather than . Set on efficiency and effectiveness. impulsive. There are four basic styles of behaviour and these are determined by the way. Assertive. Decisive and determined. 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. Others are unwilling or unable to respond in this way and we see these people often as being negative or difficult.people. Reactive.Task. their problems and needs. An example of this is during negotiations. oriented. in which people relate to one another. often in a hurry. Stubborn. . Firm. We are all different and some of us are naturally assertive and some of us are not. . Impatient. poor listener. Controlled emotions. Inflexible.The Director. Some people are highly responsive and will give lots of information about themselves. .. Likes control. EXPRESSIVE .
easily loved. Flexible agenda. Critical.The Clinician. willing and agreeable. HOW TO DEAL WITH BEHAVIOUR STYLES Some ideas for dealing with the different types DRIVERS ! Plan to ask questions about and discuss specifics. aloof. AMIABLE . ! Keep summarising . Rational and co-operative. ! When necessary.The Supporter. ! Remember to discuss the future as well as the present. efficient and to the point. Not goal orientated. . Likes rigid timetables. work out specifics on points of agreement. actions and results. Respectful. Excellent problem solver. likes security. ! Look out for the . sometimes dramatic. Group builder. ! Try short. . Distrusts persuasive people. soft-hearted. short attention span. Not quick to make decisions. Everyone. ! Do not invade personal space.impulse buy. Dependent on others. Be assertive. ANALYTICAL . Not assertive.Placing more importance on relationships than tasks. Security conscious. ! Personal guarantees and testimonials are least effective .s friend. fast moving experience stories. not responsive. Over sensitive. ! Make sure to pin them down in a friendly way. . better to provide options and facts. Motivated by logic and facts.. sceptical. ! Use facts and logic. ! Keep it business-like. Precise. orderly and business-like. Low risk taker. Emotionally expressive. ! Discussion should be people as well as fact oriented. Not assertive but responsive. Like things in writing and detail. . EXPRESSIVES ! Seek opinions in an area you wish to develop to achieve mutual understanding. disagree with facts rather than opinions. supportive. Self-controlled and serious. Emotionally expressive.
they will respect you for it. Analyse each behavioural style and for each. DEVELOPMENT EXERCISE 3. and can be used by you ! once they are recognised as tactics. analyticals expect salesmen to overstate. ! Demonstrate low risk solutions. ! Become less responsive and less assertive yourself.why?. Pre-conditioning This can begin before you even get together. and they will have spotted the deficiencies anyway.. ! Don. their effects are reduced. tactics are used to gain a short-term advantage during the negotiation and are designed to lower your expectations of reaching a successful conclusion.AMIABLES ! Work. without . ! Their decisions are based on facts and logic and they avoid risk. ANALYTICALS ! Take action rather than words to demonstrate helpfulness and willingness. seek common ground.t take advantage of their good nature. ! Take time to be agreeable. In general. in negotiation.ll be wasting your time and I will be forced to speak to your competitors. ! Discuss reasons and ask .t bother coming if you are going to tell me about price increases. questions. ! Find out about personal interests and family.t do . but established relationships take time. aggressively: Don. There are many tactics available to negotiators. answer the following questions: ! How would you recognise each behavioural style? ! How would you sell to them? 2. Let us take a sales example: You telephone for the appointment and the other side says. ! Stick to specifics . 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. BEHAVIOURAL STYLES 1. Here are some you may recognise. You. it is vital to understand 3 things: ! these tactics work ! they can be being used on you. We are going to look at negotiating tactics that may be used by you or on you. ! Be patient and avoid going for what looks like an easy pushover. ! Consider telling them what the product won. Whether or not you choose to use these tactics. ! Use personal assurance and specific guarantees and avoid options and probabilities. or eliminated You may feel that there is no need in your particular case to negotiate or resort to . or start your negotiations with the other party. ! Focus discussion on . ! They can often be very co-operative. jointly. When you do arrive you are kept waiting in reception for half an hour. This is a matter of personal choice.tactics.how.
shining into the office. As you walk through the door into the other person. If it is genuine. but costs £20. Say something like: That is a problem. the cost of our systems can be anything up to £20. This is the monkey on their back that they want you to carry around for them. This is often used tactically to force a price reduction.000 that is not a tactic but the truth. 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. won. A classic example is the person who says I have only got £10. I need to have this agreed by my Board of Directors. Instead. do we have a deal? Be careful to use this device sparingly so that the other side does not begin to feel you have no decision . they will go along with your recommendations. by the way. the price of the car does include a full tank of petrol? 30 . When one side says I have only £10. this does include free delivery.000 in my budget.t they? Will you be recommending this proposal? Nibbling Negotiations can be a tiring process.s back and they have to make a choice.000.000 and I really want to help you choose the best system that meets your needs. ignoring your efforts to make conversation. 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. both sides exhibit a psychological need to reach agreement and get on with something else. doesn. If the objection is genuine and the budget figure is correct.t show it to you? The monkey is now on the other person.s office they indicate for you to sit down.t it? or Oh. look worried. One way of countering this tactic is to say before the bargaining begins If this proposal meets your needs. by the way. If they genuinely can only spend £10. rather than a tactic to overcome. they sit leafing through your competitor. you must try to look for an alternative that meets your needs as well as theirs.being told why. At this stage. Here is what you can do. you would rather I didn. 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. making authority yourself. but don. in silence.t significantly affect the final outcome.s brochure. If they agree to the terms we have discussed. As the point draws near when an agreement is likely. Oh. You are very vulnerable as the other side reaches for their pen to sign the order form or contract to concede items that don. Does that mean that if one of our systems has everything you are looking for.000 in budget. In dealing with tactics the first decision you must make is whether it is a tactic or a genuine situation. you have a problem to solve. As you are no doubt aware.t look up. You are given an uncomfortable low chair to sit in that happens to be directly in line with the sun.
but he really will not consider the price you have suggested. I..want list. This tells .d love to do a deal with you on that basis. For example. stand firm and insist on dealing with the bad guy. Ensure the next time you are in a negotiation that you react to the other party.m terribly sorry about that. I would like to help you renew your contract. You pick up your briefcase and are being shown the door when the Finance Director smiles at you sympathetically and says I. You may be able to say something like: Come off it.s sit down and discuss the proposal realistically . so it is important that you clearly signal your unwillingness to accept the opening position. 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. Like peanuts. when they have finished reading the news. 31 Body language It is important in negotiation to react verbally and visually when offers are made.s offer. Watch out for this. you are using good guy. or else bluff yourself and give a figure that is within your acceptable range of alternatives. Human nature is such that we can believe and accept these outbursts against us and our negotiating position becomes weaker as a result. have a habit of picking up their script and tidying up their papers. If you reach the point below which you will not go. with . is well and truly over.higher authority. 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 .re a superb negotiator.. If you don. If you show no reaction. This is a tactic designed to soften you up in the negotiation.t have this kind of relationship. to the very last minute when the other party is vulnerable. bad guy..good guy. they may be tempted to ask for more and more and you will lose the initiative in the negotiation. News readers. Also. it is important that you show this with your body language. is by saying things like Well. it is almost certain that their opening offer is higher than the figure for which they are prepared to settle. Why don. but my manager refuses to let me agree terms of this nature without referring back and he refuses to talk to salespeople. bad guy. I will see what I can do. Give me your best price and I will see what I can do .relationship. You. but let.Nibbles work best when they are small and asked for at the right psychological moment. 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. One way of combining .. eat enough of them and they get fattening.t I go and talk to him for you and see if we can agree a compromise? What is the bottom line on the contract? If you give me your very best price. Good negotiators will often keep back certain items on their . He is under a lot of pressure. you are negotiating the renewal of your service contract with the Buying Director and his Finance Director. 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.
make it and ask the other side how he. or she feels about it. ask to speak to the manager and make him an offer. don. Salespeople like to be liked and will often give money away in a negotiation. sit back in your chair and remain silent. it can be very powerful to collect your papers together and indicate with your body that it really is your final offer. This is what can make price lists so powerful. Whatever you do. Say things like: Well. The low key approach Don. when you make your final offer. Over-enthusiasm during negotiations can encourage skilled negotiators to review their strategy and demand more.m looking for but I may be interested if the price is right 33 MOVEMENT AND CONCESSIONS . Look concerned and keep quiet. especially when used with broken record. Put your pen away. If you have a proposal to make. if you are buying a car avoid saying to the seller things like: This is exactly what I. The most powerful way of dealing with this is to ask them to be more specific. This can be a very powerful statement. it is non-negotiable. Having asked the question. too easily. This will only encourage repeat behaviour. the other party will disregard what you say and keep negotiating. The use of silence During the negotiation.m looking for.t change your offer as this could seriously weaken your position. If your voice says final offer but your body is saying let.disapproval. sit back and wait for the answer. you may make a proposal and find the other party remains silent. If you are in a negotiation and the other side is not responding to your proposal. so silence induces the need in people to talk.t weaken your negotiating position in response to the vice by giving anything away. show something in writing such as an office memo from your boss announcing the increase. don. You could be surprised at the results. recognise this could be a tactic and avoid giving concessions just to cheer them up. Similarly. Whatever you do. 32 The power of legitimacy People believe what they see in writing. Just as nature abhors a vacuum. If you have to present a customer with a price increase or you wish to encourage an early order to beat a price increase. When presented with a price tag in a shop. to the inexperienced negotiator. We all assume that if a thing is printed or written down. it may not be exactly what I. This will have a far greater impact than just saying your prices are about to go up. This can be very difficult to handle and often signals .t appear too enthusiastic during negotiations. The vice A common technique used by negotiators when presented with a proposal is to say You.the world that they have finished their task and are preparing to leave.ll have to do better than that.s keep talking. if the other side appears unhappy. Develop a low-key approach. For example. I really like the alloy wheels.
Making the First Move Asking questions and listening effectively are important skills both in selling and negotiating. However. for the opening demand or offer.fishing. Negotiators will tend. and trying to force the other person to concede on a major issue. 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. the negotiator is attempting to dominate the interview. The skilled negotiator will ask the other side for a complete list of all his. given that the opening position of each party differs. it will often be on the basis of a quotation based on the minimum quantity at the lowest possible price. at this stage. The first phase of negotiation involves both parties in agreeing the background to the negotiation and . as this allows the negotiator to retreat to his initial position if necessary.win. This leads to short periods of deadlock. When an offer does come. ! The use of the relationship with the other side to break the deadlock.s maximum expectation. to discuss extra demands. The opening offer will probably be at or just about the level of the negotiator. Many excellent negotiators are low reactors who will move very slowly in negotiation. Wait for the other party to speak. starting with the smaller. but hold sufficient back so that you are able to move. Always trade concessions by saying If I do this. Further Movement and Concessions During negotiations. and will not concede on a single issue until he knows the nature of the whole package. Negotiators should avoid making one-sided concessions which will severely weaken his final position and could affect the overall profitability of the deal. or her requirements. then there has to be movement and concessions if a deal is to be struck. Some of these are: ! Period of silence. In all this. it begins slowly. which can be brought to an end in different ways. it can be in the interest of each side to keep asking questions and raising objections. ! Agree to leave certain issues to one side for later and concentrate on the rest. giving him room to manoeuvre. then can be very rapid as both parties sense a deal being on the cards. ! Agree to a concession. at a later stage. They will be reluctant to give information or will defer decisions in order to increase the pressure on the other person. but not so high that the offer lacks credibility. less important aspects of the package. 34 When movement comes. pressing for maximum advantage. you do that. . He will then begin to trade concessions. ! Adjournment to review positions. if necessary. trying to get the other side to agree to these without offering anything in return. It is often better to present the opening demand or offer in terms of a hypothetical question. at first. Movement does tend to be discontinuous with either party moving and the other holding up the agreement at any one time. Do not attempt to . Identify areas of common agreement.
. Here are some notes to help you deal with price: ! Be specific.ll have to look at a longer-term agreement.. ! Uses . thanks for the 10% but the 1 year contract we have already agreed will have to stand. For example: SCENARIO 1.Okay. Responding to a specific demand like this we need to be vague.Well. We need to deal with the price issue confidently. Offer: .m willing to reach some sort of deal.. but positive: Okay. that could constitute the final deal. but with an understanding of the needs of the other side. and our counter demand needs to be specific: but to do that we. Response: . I. stop talking and wait for the other side to speak. The use of concessions enables negotiators to build a mutually profitable deal that is not one-sided in the other side.elements.Okay.I.g. Once you have stated your price.ll agree a 10% discount. Offer: . but I want a 10% discount.. techniques to force movement.Signals to be aware of that could mean the other side wishes movement to take place could include: ! Trial movement. Earlier. but what was asked for was vague. ! Appeals to the other side. we may be able to look at our discount structure. threatens use of competition. Demand: . SCENARIO 2.. ! Keep eye contact. well 2 years may be possible. it will be about £3. One side uses words like What would you say if .ll need to agree a 2 year contract Remember.. we may be able to look at our discount structure.. but can we go to the full 10%?. when you bargain. 36 DEALING WITH PRICE Overcoming the price objection Price is an issue in most negotiations.s better nature.well. but to do that we.m willing to reach some sort of deal. Response: .s favour. we discussed the different .Okay.ll need to agree a 2 year contract. It makes you look confident ! Make your tone of voice confident and your body language confident and relaxed ! Use silence.crowding. aggressive behaviour.I. ! Asks for more information. ask specific. sets deadlines and time limits. The use of concessions is a vital part of building a profitable relationship for both parties in the negotiation. offer vague. e. Demand: . Give them time to think . but we.? or uses hypothetical examples ! Summarises the position to date and asks Where do we go from here? ! One side calls for adjournment. Say the exact price rather than .000 . but I want a 10% discount.. In the first scenario an offer of 10% was made. 35 Bargaining When it comes to bargaining try to get the other side to commit themselves first.
Again. Be wary of . if you negotiate for 1 hour the last 3 minutes are when you are most vulnerable. If you offer to split the difference. There will come a time when both parties can sense an outcome is possible. but don. This is often called a win-win solution.! Deal with price objections and defend your price. look as if it is your final offer. this will be minimised if the solution you have arrived at benefits both parties. given the other side a concession that is one-sided. Concentrating on your problems rather than those of the other party. 3. Once a likely outcome is seen. Being intimidated by the status of the person with whom you are negotiating. 38 THE 40 MOST COMMON MISTAKES IN NEGOTIATION 1. review the position to date and agree a deadline for agreement. If one side avoids making these decisions. compare arguments and objections. Simply gathering up your papers. 5. The closing stages need to be approached with caution. it is important to signal this to the other party. If you have made your final offer. Forgetting the other side has things to gain from agreement as well as . 2. Underestimating your own power. you have. and silence can be a powerful tool in convincing them you mean what you say. That means. Negotiators must be careful at this stage to identify tactical delay which deliberately attempts to force further concessions.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. Failing to prepare effectively for negotiation. You have said you are prepared to move without asking for commitment in return. the other must probe to fine out the reason and deal with it effectively. either party may define outstanding issues. Body language can say as much about what you are thinking as speech. 4. looking at the other side directly in the eye and saying That is my final offer can do this. The best solution to aim for is one where both parties feel they have done well despite having to concede on certain issues. Once either side feels they have arrived at the final deal.splitting the difference. 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. 6. The final consideration is when you have done the deal and both parties are in agreement. That way there will be no unexpected comeback in the inevitable post-negotiation period when either side reviews how well or badly he has done. It has been shown that the majority of concessions are given or traded in the last 5% of the time allocated for negotiation. in effect.. Assuming the other party knows your weaknesses and strengths. Record the details and agree with the other parties involved that your interpretation of events matches theirs.
Revealing your . Trying to be liked during the final stages. Failing to make concessions conditional on final agreement being reached. 31. . Being intimidated by rules set by the other side. Believing everything the other side says about you. Responding to a high demand with a counter offer instead of challenging the validity of the high demand. 38. Discussing issues for which you are not prepared. Bluffing without having a strategy ready should your bluff be called. 12.post-mortem. 40 DEVELOPMENT EXERCISE 4. 26. for the possibility you may need to walk away. 37. 14. Feeling deadlock is only unpleasant for you and not the other party. Being forced into discussing price too early in the negotiation. break the team into 2 groups and hand each group a copy of one of the role-play briefs. 15. your service.hand. 19. 9. Conceding an important issues too quickly. 39 20. 22. 21.. Assuming deadlock means agreement is not possible. Talking too much. Failing to listen effectively. Assuming the other side is aware of the short and long-term benefits of reaching agreement. Giving away concessions for nothing. 13.split the difference. 7. demands. 28. Being inflexible. Misunderstanding tactics used by the other side. Paying too much attention to . 23. 11. 16. Losing sight of the overall agreement when deadlock is reached over minor issues. 35. Taking things personally. 10.value. 33. 32. 36. rather than .price.. Not preparing . 17. Making concessions before knowing all the other sides. 18. Making assumptions about what the other side wants. A role playing exercise for a team meeting To carry out the role-play. Carrying out a . 24. 25. 8. Making concessions of equal size to those on offer. too early. Feeling guilty about asking for a concession. Making concessions too easily and raising the other sides. ENVIRONMENTAL PRODUCTS LTD. 34. Aiming too low with your opening bid. 40. 29. 30. Offering to . Having low aspirations for yourself. your competition etc. with the other side.Head Office. 27. expectations.yourself. Being intimidated by This is my final offer! 39. Giving too much credence to time deadlines set by the other side. Accepting the first offer.
a waste paper company. You buy waste paper and convert it into recycled paper products. ! When they have prepared. You would expect to negotiate a price of between £45 and £54 per tonne. . 60 days would be even better. earlier in this book.s Brief ! You are the Commercial Director for Environmental Products Ltd. who have as a byproduct of their production process. Commercial Director. You estimate they can probably supply you with around 15 to 20 tonnes of waste paper per week. ! You need to try and get their commitment to a long term agreement. ! You are aware that the owners of The Yorkshire Gazette. ! You have contracts with several other Newspaper Publishers. which gives you not less than 30 days to pay for the waste paper you purchase. part-rolls of newsprint. 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.! Separate the teams and allow 40 minutes preparation time. however. You need this business because you have recently invested heavily in new plant and machinery. which you sell to major retailers throughout Europe. it costs you £3 per tonne less to collect 12 tonne loads. so would need some flexibility to renegotiate price. 41 ENVIRONMENTAL PRODUCTS LTD. Failure to achieve good payment terms could create problems with your Finance Director. 42 ENVIRONMENTAL PRODUCTS LTD. in order to develop their skills further. ! You have 40 minutes in which to conclude the negotiation. depending on the quality of the product and the regularity of supply. you are concerned that the price of this material will fall over the next few months. You have the capability of collecting the waste paper in 5 or 12 tonne loads. however. and have a good deal of excess capacity. ! Refer the teams to the preparation checklist. ! Your transport costs are quite high. built into any agreement you make. ! 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. 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. 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. This paper is very high quality and much sought after by companies like your own. so you would seek to ensure this is the case. based on the information in their briefs ! After 40 minutes. ! The average market price for this kind of product is currently £49 per tonne. as well as your company. a Leeds based newspaper. so this could be an important contract for you personally.
as the price of paper is falling. Your company had to pay £1. ! Because of your production process. Set yourself objectives and review dates. This paper is clean and contains no contamination. typically.t. Storage space is at a premium. You have been paid weekly in the past. a year.Production Director. 20% of each roll of paper cannot be used and has to be disposed of. leaving you with an average 20 tonnes of waste paper. If it is not collected on time and your storage capacity is full. from your production plant in Leeds. You currently have 18 tonnes of paper in your warehouse. ACTION PLAN Working with your manager. depending on quality and regularity of supply.740 in revenue. prepare an action plan to cover a 3 month period from completing this manual. . with whom you are negotiating. Your Managing Director has made it clear he does not want this to happen again. but this may prove difficult. ! You use around 100 tonnes of paper per week. which is a good. so you need another contractor and quickly. It would be good if you could agree a fixed price for. but unfortunately you didn. Also. you have to pay £40 per tonne to have the waste paper disposed of. say. and you would like this to continue. DEVELOPMENT EXERCISE 5. per week. You have an immediate problem in that your only choice of supplier for the foreseeable future is Environmental Products Limited. up to 5. ! You have 40 minutes in which to conclude the negotiation.000 tonnes of newsprint a year. You are aware that prices of between £49 and £54 per tonne are being paid for paper at the moment. ! Your current contractor has been paying you £58 per tonne. You use. You have sufficient space in your warehouse to store no more than 34 tonnes of waste paper at a time.s Brief ! You are the Production Director for the Yorkshire Gazette and several other regional newspapers. You would hope not to have to agree to less than £51 per tonne under current market conditions. ! Cashflow in your business is vital.200 to dispose of the excess waste and you lost £1. ! 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. ! With hindsight it would have been better if you had negotiated some sort of penalty clause with your current contractor. and you would like to have the paper removed once per week. which are printed. to dispose of. and therefore you need to demand weekly payment for the waste paper. you have just been informed that he has gone bankrupt. so is much sought after by waste paper companies who re-pulp it and convert it into other paper products.