Negotiation and Closing Skills Profile of a Negotiator The Win-win Strategy The importance of Knowledge Basic Tactics Strategies for Negotiating

John Muya
3/17/2013 1

Exam Question
It is often said that negotiation starts at the point where sales end. Describe the process of negotiation demonstrating its vital role in relationship building with the customers (20 Marks)



When conflicts or unresolved issues exist between two or more individuals or organizations the parties agree to negotiate in order to resolve matters. 3/17/2013 3 .What is Negotiation? Negotiation can be described as discussion held with the aim of finding terms of agreement.

Business Negotiation In negotiated exchange the price and other terms are set through bargaining behaviour in which two or more parties negotiate long term binding agreements. Other Negotiations Contract completion time Quality of goods & services Purchase volumes Responsibility of financing Product safety Credit terms Trade-in values Delivery times 3/17/2013 4 .

facilitates likelihood of a mutually agreeable means of achieving common interests. Invent options for mutual gain: Look for a larger pie to identify shared interests.Negotiation Strategies Separate the people from the problem: Whereas each party must understand the other side’s viewpoint and level of emotions the focus should be on the parties’ interests not on their personal differences. Insist on objective criteria: independent of either side’s position. Hence one side must not yield to the position of the other. 3/17/2013 5 .. Focus on interests not positions: Focusing on interests rather than positions.

Explore : Seek understanding and possibility. Expose theirs. Argue : Support your case. Package : Assemble potential trades. Close : Reach final agreement. 3/17/2013 6 . Sustain : Make sure what is agreed happens.Negotiation Process Prepare: Know what you want. Signal : Indicate your readiness to work together. Understand them. Open : Put your case. Hear theirs.

(so that we do not keep on changing the order conditions now and then) When production is interrupted frequently because of numerous change orders. but also on quality or service. Hence the need to reduce these risks.When to negotiate When many factors bear not only on price. When a long period of time is required to produce the items required or purchased. Conflict of interest 3/17/2013 7 . When business risks cannot accurately be predetermined.

Balanced strategist 3/17/2013 8 .Taking care own interests while maintaining respect for the interests of others. Self reliant ( thinking for oneself) Evict emotional arguments without anger. .Negotiation Skills Preparation and planning skills Knowledge of the subject matter being negotiated Ability to think clearly and rapidly under pressure and uncertainty Ability to express thoughts verbally Listening skills Judgment and general intelligence Ability to persuade others PatienceAssertiveness. Unassuming-Never taking things at face value.

This could happen between an organization and the suppliers. Conflicts : Negotiations between two or more parties suggests intention of “successful conclusion of a deal”. 3/17/2013 9 . resistance of points of conflict or disagreement between them.Characteristics of Negotiation Mutual interest: Recognition by both parties of degree of mutual dependence to achieve objectives Time. Win-Lose bargaining: This is where one party to the arrangement gains and the other loses. It also suggests. Win-win situation: Both parties gain. effort and cost for both parties. Effort and Cost: Negotiation usually involves significant time. considerable planning and preparation is required. Relationships: Negotiations take place against a background in which one or both parties regard an ongoing relationship with the other of being as important as the deal.

and talk only 30% of the time." 3/17/2013 10 . Follow the.listen 70% of the time. Listener. Encourage the other negotiator to talk by asking lots of open-ended questions -questions that can't be answered with a simple "yes" or "no. 70/30 Rule -.1. We are so busy making sure that people hear what we have to say that we forget to listen. Negotiators are detectives. They ask probing questions and then shut up.

2. 3/17/2013 11 . Knowledge Gather as much pertinent information prior to the negotiation.     What are their needs? What pressures do they feel? What options do they have? Doing your homework is vital to successful negotiation.

Sellers should ask for more than they expect to receive. you'll get more. and buyers should offer less than they are prepared to pay.3. Successful negotiators are optimists. 3/17/2013 12 . If you expect more. A proven strategy for achieving higher results is opening with an extreme position. Aim high People who aim higher do better.

Be patient Whoever is more flexible about time has the advantage.4. 3/17/2013 13 .

5 Satisfaction Focus Help the other negotiator feel satisfied. Satisfaction means that their basic interests have been fulfilled 3/17/2013 14 .

you may give away more than is necessary. If you open first.7 Avoid Making first move The best way to find out if the other negotiator's aspirations are low is to induce them to open first. 3/17/2013 15 . They may ask for less than you think.

because when you eventually say "yes. (It was too easy.) They will be more satisfied if you reject the first offer -." they will conclude that they have pushed you to your limit.8 Don't accept the first offer If you do. the other negotiator will think they could have done better. 3/17/2013 16 .

Always tie a string: "I'll do this if you do that." Otherwise you are inviting the other negotiator to ask you for more. Whenever you give something away. get something in return. 3/17/2013 17 .9 Don't Make Unilateral Concessions.

If you depend too much on the positive outcome of a negotiation.10 Always be willing to walk away! Never negotiate without options. you lose your ability to say "no." 3/17/2013 18 .

Negotiation Tracts Connecting : To establish a personal bond with the prospect Encouraging : To involve the prospect in the process Establish threshold positions 3/17/2013 19 .

The well is dry: Take a stand and tell the opponent you have no more concessions to make. splitting the difference: The person who first suggests this has the least to lose. sell one member of the team your proposals. Divide and conquer: When negotiating with the opponent’s team. sudden shift in your tactics.Keep the opponent from anticipating your moves. 3/17/2013 20 Classic bargaining techniques . This enables you to test reactions to your decision.Acting crazy: A good show by visibly demonstrating your emotional commitment to your position increases your credibility and may give the opponent a justification to settle on your terms. . Big pot: Start with high demands to Leave yourself a lot of space for concessions. dramatic. Trial balloon: Release your possible/contemplated decision through a so-called reliable source before the decision is actually made. so as to end up with a larger pay-off than if you started low. Surprises: Keep the opponent off balance by a drastic.

The Ultimate Negotiation Negotiation should not be: – – – – Selling any new benefits An attempt to sell on price The process of discounting until we hit the right price A place to raise new issues and concerns Negotiation should be: – The process of setting terms for desired service/product – Achieving an agreement that is satisfactory towards both parties – Conducted in a manner that leaves both parties wishing to do business together again 3/17/2013 21 .

Whatever the Outcome be courteous 3/17/2013 TO THE END 22 .

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