Archive for October, 2011
Adjusting Your Negotiation Approach
October 31st, 2011 | 
Author: The situation you’re in should shape your approach to negotiating. Here are some situations that will impact your negotiation approach.
Goods vs. Services. When buying goods, you can generally take a more tenacious approach to negotiation. With services, negotiating can be a bit trickier, particularly when you are negotiating with the person who will ultimately be providing the services such as a consultant, accountant, graphic designer, or similar professional. These individuals tend to take pride in the work they perform and view your attempts at negotiating a better price as a devaluation of their work. They may respond by providing services that demonstrate that “you get what you pay for” instead of giving you their best efforts. So take a firm but diplomatic approach when negotiating with service providers.
Custom Orders vs. Mass Production. When you place a second order for mass produced goods, you probably won’t be able to negotiate a much better price than you negotiated for your first order. However, with custom-made goods, you do have a little leverage. On the first order, the supplier probably built 100% of its non-recurring costs (e.g., process design, set up, production instructions, etc.) into the fee you paid. If you end up placing an unplanned second order, the supplier has already recouped its non-recurring costs and, thus, your unit price should be lower than it was on your first order.
Technically Committed vs. Technically Uncommitted. Let’s face it. When other people in your organization have worked with a supplier to determine the technical specifications for what they are going to buy and only one supplier can comply with them, there is little leverage that you have in negotiation. So, when other people interact with potential suppliers, your negotiation power depends not so much on how you communicate with the supplier, but moreso on how you prepare your internal team. Everyone responsible for the technical decisions should be advised of these things:
- No one should share a supplier or specification selection with suppliers until a purchase order is issued.
- The less certainty a supplier has about getting the business will translate into more price flexibility.
- Your approach is not necessarily designed to choose the lowest cost supplier but rather to ensure the lowest possible cost for the preferred specifications backed up by compliant supplier performance.
PurchTips – Edition # 140
November 27, 2007
By Charles Dominick, SPSM
Posted in 
Five Intervention Strategies in Negotiation
To advance negotiations or to bring them to a close, it is often necessary to intervene in a strategic manner, either as an outside party to resolve the situation for the principal parties or as one of the principals. Five interventions that can achieve the negotiation’s goals are to compete with the other parties, to compromise, to accommodate, to avoid the issues or to collaborate.
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Compete with the Other Parties
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Competing with the other parties is an appropriate strategy when a quick resolution is required for a simple and straight-forward problem. It can also be used when the necessary solution is unpopular and cooperation from the other parties is unlikely. Proposals to achieve goals are presented in competition to the proposals of the other parties in an either/or scenario. Typical examples are cost-cutting or staff reductions. The strategy is characterized by high assertiveness, a lack of cooperation and a quick termination of the negotiations.
Compromise with the Other Parties
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A compromising approach is an appropriate strategy when all parties are of similar importance and all parties have some power to influence the outcome. It is characterized by bargaining and trading. While the final solution typically has the approval of all concerned, it does not give clear and optimal results for complex problems. It can be used to achieve a temporary solution quickly while a more permanent solution is being considered and prepared.
Accommodate the Other Parties
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Accommodation is a strategy which is characterized by high levels of cooperation. It is appropriate when the goals of the other parties are acceptable or when the other parties themselves are of strategic importance. It should also be used when achieving a particular goal is of great importanct to the other parties and when a key factor in the negotiations is to preserve future relations. The result is that present goals are sacrificed for future gains.
Avoid the Issues
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Avoidance of the issues is an appropriate strategic response when it is clear that the issues involved will not be resolved at the negotiations or when it is clear that any possible outcome would not be acceptable. The strategy is characterized by a lack of cooperation and a lack of assertiveness. It is essentially a non-negotiation and results in a quick termination without any resolution, an outcome which is the goal of the particular strategy.
Collaborate with the Other Parties
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Collaboration is an appropriate strategy for addressing complicated issues that require new, creative solutions in which all parties can achieve their goals. It is characterized by high cooperation and high assertiveness as each party presents its goals. Each party will also expect to have its goals treated with consideration and to have them reflected in the final outcome.
While the other strategies can be practiced successfully by one side, collaboration requires that all parties participate sincerely. Collaboration is therefore more difficult to achieve and it takes much longer to reach the required consensus. Collaboration is nevertheless often attempted as a strategic option. It is the only strategy which guarantees a win-win situation for all parties and has an optimal chance of providing the best solution.
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By Bert Markgraf, eHow Contributor
Negotiation Steps for Everyday Life
Plan
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Plan your strategy ahead of time whenever possible.
Assess the Situation
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Learn what you can about the issues being negotiated. Understand the point of views and positions of the people you are negotiating with.
Build Relationship
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Build a rapport with the individual you are negotiating with. Assess how cooperative the individual will be in reaching an agreement.
Be Flexible
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Negotiation is a give-and-take process, so be prepared to be flexible. Know what concessions you are willing to make.
Bargain
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As you work to come to an agreement, place more focus on the issue rather than the differing positions.
Compromise
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Always look for an acceptable compromise that is mutually beneficial or acceptable to all parties.
By Cheryl Washington, eHow Contributor