Business Negotiation

A Practical Workbook

Paul T Steele, Tom Beasor

• Publisher: Routledge
• Year: 2017
• Print ISBN: 9781138433649
• eBook ISBN: 9781351954013
• Topic: Business
• Subtopic: Business General
• Index: Business

Getting to grips with negotiation quickly is straightforward and easy with this practical guide. Written in simple language, with a host of practical exercises to support the text, it is designed for any negotiator who wants to develop their knowledge, increase confidence and develop skills. Starting by demonstrating the importance negotiation plays in both commercial and interpersonal relationships, Business Negotiation then takes the reader through 20 developmental steps which cover: objective setting and planning; the first phases of negotiation; managing movement; and completing the deal. Each step features a knowledge and skill building exercise, tips and techniques including: ¢ Example scripts ¢ Negotiation tactics ¢ Practical exercises ¢ Dilemmas and suggested solutions ¢ Key points. In a highly interactive style, this book provides a learning route to skilled negotiation. Written by experts in the field of negotiation, it gives a clear picture of all aspects of the subject and arms the reader with a wealth of ideas and examples for their next negotiation.

Part 1
Introduction to Negotiation

1
Negotiation – What is it?

We recognize the skill with which an experienced helmsman negotiates a busy harbour to tie up, being mindful of charted hidden dangers and the unpredictability of the behaviour of other users. But are we always aware that we should be exercising a similar degree of skill and attention to detail in handling our interpersonal relationships? Statistics on the rising trend of divorce make for grim analysis of most domestic scenes, but are we any better equipped to deal with commercial difficulties? We doubt it, if only because the nature of negotiation and the impact it has on relationships has yet to be widely understood. All too often we see people exchange information, test understanding and then make a decision – and believe they have negotiated. Well, they haven’t.

Negotiation Defined

Using a workable definition, we see negotiation as

A process through which parties move from their initially divergent positions to a point where agreement may be reached.

Let us examine negotiation from a practical viewpoint using it in an everyday example:

The compact disc player

A couple bought a CD player from a well-known electronic goods stockist located out of town. They travelled home some miles away. Following the manufacturer’s instructions carefully, they set it up and plugged it in. It was lifeless. A phone call to the stockist elicited a typically brusque response: ‘Bring it in and we will see what can be done about it.’

Any summary of this opening scenario would be incomplete if it failed to identify customer dissatisfaction and a potential for a marked difference of opinion between the parties:

Having reflected on the irony of being invited to spend more in order to obtain a reliable product, the customer rang the sales manager with a number of observations:

• A separate return journey was inconvenient.
• Time lost could profitably be spent elsewhere.
• There were costs for petrol and parking which would be eliminated if the retailer collected.
• There would be loss of goodwill if the matter was not resolved satisfactorily.

The sales manager was somewhat taken aback. It was not normal custom and practice to reimburse costs.

The customer, sensing the Manager’s hesitation, pressed his point and said a set of classical CDs and a box of VHS tapes would be an acceptable recompense.

In due course the customer called in at his convenience and collected a new CD player, which was unboxed, fully tested and reboxed in his presence, along with a gift-wrapped parcel of high quality discs and tapes accompanied by a letter of apology. The customer went away satisfied with the outcome and still frequents the shop.

Points to Ponder

Jot down your initial reaction to these points.

1. As the customer how would you have proceeded differently?
   
   
   
   
2. When did the negotiation actually begin?
   
   
   
   
3. Do you think the customer’s demands were aimed too high? What would you have asked for?
   
   
   
   
4. What behavioural approach did the customer use?
   
   
   
   
5. What other methods could the customer have effectively employed?
   
   
   
   
6. Do you think parity has been satisfactorily restored between the parties to their mutual satisfaction?
   
   
   
   

Our View

1. In asking this question we are concerned with intuitively identifying and exploring possible alternative styles of approach that could have been adopted. We are looking at high and stretching objectives but ones that maintain our credibility. We are also aiming to provide ourselves with the widest choice of options depending on both the commercial opportunities and the different people involved.
   The buyer has done well to avoid putting ‘markers’ down by refraining from setting an upper limit on what can be achieved. A ‘marker’ is usually a figure – a price, a delivery period, a number of days holiday – that is your ideal position in any negotiation. By putting a marker down you immediately put a ceiling on what you can achieve, and you could prevent the other party moving further in your favour.
   In this example a mixture of logic, used with low key emotion, has yielded a satisfactory beginning.
2. If you have to ask yourself when a negotiation started then you can almost certainly be sure that you are too late. A negotiation begins at the very first point at which either party has the opportunity to influence the other. It could have begun with a letter or might have started even earlier. Many customers will have been influenced by the store’s reputation or advertising.
3. Aiming high allows room for manoeuvre. Incremental adjustments can favourably influence the atmosphere and actions of the other party. Aim as high as possible. Research indicates that those people who ask for more, gain more. However, do not take up a position so extreme as to damage your credibility.
4. Whereas logic was clearly evident, there was a hint of a more emotive appeal which could have been based on customers’ rights had the stockist not been amenable to reason.
5. Discreet threat can be employed in circumstances where power is seen to best serve the interests of the party resorting to it. When one party has leverage there is always a temptation to use it. Applied skilfully, this is a very legitimate approach. Conducted poorly, such coercion is seen as overpowering and destructive.
   It is better to use brains before brawn. Heavy handed threats have a tendency to backfire on you, particularly when used against parties whose cooperation you may need at some point in the future.
   Another approach, much in favour in Anglo-Saxon culture, would have been to use compromise. It differs from bargaining in that it applies to reaching an understanding on a single issue by agreeing to a satisfactory midpoint. A willingness to compromise could be a sign of potential weakness and the customer avoided this approach by the use of several different variables. Compromise when used in Anglo-Saxon culture denotes a desire to ‘split the difference’. We believe that this should be a tactic of last resort and should remain at the tail end of the negotiator’s repertoire.
6. This has to be a matter for both parties. Each will have had their own objectives and each will be seeking a different outcome. It is not a sign of weakness that a negotiator is dissatisfied with the outcome. Experi...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• CONTENTS
• Acknowledgements
• Introduction
• PART 1 INTRODUCTION TO NEGOTIATION
• PART 2 PRACTICAL NEGOTIATION
• Index