Best Practice Preparation: Using Purchasing Training To Uncover Important Factors To Unlock A Successful Negotiation
Nearly all negotiators completely underestimate the time required to prepare for any business negotiation even though this is a key part of business negotiation best practice.
Using your negotiation skills to understand the context is a great place to start preparing for negotiations.
Some of the key elements to consider are:
- What is the nature of the transaction in terms of risks involved, the cost and the complexity of the transaction?
- Competitive analysis: What is the current position of the market and what alternatives do the other side have available? We will approach a sole supplier in a different way than those in a competitive market.
- Is it a single transaction or should we consider securing a long-term positive relationship that creates opportunities for future business?
- Have we concluded any transactions with the other side in the past and what is their most likely method to concluding business?
- How experienced are the negotiators on the other side of the table?
- What cultures will be represented and what are the local practices?
- Who are all the parties & individuals involved in the negotiation and what is the decision process? A diversified method is required as final decision makers will most likely be interested in Return on Investment and increased revenues & margins. The final user who looks for improved productivity and efficiency will find the financial elements almost completely immaterial.
Almost any negotiation training course will highlight the importance of setting formal deal objectives.
Failing to prepare and rank our deal objectives we put ourselves at risk of being exploited and/or ending with a less agreeable agreement. Whether you are engaged in negotiation on the sales or purchasing side, consider the following elements when planning for a negotiation:
- Price and payment terms, Key obligations, Delivery, Warranties, Intellectual property and Risks.
Price and Payments: The competition and the difficulty of most business deals require finding ways to create additional value and to move negotiation from positional bargaining to mutually beneficial and creative joint problem solving. Professional buyers are not requested with buying the most affordable solution but rather with providing their organisations with the cheapest total cost of ownership, which is composed of things like:
- Acquisition costs, Maintenance costs, The cost of use, Support costs, Supplier performance criteria, Delivery, Product quality and Customer Support. (These concepts are covered in most purchasing training programmes).
If we are able to minimize the other side's costs in the whole life cycle of the product, solution or service and at the same time offer value for money, we are in a better position to find common ground.
Key Obligations: Make sure your product and services are defined and show your priorities. Include all the important quantities and specifications.
Delivery: How important are the delivery timelines and what happens if the delivery doesn't take place as agreed?
Warranties: In order to maintain trust and credibility make sure that you deliver any promises.
Intellectual property: Carefully negotiate IP ownership rights and consider the following factors:
- Which party is footing the bill for the Research and Development?
- Could the research and development be used by competitors to your disadvantage if you don' t own the IP? How can you avoid competitors to use the same IP?
Risks: The best way to manage risks is to include the elements in a contract. Cultural consideration is critical. In Asian countries the goal of negotiation is not a signed contract. In China, unexpected circumstances are settled through the relationship.
Analysing the above factors are crucial in preparing Concession Strategies that will assist you to leverage maximum value from trades and in planning meetings optimally.
1 Easy Negotiation Skills Method That Will Instantaneously Deliver Improved Negotiation Results
Research has proven that high objectives will constantly outdo low aspirations and if you therefore exaggerate your expectations at the negotiation table, you will continously influence your negotiation outcomes positively
Business Breakdown: How To Use Your Negotiation Skills To Guarantee Your Stability
In times of market instability, it is advisable to move away from price as the key negotiation factor and concentrate on 'loss framing', creating more alternatives, reciprocation and value in order to reach agreement and realise your objectives in negotiations.
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Merely depending on the negotiation abilities of individuals is a familiar oversight businesses make. Developing a strong negotiation capability is contingent on critical factors: The negotiation strategy, process, the individual's skills and the supporting network.
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Developing a strong negotiation capability is contingent on critical factors: The negotiation strategy, process, the individual's skills and the supporting network. Relying on the negotiation abilities of people is a familiar oversight businesses make.
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Instead of indicating to your opposite number that supporting my offer will assure a deal, it may be even better to say and specify what they are going to squander if they do not support it.