Business Breakdown: How To Use Your Negotiation Skills To Guarantee Your Stability

One can see a great deal of uncertainty in the world financial markets wherever you go - for the first time - regardless of geographical location.

Warren Buffet said that it is only when the tide goes out that you can see who is wearing no swimsuit. In other words, it is easy to be prosperous when the markets are doing well; it is only in tough times that we can clearly discern quality & commitment.

How can you use your negotiation skills, negotiation training or purchasing training to sidestep losses in the current economic situation?

Use 'Loss Framing'

We are more interested by avoiding loss than by attaining the very same gain. Kahneman & Tversky's Prospect Theory work describes how individuals will become risk seeking in an attempt to avoid a loss whilst they are more likely to be risk averse when pursuing benefits. In the way that we negotiate, we can make the other side aware of the unique items that they stand to lose if they don't agree to our requests and otherwise acquire if they do.

Create Alternatives

In times of uncertainty it is very important to look at other options so as to support our negotiation position. The ability to create options is important in the context of negotiation and the strength of alternatives to securing a deal is the primary driver of our negotiation power.

Usually we wait until we recognise that we are not going to be able to do a transaction before we begin to think about alternatives. We risk entering into unfavourable transaction and if we have not studied all the alternatives. Similarly, thinking about the alternatives available to your counterparty in the negotiation will give you a clear view of their relative position of strength in the negotiation. If they have good options available then they will be more aggressive and if they don't, they will tend to be more accommodating.

Use Reciprocation

Reciprocation is one of the key principles of powerful influencing skills, because we are prone to return to others the form of behaviour that they demonstrate towards us. In times of difficulty it is key that we perform in the interests of the other side if we would like them to act in ours. You can use this principle to your benefit by acting first and invoking the principle of reciprocation. Be careful and ensure that you record the obligation with the other side.

Move from price to value

It is important to take the focus off price and home in on the Total Cost of Ownership. For all services, products and solutions that we buy or sell, there is always an exchange between value & price. If we only engage on the price, the best that we will do is to haggle and it is only once we start to study the entire lifecycle of the service, product or solution that we buy or sell, that we begin to discover options for negotiation. Before you state price in negotiation, evaluate your counterparty's long term strategic fit, expertise, switching costs should they wish to change a business partner, financial steadiness and potential risks or negative consequences that may occur when your counterparty doesn't manage to reach agreement with you.

Don't forget that the magic in negotiation is found in the quality of your preparation. In times of economic uncertainty it is key to dedicate enough time to preparing for your negotiations.

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