Negotiation in B2B relationships

Negotiation in B2B RelationshipsRelationships

Workshop

Agenda

• Negotiation ‘What It’s Not’.

• Negotiation ‘What It Is’.

• Phase One – Preparation• Phase One – Preparation

• Phase Two – Bargaining

Negotiation – What It’s Not

• Negotiation is one of the more abused words in the English language.

• Some believe negotiation is a code for: – Manipulation

– Lying– Lying

What people say about Negotiation

• ‘The old idea of a good bargain was a transaction in which one man got the better of another. The new idea of a good contract is a transaction which is good for both parties to it’parties to it’

Judge Louis D. Brandeis

What people say about Negotiation

• ‘I’ll make him an offer he can’t refuse.’ Mario Puzo (Don Corleone, The Godfather)

• ‘Diplomacy is the art of letting someone else have your way’.

Daniel Vare (Italian Diplomat)

Negotiation – A Definition

Negotiation is – ‘conference and bargaining for mutual agreement’.

For Negotiation to take place

1. Both Parties must have some level of commitment to do a Deal.

For Negotiation to take place

2. Both Parties must have the authority and the will to vary the terms of the agreement.terms of the agreement.

Negotiation

• Phase One - Preparation

• Phase Two - Bargaining

Preparation

Step 1 – Set Objectives

Win - Win

‘Their Shoes’‘Their Shoes’

Objective

Us

• To secure major retail account representing $5 million in new business p.a.

Them

• To find a supplier who can supply product to meet our immediate price objectives and customer requirements.p.a. and customer requirements.

Preparation

Step 2 – Decide our Fallback Position

Imagine Total FailureImagine Total Failure

Decide Best Alternative

Fallback

Us

• To secure $1 million of business for high margin niche products only.

Them

• To find another supplier.

Preparation

Step 3 – Prioritise your Tradeables

What are the Tradeables?What are the Tradeables?

What are the Priorities?

Prioritise Tradeables

Us Them?

Product Range

High Low?

Rebates Low High?Rebates Low High?

Catalogue funding

Low High?

Product training

High Low?

Preparation

Step 4 – Set Best and Worst Trading Limits.

Best = Best allowing Win – WinBest = Best allowing Win – Win

Worst = Walkaway to Review

Best and Worst Limits

B W B W

Product range

Range 10 product lines

Range only 3 product lines

? ?

Us Them

Rebates 1.0% to sales 2.5% to sales

? ?

Catalogue funding

$60,000 p.a $150,000 p.a ? ?

Product Training

15 Training workshops

5 training workshops

? ?

Preparation

Step 5 – Plan ‘What If…’ Strategies and Supporting Arguments.

Plan Options around TradeablesPlan Options around Tradeables

Plan Creative Solutions

Bargaining

Step 1 – Get the Issues on the Table.

Start the Process

Don’t Show your priorities.Don’t Show your priorities.

Bargaining

Step 2 – Ask Questions

For Information and Motives

To create movementTo create movement

Bargaining

Step 3 – Clarify

Paraphrasing

SummarisingSummarising

Bargaining

Step 4 – Trade Concessions

If … then …

Bargaining

Step 5 – Conclude

Summarise

Write it DownWrite it Down

Negotiation Mistakes

1. Neglecting the other sides problem

2. Letting price bulldoze other interests

3. Letting positions drive out interests

4. Searching to hard for common ground

5. Neglecting BATNAs (“best alternative to a negotiated 5. Neglecting BATNAs (“best alternative to a negotiated agreement”)

6. Failing to correct a skewed vision

Source: HBR Six Habits of Merely Effective Negotiators by James K. Sebenius April 2001

Bibliography

1. Do We Have a Deal? Gavin Kennedy, Gower 1991

2. Negotiation Skills, Baden Eunson, John Wiley & Sons 1994

3. Getting to Yes, Roger Fisher and William Ury, Penguin 1981.

4. Account Strategies for Major Sales, N. Rockham, Gower 4. Account Strategies for Major Sales, N. Rockham, Gower 1988.

5. It’s a Deal – A Practical Negotiation Handbook, P. Steele, J. Murphy, R Russil, McGraw Hill 1989.

6. Negotiating: Everybody Wins, V. Helps, BBC Books 1992.

7. Planning for Behaviours for Win – Win Negotiations, Research papers available from Huthwaite Research Group Ltd

You are welcome to contact Nigel Bairstow at B2B Whiteboard your source of B2B Asia / Pacific marketing advice

http://www.linkedin.com/pub/nigel-bairstow/6/41b/726

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