Strategic Negotiation in the Corporation

8/3/2019 Strategic Negotiation in the Corporation

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STRATEGIC NEGOTIATin the Corporation

by Head E-book PressKIT


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STRATEGIC NEGOTIATION in the corporation

by Head E-book Press2

INTRODUCTION

People negotiate to achieve a desired objective. It has become an

essential tool in all circumstance and anywhere in this world. Just like in a

battle eld or a hostage situation, effective skills in conciliation are needed

by the astute businessman. In other words, an entrepreneur who wants to be

successful must be adept in the art of strategic negotiation.

The National Defense University has a very appropriate de nition for

negotiation which is the procedure wherein two persons or groups strive to

reach agreement on issues or courses of action where there is some degree

of difference in interest, goals, values or beliefs. The job of the negotiator is to build credibility with the other side, nd some common ground (shared

interests), learn the opposing position, and share information that will persuade

the other side to agree to an outcome.

J. Glenn Ebersole, Jr., CEO of J.G. Ebersole Associates and theRenaissance Group, says that one of the major points that a person must


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grasp to become pro cient in this practice is that this skill must be mastered to

get almost any deal that you want with less effort than you could imagine.

On the other hand, Gavin Kennedy explains that the focal point of this

approach is in the generation and implementation. It is not a series of axioms

to be rote learned; it is about the application of thoughtful analysis to real-

world problems. It follows this advice into the implementation phase of strategy

and is organized around case examples to demonstrate the application of the

concepts from its process model to the real world. The cases are drawn from

consultancy work in various industries and business situations and they also

draw upon the work of colleagues who have demonstrated competence in this

eld.

The theories advocated by these two experts give credence to the fact

that it is a signi cant bene t to business enterprises to have people who are

pro cient in strategic negotiation.


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APPROACHES TO

NEGOTIATIONS

IN BUSINESS

Different methods have

been identi ed regarding how

to conduct negotiations in a

business setting. Sales peoples

are expected to be good at this

so a certain time is required

to develop competence in this arena. Carol Smalley, a veteran writer and

business practitioner has come out with a useful primer in sales negotiation

techniques. These are aimed at fostering self-con dence, strengthening

relationships with clients, transforming very demanding customers into

contented patrons and enhancing overall performance.

Smalley identi ed the following procedures that can help the marketing

professional: invest in negotiating skills, be prepared to walk away if the deal


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will not be advantageous to you and the company, ask questions instead of

telling the customer reasons for purchasing a product or service, anticipate

objections as an opportunity to learn more about the customers needs

and solutions that you can offer and assess the type of personality of your

prospects.

There are seven so-called tips and tactics that the author suggested to

obtain the most out of the Guide in making a successful strategic negotiation.

1. Focus on building a long-term relationship with the client since a

short-term sale may not be for the best interest of a long-term

seller-buyer relationship.

2. Sometimes, its what you dont say that closes the deal. Remaining

silent at key moments in a negotiation can work in your favor.

3. Be realistic with expectations.

4. Leave your ego and emotions at the front door.

5. Be exible and willing to adjust strategies as necessary.

6. Realize that the buyer may be as well trained as you are in the art

of sales negotiations.


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7. Apply these strategies to other situations where negotiation skills

would be bene cial such as employer-employee relationship issues.

This being the case, the salesperson has the obligation to work hard to

achieve the required expertise in strategic negotiation.

EASY NEGOTIATIONS

Management advisor and executive coach Brian Babcock has formulated

a comprehensive format that is also easy to recall and master to facilitate

negotiations with clients. He calls this, Negotiations Made Easy and spells

out the basic ideas. These are; understanding their interests, changing the

rule of the game if necessary, preparing your strategy, tactics and negotiations

communications, understanding your Best Alternative to a Negotiated

Agreement (BATNA) and testing theirs, negotiating with results and relationship

in mind to create an agreement and, remaining principled with commitment in

all of the above.


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Best Alternative to a Negotiated Agreement (BATNA):

CORPORATE PROCUREMENT AND

STRATEGIC NEGOTIATION

The ability to consummate strategic negotiation also applies in selling

to private corporations. The rst thing that you must do is to identify the market

of corporations and map out a sales plan that will help you implement this

plan. The Corporation Procurement Exposed eBook charts a competitive

strategy line of attack that will educate you in distinguishing the weak points of

competitors and avoiding their strengths. Likewise, there is a need to create a

higher customer value by promoting customer intimacy and value innovation.


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You must be ready to provide radical innovations and let your clients perceive

your distinct capabilities by focusing on core competencies.

The eBook discusses further that you need to sell yourself through

a unique selling before being able to sell your products and services to

corporations. This will permit you to pinpoint what makes your business

different from the rest in the world of highly-engaged competitors to succeed in

your sales ventures.

This is where the need for pro ciency comes to fore because you will

have to negotiate with corporations why they must purchase from you and give

them reasons for choosing you as a supplier.

According to the eBook, corporate procurement is a very demanding and

time-consuming occupation. You need to ful ll and keep in step with the varying

demands of corporations globally. In corporate procurement, you must be cost-

competitive and your product or service must be of excellent quality but sold

at customer-friendly rates. At the same time, it is necessary to put more focus


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on your investment. You will have to assure added value to best value products

and services. The improvements and attractive features on your products and

services will be demanded by corporations more and more as your partnership

progresses. You will have to adapt and be more exible. Be sure that you are

able to keep up with ever-changing demands of consumers as well as those of

the corporation. This will prove to your market and the corporation that you

are an ideal supplier despite changing times. Finally, you need to make sure

that your products and services are of absolute highest quality. It is important

to maintain the excellence of your product or service without compromising the

reasonable rates that you offer.

STRATEGIC NEGOTIATION IS AN ART

Exceptional negotiation skills are required to be able to close a sales

transaction According to Elise Farnham, negotiating is the ability to in uence

events or people of a desired outcome. Becoming a skilled negotiator will give

claims adjusters the power to in uence and control the outcome of their cases.

Skilled adjusters understand the importance of strategic negotiation and


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begin the process from the rst day that a claim is assigned to them.

Farnham states that from the standpoint of marketing and sales, the negotiating

process can be classi ed into four major components. These are approach,

probe, presentation and closure.

In a nutshell, negotiations take place as soon as the rst contact is

established. The objective is to foment trust and this is the preferred outcome

after the rst communication. It is not an easy process. Claims representatives

know how to create trust and ful ll their promises. They must believe in and

practice old-fashioned virtues such as truthfulness, fairness and common

courtesy. During the ongoing

contacts and discussion, they

continue to clarify and manage

expectations. It is an innate

propensity of human beings

to strive to be understood.

Successful claims adjusters


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realize that this compels them to persuasion and not understanding. The crucial

strategy of the successful negotiator is to work hard to comprehend the point of

view of the claimant.

Source: creinvestmentopportunities.blogspot.com

MODEL OF STRATEGIC NEGOTIATION

In strategic negotiation , key elements that are relevant to the business

setting have been identi ed in a publication of Colleen Hanycz:

These are preparation which entails deciding important objectives,

de ning goals and thinking ahead in collaborating with each other and the

other party; relationship-building that consists of knowing the other party,

understanding the difference and similarity between you and the other party,

and building a commitment towards achieving a mutually bene cial set of

outcomes; information gathering which is learning what you need to know

about the issues and the other party, issues, feasibility of possible sentiments


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and possible failure to reach an agreement with the other side; information

using or the stage when negotiators assemble the case that they want to

make for their preferred outcomes and settlement, one that will maximize

the negotiators own needs. The presentation is often used to sell the

negotiators preferred outcome to the other; Closing the Deal: the objective

of this stage is to build commitment to the agreement achieved in the previous

phase. Both the negotiator and the other party have to ensure that they

reached a deal they can be happy with, or at least accept; implementing the

agreement: determining who needs to do what once the agreement is reached.

It is not uncommon for parties to discover that the agreement is awed, that

key points were missed, or that the situation has changed and new questions

exist. Flaws in moving through the earlier phases arise here, and the deal may

have to be re-opened or issues settled by mediators, arbitrators or the courts.

GOLDEN RULES IN STRATEGIC

NEGOTIATIONS

Many pieces have been written about the effective methods in negotiating with


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colleagues, clients and competitors. Anthony Tjan explains his four golden rules in

Strategic Negotiation which can be very applicable to those in the business.

1. The background homework: Before any negotiation begins, understand

the interests and positions of the other side relative to your own interests and

positions. Put these points down and spend time in advance seeing things from

the other side.

2. During the process: Dont negotiate against yourself. This is especially

true if you dont fully know the position of the other side. Much is learned about

what the other side really wants during the actual negotiation process. Stay rm

on your initial set of positions and explain your rationale but dont give in too

early on the points. Wait to better understand which points are more important

to the other side.

3. The stalemate: There will often come a point in a negotiation where it feels

like there is zero room for either side to budge. Two sides are stuck on their

positions and may have lost sight of the overall goals of the negotiation. Emotion

may have overtaken logic at this point. If you recognize that youve reached

this point, see if you can give in to the other side on their issue in exchange for


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an unrelated point that is relatively more

important to you.

4. To close or not to close: The

golden rule of negotiation is to always

let someone else walk away. Whether

you drive too hard a bargain, cannot

reconcile on key terms, or feel that the

deal is just too rich for your blood,

make the offer you want and let the

other side walk if they dont want it. This is not to say to be offensive or to

low ball, but rather to be honest, straightforward on what you are willing to do

and explain that you understand if it does not work for them and that it is the

best you can do.

PLANNING IS CRITICAL IN NEGOTIATIONS

So much effort and research was poured in by experts to build up the

aspects of theory and practice in strategic negotiation . The purpose of


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experts behind this is to elevate this art beyond competitive negotiation to

a much higher plane which is to solve problems. In coming up with de nite

solutions, the parties involve deal with their fundamental concerns instead

of just purely emphasizing attitudes and demands. Effective Solutions must

be formulated to satisfy the concerns and at the same time make special

considerations that are in accordance with their requirements, needs and

expectations.

People who are given the responsibility to negotiate must be acquainted

with the requirements and concerns of those they deal with. According to

Cathy Harris, There are differences that allow the negotiation to become an

inquiry to nd differing needs and the solutions that will satisfy them. While

problem-solving negotiation often deals with money, as most negotiations

do, it can become one element of a solution that has many other aspects.

Negotiation is a side-by-side dialogue where parties can trade on their

differences, rather than a battle over a limited resource. It is a mistake to

approach negotiation as a casual encounter without much forethought. Such

sessions are likely to become reactive and meandering meetings rather than


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being proactive with speci c goals in mind. Lack of planning often appears at

the negotiating table as too much reliance on demands and ineffective attempts

to persuade the opponent. Good planning can provide a negotiator with the

direction needed to do effective problem solving at the negotiation table.

There are a number of guidelines in strategic negotiation that have

been proposed by Harris to assist negotiators and make their jobs much easier.

The rst is todecide on priority interests and rank them. To make

the most of the negotiating sessions, each party should initially decide upon its

goals for the session. After identifying its goals, each party should determine

the priorities of these items. Negotiation is, after all, a matter of both parties

conceding and reaching a solution. The key to interest-based concessions is to

trade items of less importance in order to secure items of more importance.

The second is to assess the other sides priorities . Each party to a

negotiation should spend some time in the other partys shoes, imagining what

the other side might really want to achieve. The more one can understand


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the values, needs, and issues from the other sides perspective, the better

the chance of guessing at what they might want as their priority needs.

Guessing may not always lead to the right answers. Even so, this analysis can

identify potential nonmonetary solutions and get the ball rolling during the

negotiations.

The third is the fact that money represents other needs. It is often

forgotten that money is a substitute for many other genuine human needs.

Lawsuits offer a limited solution set of either money or preliminary injunctions

or declarations, such as ordering a person to perform a certain obligation.

When negotiating, there is the potential to explore exactly what the money

means to the other side and then look for ways to satisfy those needs more

productively. Thinking outside the box about why a person is claiming speci c

monetary recovery can offer options that meet both sides needs more

productively. If that option doesnt work, an invitation to the other side for

suggestions might reveal what they really want and establish a problem-solving

focus.


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The fourth is to plan factual inquiries carefully. A superior plan

for a speci c and fruitful information inquiry during the early stages of the

negotiation usually arises after analyzing the other sides possible underlying

interests and priorities, and options that might satisfy them. The best negotiators

spend time asking questions, staying curious, and uncovering the other

sides views of the situation, facts, interests, and priorities. The information-

acquisition phase can con rm some of the planning analysis or reveal new

data. Of course, having two skilled negotiators will help ensure that each side

is securing this type of data. They use and respect the norm of reciprocity: If

information is shared by one side, that side should receive the information it

requests.

CONCLUSION:

Comprehensive planning in preparation for strategic negotiation will

eventually result to the achievement of renewed con dence in the negotiating

table. It is also equally important to chart a plan of action for uncovering

factual data, interests, and priorities that can be used to craft the best solution


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possible. The most successful deals can develop from sharing valuable

information.

It facilitates the creation of feasible solution options. It also generates a

climate between negotiators that concentrates on problem solving rather than

positional bargaining. By offering creative solutions, you can also set a tone of

exploration, and avoid the harsh dynamics connected with the more unbending

positional bargaining. Negotiators will always be cautious about revealing

damaging information, to avoid being taken advantage of by the opposing

side. However, since reciprocity is respected, two negotiators can develop a

trust that provides for better information ow.

We are all aware of the fact that the business environment changes

constantly. The sweeping shift that is taking place in the art of negotiations

over the years is so enormous that it requires the same modi cation in the

thinking process. The best way to meet the challenges of negotiation in the

business environment is to put in place the process of strategic negotiation. It

will provide you with a methodical, realistic and reasonable technique that will


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allow you to create a win-win situation. You need to establish a quanti able

business value and permit both you and your customer to meet and surpass

your targets and objectives.

REFERENCES:

1. Ebersole, Glenn J. Powerful Negotiation Tips From Your Strategic

Thinking Business Coach http://www.evancarmichael.com/Business-

Coach/223/Powerful-Negotiation-Tips-From-Your-Strategic-Thinking-Business-

Coach.html

2. Kennedy, Gavin. Strategic Negotiation: Moving Through the Stages

Edinburgh Business School, Herriot-Watt University. http://www.ebsglobal.net/

programmes/strategic-negotiation

3. Smalley, Carol. Guide to Sales Negotiation Strategies and Techniques

www .business .com


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4. Babcock, Brian. Strategic Negotiations Babcock Business Strategies.

http :// www .brianbabcock .com / strategic -negotiation .shtml

5. Farnham, Elise. The Art of Strategic Negotiation Ilumine Consulting,

January, 2010. http :// www .irmi .com / expert / articles /2010/ farnham 01-

personal -insurance -claims .aspx

6. Hanycz, Colleen. Strategic Leadership and Decision Making Strategic

Negotiations, Chapter 4

7. Tjan, Anthony. Four Rules for Effective Negotiations Harvard Business

Review. http://blogs.hbr.org/tjan/2009/07/four-rules-for-effective-negot.html

8. Harris, Cathy. Negotiation Strategy: Planning is Critical The CPA

Journal. http :// www .nysscpa .org / cpajournal /2004/1204/ essentials / p44. htm


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IMAGES AND ILLUSTRATIONS:

Photo 1: http://www. ickr.com/photos/37794586@N08/3470610680/

Illustration 1: BATNA (Babcock)

Photo 2: Source: creinvestmentopportunities.blogspot.com

Photo 3: Saudi Arabia and Indonesia begin negotiations: Photo by Kazuyoshi

Nakano

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Strategic Negotiation in the Corporation