Getting the Best from your relationship with Providers and Clients Negotiating in a Localisation context

Dynamics Buyer Position Seller Position Understanding Context Objective setting Disposition of Compromise Agenda Tactics Outcomes

Rules of the Game Win/Win is not just a cliché Size does not matter Price is not everything It is not an annual event Take a longer-term view i.e. Have a strategy Relationship is important Use tools as support not the driver (teleconferences, spreadsheets). “Eye-to-Eye is best”

What’s different about our Industry Maturing supply side, with “leftovers” from previous phase of development Commodity pricing Professional demand side Value-chain analysis starting to happen No ideal industry comparisons

The Process Preparation using a systematic approach Consider your underlying interests and what outcomes you require Contemplate alternatives and your “bottom-line” Legitimacy. Fair treatment, legal contract Prepare options Drive a positive relationship Promote 2way communication Review and revisit

Measure the Outcomes Define success or failure Always document outcomes for future reference and contract conclusion. Intentions are good, but 90% of contracts fail due to misunderstandings Heads of agreement → negotiated terms → contract Prepare the ground for the next negotiation occasion Remember: people change Always look to improve the process

Techniques Supplier – Incremental pricing based on economic data – Pricing based on comparative data – Anticipated investment requirements – Growth hampered by working capital restrictions – Invest for sustainability Demand – Full knowledge of market prices (real or otherwise) – Threat of alternative sources of supply – Increased use of tools and technologies – Maturity has been reached so commodity pricing applies – Psychology

Psychology Flexibility and willingness Agnostic about logistics except schedule Confident yet factual Escalation path known Open not arrogant Listen Finally compromise

Working Groups Success criteria for the seller/buyer Setting out your stall Record the dynamic Be clear about understanding of outcome Discussion re outcomes