Trade Management  Module 8.  Main Topics:  Negotiation Process

 Trade Management Negotiation Process

 Trade Management

 Importance of Preparation  Defining your ‘ideal’ and ‘ fallback’ position (objectives)  What I must have –essential and not conceded  What I aim to have – good to have but not absolutely essential  What would be nice to have- icing on the cake

Trade Management  Perspective Taking (tactics)  Knowledge of the other party (intelligence)  Research  Build a picture of what might be important to them and what their position might be

Trade Management  Identify possible trade- offs  Prioritise the issues involved  Budget  Scope  Specifications  Support & Services  Warranty  Invoice/payment  Terms and Conditions

Trade Management  Problem Definition  Negotiation involves the solution to a ‘problem’  Need to find a compromise solution  Need to define ‘problem’ or ‘goal’

Trade Management  Problem solving and creativity in negotiation  Key to effective problem solving in negotiation  Keep agreed problem in mind and refer back to it  Establish a detailed understanding of all issues  Stay close to your ideal position  Keep an open mind and be prepared to offer or accept a new ideas  Recognize and acknowledge as and when parts of the problem are solved  Summarize regularly to ensure progressive agreement

Trade Management  Completion  Completion= closing a sale  Know when to complete as below:  Knowing when we have reached our limit beyond which we will be accepting a bad deal  Knowing when we have got what we want  Judging how close the other party is to their limit  Being fully aware of what concessions have been given and received  Reading and assessing the reactions of the party

Trade Management  Completion (cont)  Number options to complete negotiation  Summarsing  Alternative approach(either/or)  Very last concession  Consequences  Postponement

Trade Management  Completion (cont)  Before walking away  Agree what has been agreed  Summarize each issue  Record what we have agreed in an acceptable way  Confirm in writing the agreed issues  Decide and record an agreed action plan

Trade Management  Negotiation Process  Setting up process  Ensure right people will attend ( influence, expertise, authority)  Build common trust and get an early agreement to reach a settlement  Avoid perception of game playing  Use an agenda

Trade Management  Negotiation Process  Control the process  Keep people focused on problem  Keep exploring the other party’s position to solve issues  Ensure agreed facts are clear  Stay focused on limits and goals  Avoid premature compromise  Be open about how one negotiates but rigid about what  Demonstrate willingness to co-operate, but slow to offer concessions  Avoid loss of face and show of emotions

Trade Management  Choose a strategy  Hard ( winning at all cost) (adversary)  Soft ( conceding everything necessary to reach agreement) (friend)  Principled (giving and receiving concessions to achieve a mutually beneficial agreement) (joint problem-solver) Remember you can modify the strategy as the negotiation proceeds

Trade Management  Choose a strategy  Techniques  Salami  Use small consistent steps to reach a goal  Good cop/bad cop  Act surprised  Walk away  Develop power  Competition  Legitimacy  Knowledge

Identify negotiations issues & objectives Determine overall negotiation approach Assess bargaining strengths and weaknesses of the parties Tailor Team Input RFP Technical Reports Input RFP Technical Reports Establish negotiation priorities & potential trade offs Identify sellors/purchasers likely approach Prepare negotiation plan Prepare negotiation plan Identify sellors/purchasers likely approach Execute

Trade Management  Communicating effectively  Building and maintaining rapport  Questioning  Establish needs of others use open questions  Use closed questions to check agreement and understanding  Listening  Keep attention speaker  Maintain eye contact  Ask questions to check your understanding  Take notes of key points

Trade Management  Communicating effectively (cont)  Stating our case  Continuous basis to set parameters of the negotiation  Body language

 Trade Management

 Goal Attitudes- Win/Win ( collaborative) Win/Lose (confrontational) Personal styles – high impact from culture Communication Time sensitivity (high:low) Emotionalism Agreement form- contract Agreement building- detailed (a deductive process) /specific (an inductive process) Team organization- know how the other side is organized ( commitments, decisions made, leader) Risk Taking Inter-cultural negotiations (sales, purchases, alliances) Salacuse (2005) lists 10 ways that culture can impact negotiation

Trade Management  Games that people play  Stalling/delaying  Emphasis the costs of delay  Making threats  Stay principled and refuse to react  Bringing in suprises  Admit ignorance and challenge surprises  Deliberate lies- challenge facts on information you know  Personal insults- avoid getting personal