1. ISQA 454 Negotiation Planning

2. Abraham Lincoln  “When I am getting ready to reason with a man, I spend one-third of my time thinking about myself and what I am going to say, and two thirds thinking about him and what he is going to say.”

3.  What is Fundamental Goal of This Transaction?  How Will This Transaction Create Competitive Advantage?  Assess Buying Position  Assess Selling Position  Assess Situational Issues  Set Targets  Plan Concessions Negotiation Planning

4. Negotiation Success = Planning  Planning Must Be Systematic  What Kind of Transaction?  One-Time  Repetitive Requirements  Distributive Bargaining  Integrative Bargaining

5. Distributive Bargaining  Competitive  Win/Lose  Goals in Direct Conflict  Confrontational  Information is Guarded  Usually Focused on Price or Money Issues

6. Distributive Bargaining  Positional  Initial Demand  Contest of Wills  Limited Resource Situations  Typically One-Time Transactions

7. Integrative Bargaining  Focus on Common Interests, Not Differences  Address Needs, not Positions  Address Needs of All  Exchange Information and Ideas  Pursue Options for Mutual Gain  ‘Abundance’ Mentality

8. Integrative Bargaining  Answer “Why”  Multiple Ways to Meet Needs of Both  Look for Common Interests  Strives for Mutual Gain  Typically Longer Term Relationships  How Will This Agreement Look to the Other Side’s Boss

9. Win-Win Goals  Win-Win Does Not Mean Equal Gains  The Other Side is NOT the Enemy  Goal: Mutually Satisfactory Agreement  Long Term Relationship  Conflict Resolution Mechanism  Mutual Dependence  Trust  Collective Goals

10. Leverage  Leverage is any Information Used to Create a Perception in the Other Party’s Mind of Negotiation Strength on Your Part  Leverage is an Increased Means of Accomplishing a Purpose

11. Types of Transactions  Industry Standard  Custom  Straight Rebuy  Modified Rebuy  New Purchase

12. Negotiation Planning  From Whom Do We Want Responses  Research All Suppliers in Last Three Years  Use Trade Directories, Yellow Pages, Internal Users, etc. to Explore Supply Base  What Form of Supplier Response  Sealed Bids With Non-Price Negotiation  Two Step Bidding  Negotiation

13. Other Planning Issues  Don’t Assume Everyone Knows  What Are Real Goals of Meeting  Contract?  Action Plan?  Information Exchange and Next Meeting Date?  The Importance of the Agenda and Ground Rules  Operationalizing the Agreement  Commitment: What are Next Steps

14. Elements of Negotiation Planning  Facts  Both Sides Agree  Needs/Interests  Internal and External  What Are Our Differences? Why?  What if on Other Side  Alternatives  Win-Win or Win-Lose  Options  BATNA

15. Elements of Negotiation Planning  Legitimacy  Why is Your Position Proper  Be Careful of Standards, Benchmarks  Communication  Three Basic Rules  Reframe What You Say  Relationships  Unconditionally Constructive  Smile - It’s All in How You Start  Good Way Even if Other Side Doesn’t Reciprocate

16. Negotiation Planning  Use Internal Resources  What – Exactly - Do We Need  Complete, Detailed Specifications  Past Volumes  Projected Volumes  Research Total Commodity Purchases for Last Three Years  Define Performance Requirements/Specifications  Set Priorities  Develop Price or Cost Estimates

17. Negotiation Planning  Availability Issues  Lead Time Commitments  Supplier’s Inventories  Quality Issues  Warranties  SPC  Pricing  Target Pricing (Why)  Acceptable Range

18. Setting Targets  Needs  Price Range  Quality Requirements  Delivery Requirements  Wants  Payment Terms  Extended Warranties  AM Deliveries

19. Setting Targets  Like-to’s  Brown Color  Right of First Refusal of New Technology  Weekly Donuts  The Opening Position  Have High Aspirations  Temper With Realism

20. Assess Supplier’s Motivation  Quick Sale  Unload Inventory  Quota Time  “Tide Over” Business  Long Term Relationship  Foot-in Door  Market Penetration

21. What Happens If We Don’t Agree?  Walk Away Point  What Will It Cost to Change Suppliers?  What Will It Cost If We Don’t Agree?  Immediate Cost  Future Cost  Future Interaction  Relationship  Credibility  BATNA  Best Alternative  Contingency Plans?

22. Negotiation Planning: Frank  What Do We Know About Other Party  What Do They Want  What About The Individuals  What Information to Present  To Whom Shall We Present Information  How to Present the Information  Get Point Across in 30 Seconds

23. Concessions  Another Element of Planning  Issues to be Avoided  “MUST HAVE” Issues  Priorities of Other Issues  Alternative Approaches  Concession Ammunition  Concession Timing

24. Completeness of the Agreement  Amendments  Acceptance Tests  Assignment  Service Bulletins, Modifications  Confidentiality  Contract Renewal Option  Delivery  Emergency Support  Installation, Set Up

25. Completeness of the Agreement  Insurance  Liquidated Damages  Maintenance  Packaging  Payment Terms  Price Change  Spare Parts Availability  Service Support

26. Completeness of the Agreement  Taxes  Technical Publications  Technology  Training  Termination  Value Analysis  Warranties

27. The Negotiating Team  Composition  Rank  Numbers  Duties  Conduct  Observation  Scribe  Social Activities

28. Negotiation Planning Exercise