1. Competitive Negotiation Competitive Negotiation Capital Equipment Consulting

2. The five styles of negotiating – master them all know when to use each and which is your dominant style ObligingCo-operative Do NothingCompetitive Low Concern about own outcome High High Concern about others outcome Low Compromising

3. Factors affecting the different types of negotiation – relative power and complexity – what are the predictors of outcome? Co-operative Obliging Competitive Low Our Relative Power High High Complexity of Issues Low Compromising

4. Factors deciding what type of negotiation to conduct – complexity and concern for the other’s outcome Low Concern for other’s outcome - Relationship High High degree of complexity Low Competitive competitive Co-operative

5. Intensely Competitive versus Intensely Co-operative Negotiation Intensely CompetitiveIntensely Co-operative Give away little and may even try to mislead – create “straw dogs” Tries to develop a level of trust so that both sides can explore interests openly Make excessive demands so that they can make concessions to still achieve what they want. See negotiation as a genuine attempt to get the best for both sides Uses demands and threats to try and pressure the other party into concessions Concentrates on the benefits that a solution will bring for both sides.

6. Competitive Negotiation Strength of our case Strength of his case Increase the perceived strength of our case Decrease the perceived strength of his case

7. Assessment of critical success factors Benefits sought by customer Weight Wgtd score us Best Comp Us Final Value Justification of feature Operator ease of use 1510590135 Operator ease converts at 1 min/hr saving enables the operator to handle 2% more samples a day = £20/day = £4500/year Compatibility with existing 1510590105 £10,000 saving from not having to develop a new calibration Service 20140120160 Agreed service will keep machine within +/-3%. Each additional 1% drift will cost £10,000/year Delivery Speed 10506050 Delivery delay of 1 week costs £2000 to have samples done outside Total of features % of ours 60400 1.11 360 1.0 450 1.25 Means that features account for 60% of the decision so comp 1 and 2 can stand a 15 and 7% price differential Price differential justifiable from ours Personal Needs 40155 140180 To help justify this we must develop quantifiable value justification that the customer accepts as his analysis NiceNeed

8. Assess the customer’s decision making team NameType% say Veto or Specifier UsComp 1 Comp 2 Comp 3 col A P Robertson Economic Follower 20 None 760 152 840 168 640 128 750 150 S Tebbutt User Skeptic 40 Veto 1550 220 330 132 650 260 780 312 C Riseley User Charismatic 20 None700 140 850 170 700 140 600 120 A Langley User Controller 20 None600 120 700 140 750 150 850 170 S Perry Technical 0 None R Peters Sponsor 0 None Total 632610678752 T T

9. Improve our relative power – improve our alternative – my no and his valuation of our package – his no 168 his alternative – his no 100 his nice 180 my best possible my nice 168 my realistic my need 163 my alternative – my no

10. The three main predictors of outcome Your relative power Your relative level of aspirations Your relative negotiating skills What are the main factors affecting the way you choose to negotiate?

11. Improving your perceived power and Influence 1. Avoid Cascading yes’s 2. Overcoming power plays 3. Beware surprises 4. Offer a reasonable position – legitimacy 5. Test the other person’s power 6. Use your own power – instruct and adapt 7. Bring in additional power to the negotiation 8. Frame a strong and persuasive message. 9. Develop and use your BATNA – don’t need their business – bluffing 10. Appeal to your feelings not your position

12. Preparing for a competitive negotiation Set the negotiating ranges ours and theirs Set high but flexible opening offer Estimate what theirs is likely to be Set a strategy of concessions Get backing from home office Role-play the negotiation

13. Offers, Concessions, Agreeing 1. Opening Offer – how ambitious? – anchoring. The power of random numbers! The mid point rule! Use extreme but flexible offers or non offers to anchor. 2. Who goes First? 3. Initial concessions – how generous/flexible – look for quality concessions – give high value/low cost and get high value/low cost. 4. Pattern of concession making – getting smaller and change factors. 5. Final Offer 6. Closing the deal – alternatives, split the difference, sweeteners – the “straw dog”

14. Develop the push skills of Asserting and Persuading 1. State your position clearly and concisely – use a few strong reasons – don’t dilute 2. Provide facts to back it up appeal to fairness - £100 3. Don’t become angry or emotional – disengage – get a bird’s eye view – empathy, role reversal 4. Use inductive disagreement 5. Make concessions to get what you want – suggest an agreement in principle

15. Stages of Acceptance Elisabeth Kubler-Ross Swiss Psychiatrist Avoidance Denial Anxiety Anger Bargaining Sadness Acceptance

16. Framing – the viewpoint we and they take when assessing the negotiation 1. Does he see you as supplying a commodity or does he see you as a partner? 2. Change the frame from lowest cost to lowest cost of ownership. 3. Change their frame from getting the lowest price to a fair price. 4. Change your frame from getting orders to selecting the best customers to work with. 5. Change the frame from a new contract to a continuation of the existing contract. 6. Plan A plan B and Plan C 7. Reframe offers - ask why, why not, what if? 8. Reframe attacks on you as an attack on the problem.

17. Top price we could win180 Lowest price we could win155 Our cost price150 Our BATNA163

18. Top price we could win180 Lowest price we could win155 Our cost price150 Our BATNA163

19. The four phases of a competitive negotiation Opening Testing Movement Closing

20. Four Key Elements in the Opening Phase 1. Develop the right relationship 2. Develop a sense of purpose 3. Develop common goals 4. Take control and set the direction 5. State and respond to opening positions 6. Jurors decide on barrister’s opening statement – so set the tone.

21. Competitive Tactics – Opening Phase 1. Good guy – bad guy 2. Non Negotiable demands/budget limits 3. Threats 4. Lowball/highball

22. Competitive tactics – testing phase 1. Bluffing 2. Aggresion/emotional outbursts/personal attacks 3. Good guy/bad guy 4. Take it or leave it 5. Snow Job 6. Chicken

23. Competitive tactics Movement Phase Bogey Last and final offer Nibbling Authority Escalation Split the difference

24. Karrass Research Findings Skilled negotiators frequently do not use the power – they are benevolent to their opponents. Unskilled negotiators use it ruthlessly. Power is effective against opponents who have low esteem. It is much less effective on negotiators who believed in themselves. When we negotiate we are more aware of the other party’s strengths and of our own weaknesses than of our strengths and their weaknesses. We should therefore build a negotiating plan around our strengths and the other side’s weaknesses and hold the negotiation anchored to these points

25. Key Elements in Closing the Deal Summarise the agreement and both sign Publish the agreement

26. Other Issues 1. Your place or mine 2. It is not our policy 3. Salami slicing 4. Say nothing 5. Time is running out 6. Who makes the opening offer?

27. Resolving problems in a competitive negotiation 1. Guess their position 2. Winner’s Curse 3. Overconfidence 4. Endowment effect 5. Harvard experiment – sellers valued the company at twice the value.

28. Deadlock in a competitive negotiation 1. Restate the issue then wait in silence for a response. 2. Summarise the progress that has been made 3. Focus on non- absolute statements 4. Offer conditional concessions – give to get 5. Point out consequences of a failure to agree 6. Invent new options 7. Change the shape of the package 8. Change the lead negotiator 9. Re-enter the testing phase 10. Use an adjournment to apply pressure 11. Persuade them of the legitimacy of your case

29. Smart Buyers 1. Never sole source 2. Know their positions in advance 3. Assign sponsors to each alternative 4. Never let you know you are winning 5. Never let you know you are losing 6. Negotiate price in reverse preference order 7. Take it away from you at least once 8. Are aware of your deadlines