Strategic Negotiation - PCC - ebook

Corporate negotiation is a process like all other business strategies. In today's challenging and ever-changing business environment, it is imperative to understand negotiations from the perspective of both the buyer and the seller. In Strategic Negotiation, Dietmeyer and Kaplan use a research-based approach to negotiation that assists sales professionals in reaching their own business goals, while ensuring that their customers meet budget and professional objectives as well-going beyond win-win to achieve true, measurable business value for all parties at the negotiating table. The authors use their own strategic, four-step negotiation process to teach sales professionals how to attain quantifiable value in their dealings:  * Estimating the negotiation. What are the actual issues in the negotiation? Sellers determine the effects, both positive and negative, of a lost deal.  * Validating the estimation. A fact-finding exercise to confirm the accuracy of previously made assessments.  * Creating value. Sellers structure a series of deals creating measurable value for parties on both sides of the negotiation. Each offer addresses the essentials but goes on to include additional benefits for the buyer.  * Dividing value. A presentation of "multiple equal offers" is made to buyers, providing more value and choices than they anticipated. Chapters include worksheets for readers to analyze and evaluate their own negotiations from both a seller's and buyer's point of view.

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Negotiating effectively isn't really an art. Instead, it is a science or a process that can and should be systemized because:

Deals these days are becoming far more complex than in earlier times.

More professional buyers are in the marketplace now and these buyers are trained to see negotiation as a process.

Few firms think long-term which means their competitive behavior is becoming increasingly irrational.

There is much more internal negotiation going on now within companies than previously occurred.

As a result, a formal four-step strategic negotiation process has been developed which will take the guesswork out of negotiating and enable you to blueprint every negotiation. This strategic negotiation process consist of four steps and one important but often neglected preliminary activity:

PreliminaryEstablish Goals

Before you attempt to negotiate anything, stop and quantify exactly what you're attempting to accomplish. Think about what you want to achieve before you start determining how to go about achieving it to stay headed in the right direction.

Most people plunge right into the back-and-forth details of a negotiation without first taking the time to consider why the negotiation is important. This is because people tend to approach negotiations tactically rather than strategically. They are more concerned about getting to where they're going than they are where they actually want to end up.

If you have no negotiation goals:

■ You can waste a lot of time and effort bargaining hard for items which later turn out to be of little or no value.

■ You can damage your long-term relationship with the other party for a few concessions that turn out to be worthless.

■ You won't be able to recognize a good deal when you see it.

Ultimately, your goal in any negotiation will be easily stated:

"To create joint value for both parties and then divide it in such a way that the ongoing relationship is strengthened rather than weakened or diluted."

This may sound good in theory but difficult or even impossible to achieve in practice. The simple fact, however, is that unless there is something in it for both parties, nothing of substance will occur. Making the aim of the negotiation to create more value and split that value both ways also changes the nature of the negotiation substantially. If the other party realizes you're trying to create a smarter deal for them, they will naturally be impressed. Once they you have several successful negotiations behind you which prove definitively that you genuinely want to help them at the same time as you help yourself, an exceptionally strong relationship will emerge.

Put differently, your aim should always be to enlarge the pie rather than argue over who gets the biggest slice of the current pie. As shown on the graphic below, the traditional approach to negotiating has focused on how to divide the economic benefits which are found in the agreement zone between both parties. Whoever had the greatest power in the negotiation could be expected to secure the larger proportion.

A more astute approach, however, is for both parties to work together to increase the size of the agreement zone as a whole. That way, no matter how the agreement zone ends up being divided, both parties come out ahead. The economic benefits of the enlarged agreement zone can then be divided between the two parties in such a way that it is fair given the ongoing relationship.