Negotiating – A Global Challenge

Negotiation is an exchange of different objectives with the goal of finding a common ground for a mutually acceptable compromise; it is something that should be workable for both parties. Anything beyond that is not negotiation, rather a flaunting of might or arrogant forcefulness, a kind of desensitization of respect. Negotiation requires mutual respect not mutual trust. Trust is something that is gained through negotiation not integral to it. Trust comes through negotiation and interaction. If we feel that we should trust our opponent from the beginning then we are being trite.

When talking negotiations, most people from North America would likely consider themselves to be upright in their interactions. This is good, when negotiating amongst ourselves or with those who hold the same core values and ideals as we do. But, in this world not all people hold the same core values and ideals. We can look to the Middle East and conflicts taking place in the world today to realize that not everyone thinks same.

Perhaps we can see a thread of puritan ideals, when trying to realize a world in which everyone should be “good” and at the same time a good that has been dictated by our cultural values. How can we describe “good” in a way that crosses all cultures? I ask this because I was fortunate to live twenty years of my life in a culture that is quite different from that into which I was born, a culture where I learned that “good” can mean something much different than what I was taught as a child.

In “The Art of War“, by the classical Chinese strategist “Sun Zi“, he talks of understanding as a strategy. He said:

Know yourself and know your adversary and you will win one hundred battles,

Know yourself and know not your adversary and you will win fifty battles…

Taking Control of the Negotiation Process

Western culture: the main reason why most of aren’t keen to negotiate on a deal. Yet for small businesses in particular, the ability to understand the processes involved in a negotiation can mean the difference between profit and loss.

Knowledge is power and it can take as little as one day to grasp the fundamentals of successful negotiation. Once learned, you’ll be surprised at just how often these skills come in handy, at work of course, but in your everyday life too.

Let’s look at a few figures first. A successful 1 million business might make ten percent profit. There are plenty of organisations with that kind of revenue making no more than two or three percent pre-tax profit. Imagine then a tough year like 2008, when costs rose dramatically and major customers refused to accept price increases of any kind.

By honing your negotiating skills, it’s quite realistic to expect improvements in your deals, depending on which commercial area you’re in, three or even five percent more might be feasible. The biggest challenge is to first accept that there’s a set of highly effective rules for negotiating and that professional buyers in particular know exactly how to use them.

Perception is reality. It is usually within your control to manipulate the environment of a deal and that one advantage can make a huge difference to the shape of a deal. Suppose you are buying a car and having looked around it, you’ve decided it’s exactly what you want. The sticker price on the car is 3,950 ‘or nearest offer’. So what does ‘or nearest offer’ tell you? It means the vendor doesn’t expect to get 3,950 at all. And what do you think he might be aiming to get?

So now you’re thinking he’d be happy with 3,700 and you haven’t done a thing yet.

How to Relax and Put Your Negotiations on Auto-Pilot

You are in the middle of an intense negotiation for a big contract with a large company. If you are able to come to an agreement, you will make one of the largest commissions you’ve ever made. You are almost there, and then your negotiating opponent throws you for a loop by asking for a last-minute concession on the price.

What do you do?

If you have a proper system of negotiation in place, it will be easy for you. You will just react based on pre-defined rules that you’ve already set for yourself before starting the negotiations.

You do have a set of rules and a system in place, don’t you?

If not, it’s time to put one into place.

First, you will need to define the desired outcome of the negotiation. What is your ultimate mission and purpose? What does a successful outcome look like for you?

Within that framework, there will be plenty of smaller agreements to come to before the big agreement is made. So, you will need to draw out a map, at least in your mind and preferably on paper.

Start at square one and list all of the potential forks in the road. What decisions could you possibly have to make during the course of the negotiation? If you are offering consulting services for example, you may think of some of the following:

How many hours will you be expected to dedicate to this client?

Will you be working on-site or off-site?

Will you be the only one working on the client’s project or will there be a team available?

Are you offering a guaranteed level of performance?

Are you going to bill up-front, after the work is done, or in small increments throughout?

For each one of these questions, you should already have an answer.

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