Negotiation in B2B relationships
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Transcript of Negotiation in B2B relationships
Negotiation in B2B RelationshipsRelationships
Workshop
Agenda
• Negotiation ‘What It’s Not’.
• Negotiation ‘What It Is’.
• Phase One – Preparation• Phase One – Preparation
• Phase Two – Bargaining
Negotiation – What It’s Not
• Negotiation is one of the more abused words in the English language.
• Some believe negotiation is a code for: – Manipulation
– Lying– Lying
What people say about Negotiation
• ‘The old idea of a good bargain was a transaction in which one man got the better of another. The new idea of a good contract is a transaction which is good for both parties to it’parties to it’
Judge Louis D. Brandeis
What people say about Negotiation
• ‘I’ll make him an offer he can’t refuse.’ Mario Puzo (Don Corleone, The Godfather)
• ‘Diplomacy is the art of letting someone else have your way’.
Daniel Vare (Italian Diplomat)
Negotiation – A Definition
Negotiation is – ‘conference and bargaining for mutual agreement’.
For Negotiation to take place
1. Both Parties must have some level of commitment to do a Deal.
For Negotiation to take place
2. Both Parties must have the authority and the will to vary the terms of the agreement.terms of the agreement.
Negotiation
• Phase One - Preparation
• Phase Two - Bargaining
Preparation
Step 1 – Set Objectives
Win - Win
‘Their Shoes’‘Their Shoes’
Objective
Us
• To secure major retail account representing $5 million in new business p.a.
Them
• To find a supplier who can supply product to meet our immediate price objectives and customer requirements.p.a. and customer requirements.
Preparation
Step 2 – Decide our Fallback Position
Imagine Total FailureImagine Total Failure
Decide Best Alternative
Fallback
Us
• To secure $1 million of business for high margin niche products only.
Them
• To find another supplier.
Preparation
Step 3 – Prioritise your Tradeables
What are the Tradeables?What are the Tradeables?
What are the Priorities?
Prioritise Tradeables
Us Them?
Product Range
High Low?
Rebates Low High?Rebates Low High?
Catalogue funding
Low High?
Product training
High Low?
Preparation
Step 4 – Set Best and Worst Trading Limits.
Best = Best allowing Win – WinBest = Best allowing Win – Win
Worst = Walkaway to Review
Best and Worst Limits
B W B W
Product range
Range 10 product lines
Range only 3 product lines
? ?
Us Them
Rebates 1.0% to sales 2.5% to sales
? ?
Catalogue funding
$60,000 p.a $150,000 p.a ? ?
Product Training
15 Training workshops
5 training workshops
? ?
Preparation
Step 5 – Plan ‘What If…’ Strategies and Supporting Arguments.
Plan Options around TradeablesPlan Options around Tradeables
Plan Creative Solutions
Bargaining
Step 1 – Get the Issues on the Table.
Start the Process
Don’t Show your priorities.Don’t Show your priorities.
Bargaining
Step 2 – Ask Questions
For Information and Motives
To create movementTo create movement
Bargaining
Step 3 – Clarify
Paraphrasing
SummarisingSummarising
Bargaining
Step 4 – Trade Concessions
If … then …
Bargaining
Step 5 – Conclude
Summarise
Write it DownWrite it Down
Negotiation Mistakes
1. Neglecting the other sides problem
2. Letting price bulldoze other interests
3. Letting positions drive out interests
4. Searching to hard for common ground
5. Neglecting BATNAs (“best alternative to a negotiated 5. Neglecting BATNAs (“best alternative to a negotiated agreement”)
6. Failing to correct a skewed vision
Source: HBR Six Habits of Merely Effective Negotiators by James K. Sebenius April 2001
Bibliography
1. Do We Have a Deal? Gavin Kennedy, Gower 1991
2. Negotiation Skills, Baden Eunson, John Wiley & Sons 1994
3. Getting to Yes, Roger Fisher and William Ury, Penguin 1981.
4. Account Strategies for Major Sales, N. Rockham, Gower 4. Account Strategies for Major Sales, N. Rockham, Gower 1988.
5. It’s a Deal – A Practical Negotiation Handbook, P. Steele, J. Murphy, R Russil, McGraw Hill 1989.
6. Negotiating: Everybody Wins, V. Helps, BBC Books 1992.
7. Planning for Behaviours for Win – Win Negotiations, Research papers available from Huthwaite Research Group Ltd
You are welcome to contact Nigel Bairstow at B2B Whiteboard your source of B2B Asia / Pacific marketing advice
http://www.linkedin.com/pub/nigel-bairstow/6/41b/726
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