Unit 12
Exercise 5. Read the following three extracts, each part of a different type of negotiation. Match each negotiation to one of the three types described below, A, B or C.
Extract 1.
| Lawyer: | Yes, I understand what you are saying, but the facts are clear. The company was responsible for carrying out all the safety checks. Those checks were not made. |
| Manager: | Thats what you say |
| Lawyer: | There is evidence that safety practices were poor. You know that. I advise you to make a settlement, Mr. Cooper. If not, I think it could be worse for the company. You dont want the press involved in this. |
Extract 2.
| First man: | The price includes all the land and the buildings. |
| Second man: | Yes. What about the payment terms? With better terms, you could accept a lower price? |
| First man: | No, I think terms are not the problem. The issue is price, Mr Ford. We have had several offers. |
Extract 3.
| Woman: | Yes, what looks good here is the practical qualities of the building and the use of natural materials, stone, glass, wood. Its very attractive. |
| Architect: | I thought youd like it. But wed like to discuss some other possibilities. There are different options we need to get things right absolutely right. |
| Woman: | Yes, we need to talk about the time schedule, too. |
| A. | A business negotiation can be similar to a discussion between friends fixing a social engagement. Two parties have a shared objective: to work together in a way which is mutually beneficial. Proposals and counter-proposals are discussed until agreement is reached. Both sides hope for repeat business. This is an agreement-based negotiation. Sometimes referred to as a win-win negotiation | |
| B. | Two other types of negotiation are less founded on mutual benefit, but on gaining the best deal possible for your side. In the first type, both teams negotiate to independent advantage. This means that each team thinks only about its own interests. In this type, a seller typically seeks to sell a product but is less concerned about repeat business. | |
| C. | A third type is the negotiation to resolve conflict, for example, in a contractual dispute. Here, it is possible that each party regards the other as an opponent and seeks to win the argument. This is a win-lose negotiation. |
Exercise 6. Kevin Warren, an Executive Vice President at Coca-Cola (UK), is talking about negotiating. Read the first part of the interview.
What do the letters L-I-M stand for?
What was his L-I-M?
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| Interviewer: | When you go into a negotiation, do you always expect to win? |
| Kevin Warren: | I guess the honest answer is that I always have a clear expectation of what I expect to achieve, I guess I would like to always win. Let me illustrate that for you. Something that was sort of shared with me early in my career was the mnemonic L-I-M and thats Like, Intend, Must. What would I like to do, what would I intend to do, and what must I do? And this is probably well illustrated by a recent contract that we negotiated in the UK with a major leisure company. And, I guess our like was, we would like to win the business there ad then, in the negotiation on that day. I guess our intend was that we must leave that group thinking that we are a very professional and competent outfit who can best meet their needs. And I guess our must was, we must have done enough to keep the dialogue open and ensure that our competitor didnt win the business on that day. So, the short answer is you dont always win. I always want to win, but I dont always expect to win but I certainly expect to deliver the objective that we went in to achieve. |
Exercise 7. Read the second part of the interview to find out what three negotiating tips Warren gives.
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| Interviewer: | Could you give me some tips for negotiating? |
| Kevin Warren: | Yes. I think everybody has their own tips. But these are things that have worked for myself and the people Ive worked with, and its more around avoiding classic errors. And I guess the first one is to identify who the decision maker is. Ive lost count of the occasions at every level, from first-line salesman through to board director, board to board negotiations where Ive seen fantastic presentations, superb dialogue and the person thats been sitting across the table, so to speak, is not the decision maker. So thats the first tip, make sure you know who youre talking to. The second one is that all salesmen, if theyre good salesmen, tend to be very enthusiastic about what theyre selling. That could be a product or a service, or even a social occasion. And in their enthusiasm they focus on their need, rather than the buyers need. For example, in our own case Ive seen on many occasions people basically go straight to the point Were here to sell you Coca-Cola, its the worlds number one brand, you must want it. What they havent done is to establish the buyers need. The important thing is to understand the buyers need. Now, its not impossible to sell without establishing that need. But it tends to mean youll never have a long-term relationship. For example, because I never established your need, if another soft drinks supplier walks through the door and just offers you more money, youll probably switch. So I think its very important. |
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| Kevin Warren: | My favourite one, and Im probably in danger of doing it myself now, is once youve made the sale, shut up. I think its very important: close the sale, reinforce the buyers decision everybody likes to feel theyve made a good decision and then leave. |
READING FOR GIST
Exercise 8. Read the text about negotiations and choose the best title from the following:
1. Unsuccessful negotiations and how to avoid them.
2. How to make negotiations effective.
3. Skills for successful negotiations.
4. Bargaining and making concessions
In business negotiations good people skills, mutual respect and trust are absolutely essential. One of the aims of the first meeting is therefore for the two parties to develop trust and sound each other out.
This phrase can be made easier if you do your homework beforehand. Doing your homework means finding out as mush as you can about the company you are dealing with, about its needs and expectations, and about its negotiating style. It also means defining precisely what you want and what your conditions are, as well as deciding in advance what kind of concessions you are willing to make. If you are clear about those points and generally feel well-prepared, you will be able to handle the bargaining stage much more effectively.
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In this second phase, what you should be aiming for is a win-win situation. Obviously, it is easier to reach an agreement if both parties take away something from the deal. Getting to a win-win situation clearly requires a number of special skills, such as making concessions. There are three key issues to bear in mind when making concessions. Firstly, it may not be a good idea to start with your biggest one, as your prospect may then think you are desperate to strike a deal.
On the other hand, starting small and making gradually bigger concessions is not recommended, either, as this may arouse unrealistic expectations. Secondly, resist the temptation to make a concession whenever your prospect grants you one.
And thirdly, make sure your prospect is fully aware of the value of every concession you make.
Let us now turn briefly to three serious dangers which often lurk behind negotiations. The first pitfall to avoid is to allow the negotiation to drag on indefinitely. Agree on a schedule at the outset, and keep to it. The next one is the unwillingness to admit that your prospects arguments may be right and yours wrong. Finally, never exert undue pressure on your prospect either. Ultimatums, for instance, have no place in effective business negotiations.
READING FOR DETAIL AND VOCABULARY
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Exercise 9. Now read the text again carefully and find words or phrases in the text which mean the following:
| 1. | (business) a possible or likely customer | |
| 2. | (formal) to allow someone to have or do what they want | |
| 3. | (adj) felt or done in the same way by each of two or more people | |
| 4. | to wait, sometimes hiding in order to frighten, annoy or attack something | |
| 5. | a problem that is likely to happen in a particular situation | |
| 6. | to continue for longer than you want or think is necessary | |
| 7. | to decide together what will be done and how it will be done | |
| 8. | from the start (beginning) of something | |
| 9. | to follow an agreement or a rule | |
| 10. | to agree to do what someone wants you to do although you do not want to | |
| 11. | (formal) to use influence, authority or power in order to affect or achieve something | |
| 12. | (adj) (formal) not necessary or reasonable | |
| 13. | to try to find out someones opinions, ideas, feelings by talking to them |
CHECK YOUR KNOWLEDGE.
Exercise 10. Give the Russian equivalent:
| 1. | mutual respect | |
| 2. | to make concessions | |
| 3. | to do something beforehand | |
| 4. | to develop trust | |
| 5. | the negotiating style | |
| 6. | to feel well-prepared | |
| 7. | to handle the bargaining stage | |
| 8. | to aim for something | |
| 9. | to take away something | |
| 10. | to reach an agreement | |
| 11. | to bear in mind |
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| 12. | to strike a deal | |
| 13. | to arouse unrealistic expectations | |
| 14. | to resist the temptation |
DISCUSSION.
Exercise 11. You are going to take part in the discussion on Effective negotiations. These are questions which can be asked during the discussion. The working language of the meeting is English. So, translate the following questions into English and be prepared to ask the participants a few questions.
1. ?
2. ?
3. ?
4. ?
5. ?
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6. ?
7. ?
8. . ?
9. ?
10. ?
11. ?
12. ?
Exercise 1 2. Role play. Conduct a meeting dealing with negotiations.
Part 2. NEGOTIATION STRATEGIES.
Exercise 1. What is the best approach to negotiation?
The win win approach, where both you and the other person can feel happy with the outcome, or the I win you lose approach, where the strongest person gets the bigger share?
Which of these strategies are best for finding a win-win solution in a negotiation?
a) If you dont agree, say no.
b) Support your proposal with reasons and arguments.
c) Ask questions to find out what your partners position is.
d) Keep repeating your demands.
e) Look for alternative solutions.
f) Take time to think.
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Exercise 2. Viktor, a supplier, talks to two of his buyers, Xavier and Yacoub, about new delivery charges.
Read the two negotiations and answer the questions:
1. Which buyer is more likely to reach an agreement with Viktor?
2. How does Xavier respond in the first negotiation?
3. How does Yacoub respond in the second negotiation?
4. In the second negotiation, how does Viktor respond to the proposal?
Conversation 1.
| Viktor: | Well the thing is we need to discuss the delivery terms. Up to now, weve always included free delivery in the price. But unfortunately, our transport costs have risen so much in the last few months that were now going to have to charge for delivery. |
| Xavier: | Pay for deliveries? Thats no way! None of your competitors charge for deliveries! |
| Viktor: | Not for the moment, no. But we think theyll have to take a similar step very soon. After all, their costs have risen just as much as ours! |
| Xavier: | In the meantime, its totally unacceptable. Well have to switch to another supplier if you insist on this. |
Conversation 2.
| Viktor: | Well the thing is we need to discuss the delivery terms. Up to now, weve always included free delivery in the price. But unfortunately, our transport costs have risen so much in the last few months that were now going to have to charge for delivery. |
| Yacoub: | I see. Well, I can understand your position. But how much are you thinking of charging? |
| Viktor: | Wed like to propose five per cent on each order. |
| Yacoub: | Do you mean five per cent of the order value on each delivery? |
| Viktor: | Yes, thats right. |
| Yacoub: | Let me think Heres another idea. How about a flat rate of 20 euros per delivery? That way, we could save money by ordering less frequently and by ordering larger quantities. And youd gain because you wouldnt have to deliver so often. And you could carry more in each load which would be economical. |
| Viktor: | So youre saying youd be willing to buy in large quantities? |
| Yacoub: | With flat rate, wed have the pinion to save money by doing that, yes. |
| Viktor: | Well, it sounds like a reasonable idea But Ill need to do some calculations to see how it would work. |
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Part 3. PREPARING FOR A NEGOTIATION: NEGOTIATING SCENARIO AND NEGOTIATING STYLES.
PREPARING TO NEGOTIATE
Exercise 1. What considerations are important in preparing to negotiate?
Suggest as many as you can. Write down your ideas.
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Exercise 2. John Rix is an expert on negotiation. Read what he suggests, then compare your ideas with the ideas of John.
Before negotiations begin, preparing and planning are very important.
a) Get as much information as possible about the situation. If dealing with people from another culture, find out about its etiquette and negotiating styles: the way people negotiate what they consider to be acceptable and unacceptable behaviour, and so on. (See Culture Page).
b) Work out your initial bargaining position: what are your needs and objectives (the things that you want to achieve)? Decide your priorities (the most important objectives).
c) Try to estimate the needs and objectives of the other side.
d) Prepare a fallback position: conditions that you will accept if your original objectives are not met.
e) Perhaps you are in a position to influence the choice of venue: the place where you are going to meet. If so, would you prefer to:
Ø be on your own ground/on home ground (in your own offices)?
Ø go to see the other side on their ground (in their offices)?
Ø meet on neutral ground, for example in a hotel?
f) If you are negotiating as part of a negotiating team, consult your colleagues about points a) to e), and allocate roles and responsibilities.
NEGOTIATING SCENARIO.
At the beginning of a negotiation, follow these steps:
1. Meet and greet representatives of the other company and introduce your colleagues.
2. Offer coffee and small talk. Try to create a relaxed atmosphere.
3. Go to the meeting room and suggest that you get down to business.
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4. Have a clear agenda and a timetable.
5. First, give the background to the negotiations. Talking about the situation is a good way of reminding people of key facts and issues.
6. Then kick off the negotiations themselves, perhaps by finding out more about the priorities of the other side (the things they think are most important) or talking about your own requirements.
NEGOTIATING STYLES.
When youre negotiating with people from other cultures, its important to think about what they consider as normal behaviour (See Culture Page). Youll need to think about the following:
| body language | conversational rules | hierarchy |
| physical contact | relationship building | attitudes to time |
Exercise 3. Read the text in which a Management Communications Consultant, Diana Ferry, talks about preparing for a negotiation.
Mark the seven points below in the order in which she mentions them.
| a) | Identify your minimum requirements. | |
| b) | Prepare your opening statement. | |
| c) | Decide what concessions you could make. | |
| d) | Know your own strengths and weaknesses. | |
| e) | Know your role as part of a team. | |
| f) | Prepare your negotiating position know your aim and objectives. | |
| g) | Prepare any figures, any calculations and any support materials you want. |
I would have to say that one needs to be very prepared. I mean to know what you want from a negotiation, whats your purpose, your aims and objectives. Without clear aims, you cant have clear thinking, so aims are vital, to have a clear purpose. What do you want? A contract? You want a firm agreement or just to find out a few things?
Then, you have to know what the minimum deal is. Decide what is the least the lowest offer you can accept for a deal an agreement.
Then you have to know where you can give way or make concessions. So fixing concessions and targets is important. Without that you end up agreeing to something and later thinking Oh no thats a bad deal! =or you miss out on what seemed a bad deal at the time but was in fact not bad anyway.
Another area is to know your strengths and your weaknesses. If we take the classic marketing SWOT analysis you have to understand your own strengths and weaknesses as well as the opportunities and threats or dangers that exist outside, from competitors for example.
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So, know the market, know your strengths know about prices and other possibilities. If you do this, you can see the negotiation in its proper context.
Then you need to prepare all support information. Figures, numbers, pictures, whatever. It could be anything but the most important thing is that you can support what you say. It helps you to be clear.
Next, the team Hs to be well prepared, well managed. If its a team you have, everyone needs a clear role, clear responsibilities to have roles.
Finally, your opening remarks. Prepare what to say. Begin in general terms what you hope to achieve the general intention, what youre looking for. The opening statement sets up the right atmosphere, the right expectations; it helps things to be clear between the two sides.
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Exercise 4. Match each of the four aspects of good preparation on the left with why they are important on the right. If in doubt, check your answer by reading the text again.
| 1. | Knowing your aims and objectives | a) | means you can support your argument. | |
| 2. | Knowing your own strengths and weaknesses | b) | helps clear thinking and purpose. | |
| 3. | Preparing any figures, calculations and other materials... | c) | creates reasonable expectations. | |
| 4. | Preparing an opening statement... | d) | helps you to know the situation or context in which you want to work. |
WRITING.
Exercise 5. As a Management Communications Consultant, write the Recommendations section of a report outlining your practical suggestions on how to train staff for successful negotiation. (Write your recommendations on how to train the staff to be successful in a negotiation).
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Part 4. MAKING AN OPENING STATEMENT.
Exercise 1. Most formal negotiations begin with an opening statement from each side. What do you think an opening statement should include? Write down your ideas.
Exercise 2. Read the conversation between a small Singaporean software company called LP Associates and a possible partner, Kee Ltd. You will read part of an opening statement from Stella Wang, the Production Manager at LP Associates.
Tick (*) four of the eight statements given below the text which best represent what she says. (Students should identify four broad objectives of the negotiation).
Well, thank you for coming here today. As you know, we have a busy agenda. May I begin by outlining some basic thoughts that we have on this meeting? First of all, we see it very much as a first meeting, a preliminary negotiation to identify areas in which we can perhaps work together on certain products- prototype products that we have developed. There are two, possibly three, ways in which we might go forward. Id like to summarise these under three headings. First, development projects, second license agreements. The third is the possibility of some kind of consultancy relationship. Is everyone happy if I say a few words about these to begin with? Right, well. First of all, joint development projects. This is
1. LP Associates want to reach a final agreement in this negotiation.
2. These are preliminary talks.
3. The two parties want to resolve a conflict.
4. They want to agree on a name for the joint venture.
5. LP Associates would like to consider joint product development.
6. They would also consider license agreements.
7. LP Associates want to agree a complete sale of their ideas.
8. They want to consider working on a consultancy basis.
DISCUSSION.
Exercise 3. Compare Stella Wangs opening statement with the suggestions you made at the beginning of this section.
a) What did she include that you also suggested?
b) What other things did she include?
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Exercise 4. Suggest phrases for each of the following at the start of a negotiation.
a) Welcome the other side.
b) Develop small talk (trip, weather).
c) Mention plans for lunch make your visitors feel welcome (see city centre/local restaurant).
d) Suggest you start talking about the main subject of your meeting.
e) Introduce a colleague (Luke Fox, Marketing Department).
f) Explain general aim or purpose of the meeting (preliminary/exploratory).
g) Say what your side wants from the meeting (establish beginnings of a partnership /learn about supply systems /price variations and supply costs)
Exercise 5. Try to bring together many of the phrases above in a single opening statement.
Exercise 6. Choose one of the following situations to prepare an opening statement in a negotiation. Remember to include welcoming remarks and some general comments on your expectations for a successful meeting and an agreement which leads to a lasting partnership.
Situation 1.
Your company, Ultra Compo, is meeting representatives of OHTA Inc. from Tokyo. OHTA Inc. wants to set up an agency in your country to distribute its electronic components.
Objective.
Exploratory talks to:
a) know more about the products;
b) find out about OHTAs existing international distribution network;
c) discuss in general the terms under which the two companies could cooperate.
Independent objective: to internationalise your own companys activity and extend your product range.
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Situation 2.
You are interested in buying some land in a suburb of Lima in Peru, where you want to establish a distribution warehouse to serve the Andean region of Latin America. You have a meeting with the lawyers acting for the landowner, PuertosCallao S.A., a port authority in Lima.
Objective.
Exploratory talks to find out:
a) more about the land, its exact location relative to the port, airport, city centre, etc.;
b) the cost of a land;
c) the present condition of the land existing buildings, etc.
Independent objective: to secure the land on the lowest possible terms, either by buying it now for cash, or getting a deal spreading costs over a longer term at low interest, or leasing the land.
