Effective negotiating requires clear thinking and a constructive approach
It is necessary to have a clear understanding of what for you are the most important issues and at the same time what for you arc less important. Try to identify aspects in the second category where the other side will be very happy to gain concessions. Give what is not so important for you, but is valuable for the other side.
To do this, you have to do the following:
• Check every item of what the other side wants. Ask how important items are and look for flexibility.
• Do not guess their opinions or motives – you could be wrong, or they won't like your speculation.
• Note the other side's answers, but don't immediately say what you think.
• Avoid being forced into considering one issue alone, consider two or three at once – aim for an agreement to a package.
If there are big differences between the two parties, you have a choice of these options: to accept, to reject, or to continue negotiating. If you decide to continue, then the options in the next round are:
• to make a new offer
• to seek a new offer from the other party
• to change the shape of the deal (vary the quantity or the quality, or bring in third parties)
• begin bargaining.
Your bargaining should be governed by three principles: be prepared, think about the whole package, and be constructive. In preparing, you must identify the issues, and prepare your bargaining position. You need:
• an essential conditions list – issues where you cannot concede anything
• a concessions list – issues where you can make concessions
• to grade the concessions from the easiest to the most difficult, where you need most in return.
As for the package, you must look for agreement in principle on a broad front. When the time comes for compromise, each party will concede on one issue if they win a concession on another.
The final principle is to be positive and constructive. You should be fair and cooperative, even during difficult bargaining. This approach is most likely to move the negotiation towards a settlement that both sides feel is to their advantage.
Adapted from "Negotiating," by Bill Scott. Gower Handbook of Management (London: Gower Publishing Ltd., 1988).
2 Read the text again. Identify the following:
a) how to respond to what the other side wants
b) three ways to change a deal
c) three actions to prepare for bargaining.
3 Listen to a recording of part of a negotiation between Arco, a manufacturing company, and a research company called Central Auto Systems, CAS.
Twelve months ago Arco and CAS agreed to a joint development program to manufacture an engine designed by CAS. However, Arco has recently gone through a major restructuring of its activities. The company has decided not to proceed with the joint venture for the new engine.
The negotiation is about ending the joint venture and agreeing to compensation for CAS. In the extract, you hear Joe Blassini and Chris Pass of Arco talking to Elaine Chan of CAS. Listen once and mark the following as true (T) or false (F):
a) The reversal of rights is linked to the compensation agreement.
b) Joe Blassini thinks Arco's work on the fuel system must be considered.
c) It will be difficult for CAS to find a new partner.
4 Listen again. Identify examples of language used to link agreement on one issue to agreement on a different issue. Complete the blanks in the sentences below:
a) We want compensation to _____ our work _____ _____.
b) Yes, we _____ _____ to that, _____ _____ _____ we can accept your compensation demands.
c) So, we need to _____ the question of rights to compensation.
d) The problem is that _____ _____ revert all rights, we _____ _____ keep the compensation within _____ _____.
Make sentences which include concessions based on the cues below. The first is done for you as an example.
a) a better warranty / quicker payment terms
We could offer a better warranty, if you would agree to quicker payment terms.
b) free delivery / larger order
c) free on-site training / small increase in price
d) 5% discount / payment on delivery
e) extra $50,000 compensation / agreement not to file a lawsuit
f) promise to improve safety for staff/ agreement on new contracts
g) better working conditions / shorter breaks
Work with a partner. Choose an item that one of you owns and the other would like t buy, for example, a house or car. Work separately to prepare a negotiation based on the sale of the item you choose.
Decide on various bargaining points, including price, extra benefits, guarantees, payment terms, delivery time, part exchange of other item(s), etc. After brief preparation, begin your negotiation, each making an opening statement before beginning bargaining over the details of the agreement.
Note: You must reach agreement!
Accepting and confirming
An essential requirement in negotiating is to be absolutely clear what the other party is proposing and to state clearly what is being agreed. Inevitably, this involves a degree of repetition and paraphrasing. In the recording you are going to hear there are examples of this kind of repetition.