Objective of Negotiation
Objective of Negotiation
Several objectives are common to all procurement or sales negotiations:
To obtain the quality specified
To obtain a fair and reasonable price
To get the supplier to perform the contract on time
In additional, the following objectives frequently must be met
To exert some control over the manner in which the contract is performed
To persuade the supplier to give maximum cooperation to the purchasing company
To develop a sound and continuing relationship with competent suppliers
To create a long-term relationship with a highly qualified supplier
The Negotiation Process
Formal negotiation process consists of 3 major phases
1. Preparation
90% or more of time involved in a successful negotiation is invested in preparation of the actual face-to face discussion. the negotiator must
1. Possess or gain technical understanding of the items or service to be purchased
2. Analyze the relative bargaining positions of both parties
3. Have conducted a price or cost analysis
4. Know the seller
5. Be aware of cultural nuances
6. in every conceivable and practicable way,be through prepared
1. Establishing objectives
As a part of preparation process Negotiation objectives must be specific General objectives such as “lower that previous price”, “good delivery” are inadequate
2. Face-to-face discussion
Establishing trust is a key ingredient in effective negotiations Several activities which can facilitate the development of a reasonable level of trust Agree on a common goal or shared vision
Expand the pie Use fairness criteria that everyone can buy into
Capitalize on network connection Find a shared problem or shared enemy
Focus on the future (instead of past) Use shared procedures
3. Debriefing
Most people have little opportunity how to learn how to negotiate effectively
The problem is not lack of experience