Exercise 4. Read the following three negotiations and answer the questions:
a) Where are the people and what is being negotiated?
b) Which negotiation is win-win, which is lose-lose and which is win-lose?
Negotiation 1.
| Husband:
| What about Majorca this summer? We should start planning or everything will be booked.
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| Wife:
| Oh, not another beach holiday? You want to go to Majorca although you know I hate lying and doing nothing. I’d like to suggest something active like trekking in the Alps.
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| Husband:
| Walking up and down mountains. You can’t be serious!
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| Wife:
| You don’t know anything about it! Come and have a look at the brochure. There’s a lot of sun too in the Alps.
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| Husband:
| I don’t want to know anything about it. I need two weeks to relax, eat
too much and do nothing. There’s no way I’ll walk around mountains, in spite of the sun.
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| Wife:
| I’ll go to Majorca for a week provided we go to the Alps for a week.
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| Husband:
| No way!
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| Wife:
| We do what you want every year. Can’t you compromise this time?
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| Husband:
| I can meet you half way. Let’s find an island with a mountain on it. That way you can wander around on it and I can lie on the beach. Can you go along with that?
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| Wife:
| That’s out of the question! Either we do something together or I don’t want to go. That’s my bottom line.
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| Husband:
| That’s makes two of us. That means that neither of us is going on holiday this year. Great!
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Negotiation 2.
| Man:
| Thank you for showing me round. It’s a beautiful house.
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| Seller:
| Yes, I know. I don’t want to sell it, but my husband has got a job in New York so we have to move.
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| Man:
| So, how much are you asking for it?
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Unit 12
| Seller:
| I’d like $600,000.
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| Man:
| Frankly, I think that’s a lot for this house. Is that your best offer?
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| Seller:
| I think it’s a fair price. Remember there is a very big garden and a new garage.
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| Man:
| True, but look at the windows. You need to replace all of them. And the floor downstairs doesn’t look good. I would only pay that price on condition that you do all the repairs.
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| Seller:
| You have a point there. I should repair the windows. However, I don’t have time to do all of the work. If I understand you correctly. You will take the house If I lower the price because of renovations?
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| Man:
| Exactly. Look, you want a quick sale, and I really like the house. If you go down to $550,000 I’ll take it and you’ll have your money at the end of the week.
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| Seller:
| Done! Let’s draw up the contract.
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Negotiation 3.
| Modelling agent:
| If you want Tania to model your winter collection, it will cost $10,000 an hour.
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| Shop owner:
| That’s far higher than I expected. We only need her for two hours.
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| Modelling agent:
| Fine. That’ll cost $20,000 for the evening. It’s at your new shop in the centre of town, isn’t it? Nice location.
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| Shop owner:
| Look, the model Inbooked can’t make it. Our new shop opens on Friday and I really need a model but we talk about the price again?
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| Modelling agent:
| No, I don’t want to discuss this. You know Tania is almost a top model. $10,000 is the pie if you want a famous face. I can’t go any lower than that. Take it or leave it.
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| Shop owner:
| I have no choice. But can’t we take a long term view? If Friday is a success then I’ll book Tania for the spring and summer collection. Surely you can give me a discount for three firm bookings?
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| Modelling agent:
| Afraid not. As I said, Yania is in demand at the moment.
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| Shop owner:
| Look, I’ll pay the 20,000 as long as she stays for extra hour and chats to my regular customers.
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| Modelling agent:
| So what you’re saying is you want some more than two hours work. No deal! You can have Tania for two hours and not a second longer. If you want extras, you have to pay for them.
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| Shop owner:
| I think that’s very unreasonable, but, OK, it’s deal. $20,000 for two hours, but, I won’t do business with you again.
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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.
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| Manager:
| That’s what you say …
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| 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 don’t want the press involved in this.
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Extract 2.
| First man:
| The price includes all the land and the buildings.
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| Second man:
| Yes. What about the payment terms? With better terms, you could accept a lower price?
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| First man:
| No, I think terms are not the problem. The issue is price, Mr Ford. We have had several offers.
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Extract 3.
| Woman:
| Yes, what looks good here is the practical qualities of the building and the use of natural materials, stone, glass, wood. It’s very attractive.
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| Architect:
| I thought you’d like it. But we’d like to discuss some other possibilities. There are different options – we need to get things right – absolutely right.
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| Woman:
| Yes, we need to talk about the time schedule, too.
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| 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
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| B.
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| 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.
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| C.
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| 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.
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Negotiation strategies.
Exercise 10. 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 don’t agree, say “no”.
b) Support your proposal with reasons and arguments.
c) Ask questions to find out what your partner‘s position is.
d) Keep repeating your demands.
e) Look for alternative solutions.
f) Take time to think.
Exercise 11. 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,
we’ve always included free delivery in the price. But unfortunately, our
transport costs have risen so much in the last few months that we’re now
going to have to charge for delivery.
Xavier: Pay for deliveries? That’s no way! None of your competitors charge for
deliveries!
Viktor: Not for the moment, no. But we think they’ll have to take a similar step
very soon. After all, their costs have risen just as much as ours!
Xavier: In the meantime, it’s totally unacceptable. We’ll 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,
we’ve always included free delivery in the price. But unfortunately, our
transport costs have risen so much in the last few months that we’re 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: We’d 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, that’s right.
Yacoub: Let me think… Here’s 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 you’d gain because you wouldn’t
have to deliver so often. And you could carry more in each load which
would be economical.
Viktor: So you’re saying you’d be willing to buy in large quantities?
Yacoub: With flat rate, we’d have the pinion to save money by doing that, yes.
Viktor: Well, it sounds like a reasonable idea… But I’ll need to do some
calculations to see how it would work
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?
Unit 12
| 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 that’s 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 didn’t win the business on that day. So, the short answer is you don’t always win. I always want to win, but I don’t always expect to win – but I certainly expect to deliver the objective that we went in to achieve.
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Exercise 7. Read the second part of the interview to find out what three negotiating tips Warren gives. Wrote them down:
Tip 1 ………………………………………..
Tip 2 ………………………………………….
Tip 3 …………………………………………..
| 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 I’ve worked with, and it’s more around avoiding classic errors. And I guess the first one is to identify who the decision maker is. I’ve lost count of the occasions at every level, from first-line salesman through to board director, board to board negotiations where I’ve seen fantastic presentations, superb dialogue and the person that’s been sitting across the table, so to speak, is not the decision maker. So that’s the first tip, make sure you know who you’re talking to. The second one is that all salesmen, if they’re good salesmen, tend to be very enthusiastic about what they’re 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 buyer’s need. For example, in our own case I’ve seen on many occasions people basically go straight to the point – «We’re here to sell you Coca-Cola, it’s the world’s number one brand, you must want it.» What they haven’t done is to establish the buyer’s need. The important thing is to understand the buyer’s need. Now, it’s not impossible to sell without establishing that need. But it tends to mean you’ll 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, you’ll probably switch. So I think it’s very important.
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Unit 12
| Kevin Warren:
| My favourite one, and I’m probably in danger of doing it myself now, is once you’ve made the sale, shut up. I think it’s very important: close the sale, reinforce the buyer’s decision– everybody likes to feel they’ve made a good decision – and then leave.
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