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Wednesday, July 16, 2008

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Make It a Good Deal!

Negotiation is something everyone does, knowingly or otherwise. A child negotiates to do homework later, watch his favourite TV programme or for a reward for passing his examinations. An employee negotiates for a raise or promotion. You may negotiate to buy or sell a house.
These are just examples of numerous negotiations that take place every day. If they are handled with the right skills, it can make significant difference to the outcome.
The moment you are given the discretion to grant any kind of concession to an "opponent", you are in the role of a negotiator. And if you have an exchange item that is of a perceived value to your opponent, you are likely to go for an agreement rather than a deadlock.
In the first example, the parents can use the situation as an opportunity to structure a positive study plan together with their child, who will be positively motivated as he is the main stakeholder. By determining the goal jointly, they can work out a plan to achieve results that would satisfy both parties.
Having a structured arrangement to achieve the goal is more constructive than making a casual promise.

Preparation
The most important stage of the negotiation process is the preparation and planning stage. This is where you identify the goal, objectives, the strategy and decide what tactics to use.
Gathering information and using it to analyse the situation is critical. Find out as much as you can about your opponent and identify any advantages.
Anticipate your opponent's list of demands, and identify which are the ones you will have to make decisions on. Knowing which issues you have to make a spontaneous decision about and which ones you need to buy more time for is important because you cannot afford to make a mistake.

Strategies
Strategy in negotiation refers to a win-win, win-lose or lose-win outcome. You can expect to build a long-term relationship in business only when your customer is always on the winning side. However, you might consider using a lose-win strategy if you want to break into your competitor's stronghold to let the customer try your product for the first time.
At the start of a negotiation, the one who makes the first move is referred to as the "opening gun". There are advantages and disadvantages of this position, but whatever you do, never adjust your opening.
For example, you are prepared to open a negotiation at $1,000. But your opponent opens at $600. If you panic at the 40 per cent difference and name your opening price at $800, you opponent has gained an advantage. Therefore, never let your opponent's opening affect you.
The next stage in negotiation is called the "exploration stage". This is when the more experienced negotiator can be identified and both parties find out more about each other's personal and company agenda.
A series of well-placed questions and the probing technique are applied at this stage to get vital information that will determine your next step. Use appropriate comments like, "that's interesting, tell me more" and "help me to understand your constraints".
During the discussion, the professional negotiator will always take notes and re-confirm important details and summarise the meeting at the end.

Tactics
Many tactics are used in negotiation, and some might be even considered unethical or unprofessional. There are four main pressure tactics:
  • Time pressure: Shortening and delaying the deadline
  • Physical pressure: Dragging the negotiation and skipping meals etc
  • Mental pressure: Loss of sale or account, not meeting targets or quota
  • Financial pressure: Loss of commission, revenue or profitability

To be a good negotiator, you need to have a comprehensive understanding of the negotiation process, know your own strengths and weaknesses as a negotiator - and get some practice.

[Source:
The Straits Times, CATS Recruit - Wed, June 27, 2007
by Michael Low, Sales Training Consultant at Dynamic Life]

Find more references at Negotiation Skills!



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