Business Negotiations

Business Negotiations
Part 2

Osvaldas Čiukšys
sadlavso@hotmail.com

Main stages of negotiation

Preparation

Exchange of
Information

Direct
Negotiation/
Bargaining

Closure and
Commitment

2
© Business Negotiations, Osvaldas Čiukšys

“8 step” approach
by John Benson
Gavin Kennedy
John McMillan

Theory is based on 4 crucial phases of negotiation and 4 minor
steps within the major phases:

A. PREPARE
B. ARGUE
C. Signal
D. PROPOSE
E. Package
F. BARGAIN
G. Close
H. Agree
3

Negotiations Bargaining
zone

Offers
Counteroffers

Argumentation
Opponents Discussion Opponents

Trade – offs
Concessions

Deal zone

4

7 stages of direct negotiation (bargaining):

1 • Opening
2 • Presenting positions
3 • Influencing positions
4 • Looking for possible agreement
5 • Adjusting positions
6 • Agreeing solutions
7 • Closing


Negotiations: opening (1)
Create cooperative and constructive atmosphere:
1. Inquire about trip, hotel, flight etc.
2. Introduce your team
3. Announce time table: information about coffee breaks,
lunch, production site visit etc.
4. Ask whether sent documents and information were well
received, are sufficient and understood by the other side
5. Ask does the other side need some other help or assistance:
separate room, copying or other office services


Negotiations: opening (2)

Take the initiative:
1. Propose and agree the goal of the meeting
2. Announce (correct) the agenda and issues to be
discussed
3. Shortly summarize (make comments and
corrections) the situation and already agreed
issues
4. Invite your opponents for comments, correct them


Possible agendas (1)

1. Push: start with important issues

2. Procrastinate: you begin with less important issues

3. Assemble: put together groups of issues both
parties are likely to agree, forming packages for
agreement

4. Classify: classify issues like financial on one side, and
all other issues on the other

5. Sort: review all issues to be negotiated and decide if
there are any that can be settled quickly


Possible agendas (2)
6. Select: you suggest the order of issues to be
discusses. Never agree to this formula: who picks up
an issue to be discussed gets strategic advantage
7. Consult: you agree agenda prior to it and then revise
the schedule and announce it
8. Concede: put some issues on the table for
discussion you willing to concede. Because of your
concessions you can require and anticipate
concessions in return
9. Soften: make concessions not important for you on
the first stage . When the opponents are comforted
negotiated the real deal
10. Appetizers: start with easy issues to agree on.” If
we did it so easy, lets do this one as well “


During the Negotiation
 Your ultimate goal: to learn and find out what they
really want and aiming for

 Benefit from the momentum of the first impression

Listen
Listen to how Analyze and
carefully to
they say it observe
what they say


Negotiations: a good start
1. Pay attention to trivial information
“I hope things go well this time”, “We reserved the hotel for two
days”, “We’ve been having a good year, but stock has increased since…”

2. Create a diversion
Make some jokes. Build self confidence, test the atmosphere. If they
feel nervous or want to start immediately, expect hard negotiation…

3. Be diplomatic
Introduce the issues in relaxed manner, even if you intent to attack and
play tough later on. Do not provoke immediate back fire


Importance of the Beginning

 The initial stage of negotiation is very
important (even none of the issues are
resolved) because the atmosphere and tone
are set

 If your attitude differs radically from that
of the other side, experience show that it is
only during this initial phase that there is a
chance of making any changes


Negotiations: “don’ts”
1. Do not talk unprepared, talk to the point
2. Do not make long statements, use short sentences
3. Do not interrupt the opponents and the other
members of your team
4. Do not change or modify the agreed strategy without
proper analysis and common agreement
5. Do not let the other side to change your strategy and
agenda, keep the initiative
Take breaks, do not act spontaneously!


Negotiations: “do’s”
1. Let the other side talk
2. Use pause and time intervals in your speech to stress
the importance of the point you are making
3. Use prepared arguments: hard working in
preparation – easy in improvisation
4. Ask questions, do not provide immediate answers
5. Ask for explanation and justification: why you
consider its good for us both, for my company, for
me?
Take breaks, do not act spontaneously!


Making the First Offer (1)
• Making the offer first you do the anchoring
• Setting the rules – taking the initiative
• Your figures and arguments are first to be discussed
• It puts the opponent into “must react” position

Explain:
why you making this offer
but
not what you are offering or proposing


Making the First Offer (2)
• If the situation is not completely clear, let the
opponents to make the first offer
• Ask the opponents their opinion how to solve
the situation/come to the agreement
• If you are not sure about your arguments,
calculations etc., ask your opponents to discuss theirs
Let them disclose their intentions:
what we can do to solve this issue?
or
help us to help you


Negotiations, the Real Life:
the factor of “nuclear bomb”
If there is a chance – make yourself “a nuke bomb”
You don’t need to use it, but better to posses one, usually it
makes your opponents more cooperative:

 research for a sensitive information
about your opponents
 look for irregular business practices of
your opponents
 look for unsatisfied clients, bad business
cases…

Let them know, that you know….

17

Negotiations: some rules to follow
1. Never (ever) accept the first offer
2. Leave yourself a room for maneuver: don’t be too
detailed
3. Nothing is for free: let them work hard for every (even
not important for you) concession
4. Be constructive, not destructive: don’t react to and be
imprisoned by tricks and abuse from the other side
5. Always be ready to terminate negotiation if it brings
bad results to you and let them know (and feel) it


Arguments: soldiers
of your negotiating army

• Arguments is opposite of persuasion. They deal
with logic while the other deals with emotions
• Arguments appeals to reason (or what seems to
be a reason)
• Argument play up your own points and minimize
the importance of the other side


Make your arguments stronger

• Use comparisons
• Refer to best practices
• Use expert opinion
• Use presentations, statistics , reports, studies etc.
• Visualize your argumentation: presentations,
charts, samples etc.

People believe what they see…


Organize your arguments
1. Deduction: What is true of a group is also true for its
members. “This consortium is solvent. The business is
under the consortium, therefore it is solvent”
2. Induction: If a large number of members share the
characteristic, it is very likely that other members will
share it too. “This consortium is insolvent. This business is
under the consortium, therefore it might well be in
difficulty too”
3. Analogy: A particular situation is similar to another.
“This business shows the same trend as another, the
market is the same, so outcome of similar operation could
well be the same”
4. Hypothesis: Let us suppose that we go ahead with your
proposal. What do you think would happen? Suppose that
the bank withdrew the credit or supplier abandoned us, or
we did not get this order?

Prepare the order of your arguments

First come strong arguments. These put the others side on the
defensive. You show your seriousness

Secondly, present the weaker arguments. They are weaker but it
doesn’t mean that they are not justifiable. Make as much of
them as you can. Let them be tired to work on it

Finally, come with your “sledgehammer” arguments which will
have the strongest impact on the solidity of their position


Formulating your offer (1)
Find the common interest and exchange it to concession from the opponent

You
1 2 3 4 5 Opponent

23

Practical example:

Buyer’s (Your) interest: to buy 10 computers with maintenance service for
possibly lowest price to arrange new office

Seller’s interest: to sell to you 12 computers (at least 10) with maintenance
service

Your tasks:
1. Lowest price
2. 10 computers
3. Maintenance
1 2 3 4 5
Seller’s tasks:
5. 12 computers
4. 10 computers
3. Maintenance

24

Making concessions (1)

Concessions Negotiation rounds

10 2 2 2 2 2

10 1 2 3 4

10 4 3 2 1
• Start from small, not important concession and finish with bigger one
• Trade your concession for a bigger one from your opponents
• Package: “ we are ready to give up on issue A if you agree
to give us B and C”
25

Making concessions (2)
1. Make your possible concessions list (invent and create
as more as possible)
2. Group them to minor, less and really valuable to you
and your opponents
3. Make the list of possible concessions you want to
receive from your opponents and group them
4. Shape up your proposals in packages and make a
trade-offs: exchange the package made of lower value
concessions to one of real importance


Shaping up a proposal

Separate THE EXPLANATION phase and THE JUSTIFICATION phase

If you can meet the following conditions 1…,
2…, 3…, n…, we will be prepared to consider
offering the following: 1…, 2…, 3…, n….. Our
reason for doing so are a…, b…, c…, …z...


Phrasing a proposal
1. Use a pause in your speech prior to making any offer
2. Use positive body language: lean forward slightly,
establish a direct eye contact
3. Use short sentences, do not go into details
4. Explain why your offer is valuable for your opponent,
the whole agreement and joint business
5. Ask the opponents to comment on your offer, let them
repeat it with their own words
6. Make comment similar to “we are almost near the
agreement on this issue”


The biggest mistake when making proposals

• The biggest mistake inexperienced negotiators are
making is warning the opponents about negative
answer or tough offer. They signal about it in advance
by introductory (warning) phrases and non verbal
behavior
• Decided to attack – do not warn your opponent

29

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