Introduction to Negotiation

What is Negotiation? Negotiation happens to you every day, in all types of situations – it’s a common facet of everyday life. In business terms negotiation is seen as a key business tool which can be used in many forms from strategic negotiation with suppliers through to staff disputes. In it’s correct context negotiation is used for resolving conflict –in business it’s used between two parties to agree an often compromised outcome.

Negotiation in a business context

It’s importance in business is that negotiation protects organizational assets – why pay more for something when you don’t have to – have you got the best possible terms of trade? Resources are not a bottomless pit so negotiation has a particularly important part to play as well as protecting an organization commercially.

Why Negotiate

Negotiation is used to bargain, compromise and craft an outcome – it is the general process we use for getting what we want from people who in return want something from us. In the context of a buyer seller relationship – the buyer requires a product and / or services with the seller requiring remunerating. The more complex the purchase (or higher the value) the greater the need for negotiation to protect both organizations financially and commercially.

An appropriate time to negotiate

Businesses negotiate all the time! In purchasing departments where cost down initiatives result in the procurement team |”negotiating better terms” through to staff negotiating periods of absence.

Generally speaking negotiation occurs the most where the stakes justify the time, resources and effort (e.g. financial penalties) to carry it out.

Phases of Negotiation

Negotiation is typified by four phases

• Preparation – understand who you will negotiate with, what you want, the market position and other attributes that will assist in the discussions
• What do they want? – understand the likely “trade” points of the other side – what are the buttons to push to get what you want
• Proposal – what can you trade/concede
• Bargain/Trade – the real negotiation!

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