Practical tips on negotiating

Preparation

1. Remember that a negotiation aims towards mutual advantage. Prepare realistic objectives and a clear strategy of concession and fallback to achieve those objectives.

2. Structure the negotiation to your advantage. Work out a procedure to be agreed with the other side.

3. Discover as much about the business culture of the other side as possible. Find out what emphasis they put on the socializing phases, what level of formality should be expected, what the typical latitude of the zone of bargaining may be and how long the negotiations are likely to take.

4. Practise and rehearse the key phrases in English which will help you to structure, propose, clarify, probe, bargain, delay, pressurize and close.

5. Establish clear roles within your team and coordinate your tactics. Rehearse the overall situation with your colleagues to identify problems and difficulties.

During the negotiations

1. Establish a positive emotional climate as soon as possible.

2. Remember that plain speaking often is valued highly. Do not be offended if an American speaker, for example, speaks very directly. There is a sharp distinction between the private and the public person.

3. Set the structure of the negotiations and establish a climate of agreement early by agreeing a procedure.

4. Define the function and the target of each session to avoid unreal expectations.

5. Follow the agreed structure and give clear signposts and signals throughout.

6. Establish a process of checking and cross-checking early on to avoid misunderstanding and confusion.

7. If something is not clear, say you do not understand or ask for clarification. No loss of face is involved.

8. Use the techniques of restatement and review to check the other side’s position or buy time to think.

9. Use polite and tentative language to avoid the impression of arrogance or insensitivity when asking for information or putting forward proposals, e.g. Could we ask how much … ? rather than How much …? or We foresee the need for … rather than We want …

10. Never say no to a proposal or idea. Present a counter-proposal or identify the positive aspects of the proposal before declining it with an apology and an expression of regret.

11. Never say something is impossible. Say it could be difficult or problematic.

12. Say yes to the person if you have to say no to the idea.

13. Whenever possible, emphasize common ground and stress the positive aspects of the dialogue. Eliminate the negative aspects by reducing them to objective problems that need to be solved in a spirit of collaboration.

Some important Don’ts

Don’t voice assumptions about the other side’s interest or positions.

Don’t become involved in a back and forward argument in which every point has to be defended and justified.

Don’t threaten the other side. Influence them instead. Help them understand your position and show how their interests may be served if they understand yours.

GLOSSARY

bid - the offer at a certain price for the shares of a company with the aim of taking control of that company

break-even point - the point in time, sales or production when total revenues equal total costs, i.e. the point after which a profit will be made

Budget overruns -the amount by which the money spent on a particular project exceeds the money budgeted for that project

C.E.O. ( Chief Executive Officer) - the member of a company's board ultimately responsible for the decisions taken. This title now often replaces the term managing director in larger British companies

capacity – the maximum number of units that a particular factory or production centre is able to produce over a period

cash flow - the net difference between cash coming into a company and cash going out of a company at any one time, e.g. a negative cash flow means that there is more cash being spent by a company than is being received by a company at a particular point in time

collaboration – the commitment of resources by two separate companies to a common venture or project, e.g. a joint venture

conflict of interest – a term used to describe areas of mutual activity where two sides committed to an agreement may find themselves acting against the interests of each other

corporate treasurer - the company executive responsible for the management of that company's overall finances

cumulative cash flow - the net difference between the total amount of cash that has flowed into a company over a period of time and the total amount that has flowed out of the company over the same period

economies of scale – the extra savings to be got from producing large quantities of product as against small quantities

equity – a more formal term for share

exploratory session – a negotiating session devoted to discovering what is possible and what is not possible

fallback position – the position to which one side in a negotiation is willing to retreat if it cannot achieve its ideal target

first half figures - the balance sheets and profit and loss accounts relating to the first six months of a company's financial year

fixed price contracts – contracts to supply goods and services for a price which is fixed for the period of the contract

greenfield site - a site for a factory on new land as opposed to an existing industrial location

insolvent – no longer able to meet its financial commitments. This will probably mean that the company is either in or about to go into liquidation

joint venture - a company established jointly by two separate companies with a view to sharing risks, costs and income

knock-down price - a very low price

launch expenses - the expenditure needed to launch a new product into the market, e.g. advertising, promotion, sales trips

licence – an official document giving you permission to own or do something for a particular period and/or in a defined territory

open to tender – a supply contract which all potential suppliers may bid for under competitive condition

package – a negotiating term which refers to the final comprehensive agreement

patent – the legal right to use and sell an invention

payback period - the period of time over which revenues from a project will pay back the money invested in that project

press release - an announcement prepared by any organization for distribution to the press

quid pro quo - the concession that one side in a negotiation will make in return for a concession from the other side

quota restrictions - a limit, often in the form of maximum units, imposed by one country on the importation of goods from other countries

R&D - research and development

royalty - the income receivable from the ownership of a patent or licence
assigned to another company

stake - a financial interest in a company or a property, e.g. a stake in a gold company

state of the art technology - the most up-to-date technology

strategic acquisitions – a policy of taking over key companies as part of a coordinated, long-term company plan