Unit 12. Know what you want.

Part 1. TYPES OF NEGOTIATION.

Exercise 1. What do you understand by the term «negotiation»?

Work out a short definition. (key ideas: two or more parties, specified goals, discussion, compromise, agreement)

A fairly all-inclusive definition, which I may suggest, is

NEGOTIATE (v) – to try to reach an agreement by discussing something in a formal way, especially in a business or political situation to negotiate something with somebody.

NEGOTIATION (n) – formal discussion in which people or groups try to reach an agreement, especially in a business or political situation.

If people negotiate (with each other), they talk in order to reach an agreement,

which is to their mutual advantage (good for them both).

For example:

1. customer-supplier negotiations;

2. wage negotiations;

3. merger or takeover negotiations;

4. trade negotiations.

Negotiations also take place to settle disputes (decide arguments) such as:

a) contract disputes;

b) labour disputes;

c) trade disputes.

Word combinations with «negotiations»

Intense Intensive	negotiations	are very difficult and tiring, with a lot being discussed.
Delicate Tense	are very diffucult and could easily fail.
Eleventh-hour Last- minute	take place the last possible moment of the time available.
Protracted	take a very long time.

Someone who takes part in negotiations is a negotiator, and someone who is a

good at getting what they what is a tough negotiator.

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Another word for «negotiate» is bargain. This is also used to talk specifically about discussing and agreeing the price of something. Another name for «negotiator» is bargainer.

Another word for «negotiation» is bargaining used especially in phrases like:

a) collective bargaining;

b) pay bargaining;

c) wage bargaining (discussion between groups of employees and their employers about pay and conditions).

«Bargaining» is often used in these combinations:

bargaining	ploy tactic	a particular technique used by a negotiator.
chip tool	an issue that a negotiator uses in order to gain an advantage.
point	a particular issue that negotiator discusses
power	the degree to which one side is strong enough to obtain what it wants.
process	the way that negotiations develop.

THE STRUCTURE OF A NEGOTIATION.

Exercise 2. Read the following conversation between two friends to find out:

a) the first suggestion;

b) the counter-suggestion;

c) the agreement.

Jack:	What shall we do on Saturday?
Jill:	Er… let’s go and see a film.
Jack:	We could do that – or what if… you know it’s Mary’s birthday? Why don’t we go out with her and Thomas – go for a meal or something?
Jill:	That’s a good idea- where shall we go?

Exercise 3. Here is a representation of the typical structure of a negotiation. Compare this with the conversation you have just read.

(1) Suggestion
	(2) Counter – suggestion
(3) Agreement
	(4) Confirmation

Exercise 4. Complete the questionnaire from a business magazine about negotiating.

Mark the sentences with T (true), F (false) or D (it depends):

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QUESTIONNAIRE

	THE SENTENCES	T (true), F (false) or D (it depends):
1.	There is always a winner and a loser in a negotiation.
2.	You have to give something to get something.
3.	You need an agenda.
4.	Making small talk is necessary.
5.	You need to prepare as much as possible.
6.	You can promise anything.
7.	Negotiations are the same all over the world.
8.	It’s a good idea to sum up agreements regularly.

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.
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.
Husband:	Walking up and down mountains. You can’t be serious!
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.
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.
Wife:	I’ll go to Majorca for a week provided we go to the Alps for a week.
Husband:	No way!
Wife:	We do what you want every year. Can’t you compromise this time?
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?
Wife:	That’s out of the question! Either we do something together or I don’t want to go. That’s my bottom line.
Husband:	That’s makes two of us. That means that neither of us is going on holiday this year. Great!

Negotiation 2.

Man:	Thank you for showing me round. It’s a beautiful house.
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.
Man:	So, how much are you asking for it?

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Seller:	I’d like $600,000.
Man:	Frankly, I think that’s a lot for this house. Is that your best offer?
Seller:	I think it’s a fair price. Remember there is a very big garden and a new garage.
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.
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?
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.
Seller:	Done! Let’s draw up the contract.

Negotiation 3.

Modelling agent:	If you want Tania to model your winter collection, it will cost $10,000 an hour.
Shop owner:	That’s far higher than I expected. We only need her for two hours.
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.
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?
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.
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?
Modelling agent:	Afraid not. As I said, Yania is in demand at the moment.
Shop owner:	Look, I’ll pay the 20,000 as long as she stays for extra hour and chats to my regular customers.
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.
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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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.
Manager:	That’s what you say …
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.

Extract 2.

First man:	The price includes all the land and the buildings.
Second man:	Yes. What about the payment terms? With better terms, you could accept a lower price?
First man:	No, I think terms are not the problem. The issue is price, Mr Ford. We have had several offers.

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.
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.
Woman:	Yes, we need to talk about the time schedule, too.

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
B.		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.
C.		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.

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?

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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.

Exercise 7. Read the second part of the interview to find out what three negotiating tips Warren gives.

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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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.

READING FOR GIST

Exercise 8. Read the text about negotiations and choose the best title from the following:

1. Unsuccessful negotiations and how to avoid them.

2. How to make negotiations effective.

3. Skills for successful negotiations.

4. Bargaining and making concessions

In business negotiations good people skills, mutual respect and trust are absolutely essential. One of the aims of the first meeting is therefore for the two parties to develop trust and sound each other out.

This phrase can be made easier if you do your homework beforehand. Doing your homework means finding out as mush as you can about the company you are dealing with, about its needs and expectations, and about its negotiating style. It also means defining precisely what you want and what your conditions are, as well as deciding in advance what kind of concessions you are willing to make. If you are clear about those points and generally feel well-prepared, you will be able to handle the bargaining stage much more effectively.

In this second phase, what you should be aiming for is a win-win situation. Obviously, it is easier to reach an agreement if both parties take away something from the deal. Getting to a win-win situation clearly requires a number of special skills, such as making concessions. There are three key issues to bear in mind when making concessions. Firstly, it may not be a good idea to start with your biggest one, as your prospect may then think you are desperate to strike a deal.

On the other hand, starting small and making gradually bigger concessions is not recommended, either, as this may arouse unrealistic expectations. Secondly, resist the temptation to make a concession whenever your prospect grants you one.

And thirdly, make sure your prospect is fully aware of the value of every concession you make.

Let us now turn briefly to three serious dangers which often lurk behind negotiations. The first pitfall to avoid is to allow the negotiation to drag on indefinitely. Agree on a schedule at the outset, and keep to it. The next one is the unwillingness to admit that your prospect’s arguments may be right and yours wrong. Finally, never exert undue pressure on your prospect either. Ultimatums, for instance, have no place in effective business negotiations.