Contracts and Procurement

NEGOTIATION TECHNIQUES 2

Negotiation Techniques

Wendy Ewing

American InterContinental University

Annotated Outline: Negotiation Techniques

Purpose: To examine the best negotiation techniques

1. Introduction

· When businesses get tough, deal negotiators tend to endure intense pressure to strike the best deals for their companies.

· Wheeler & Wheeler (2013) offers critical insights on some of the best negotiation techniques to ensure a win-win-situation for the parties involved.

2. Recommendations for successful Negotiations

i. Always make the first offer

· It is always best to make the first offer in a negotiation because information is power.

· Individuals that make the first offer usually win terms that are almost closer to the company’s set target price.

· This is based on the psychological principle of anchoring that postulates that once a first number is set on the table, both parties to a negotiation start to negotiate based on it, thus setting the stage.

ii. Make as many counteroffers as possible

· From a psychological point of view, negotiators feel more comfortable and successful if a price tussle begins.

· Every seller and buyer want to feel included in the deal, having had a say on the final outcomes.

· Therefore, it is always good to allow slight declines from the first offer, thus allowing the other parties to feel in control of the negotiation.

iii. Share information

· According to Siedel (2014), sharing tiny bit of information with the other party creates some trust based on the principle of reciprocity, because people tend to match and reciprocate what has done to them.

· Wining the other party’s trust softens their stance on the first stake, hence allowing room for flexible negotiation.

iv. Rank priorities

· Siedel also proposes ranking priorities in order to know what aspect of the contract to compromise and maximize on the other.

· For instance, a company entering a negotiation may have to compromise on the price but maximize on building less profitable but long-term business deals with a sustainability perspective in them.

3. Win-Win negations.

· Making the first offer and allowing room for counter offers ensures compromise from each party, giving them to rank their priorities and only settle on an offer that meets the needs of each party.

References

APA Siedel, G.J. (2014). Negotiating for Success: Essential Strategies and Skills. California: Los Gatos.

Wheeler, M., & Wheeler, M.A. (2013). The art of negotiation: How to improve agreement in a chaotic world. Simon and Schuster; New York, US