Transcript PowerPoint Template

Lecture 1
Negotiation skills
Contents
1
The negotiation process
2
Negotiation styles
3
Negotiation tactics
1. The negotiation process
Negotiation:
-- process in which two or more people or organizations
with common or conflicting interests work towards a way
of resolving an issue or agreeing on how they will
cooperate
Business people are negotiating all the time:
 formal negotiation: sit down at the table, talk about the
unit price, the conditions for a timely delivery, the clauses
for compensation and force majeure, etc.
 informal negotiation:
 talk to your boss about the pay raise
 contact your debtor about the overdue payment
 call your supplier to claim compensation for a wrong
dispatch of merchandise
 ask your subordinates to finish the work according to
the scheduled timetable
1.1 Before the negotiation
1. Identify the team leader: able to select team members,
prepare the negotiation plan, make the bargain, make
decisions on concessions and the final terms, generate
high morale and maximum contribution from each
member
2. Form the negotiating team:
 size: 2-5; never reduce the negotiating team to one,
no matter how qualified the negotiator is; don’t exceed
five to avoid lack of control
 coverage: include members in commercial (price,
market, delivery terms), technical (specification,
delivery program), financial (terms of payment,
insurance, financial guarantees) and legal (terms and
conditions of contract) areas, as well as an assistant
to the main negotiator (make notes, do calculations,
remind him of any missing points)
3.
Collect and assess data from various sources: MOC (商务部),
CCPIT (中国贸促会), Chinese Embassy, Chinese local companies,
foreign trade corporations, banks, agents
4.
Develop the negotiation plan: a framework within which to
negotiate; formulated by all the team members and finally approved
by the team leader and the top management; the plan should:

identify the team leader and other members of the negotiating
team

set up the lines of communication and reporting system

define the negotiating objective in terms of the major issues to be
discussed

develop counter-proposals in case objections are raised on any
of the points you proposed

sate the minimum acceptable level for each of the major items:
e.g. price concession of 5%, remittance (汇付) or collection (托收)
as terms of payment, FOBST as terms of delivery, 1-year extra
warranty

establish the time period within which the negotiation should be
concluded
1.2 During the negotiation
Opening: exchange greetings and aims to set the “climate” for
the later communication, establish some common ground
before moving into areas of difference, esp. Japanese (slow
start, value trust more than agreement), e.g.

I’ve been long hearing of you and your company, and I’m
very pleased to know you in person.

We’re very glad to have the chance to visit your factory. I do
hope I can make a substantial deal with you today.

Hi Mr. Bingley, how are you getting along with your business?

Nice to meet you again. How are sales in Sweden?

We’ve seen your catalogue and exhibits in the showroom.
We’re interested in the latest model of drills in particular.
2. Identifying: specify in detail the issues to be resolved, e.g.

To come straight to the point, what is the CIF New York price
for your dishwashers?

We need to talk about the terms of delivery.

Let’s return to the topic of commission, shall we?
1.
3. Bargaining: negotiate the identified issues, propose your
position, initiate the other party’s stance, make
concessions and compromise, e.g.
 The quality of the last batch is far from being acceptable.
 To tell you the truth, $200 can hardly cover our
production cost.
 For friendship’s sake, we may exceptionally consider
reducing our price a little, but never to that extent.
 Honestly, the rate of commission you propose is far too
small.
 Then how big a step are you prepared to take?
 Could we make a compromise? How about a 5%
discount?
 We have made a reduction on the price. So it would be
your turn to make some concessions on the terms of
payment.
 It’s our final position. Now it’s up to you.
4. Concluding: summarize the points and confirm the
agreement, e.g.
 Ok, let’s call it a deal!
 I’m glad that you add your order.
 Fine. Let’s get the contract finalized.
 You’ve driven a hard bargain, but we’ll accept it,
since we have been doing business for so long.
 So you will arrange for the L/C to be opened in our
favor as soon as you get back, and we will effect
shipment within two weeks on receipt of your L/C.
 That sounds reasonable, but it’s subject to the final
confirmation of the head office. I will have you a
definite answer tomorrow.
 That’s a deal. We look forward to a long-term
relationship with you.
Case study: Price negotiation
The seller: Mr. Wang, the Export Manager of a Zhejiangbased company producing plastic products
The buyer: Mr. Welsh, the Import Manager of a large chain
store company in the U.S.
The setting: After a factory tour, Mr. Welsh picks up
several products and starts to negotiate prices with Mr.
Wang
Your tasks:
1. What are the major issues identified and bargained in
this negotiation?
2. What nonverbal signals sent by both parties are most
impressive to you? In what way do they help both
parties to achieve their aims?
2. Negotiation styles
Possible negotiation outcomes:




Win-lose
Lose-win
Lose-lose
Win-win
The aim of win-win negotiation is to find a
solution that is acceptable to both parties, and
leaves all involved feeling that they've won – in
some way – once the negotiation has finished.
Five negotiation styles
3. Negotiation tactics
 the yes-but technique: to affirm first to establish the
image as cooperative and appreciative of the viewpoint of
the other party, and then to identify the differences and
reject what the other party would like you to do; cf. the
“no-although” way
 the side-stepping technique: to side-step an issue you
don’t want to answer directly, e.g.
Can you guarantee delivery by Jan 1st?
– Here, have a look at the program to see how we’ve
been doing in the past three years, and you can know
how reliable we are.
 offer more options: to make the other party’s job easier,
and to discover the maximum common ground, e.g.
possible options for a request of price reduction include:
 quantity/repeat order discounts
 improved packaging and labeling (for the same price)
 more prompt delivery or better payment terms
 free promotional materials in the language of the import
market
 free training of maintenance staff and after-sales
consulting service
 supply of free parts to replace those damaged from
normal wear and tear
 market exclusivity
 higher commission rate
 make the other party seem unreasonable: to challenge the
validity of a proposition, e.g.
Your company, as the seller, is responsible for any delay to the
contract.
– Normally yes, but you know, the seller cannot be responsible
for events over which he has no control, such as war or riots.
 be personal and emotional: be dramatic and sometimes
sentimental, as everybody can be charmed or touched, e.g.
 If we were not friends, I will have no way to quote you such a
rock-bottom price.
 Oh, you are really tempting me!
 Oh believe me, you drive me to a tight corner. We don’t have
any profit margin in that case.
 This is our latest design. I have to say you have incredible
taste.
After-class assignment
Case study: Negotiation tactics
The seller: Mr. Fang, the Manager of an import & export
company which produces gifts and decorations for
Christmas, Easter and other traditional holidays
The buyer: Mr. Leeser, the General Manager of a German
wholesaler
The setting: In a trade fair in Guangzhou, Mr. Leeser walks
into the booth of Mr. Fang’s company, and is attracted by
the exhibited products.
Your task: Based on the negotiation styles and tactics
we’ve discussed, evaluate the performance of both
parties in the negotiation.