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L4M5 - Commercial Negotiation > Chapter 3.1 > Flashcards

Chapter 3.1 Flashcards

Identify the stages of a commercial negotiation

1
Q

What are the 7 steps to negotiation (RESPECT)

A
  1. Ready yourself (preparation stage)
  2. Explore needs
  3. Signal for movement
  4. Probe with proposals
  5. Exchange concessions
  6. Close the deal
  7. Tie up the lose ends
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2
Q

What are Steele and Beasors negotiation stages (from step 6 onwards)

A
  1. When do we start?
  2. The opening round
  3. The power of questions
  4. The skill of listening
  5. Who moves first?
  6. Its your turn to move
  7. Bargaining and dealing
  8. The edge of the cliff
  9. Shaking hands
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3
Q

Conditioning

A

The art and process of setting expectations within the mind of the other party as well as making the right first impression

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4
Q

Name 3 examples of expectation formation

A
  1. Suppliers reputation in the marketplace, brand value, price/quality perceptions, international reach
  2. Your experience of written communications with supplier: responsiveness, accuracy of paperwork and language, working hours
  3. Suppliers representatives job title, form of address
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5
Q

Anchoring

A

A well-known cognitive bias in negotiation whereby people have a tendency to give too much weight to the first number (price) put forward in a discussion and then adjust from that ‘anchor’

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6
Q

Name 5 immediate conditioning factors on the day of the meeting

A
  1. Punctuality
  2. Personal appearance
  3. Last-minute changes
  4. Layout and organisation
  5. Welcomed by the senior executive
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7
Q

Name 3 factors that often mean the buying side normally have a head start

A
  1. Meeting agenda
  2. Use of silence
  3. You go first
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8
Q

Name the 4 key phases of negotiation

A
  1. Open
  2. Test
  3. Move
  4. Agree/close
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9
Q

What does the opening stage of the negotiation cover?

A

The very first few minutes when the parties meet and greet each other and are seated in the negotiation room in preparation for the main event

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10
Q

What does ZOPA stand for?

A

Zone of potential agreement

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11
Q

Should you negotiate if there is no ZOPA

A

No - there is no point

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12
Q

What does the testing phase do?

A

Checks assumptions and confirms understanding

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13
Q

What form can testing take place?

A

In the form of questions following a presentation by either side or questions on a tender or proposal document received by the buyer from the potential supplier

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14
Q

Name 4 indications you may receive from careful listening observation and interpretation

A
  1. Areas where the other party is willing and unwilling to make concessions
  2. What factors or issues the other party places a high value on
  3. If there are any non-commercial or emotional factors that may be pertinent
  4. The other party’s underlying interests - why they are taking the position they are
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15
Q

What is the testing stage essentially?

A

An information gathering stage where the hypotheses and assumptions you have made in the planning stage can be tested and confirmed or disconfirmed

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16
Q

What does the testing phase help to confirm?

A

That your approach and objectives are appropriate for negotiation

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17
Q

What should you have at the end of the testing phase?

A

Your key assumptions should be confirmed or clarified and understand the why and what of the negotiation so that there is less risk of surprise later

18
Q

What should you do before you start to make/accept proposals

A

Take 5 minutes out with your team to pause and take stock of the situation to confirm whether your objectives and strategy are still relevant or whether tweaks need to be invoked

19
Q

What is the proposing phase

A

Asking ‘if’

20
Q

Why is the word ‘if’ very useful?

A

It allows you to test tentative proposals without committing yourself

21
Q

What happens in the bargaining stage?

A

Using tradable. Its the meat of the negotiation meeting and is where both parties trade concessions

22
Q

What is important in the bargaining phase

A

That you must agree your bargaining range with your team/stakeholders before the meeting and not during it

23
Q

Will all negotiators get to the agreement and closing phase?

A

No

24
Q

What is the agreement and closing phase?

A

When it is either clear through explicit language, or strongly suggested through non-verbal signals, that the other party is ready to move to agreement

25
Q

What is the CIPS preferred approach to negotiation?

A

Principled or win-win approach

26
Q

What is the win-win approach

A

Where an agreement is sought that leaves both parties feeling somewhat satisfied

27
Q

Name 7 tips to protect relationships

A
  1. Adopt a principled approach in negotiations and seek a win-win
  2. Accept it is okay to agree to disagree and express your wishes
  3. Leave open the option of future business/references if there is no deal
  4. Respect confidentiality
  5. Do not lie to the other party
  6. Do not publicly criticise suppliers even if negotiations break down
  7. Do not personalise criticisms or insult individuals
28
Q

What is the need for behavioural change driven by?

A

Both the desire to achieve a required outcome, and the actions of the other party, dependent on the direction each stage is heading

29
Q

Name 8 behaviours procurement professionals should demonstrate at the opening stages of negotiations

A
  1. Ensure to be punctual and well presented
  2. If you are hosting, welcome their arrival
  3. Breaking the ice with some small talk
  4. Consider using some visual aids to set out key objectives/make key points
  5. Start the conditioning process
  6. Check authority
  7. Check agenda
  8. Employ the warm with the person/tough on the issue approach from the start
30
Q

Name 3 behaviours procurement professionals should avoid in the opening stages of negotiation

A
  1. Using a strong pushy cold or tough style at the opening
  2. Putting any markers down
  3. Criticise other organisations/the other party’s previous contracts/third parties
31
Q

Name 9 typical behaviours at the testing phase

A
  1. Asking appropriate questions to get missing information
  2. Asking open why what and how questions
  3. Develop new options
  4. Checking all key assumptions
  5. Clarifying both party’s perceptions
  6. Show concern for the other party’s needs and interests
  7. Summarise regularly and use paraphrasing
  8. Listen attentively with ears and brain
  9. Seek to identify and confirm any common ground
32
Q

Name 5 typical behaviours that procurement professionals should avoid demonstrating at the testing phase

A
  1. Interrupting, blaming, using sarcasm, threatening, seeking to score points, or talking too much
  2. Being embarrassed by long pauses
  3. Confusing conflicts of interest with antagonism between people
  4. Making any firm proposals, accepting any offers or even indicating acceptance
  5. Allowing yourself to be drawn into an argument
33
Q

Name 12 typical behaviours during the proposing phase

A
  1. Get the other side to propose first
  2. Make tentative suggestions
  3. Present with confidence
  4. Aim high with initial proposals
  5. Acknowledge their proposals
  6. Keep saying ‘if’
  7. Expect counter proposals/objections
  8. Introduce some of your opinions/alternative ideas
  9. Summarise regularly
  10. Consider linking your proposals
  11. Ask questions
  12. Consider proposing time-out
34
Q

Name 6 things buyers should not do in the proposing phase

A
  1. Interrupt
  2. Use irritating phrases
  3. Use multiple points
  4. Use only your strongest point
  5. Reject a proposal instantly
  6. Immediately make a counter proposal to their proposal
35
Q

Name 11 typical behaviours during the bargaining phase

A
  1. Always lead with conditions before offering tradeables and making concessions
  2. Try to trade things that are easy for you to give but valuable for them
  3. Use tradeables and make concessions in small steps
  4. Make notes of all tradeables and concessions in small steps
  5. Make notes of all tradeables and concessions and visibly show that you are tracking and recording progress through the negotiation
  6. Observe their non-verbal behaviour/body language very carefully
  7. Manage your non-verbal behaviour/body language particularly carefully
  8. Consider linking issues
  9. Use time tactics
  10. Focus on all the options/variables involved
  11. Consider using silence to encourage the other party to move first
  12. Summarise regularly
36
Q

What 4 things should you not do at the bargaining stage

A
  1. Be surprised by how quickly the bargaining stage is completed
  2. Lose sight of your objective
  3. Get greedy and blow the deal
  4. Make unplanned concessions
37
Q

What 9 things should you do at the agreement and closing phases

A
  1. Watch for closing/buying signals
  2. Check to ensure all issues have been resolved
  3. Consider using visual aids to summarise
  4. Use summary close
  5. Make a decision to conclude/close
  6. Seek agreement in principle if the other party does not have the final authority
  7. Make your own private notes on the final agreement
  8. Shake hands on the agreement
  9. Leave the meeting as soon as possible therafter
38
Q

Name 7 things you should not do at the agreement and closing phase

A
  1. Force an agreement by making final offers
  2. Get greedy
  3. Get careless with information
  4. Accept ambiguity or uncertainty
  5. Yield to pressure during the closing stage
  6. Tell them they could have got a better deal
  7. Gloat publicly about the deal
39
Q

Name 6 general behaviours expected from a procurement professional after the negotiation meeting

A
  1. Always offer to prepare the agreement document
  2. Immediately or ASAP after the negotiation, get the terms/details of the agreement in writing to confirm mutual understanding
  3. Detail who is to do with what and timescales and not just what was agreed
  4. Have the agreement checked by legal advisors if required
  5. Be organised on your side to get all of the necessary sign offs with minimum delay
  6. Be aware of the temptation for the other party to reopen the negotiation on a particular issues
40
Q

Name 3 things you should not do after a negotiation meeting

A
  1. Be tempted to slip in a few extra items when documenting the agreement
  2. Use ambiguous language in describing who does what
  3. Allow too much time lapse between the end of the negotiation and the delivery of the agreement document

L4M5 - Commercial Negotiation (12 decks)

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