on business | 5 Business Negotiation Strategies You should Learn

5 Business Negotiation Strategies You should Learn


We have frequently observed that in many places the logic of taking a negotiation as a “zero-sum” game still persists; that is, one party seeks to win everything, at the expense of the other party.

John Paul Getty, who was declared the richest man in the world in 1966 by the Guinness Book of Records, once said: “One should never seek to obtain all the money that exists in a negotiation. Let the other party also make money, because if you earn the reputation of always taking all the money, you will not have many opportunities to negotiate. ”

Negotiations affect the daily lives, both at home and in our work. In general, if a much greater benefit can be obtained in the negotiations, without leading the other to a total loss. The best agreement can allow the benefit of both parties. Now, we will share 5 business negotiation strategies to achieve success:

 

Before negotiating, you should investigate and analyze

It is critical, before a negotiation, to answer questions such as Who will we negotiate with? What are they looking for? What is the value of what we are selling or buying? What is happening in the industry? For example, in an acquisition in which we act as advisors, we get our client to pay a significantly lower price than the seller requested, since we show that the value estimated by the seller, with the support of his financial advisors, was exaggerated.

The seller estimated that his business would generate very high profitability. Our analyzes, based on research with similar businesses in the Americas, Europe and Asia, indicated that the margin could initially be high, but that over time the margins would fall as more competition would appear.

 

Define the variables, objectives and goals, before the negotiation

When negotiating it is important to define 2 elements. First, you must define the variables that we want to negotiate, beyond the price (e.g., commercial conditions, delivery times, payment methods, etc.).

One of the critical variables is the allocation of personnel from the Research and Development area of ​​the supplier in the client's facilities to ensure better communication, faster, and more effective in developing new products for the client. Second, it is important to think about the maximum we are willing to request and the minimum we are willing to accept in each of the negotiation variables. This will allow negotiations to begin with a high objective,

 

You should always have options

To know what is the minimum we are willing to accept, it is critical to have options. One party loses a lot of credibilities when the other party discovers that it has exaggerated or pretended or lied. The strength of a negotiating position depends on the options available.

 

Roles must be defined

Individual negotiations are always easier since there are no other people with whom a common front should be coordinated, however, many times corporate negotiations require the participation of multiple areas. For example, if it is an acquisition, the participation of the CEO, the CFO, board members, etc. may be important. If it is a purchase of inputs, the participation of the leader of Manufacturing, or Logistics, or Finance, or Quality Control, etc. may be important.

In such circumstances, one may be tempted to negotiate individually, but this may be counterproductive. It is best to negotiate as a team. For this, it is important to have a common understanding of the points described above and to establish very clear roles.

For example, define the leader, who will analyze the numbers offered during the negotiation, the technical manager, etc. Given that several participated, it is also important to define a clear agenda, as well as the main messages. Finally, it is important to rehearse before negotiations. A well prepared and coordinated team always achieves superior results.

 

Emotions should be used cunningly

Negotiation theory indicates that one must remove the emotional component in between. In theory, that sounds good, but in practice it is impossible. We are not robots. Also, it can be counterproductive. What we should remove are negative emotions. But there are other emotions that we must maintain.  We must proactively foster positive emotions to sell our proposal. We must not forget that although we are “buying” something, we are also selling a proposal.

Also, sometimes we have to face a counterpart that comes in a threatening or angry attitude. Sometimes this happens by a natural demonstration of emotions or sometimes they are tactics used by negotiators, to intimidate the other party. In these cases, it is shown that one should neither intimidate nor escalate the battle. What one must do is to respond with the same tone to send the signal that he is not being intimidated, and immediately offer to lower emotions together to continue the negotiation and reach an agreement.

Finally, it is important to use emotions to show that the offer of the other party is not to our liking. So we send the signal that they should improve the offer, without us putting another figure on the table.

We hope that with the practice of these business negotiation strategies, you can extract more value in your negotiations and achieve the reputation of generating win-win agreements.