Business Breakdown: Using Your Negotiation Skills To Guarantee Your Survival

One can see a great deal of insecurity in the world financial markets wherever you go - for the first time - regardless of geographical location.

Warren Buffet stated that it is only when the tide goes out that you can see who is naked. In other words, it is easy to be prosperous when the markets are thriving; it is only in tough times that we can easily discern quality & commitment.

How can you use your negotiation skills, negotiation training or purchasing training to sidestep losses in the present economic situation?

Use 'Loss Framing'

People are more interested by avoiding loss than by attaining the very same gain. Kahneman & Tversky's Prospect Theory work describes how individuals will become risk seeking when trying to avoid a loss whilst they are more likely to be risk averse when pursuing gains. In the way that we negotiate, we can make the other side aware of the items that they stand to lose if they don't agree to our requests and otherwise acquire if they do.

Create Alternatives

In times of uncertainty it is very important to create alternatives so as to support our negotiation position. The ability to create options is vital in the context of negotiation and the strength of options to securing a deal is the primary driver of our negotiation power.

Usually we wait until we know that we are not going to be able to do a transaction before we begin to think about other options. We risk entering into unfavourable deal and if we have not studied all the alternatives. Similarly, thinking about the alternatives available to your counterparty in the negotiation will give you a clear understanding of their relative position of strength in the negotiation. If they have good options available then they will be more competitive and if they don't, they will tend to be more accommodating.

Use Reciprocation

Reciprocation is a key principle of powerful influencing skills, because we are prone to return to others the form of behaviour that they demonstrate towards us. In times of economic uncertainty it is key that we perform in the interests of our counterparties if we would like them to act in our best interests. You can use this principle to your benefit by acting first and invoking the principle of reciprocation. One note of caution and ensure that you record the indebtedness with the other side.

Move from price to value

Remove the focus off price and home in on the Total Cost of Ownership. For all services, products and solutions that we buy or sell, there is always an exchange between value & price. If we only engage on the price, the best that we will do is to barter and it is only once we start to study the total lifecycle of the service, product or solution that we buy or sell, that we start to discover options for negotiation. Before you state price in negotiation, examine your counterparty's long term strategic fit, expertise, switching costs should they wish to change a business partner, financial steadiness and possible risks or negative consequences that may occur when the other side doesn't manage to reach agreement with you.

Don't forget that the magic in negotiation is found in the quality of your preparation. In times of economic uncertainty it is key to commit enough time to preparing for your negotiations.

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