MANAGEMENT: Good Negotiation Leads To Good Profits
Recent Western Cape Business News
Barney Jordaan, Programme Director of the Negotiating Skills course running at the UCT Graduate School of Business from 11 - 13 August says careful planning, preparation and research – and having a formalised negotiation approach – is paramount to achieving negotiation success. It also proves that good negotiation skills can be the difference between success and failure in the corporate world, he said.
Jordaan advises companies to look at a few key elements to improve how they negotiate.
“Companies would do well to think more strategically about deals, what they have to offer and what they expect to get before they even reach the negotiation table – good negotiation begins with careful preparation and research. You also need to prepare the table (e.g. who is going to be there?; what do we do if we can’t agree?) and design the deal in such a way that it is really attractive to the other party as well as yourself.
“Successful negotiation is not about ‘winning at all costs’. In fact, coming up with mutually acceptable solutions that keep relationships in good order are more beneficial to businesses in the long run than deals where only one party gets its way,” said Jordaan.
Jordaan adds that designing an attractive deal, especially in highly competitive industries, often requires some creative thinking and stepping in to the other party’s shoes, offering the cut-throat food market as an example thereof.
“Imagine that a strawberry farmer is approaching a large food retailer to buy his products. There are many strawberry farmers in the market, so being successful will require designing a deal that offers more than just strawberries. It demands that the farmer understands what the retailer is looking for beyond just a good price. For example, are they looking for organic produce, do they support sustainable farmers, do they promote ethical treatment of farm workers, or are they looking for local producers?
“Understanding what else is important to the retailer beyond cost and quality can provide crucial extra leverage when the two parties meet around the table. Do not let your deal rest upon one factor only. Look for creative ways to add some extra value,” he said. “In competitive climates this can be the real deal-clincher.”
Besides having a mutually appealing deal to offer, businesses must also pay attention to what happens during the negotiation – the way the process is executed is critical to value creation and sustainable relationships.
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