The Power of Negotiation

The Power of Negotiation

by Dell Wright

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Product Details

ISBN-13: 9781469781891
Publisher: iUniverse, Incorporated
Publication date: 05/29/2012
Pages: 140
Product dimensions: 6.00(w) x 9.00(h) x 0.33(d)

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THE POWER OF NEGOTIATION

Teaches Life Changing Skills, Negotiation Practices, Artful Communication, Tactful Assertiveness, Building Relationships, Win-Win Negotiations and more.....
By DELL WRIGHT

iUniverse, Inc.

Copyright © 2012 Dell Wright
All right reserved.

ISBN: 978-1-4697-8189-1


Chapter One

Progressive Negotiation Tactics

The Win-Win Concept

WIN-WIN

• Strike a deal that's a winner for both you and the party you're negotiating with

• Both parties must be in favor of the deal

Negotiation is a vital skill to have in business. For many people, negotiating is a difficult task and many struggle with the art of negotiation. The Win-Win concept can help ordinary people become stellar negotiators.

When negotiating, we must always consider the other party's situation as well as ours. If you can strike a deal that's a winner for both parties, you're on the right track. With that said, you must always focus on forming a relationship that works out for both you and the party you're trying to negotiate with. If it's a winner for you and a winner for the other party, there's no reason a deal can't be formed.

When you make an offer, make sure the offer favors the other person's needs. Make sure there's an assurance on both sides and always think win-win.

Being Fair

BEING FAIR

• Ensure fairness on both sides

• A negotiation cannot succeed without either side

• Think Win-Win

Let's dwell deeper into creating win-win relationships. The first essential guideline is to be fair.

This is the most important concept that you have to always consider when you're negotiating with people. You have to ensure fairness in both sides since a negotiation is meant to keep matters fair and equal to one another. Therefore, if a negotiation is one-sided and is favorable to only one person, there's no point in negotiating. What's the use to negotiating or being a negotiator if you only intend to benefit yourself?

There's no reason for you to negotiate with others if you're focused on the side that can only benefit you. If you do not consider other things that can also be beneficial to others, they might not agree to your needs. Ultimately, both sides lose because they get nothing in return.

Being Reasonable

BEING REASONABLE

• Must benefit the other party

• Think in terms of "both": make the other party satisfied while still achieving your goal in the negotiation process

You have to be very reasonable when negotiating with others. Make sure that everything in your talk will go smoothly and be beneficial to your side as well as to other people whom you're negotiating with.

Let's say you own a company and you have to negotiate with your employees in regards to the salary increase they're demanding. You have to present them with your company's account statements or current profit versus loss margin to explain why you can't increase their salaries.

Being reasonable is very important. In the example above, the more your employees understand your concerns as a company owner, the more they understand how they impact the company's success.

Be Realistic

BE REALISTIC

• Is it possible? Is it achievable?

• Remember: no one likes being undercut!

When you negotiate about something, one of the most vital things to keep in mind is reality, especially if you're dealing with financial matters. Most people these days are not realistic, particularly in their finances. You can't negotiate with your eyes closed. Being unreasonable derails the negotiation process.

Always keep in mind that no one wants to be undercut. Never use your excellent skill and knowledge in negotiation to fool people and lead them to deal with something that will result in negative effects.

Dirty negotiation is fairly common, especially in business. While not all businesses engage in shady negotiation practices, there are many who do. As an example, let's say there is a factory that needs to dispose toxic materials and negotiate with people who live in the area surrounding their plant and do not disclose the danger and possible side effect associated with their intended plans. In this instance, the people, unaware of the possibility of harm, agree to the terms of the negotiation, slanted in favor of the factory.

In this instance, the factory presented an unrealistic negotiation to their neighbors, which could likely result in harm to both parties; for the people residing in the affected area, they could suffer physical harm as well as property loss. For the company, negative publicity and angry, duped residents could harm the company's reputation and cost the company millions of dollars in lawsuits.

Responsible and fairness in negotiation would have protected both parties.

Why Negotiation is an Important Business Skill

WHY NEGOTIATION IS AN IMPORTANT BUSINESS SKILL

• Reduces costs and stay within budget

• Gets more sales

• Gets more value for your money

Businesses require skills and insight from their employees to achieve success. One of these skills is negotiation, which is vital to running a business. Negotiation skills are crucial to closing successful business deals, fixing manpower issues and even regular business operations, ranging from hiring to financial aspects.

Negotiation keeps businesses running smoothly. For instance, through great negotiation skills, business leaders can keep their employees happy, with fair pay and benefits. Providing employees with fair compensation is the most important thing to a responsible businessman, because without employees, companies can't exist.

Negotiation is also vital to closing business deals between companies. In this instance, be aware of essential negotiation strategies. One of these strategies is including a win-win concept. What's being said during negotiations can also imply a win-win situation for the other side or to the company that's being dealt with. This way, both parties can avoid experiencing any risk of losing great details when it comes to closing certain business transactions.

Employees and other business concerns can also be settled effectively when the business owner is responsible and, most importantly, skilled in negotiating. A very common scenario that arises in business is when employees want more money or benefits or some other form of monthly compensation. Mangers and executive leaders who lack negotiation skills are ill-equipped to handle these matters, and respond by giving employees all or nothing. Too much concession usually leads to increased demands and financial losses; too little results in employees jumping ship to find greener pastures. Either outcome is ultimately a, lose – lose, situation.

Negotiation skill is extremely important in most businesses and even in our daily lives. Whether in business or in life itself, negotiation improves communication and creates the best possible outcome for all parties involved, no matter how big or small a negotiation may be.

KNOWING YOUR GOALS AND OBJECTIVES

Goal Setting in Negotiation

GOAL SETTING IN NEGOTIATION

• The more specific you are, the more sophisticated you can make your negotiations sound

• Keep track of your goal progress

• Don't be too ambitious or cutthroat

We all have our own objectives and goals in life. They keep us on track, and when we think about them, we tend to focus on the positive. Unfortunately, life isn't always positive or good. There are times when we have a long, ugly road in front of us, but we continue on, facing challenges as they arise. Setting goals is basically establishing a plan that you need to follow in order to get what you want out of life.

When you set goals, the first step is to list everything so you can determine how to accomplish them. Writing down lists of things you want to do helps you manage your goals and objectives and gives you a better handle on how to hold onto your goals and objectives.

Sometimes, people are so focused on achieving idealized goals that they may wind up dissatisfied with their outcomes. Fulfilling objectives and goals in life is never easy, but if you don't give up, you can achieve yours. It's all in your approach.

First, be specific with your goals. There are many different factors that can impact your goals, so you need to identify every detail so you'll be able to meet every challenge that comes your way. Be optimistic. And be sure to reflect and assess all of your struggles and accomplishments as you move towards achieving your goals so you can determine if you've succeeded according to your own unique plan.

Second, stay on track with your goal's progress. Continuous goal tracking can give you an idea of how to appraise and evaluate your progress. This way, you'll be able to determine whether or not you're headed in the right direction. Also, look at the goals you haven't been able to accomplish. You can learn from your mistakes and discover new ways to achieve these goals.

Third, don't be too ambitious. Set goals and objectives that are realistic instead of idealized goals that are impossible to achieve. In order to ensure your success, concentrate and be conscientious. Do some self-evaluation. This step is incredibly significant; evaluation can be your best asset towards meeting your goals.

Fourth, formulate a timetable. Timetables can help you determine and track the amount of time you spend on each goal. If you discover that you've spent too much time on a particular goal, step back and try to figure out what went awry.

Lastly, make sure your goals are things you're truly passionate about. Goals you're enthusiastic about are easier to achieve. Try to define and indentify your goals and objectives and ask yourself if these are goals you really want to accomplish.

Setting goals and objectives requires planning, but you can't be successful without it!

Goals versus Objectives

GOALS VS. OBJECTIVES

• Goals and objectives are two different things

• Goals are the larger accomplishment

• Objectives are the "legs" you need to reach the larger accomplishment

There's a bit of misunderstanding when it comes to goals and objectives. While many people think they're similar, they're actually two different things. Goals are much larger than objectives, but cannot be achieved without objectives. Objectives are essentially the way goals can be reached.

Why do you have to set goals and objectives in business? Pairing them both empowers success; in fact, no business establishment can succeed without proper goals and objectives.

Running your own business isn't easy. We're surrounded by gigantic companies on all sides who are very difficult to work and compete with. But, by focusing on your own company, you can compete through good service and customer satisfaction.

Customer satisfaction is one of the most important goals companies can have, regardless of size. Prioritizing your customers over your competitors is a good way to stay focused on your own success.

TOP TACTICS FOR NEGOTIATION

Win-Win, Revisited

RECAP OF WIN-WIN CONCEPT

• Be fair

• Be reasonable

• Be realistic

By now, you understand how important the Win-Win Concept is to successful negotiations.

Individuals should always be fair when negotiating with others, especially in business matters. Fairness is paramount to ensuring deals are fair and don't neglect the needs of others. Being reasonable is equally important; take the other person's (or company's)situation into account when negotiating. Lastly, be realistic, especially when negotiating with employees.

Be the First to Offer

TAKE THE INITIATIVE

• Be the first to make an offer

• Always ASK first

• If you never ask, you'll never get anything!

If you want a certain company or person to partner with you after a successful negotiation, you need to offer to help them without expecting anything in return. This is also a great way to get help down the road.

Making the first move can also be advantageous to both parties. Just be open and honest; no one wants to feel as though they've been tricked into returning a favor. There are skilled and knowledgeable negotiators who deceive others to their gain; refrain from following in their footsteps. You never know if the other party has a hidden agenda.

The Barter System

LEARN THE BARTER SYSTEM

• If you can't offer a monetary deal, revert to the "barter system"

If you're in a service business, you always have to price in a way that's fair and competitive. If you render services without a fixed charge, you'll find yourself constantly negotiating with customers. Set a price that is fair for your customers without undercutting yourself.

By setting a price that's fair, you can always give your customers discounts as needed. And, you can adjust your prices on a case by case basis; for some, you could waive a particular fee, while for others, you could offer a free bonus. By using this method, you can keep your customers happy without sacrificing your bottom line.

Never Name the Price

NEVER NAME THE PRICE

• Never be the first to name the price (especially if you're in a service industry or one where it's routine for clients and customers to bargain

• When asked to name the price, name it at 10%-20% higher so your customers will bargain for your desired price!

It's never a good idea for the owner of a service-based business to name a fixed price when deals are closed or if customers don't ask. Once a customer asks, tell them that the price is at least 10% higher than a fixed price; they will likely bargain down to your fixed price. Your customer will feel like they got the "right" price, and you both get what you want in the process.

This may sound like you're tricking your customers. While this is true on the surface, it's also necessary for business. Customers enjoy getting a bargain, and word of mouth travels; if you offer a "special" price, you're likely to get more customers asking for the same deal, without spending a dime on advertising or undercutting yourself.

Responding to Discount Requests

HOW TO RESPOND TO CUSTOMERS

• Let the customer know that the price you're offering is the lowest you can go without eating into production costs

• Use phrases like "I don't set the policies" or "I'm not in charge here"

There will always be customers asking for discounts. They may even offer to pay well below the original and fair price for services or products. When this happens, politely explain to them that you can't afford to price something as low as they're requesting. This method also helps you negotiate successfully with potential customers.

Even if you're a novice in your niche, you still want to have a plan of action to deal with situations like these. Without a strategy, you'll jeopardize your potential for success. Through simple negotiation, you can offer your customers prices that are right and fair—for you both!

Know Your Competitors

UNDERSTANDING COMPETITORS

• Know who they are and what they offer

• Demonstrate how your offering is different

For most profitable businesses, competition is inevitable. So, if you're a business owner, negotiation is in your best interest. Study your competition well so you can use their shortcomings to your advantage. When negotiating with your customers, offer additional services and deals your competitors don't.

Understanding your competitors is crucial to the success of your business, particularly if you want to compete with them. Healthy competition is good for you because it makes you work harder; it's good for your customers because it gives them more choices. Embrace your competitors; they not only make life more interesting, but they may be your partners later on down the road.

Negotiation Skills

Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog. Nobody ever saw one animal by its gestures and natural cries signify to another "this is mine, that is yours: I am willing to give you this for that." Adam Smith, 17th Century Economist

If you want to trade for anything, you need to learn how to negotiate. There are many opportunities to negotiate better deals and terms, but these chances are often overlooked because neither side makes it clear that negotiation is an option. Most people wrongfully assume that nothing is negotiable unless the other party indicates that the otherwise is the case. A more realistic view is that everything is negotiable.

The complexity of the negotiating process will vary according to size and complexity of the proposed deal, as well as the attitudes adopted by the parties involved. The time and effort you invest in any round of talks should reflect the potential benefit that can be gained from them.

The 4 Phases of a Negotiation

Nearly all negotiations are characterized by four phases:

• Preparation

• Opening

• Bargaining

• Closing

In large scale negotiations, each of these phases are normally tackled sequentially. But, in smaller scale negotiations, these phases tend to merge, possibly into a single, unstructured process. When this happens, a good knowledge of the logic that underpins the four phase approach can guide you, even when negotiating larger deals.

Preparation

Preparation involves the gathering of information—knowing the state of the market, being aware of the supply and demand, as well as any current or upcoming discounts or special offers.

Opening

The opening phase of a negotiation involves both sides presenting their starting positions to each other. This usually represents the single most important opportunity to influence the other side.

(Continues...)



Excerpted from THE POWER OF NEGOTIATION by DELL WRIGHT Copyright © 2012 by Dell Wright. Excerpted by permission of iUniverse, Inc.. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Table of Contents

Contents

Acknowledgment....................v
Author's Biography....................vii
Preface....................xiii
Introduction....................xv
The Harvard Method....................xix

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