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Procurement Negotiation

Many people see negotiation as a form of adversarial contest in which one side wins and the other side either loses or does not win as much.... thumbnail 1 summary
Many people see negotiation as a form of adversarial contest in which one side wins and the other side either loses or does not win as much. The reason for this is limited point of view is that all organisations are in business to "win" and no business can expect to consistently "lose" and stay in business.

If the two parties to a contract need to work with one another over the longer term, then win-lose negotiations are likely to fail both organisations because losing causes resentment and this usually means that the "loser" tries to avoid losses in the future. This can lead to retaliatory action to re-coup previous losses which could have the future effect of disadvantaging the original "winner".

There are a number of manipulative techniques which are supposed to help "winning". However, they are only effective if the other party is unaware of them and, in general, they are only employable once in negotiations with any given organisation. Such techniques are not the stuff of long term, professional, commercial relationships for which a much more positive approach is needed based on "win-win".

The fundamental of any "win-win" negotiation is that both parties feel that they have got a good deal. This is not the same as a triumphalist feeling which a party might experience if successful at "win-lose". "Win-win" is the basis for both parties feeling that they can confidently deal with the other in the future in the reasonable expectation of achieving mutual benefit.

Longer term relationships are desirable. They are less costly and more profitable for both parties to manage because the very high costs of finding new suppliers or new customers are avoided and so are the costs of the learning curve associated with dealing with a new commercial partner.

Win-win is not an easy option even if essential because both parties need to continue to deal with each other successfully over the longer term.

Ultimately, most negotiations come down to one party having the money and not wanting to part with much of it and the other party wanting as much of the money as possible and at the lowest cost to itself. Despite the antagonistic nature of this situation, there is a possible basis for a win-win deal if both parties concentrate on saving money by spending it effectively.

There are positive negotiation techniques which assist in developing this approach. It is preferable for both parties to understand them and use them. However, it is also effective if the techniques are understood and employed by one party which accepts that part of its role as a negotiator is to change through example and persuasion the attitudes and approach of the other party.

Positive negotiation techniques are also employable in negotiations between parties have no need for a long term relationship.

Their advantage is that they can avoid or at least reduce the impact of win-lose and they can speed the negotiation process, bring about a conclusion of greater satisfaction to both parties and keep time consuming and therefore costly negative action and re-action to a minimum.