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Negotiation Planning Guide

Negotiation Planning Guide. Negotiation Planning Guide. STEP 1 - Identify company objectives, expectations & alternatives STEP 2 - Identify the supplier’s business drivers STEP 3 - Identify the supplier representatives STEP 4 - Identify and plan for our strengths (weaknesses)

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Negotiation Planning Guide

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  1. Negotiation Planning Guide

  2. Negotiation Planning Guide STEP 1 - Identify company objectives, expectations & alternatives STEP 2 - Identify the supplier’s business drivers STEP 3 - Identify the supplier representatives STEP 4 - Identify and plan for our strengths (weaknesses) STEP 5 - Identify lists of issues that the supplier will raise STEP 6 - Identify the key messages(s) that we want to deliver STEP 7 - Organize the company negotiating team STEP 8 - Develop a detailed strategy

  3. Developing a Negotiation Strategy STEP 1 Identify company objectives, expectations & alternatives • develop objectives, etc. for all aspects of the contract • focus on Least Acceptable Alternative (LAA) and Most Desirable Outcome (MDO) for each aspect (LAA is sometimes referred to as Best Alternative To a Negotiated Agreement - BATNA) • identify potential negotiation positions that will facilitate achieving MDO STEP 2 Identify each supplier’s business drivers, LAA & MDO and benefits that will result from addressing them. Examples might include: • supplier needs this contract to absorb excess capacity = more aggressive pricing • demand for supplier services is growing (profit potential increasing) = secure resources to meet our needs while offering supplier competitive margins • supplier seeking multi-year contracts = better pricing and supply assurance • supplier market is increasingly competitive = lower cost, better service, etc.

  4. Developing a Negotiation Strategy (continued) STEP 3 Identify each supplier’s representatives involved in the negotiations • who are they • what prior dealings have we had with them • what are their experiences • what role are they playing in the negotiation • what is their personal stake in the negotiation • how will the outcome of the negotiation impact them STEP 4 Identify our strengths (weaknesses) and plan on how to take advantage of (compensate for) them during the negotiation. Examples might include: • this is first of many similar projects in the business plan = promise of long term contract or relationship • competitors are anxious to break into this market = threat to take business elsewhere • market is very tight and supply constrained (suppliers’ market) = our willingness to commit to long term agreement

  5. Developing a Negotiation Strategy (continued) STEP 5 Identify lists of issues that you might expect the supplier to raise during the negotiation and prepare to deal with them. Examples might include: • use of incentives • escalation terms • performance metrics • terms and conditions STEP 6 Identify the key messages(s) that we want to deliver based on analysis of information from previous steps. Examples might include: • the competition is very aggressive in seeking this contract • we are looking for a long term relationship that looks beyond current short term market conditions. • we are not satisfied with the technical (or commercial) quality of your proposal

  6. Developing a Negotiation Strategy (continued) STEP 7 Organize the company negotiating team • considering the information developed, identify the experts needed to support the negotiations • determine roles and responsibilities in preparing for and conducting the negotiations • identify spokesperson for each aspect of the planned negotiation • establish procedures and protocols for calling conference breaks, seeking clarification, etc. among team members. • practice by role playing using different tactics for each side to better anticipate issues and outcomes. STEP 8 Develop a detailed strategy that properly considers all of the information developed and takes advantage of the strengths of the negotiating team. Recognize that this strategy may vary with each of the suppliers/contractors involved.

  7. Company Objectives - Expectations - Alternatives Services Contract Sample Format • Project team should identify their objectives, expectations & alternatives while preparing the RFP documents (may influence the RFP). • In all cases, objectives, expectations, & alternatives should be identified prior to receipt of proposals.

  8. Company Objectives - Expectations - Alternatives Commodity Contract Sample Format • Project team should identify their objectives, expectations & alternatives while preparing the RFP documents (may influence the RFP). • In all cases, objectives, expectations, & alternatives should be identified prior to receipt of proposals.

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