NEGOTIATION

Negotiation

Willie E. Davis

Webster University

Abstract

To be a successful negotiator requires a latitudinous understanding of business and an ability to employ skills in management, accounting, human relations, economics, business law, and quantitative analysis. There also exists the need to be well-versed in regards to the items being purchased and strategies affiliated with a particular negotiation. These various facets are interwoven into the very fabric of the procurement process.

Introduction

Take a moment and think if you would, what the term negotiate means to you.

Thoughts such as price haggling, bargain hunting, making a deal, looking for a good price, etc. probably readily come to mind. When we hear the term negotiate, for most of us, our focus is on price. As will be revealed to you later on in this document, true negotiating focuses on more than just price. According to Webster’s Dictionary the term negotiate means “to carry on business or to confer with another so as to arrive at the settlement of some matter”. In our text we see that the term carries with it a myriad of meanings depending on its usage or interpretation. For the purpose of this document, we will refer to purchasing’s definition of negotiation opposed to that given by government or industry. We will view it solely as a decision- making process. In doing so there are several objectives of negotiation that must be considered. These objectives are quality, fair and reasonable price, on-time performance, control, cooperation, and continuing relations.
Negotiating is part of our every day life. We negotiate in some form or fashion on a routine basis and our primary focus is usually what do we view as a fair and reasonable price to pay for an item. For instance, when we buy cars, houses, furniture, clothing, jewelry, etc., our main concern is whether or not we feel we are getting a good deal. Some of us will even buy an item we do not want if we are led to believe that we are getting a deal too good to pass up. I will use myself as an example. Several years ago I purchased a pickup truck that I didn’t even want because I felt that the price offered was too good to pass up. How did this occur you might ask? Well, I was out shopping for a new - but inexpensive car, when I stumbled upon this energetic and overly zealous car salesman. The negotiation process ensued. The salesman quoted me a price that I knew he couldn’t deliver. Me being the bargain hunter that I am challenged the gentlemen to honor the price quoted. I told him that if he could in fact sell the vehicle for the established price he had had himself a deal. Wanting to save face, the salesman conferred with his boss, which eventually led to a mutually acceptable price. The deal was closed. For the next twelve months I drove around in a vehicle I didn’t desire to own. Because I got caught up in the negotiation process and I failed to prepare properly.
Since being a student in this class, I have learned that a successful negotiation requires preparation. Our text states that preparing for the face to face discussion can require as much as 90 percent of our time. In other words, I should have done my homework prior to my face to face encounter with the car salesman. I would have benefited from being more knowledgeable about the technical aspects of the vehicle I wanted to purchase. Information on what other dealers in the area were selling the vehicle for would have improved my bargaining position as the buyer and lessened the car salesman’s position. Finally, conducting a cost analysis and research on the seller would have been helpful as well.
To do well as a negotiator, it is imperative that you convey to the seller what type of quality you expect, at what price you are willing to pay, what time lines you are dealing with, and how much control you will maintain.