Which of these negotiating tips do you agree with? Why?/Why not?

1. In the early stages, you need to ask the other side a lot of questions.

2. Always interrupt if you don't understand something.

3. Never make a concession for free. Always get something in return.

4. Use simple, direct language and be open about your aims.

5. Signal what you are going to do. For example, say, 'I'd just like to clarify that.'

6. Summarise often so that everyone is clear when you reach agreement.

7. Adapt your language so that you don't appear aggressive.

8. Talk about your emotions and how you are feeling.

Assignment 4.

A.Answer the following question.

How effective are these negotiating styles?

a) Playing the 'tough guy'; being persistent in stating your demand and negotiating as long and hard as possible until the other person finally gives in

b) Being flexible; being prepared to make concessions when appropriate and achieving a win-win situation, although you may not get everything you want

c) Staying 'silent'; pausing between sentences, listening more and talking less so that the other person trusts you and is more vulnerable

B. Match these negotiating techniques (1-4) with what the negotiators actually say (a-h). What other negotiating techniques do you know?

1. Explain the value of a concession

2. Testing the situation

3. Responding to an unacceptable concession

4. Checking with a higher authority

a) What if I take 4,000 units? How much that would cost me?

b) Yes, and your sales also increased because of that, right?

c) Let me run this by my boss and I'll get back to you, OK?

d) I see … (silence)

e) What would you say if we were to extend the deadline by a fortnight or so?

f) I'd like to do business with you, but I am afraid we are simply too far apart.

g) We'll pay for the delivery. In real terms, that's a saving of about $600.

h) Here she is! Well, if you don't mind, our Purchasing Manager will take over from here.

C. Complete a sales manager's notes below on making concessions with the words and phrases in the box. What do you think of the advice?

understand its value 'take-it-or-leave-it' big concession walk away one by one some sort of compensation willing to make concessions ill-will

Sales negotiations: making concessions

1 I don't give the first ………..

2 Don't assume you have to match your customer's concessions ………..

3 Don't give a concession away without ………….

4 Never give away a concession unless the customer ………….

5 The best time to ………… is when you're offering one.

6 Whatever you do, don't advertise you're ………….

7 The ………… offer is unacceptable – it only creates …………..

8 If the customer isn't planning to buy, you need to ………….

Case study: Ashbury Guitars

Background

The Kim Guitar Company (KGC) in Seoul, South Korea, makes electric guitars for Japanese manufacturers and distributors in Europe and the US.

A major US distributor, Ashbury Guitars, has contacted KGC about marketing a range of guitars under its own brand name for the Californian market. Ashbury Guitars is a well-established company with an up-market image. It has had no previous dealings with KGC. Ashbury’s owner, Richard Grant, plans to put three models on the market: the Ashbury SG1000 (the most expensive model), the SG500 and the SG200. The body of die guitars will have an experimental shape as well as advanced technical features.

It is now early January. KGC has agreed to manufacture the guitars for Ashbury, even though it is a very busy time of the year for them. The two companies have had some initial correspondence by e-mail and now a face-to- face meeting is required.

Several points of the contract need to be negotiated. KGC’s owner, David Kim, has flown to San Francisco to meet Richard Grant. At the meeting, the Marketing Director of each company will be present. The purpose of the meeting is to make a deal acceptable to both sides, and which could be the basis for a long-term relationship.

 

You are negotiating as either:

• The KGC team: David Kim and Marketing Director

• The Ashbury team: Richard Grant and Marketing Director

 

Read your information files. Identify your priorities and work out your strategy and tactics. Then negotiate so that you get the best deal for your company.

 

Assignment 5.

As the owner of either Ashbury Guitars or KGC, write an e-mail summarising the points agreed during the negotiation. Indicate any terms of the contract requiring discussion or clarification.

 

Information file: KGC

Models

You can supply three models in the first year: Ashbury SGiooo, SG500, and SG200. The SG1000 will be costly to produce because it has advanced technical features.

Quality

To reduce costs of production, you want 40% of the order to be manufactured by other Korean firms.

Quantity

You want Ashbury Guitars to place a first order of at least 2,000 guitars. You need a large order to cover the costs of setting up the production lines. Try to persuade Ashbury to buy a large number of the SGiooo model because your profit margin on this guitar is high.

List price (USS Estimated cost Prices quoted

Of production to Ashbury

 

SG1000 510 920

SG500 340 550

SG200 290 475

Payment

By bank transfer, as soon as the goods have been dispatched.

Delivery

30 June. If an earlier delivery is required, production costs will increase by 10% because of overtime payments to workers. Before 30 June, the factory will be fulfilling orders for other customers

Discounts

Your company policy is to offer new customers 3% off list price for a first order, and 5% for second and further orders.

Guarantee

You usually offer a guarantee of 5 years.

Information file: Ashbury Guitars

Information file: Ashbury Guitars
Models	You want KGC to supply three models: Ashbury SG1000, SG500 and SG200. The SGiooo has some special additional features.
Quality	You want KGC to produce all the guitars in their own factory. If they use other manufacturers for part of the order, the quality of the guitars may not be very good.
Quantity	You want to place the following first order: Model Quantity SG1000 400 SG500 1,200 SG200 200 You are sure that demand will be good for the SG1000. The cheaper guitars may sell well. However, there is strong competition in the lower price ranges.
Price	KGC have quoted these prices: SG1000 US$920 SG500 US$550 SG200 US$440
All prices include transport costs to Pusan, Korea.
Payment	By bank transfer. You want to pay a deposit of 50% immediately, and the remaining 50% one month after receiving the goods.
Delivery	By 1 June. A later date will result in reduced sales. (Music festivals in California in May create demand.)
Discounts	Although this is a first order, you hope to negotiate a discount of at least 6% off the quoted price. If you place other orders in the future, you hope to have a discount of 8%.
Guarantee	At least three years.

 

INTERNATIONAL NEGOTIATIONS

SESSION 3

Assignment 1. Read the following quotations. Comment on them and answer the question.

«The aim of argument, or of discussion, should not be victory, but progress»

(Joseph Joubert (1754-1824), French moralist and essayist)

«Strength lies in differences, not in similarities»

(Stephen Covey, US author and management consultant)

«If you destroy a bridge, be sure you can swim»

(African (Swahili) proverb)

«Forty for you, sixty for me. And equal partners we will be.»

(Joan Rivers, American comedian and businesswoman)

 

Do you agree with these quotes? Explain why, or why not. Give examples from your own experience.

Assignment 2.

A. Do you agree or disagree with these statements. Why/why not?

 

1 Conflict is not always a bad thing.

2 Where there is a conflict, it is best to keep things rational rather than showing your emotions.

B. Look at this checklist of techniques used to deal with conflict. Which do you most often use? Which get the best / worst results? What other techniques have you used or seen used?

1 Ignore the problem – it will sort itself out

2 Try to put yourself in the other person’s shoes.

3 Use humor to defuse a tense situation.

4 Say loudly and clearly exactly what is on your mind.

5 Remain calm and do not get emotional.

6 Ask a lot of open questions.

7 Speak more than you listen.

8 Try to reach a compromise.

9 Accept you are in the wrong – anything for a quiet life.

10 Summarise what the other person says in your own words.

Mini-lecture