Negotiations
Training
Understanding
The Other Party's Business:
Uncovering
the Business Situation
One of the most
important advantages you can have prior
to a negotiation is the level of time you spend preparing
for an important discussion. Surprisingly, many people want
into a negotiation blind. They plan to fumble their way through
discussions, hoping to come out with the best deal possible.
This approach
is like a football coach sending his team out into the field without
having scouted his opposition. Imagine a coach leading practice
for a full week without knowing if the team he is playing is an
option team or runs a west cost offense. Come game day, if that
coach prepared his team without knowing much about his
competition, he will be in for a rude awakening. Any coach who
takes this approach will
not last long, certainly not as a head coach.
Yet, businessmen
do this all the time. Many of us find it baffling. How can one
company expect to negotiate with another company without having
a sufficient amount of background
information? Would it be wise to enter into a partnership agreement
without knowing if the other company had a track record of living
up to their commitments? Would a company want to negotiate
a financing deal without understanding if a buyer had a good
credit rating? Of course not... and yet, it's much more common than
many of us realize.
Prior to any
negotiation, a sufficient amount of time should be spent collecting
as much background information on the other party. Depending on
the type
of negotiation, this may include anything from press coverage
of a company to financial statements or analyst comments. A great
deal of data is now available at out fingertips - to not use that
data to our advantage to further our interests is a disservice to
our companies. Most businesses now have an online
presence. Web pages are invaluable. Some companies so much data
that one can get lost searching through content. Focus on those
areas that are pertinent to your discussion and may affect the outcome
of any negotiations.
Other information
to gather may be based on previous
business dealings
or negotiations. Have you worked with the other company before?
What types
of concessions do they request during negotiations? Do they
have any specific terms or conditions that are standard in any agreements
they might make? Are there any specific approval processes or internal
procedures that will affect a negotiation? Essentially, whatever
might have happened in the past needs to be gathered for internal
use. Previous members of negotiating teams should be consulted to
gather opinions on the other party. It is recommended that you speak
to as many people as possible, without going overboard, to gather
this information.
As you prepare,
put thought into what the other party's negotiation
strategy might be. Do you know what they might perceive to be
the ideal outcome or "Wish" of a negotiation? Can you
determine what their "Bottom Line" might be? What are
some of the concessions they may ask? Are they liable to try to
use negotiating
tactics to get the upper hand? What is at stake if they are
not able to come to an agreement with your company? Just as you
must formulate and deliver on your own negotiating
strategy, it helps to have an internal picture of what the other
party's negotiating strategy may be. By coming up with an idea of
their possible strategy, you will be able to anticipate
their moves and react accordingly. This is no different than
a football coach running his defense through drills designed to
stop a particular type of offensive attack.
Build a list
of questions to help guide your research. Here are a few questions
to get started on the right foot:
* How is the
company doing financially?
* What is their reputation in the industry?
* What types of agreements, similar to this one, have they pursued
in the past?
* Are they facing any particular challenges at this time?
* Are they growing or cutting jobs?
* What areas are of the biggest concern to them?
* Are they facing any external pressures on their business?
* Do they have the financial or logistical capability to maintain
an agreement?
* What is at stake during this negotiation?
* What will happen if we don't come to terms?
* What departments or divisions will be involved?
* Do we know their structure?
* What market share does this company have?
* What challenges are they facing from their competition?
* Are they affected by any government regulations, oversight committees
or other industry requirements?
You will eventually
know which questions make sense for your situation. Over time, practice
from one negotiation to another will make this an easier process.
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