Modules_of_Business_Negotiation

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					  Chapter Two


Modules of Business
   Negotiation
                Question
• What are inquiry, offer, counter-offer,
  acceptance and conclusion of a contract?

• Example
                     Case
• A Beverly Hills home is sold for $10 million with
  a closing to occur in 60 days, and the seller
  makes it on a pre-printed form of contract
  containing various terms and conditions.
  Madonna may want to purchase the house and
  enquire about the price. If she "accepts" every
  terms and conditions by countersigning the offer,
  then a contract has occurred.
• But if Madonna doesn't like the price offered or
  some of the terms, she may counter, say, at $8
  million with closing to occur in 90 days. This
  counter offer acts as a rejection of the seller's
  offer. If the seller accepts the counter offer, the
  contract comes into existence then. If the seller
  rejects it, makes a counter offer, or doesn't
  respond within the time required, there is no
  "acceptance" of the seller's counter offer and
  thus no contract.
                    Contents
• Enquiry & Reply
• When not to negotiate
• Offer & Counter-offer
• Breaking Deadlocks
• Acceptance & Conclusion of a Contract
• Managing Time
• Negotiation Skills Test
             Enquiry & Reply
• Enquiry and offer start the negotiation
  – general enquiry
  – specific enquiry

• Guidelines for making enquiries
• Guidelines for replying enquiry
             Case of enquiry
• 天津某公司欲购日本丰田佳美轿车,先直接向丰田公司驻
  中国代表处询价,没有得到答复。于是该公司转而请北京
  A公司(与丰田公司有过直接交易)代其向丰田询价。天
  津公司代表给北京A公司打了多次电话催问结果。A公司
  代表也找到了在丰田公司的熟人探讨可能性。丰田公司认
  为汽车进口需要许可证,所需资金金额也较大,需落实了
  才愿报价。A公司把条件转告天津公司代表。天津公司代
  表认为可以开信用证,等车到码头后再说许可证。于是北
  京公司和丰田公司代表均不再表态了。天津公司代表又多
  次打电话催问探寻结果,均未得到报价。

• What is wrong with Tianjin company‘s enquiry?
           Analysis
• 1. 组织不够严谨。没准备好探寻的条件(没钱,没许可
  证),探寻方式,预测后果等方面准备不够,直到对方不
  理才换方式。

• 2. 间接探寻时,委托人选择正确,但管理不到位:双方关
  系不明确,责任不清,利益不明确,使探寻力度不够。

• 3. 策略上,急需之情流露无遗,探寻结果不好。
  Guidelines for Making Enquiries
1. Have a specific idea before the inquiry.
2. For the first time enquiry, give a brief
   introduction.
3. Be reasonable in the information
   requested and exact in each requirement.
4. The use of printed enquiry forms.
5. Be addressed to the company instead of
   an individual.
  Guidelines for Replying Enquiry
1. Be correct and exact
2. Focus on what you can do
3. Make a product catalogue list
4. Fulfill the function of a salesman
5. To make the buyer reply as soon as
   possible
        When not to negotiate
Reasons for saying no when necessary:
   It prevents you from having to concede
   substantial ground unnecessarily.
   It avoids raising false hopes, which would make it
   difficult for us later to satisfy later.
   It stamps your personal authority and
   professionalism on the situation.

How to say No:
   1. A clear and honest ―No, I'm afraid not‖
   2. Suitable explanation and empathy for the other
                    Exercises
• True or false
• Case I
  – Would you please Kindly advise how we should
    approach the situation in this regard as we have a
    limited budget every year for our organization.
• Case II
  – How do I respond to the above statement without
    offering a concession that can be negotiated against
    me later and get them to tell me what they are willing
    to pay?
                  Case I
• Research our BATNA, and raise objection
  or frustration
• Try to find substitute suppliers
• Try to find substitute materials, by
  redesigning
• Inform the supplier of their potential loss
  incurred by raising price
• Ask your customer to apply pressure to
  them
                  Case II
• Ask what do they want exactly.
• Collect information on any relating issues
• Understand our bottom line
• Make counter-offer with small concessions.
          Negotiation skills test
• Case 1: As a seller
     You want to sell your yacht and you know
  that you would be very fortunate to get as much
  as £225, 000 for it. While you are considering
  placing the advertisement, a keen yachtsman
  approaches you and offers £250 000 in cash
  immediately for your boat. Do you:
• A: Accept his offer without further ado?
• B: Tell him to wait until the boat is advertised?
• C: Haggle?
                                     >>Case 2
                  Sheep
• A. You are thinking only of the profit you
  might make and not about the problems
  you might create.
• These are the characteristics of a sheep.
• Always challenge a first offer!
                 Donkey
• How crazy can you get? His offer is
  already more than you were hoping for
  and to delay a decision by sending him out
  of your sight is foolhardy—he might see
  another boat on the way back to his car.
  This is the stubborn characteristic of a
  donkey.
                 Fox / owl
• C. Absolutely right. No matter how good
  the first offer, haggle; he might offer even
  more (the choice of a fox) .
• Besides, he will be happier with the boat if
  he thinks he squeezed the boat out of you
  at his price.
• (the sure touch of an owl, if you thought
  through these consequences of the
  problem).
            Case 2: As a buyer
•      You are in the market for a yacht and have
  taken a fancy to the ‗Isabella‘ which is advertised
  at £225 000. The most you can raise is
  £212 000 from selling your own boat and
  borrowing from the bank. You meet the owner in
  the boathouse and casually tell him of your
  (strong) interest. You mention that you could
  only raise £212 000. He agrees to sell you the
  ‗Isabella‘ for that sum. Is this:
• A: An offer you cannot refuse?
• B: A lousy situation?
• C: An occasion to celebrate your bargain?
                                       >>Case 2
                 Sheep
• Oh dear, you are an impetuous sheep
  aren't you?
                    Fox
• Because he accepted your first offer it
  must cast doubts in your mind about the
  Isabella and/or what you might have got it
  for if you had opened lower. Makes you a
  fox caught out by another Fox wanting rid
  of his boat.
                 Donkey
• How do you know it is a bargain?
• Sign of a donkey.
         Case 3: Young actress
•      A young talented actress wants to get into
  the ‗big time‘ and she meets a television
  producer who is desirous of securing her
  services for an important part in a detective film.
  He tells her that she cannot get top rates until
  she is ‗known‘ but if she does this one ‗cheap‘
  and gets famous, she will see ‗train loads of
  money‘ coming her way for her future work.
  Should she:
• A. Tell the producer to ‗offski‘?
• B. Agree, as she has to start somewhere?
• C. Demand top rates if she is to do a top job?
                                        >>Case 3
                    Fox
• Obviously a very determined and self
  confident young woman.
• But consider the risks that she blows it by
  trying to intimidate the producer. He might
  ‗offski‘ and she might ‗neverski‘.
• However, if she thinks she can keep him in
  play while she batters away for a higher
  price through (C) it could be a good move
  for a fox.
                  sheep
• Terrible! He has played the ‗sell cheap/get
  famous‘ ploy beloved by power players
  when dealing with sheep.
                     Owl
•        Has the tactical implications of (A)
    without its higher risks. She knows what
    she is worth. She can come down a little
    without losing out or relying on vague
    hopes and fantasies as in (B). If you sell
    yourself and your products cheap then you
    will get exactly what you demonstrate they
    are worth! All owls know this.
                   Case 4
•        You have been buying a component
    for your room divider systems, which you
    manufacture and install to order, from a
    large aluminium extruder for a number of
    years. Their new marketing manager rang
    you this morning with the news that they
    have decided to cease extruding your line
    because they cannot make a profit at
    current prices. Do you:
• A. Suggest that you re-negotiate the current
  contract price?
• B. Ask for details of their costing and profit
  requirements?
• C. Check for availability of capacity and prices
  from other extruders?
• D. Tell them that you are well aware of the
  negotiating ploy they are up to?

                                   >>Case 5
                  Sheep
• Sheepishly hasty, even if you need
  deliveries to complete current orders.
  You've fallen for the ‗Gotcha‘ ploy!
                   Owl
• Owls need information before they act,
  and how they respond will indicate how
  genuine is their problem.
• Meanwhile compare the details already
  collected because, to be frank, this is
  something an owl does on a regular basis.
                     Fox
• If this information is not to hand you are a
  fox and not an owl, because though the
  fox knows what to do in a crisis, the owl
  anticipates crises and prepares for them
  before they have to negotiate.
                     Fox
• Very clever of you to spot their ploy to
  raise prices by creating a delivery crisis
  but if you are that smart why are you so
  unprepared?
                 Case 5
•   You have been working only three
  weeks in a new job as a shipping agent in
  Baltimore, USA, and had planned to get
  married on Friday 18 August (which you
  did not disclose at the job interview).
• Your ‗intended‘ spouse expects a proper
  honeymoon vacation of at least a week in
  Bermuda. It's now 16 August and you ask
  your boss for leave for the wedding day
  and for the vacation. She is visibly not
happy with your request and asks stiffly
how long you were ‗thinking of being
absent‘. Do you reply:
• A. The wedding day only?
• B. Two weeks?
• C. Three days?
                   Sheep
• No. A surrender which you will spend the
  rest of your married life sheepishly trying
  to justify to your partner.
                   Fox

• Good. Start boldly and work down if you
  have to. Your boss will respect your
  courageous assertiveness eventually. A
  move for clever foxes.
                 Sheep

• Weak. She will squeeze a sheep like you
  to a weekend in Newark, New Jersey.
           Offer & Counter-offer
• An offer is an expression to enter into a
  contract.
  – Firm offer
  – Non-firm offer
• Ineffective offer
  – upon receipt of a rejection notice from the offeree
  – lawful revocation of offer
  – expiration of offer.
• Counter Offer
• Guideline for making offer and counter-offer
                  Firm Offer
• A firm offer is a promise made to a specific person
  or persons to express or imply a definite intention
  of the offeror to make a contract under clear,
  complete and final trade terms.
• Clear: the intention and the terms in the offer
  should be clearly described without ambiguity.
• Complete: to include all main trading terms
• Final: signifies that the offeror intends, without
  reservation, to enter into a contract with the
  offeree if all the terms offered are accepted by the
  offeree.
                 Non-firm Offer
• Not binding
• Inclusion of such terms: ―reference price‖
  ―subject to our final confirmation‖ ―subject to
  being unsold‖
• Not clear, complete or final
• Quotation sheets and price lists
• Under United Nations Convention on Contracts
  for the International Sales of Goods only name,
  quantity and price of the goods are required to form an
  offer
      Withdraw and Revocation
• An offer can only be withdrawn if the
  withdrawal reaches the offeree before or
  at the same time with the offer.
• Once an offer becomes valid, it can only
  be revoked before the acceptance is
  dispatched.
              Counter-offer
• A counter-offer is an offer made by an
  offeree to an offeror with substantial
  change to the offer.
• A substantial change is defined as a
  change in the main contents of a contract
  including the objects, quality, quantity,
  price or compensation, time, place and
  method for performance, remedies for
  breach and dispute resolution.
           Guidelines for
    making offers & counter-offers
1. Be sure you understand their offers and
   counter-offers
2. Let your opponent make the first offer and
   remember each counter-offer is entirely new
   offer.
3. Set a baseline figure and explain the basis for
   any offer or counter-offer. Avoid lowballing and
   highballing.
4. There should be different prices for customers
   from different countries or different specialties.
         Breaking Deadlocks
• changing issues
• trying to find agreements in principle
• caucusing
• adjourning but not ending the negotiating
  session
• bringing in other parties
• developing new information
• moving to a more informal setting
             Changing issues
  一次,松下幸之助去欧洲与一家当地公司谈判。由于对
 方是当地知名企业,态度有些傲慢。谈判气氛非常紧张,
 双方大吵大闹,甚至拍岸跺脚,松下幸之助无奈只好提出
 暂停谈判,等吃完午饭后再协商。
   经过一中午的休整,松下幸之助仔细思考了上午的对决,
 认为这样硬碰硬可能谈不成这笔生意。于是开始考虑换一
 种方式。谈判重新开始,松下首先发言。而对方各个表情
 严肃,一副志在必得的样子。松下没有说买卖的事,而是
 说起了科学与人的关系。

• Can you guess the contents of his talk?
• Do you think he just wanted to ease the tension
  with leisure talk?
• What point did he want to make?
  他说:“刚才我利用中午休息的时间去了一趟科技馆,
在那里我看到了矩子模型,并且深受感动。目前人类已经有
了许多了不起的成果,据说阿波罗11号又要飞向月球了。人
类的智慧和科学事业能够发展到这个水平,这实在应该归功
于伟大的人类。”对方以为松下在闲谈也就慢慢缓和了紧张
的面部表情。
  松下继续说:“然而,人与人之间的关系并没有如科学
事业那样取得长足的进步。人们之间总是怀着一种不信任感,
他们在相互憎恨,吵架。在世界各地,类似战争和暴乱的恶
性事件频频发生在大街上。人群熙来攘往,看起来是一片平
和的景象,其实人们内心深处却仍进行着丑恶的斗争。”

•Can you get his point now?
•Be alert to persuasion!
  他稍微停顿了一下,对方越来越被他的话吸引。
  他继续说:“那么,人与人的关系为什么不能发展的再
文明一些再进步一些呢?我认为人与人之间应该有种信任感,
应保持一种相互谅解的态度,携起手来为人类的共同事业而
携手奋斗。科学事业的飞速发展与人类精神文明的落后,很
可能导致更大的不幸事件。日本在二战期间已经蒙受了原子
弹所造成的巨大灾难。” 会场一片沉默,人们都陷入了深深
的思索之中。
  随后,松下逐渐将话题转入到谈判的主题上,谈判气氛
与上午完全不同,双方成了为人类共同事业而合作的亲密伙
伴。最后欧洲公司接受了松下的条件,双方很快达成了协议。
   developing new information
  美国一家大保险公司在市中心一块相当好的地段拥有一
家大酒店的抵押权。虽然生意不错,但酒店老板很少按时付
款。由于酒店老板无法按规定时间付款,保险公司威胁说要
取消这家酒店的回赎权。
  酒店老板听说这一消息后,只问了一个问题:“你们将
在哪放客人的汽车?‖
  他知道停车场是另一份合伙契约的一部分,完全在他的
控制之下,但保险公司却不知道这一点。如果保险公司取消
酒店的回赎权,酒店老板就会关闭停车场,从而使酒店无法
营业。无奈,保险公司停止了取消回赎权的诉讼,宽恕了酒
店逾期付款的行为。
              Exercises

Simulated Negotiation
If you were the seller, how you can
improve your offer to fulfill the ―function
of salesperson‖?
        Acceptance & Conclusion
             of a Contract

• An acceptance is the unconditional
  agreement to an offer.
• An acceptance must be:
   – 1. Absolute and unconditional
   – 2. Made by the offeree
   – 3. In the form of a statement or the conduct
     that the seller delivering the goods and the
     buyer making the payment
   – 4. Within the validity of the offer
                    Contract
• The actual contract can take the form of fine
  print on the other side of an order form or an
  invoice, or it can be tailor-made for a particular
  sale.
• From your company's perspective, you always
  want to start with your own form. Having your
  form preprinted helps it to look "standard" and
  non-negotiable.
• In practice, a contract may not be regarded as
  effective unless and until the company chop is
  placed.
 Guidelines for closing the negotiation
1. Keep in mind that sound closing of negotiation
   is never done in a hurry.
2. Ask yourself the question: WHO gets HOW
   MUCH, of WHAT, WHEN?
3. Besides payment obligations, a business
   contract usually spells out various obligations
   of each party.
4. Unresolved issues should not be ‗fudged‘ by
   producing vague or ambiguous forms of words
   in order to achieve apparent agreement.
5. An agreement is not successful until it has
   been effectively implemented.
            Managing Time
• It is very common in the negotiating
  process for the agreement to come
  together at the last minute.
• Another pattern that is quite common is for
  the parties to reach agreement on some of
  the easier issues early on in the process
  while the remaining difficult issues are
  resolved at the last minute.
                  Exercises
• Case Study
• Please discuss the point below in small groups
• What would be his best plan in this situation?


Negotiation Simulation
• Read this dialogue in pairs and underline
  some expressions that you think are
  commonly used in negotiation.
                Case study
• Is relationship important to the two
  companies?
• What can you do to reduce downtime?
• Can you help them in any way?
• Listen and communicate
• Consider the cost of going to court

				
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