NEGOTIATIONS
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Negotiations
Marion Stephens
Colorado Technical University
NEGOTIATIONS
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Negotiations
Maude defines negotiation as a discussion that aims at reaching an agreement between
two parties involved in the dialog process (2014). Often, each party in a negotiation lays down
their own needs, requirements, and interests and tries to persuade the opponents to agree to the
provided terms and conditions. A business may engage in a negotiation with another enterprise
in a bid to form a merger aimed at increasing the market share for the products leading to
subsequent profitability. Negotiation plays a pivotal role in enhancing two interested parties to
reach an agreement aimed for mutual benefit.
Negotiation Scenario
In my previous organization, the company engaged in partnership negotiations with a
Chinese enterprise that operates several stalls in the country.
Purpose of the Negotiation
The partnership negotiation by my former organization aimed at venturing into the new
global market through a partnership deal that would promote sales of the company fashion
products in the new international market environment. This aimed at increasing the company's
shrinking market share, promoting growth of revenues, as well as improves the profitability of
the enterprise. Moreover, the negotiations focused on enhancing long-term sustainability of the
company.
Employed Negotiation Tactic Essential for Both Sides
Ehlich and Wagner postulates that negotiation strategies and tactics enhance the ability to
attain the intended negotiation purposes successfully. In this regard, to foster a successful
negotiation process between the two companies, both parties involved in the negotiation should
prepare adequately for the process. This includes highlighting and clearly understanding the
NEGOTIATIONS
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party objectives for the negotiation as well as the expected return on a successful negotiation
process. Secondly, both companies should ensure that the top management or the key decision
maker actively engage in the negotiation process. By integrating the key decision makers, would
alleviate a situation where the leadership or corporate decision makers fail to ascent to a
concluded deal terms and condition due to organizational convenience issue. Understanding the
culture is the last most critical negotiation technique that the companies’ negotiators would
employ. This would limit the chances of becoming offended due to culture difference, for
instance, in the usage of both the verbal and non-verbal cue in the negotiation process.
Discussion of Negotiation Outcome
The negotiation process between the two companies was fruitful leading to signing a
partnership deal that aimed at exporting fashion designs to the Chinese market and selling the
products in the partner’s sales outlets. Therefore, the dialog enhanced the accomplishment of the
former company objective of venturing into a new global market with an aim of increasing
market share, profitability, and subsequent long-term sustainability of the company.
Assessment of the Strategy Used
In my opinion, the negotiation strategies utilized by the two companies were the most
appropriate to enhance the process. For instance, understanding the culture was essential given
that both sides hail different cultural background. Besides, prior preparation and understanding
of the negotiation objectives played a pivotal role in enhancing successful dialog process
culminating in the outcome of the discussions. Nonetheless, incorporating the leadership was an
ideal strategy in the negotiations because it enhanced making and signing of the final deal by the
key decision makers.
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References
Ehlich, K., & Wagner, J. (Eds.). (2011). The discourse of business negotiation (Vol. 8). Walter
de Gruyter.
Maude, B. (2014). International Business Negotiation: Principles and Practice. Macmillan
International Higher Education.
VENDOR CONTRACT NEGOTIATIONS
Vendor Contract Negotiations
Marion Stephens
Colorado Technical University
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VENDOR CONTRACT NEGOTIATIONS
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Vendor Contract Negotiations
Businesses are open systems requiring the input of various factors to guarantee successful
production of high-quality output. Consequently, the business manager will always need to contact
the best supplier for various input necessities within the said business environments (von Branconi
& Loch, 2004). With different parties involved in the supply of the various projects, it is necessary
for the supplier to determine the highest quality vendor offering the best bargain for a particular
input product. However, the supplier may not be willing enough to enter into a contract with the
business based on the existing terms, while the business may not be ready to agree to the terms as
presented by the vendor. The impasse therein results in the necessity of negotiation of terms of the
contract, for the different parties involved to reach an even compromise.
In essence, negotiations within the business context involve a bargaining process between
different parties interested in products that either one of them has in his or her possession (Kong,
Dirks, & Ferrin, 2014). Therefore, there would be a need for a conversation between the various
involved individuals representing both parties to meet, hold discussions, and reach a compromise
agreeable to the different parties involved. Negotiations are intended to help each party gain an
optimal benefit from a particular business transaction irrespective of not achieving the maximum
benefit he or she would have wished to achieve.
A vendor selection process involves the determination of the best supplier of the various
products necessary for use within a business firm, for it to achieve its objectives. One of the
primary aspects of the selection process would be to engage a vendor who meets some of the
primary qualification aspects, in which case a contract negotiation could be involved. Notably,
every party within a negotiation process often begins by indicating the most preferable conditions
of the agreement, following which the discussion of the other party’s position helps to come down
VENDOR CONTRACT NEGOTIATIONS
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on some of the demands. Similarly, negotiations in the vendor selection process would require
similar approaches, in which case the eventual contract signed by the different parties meets most
of the expectations of the business and the vendor in question. Ergo, the contract negotiation
process in vendor selection helps achieve most of the expectations of both the vendor and the
business affected by the transactions.
Ultimately, different parties would be involved in the negotiations, key among them being
the representatives of the business and the vendor therein (Kong et al., 2014). The two parties
represent the interests of two of the most invested parties in the negotiation process, whose
opinions determine the nature of the drafted contract. In addition to the two representatives, it
would be appropriate if a legal representative was available to ensure that the contract does not
exceed the legal parameters of the business in question. It would be in the best interest of the
parties involved to ensure that the transactions therein do not exceed the legal parameters as such
could lead to legal issues in the business and the contract signed by the vendor and the business.
In summary, negotiations are an important aspect of any business without which it would
be difficult for any party to conclude a transaction successfully. They ensure that the agreement
made is appropriate for each of the parties involved, without too much favor on one of the parties
at the expense of the others. In any case, such a situation would limit the chances of transacting
since every party involved would be interested in achieving the maximum gain from the said
business.
VENDOR CONTRACT NEGOTIATIONS
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References
Kong, D. T., Dirks, K. T., & Ferrin, D. L. (2014). Interpersonal trust within negotiations: Metaanalytic evidence, critical contingencies, and directions for future research. Academy of
Management Journal, 57(5), 1235-1255.
von Branconi, C., & Loch, C. H. (2004). Contracting for major projects: eight business levers for
top management. International Journal of Project Management, 22(2), 119-130.
Introduction to Negotiations
Marion Stephens
Colorado Technical University
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Purpose of Negotiation
Definition and purpose of Contract Negotiation
Contract negotiation is an action of two or more individuals or parties discussing of a potential
partnership agreement. That is, a contract negotiation is a process, which entails compromising and
discussing agreement terms with the aim of reaching a final arrangement between two parties involved
in a contract. In most agreements of contracts, every party tries to negotiate for the interest of their
business; therefore, making negotiation is a vital aspect of a contact since both parties are legally
bound by contract terms and conditions.
Reasons for Conducting Contract Negotiations
The core objective of contract negotiation is for an arrangement to be made which is beneficial
to both parties involved in a contract. Although discussion may go forth and back between involved
parties until all points are agreed upon, the end objective of a contract negotiation is to reach an
arrangement equitable and fair to every party.
Purpose of Negotiation in Supply Chain
Negotiations in supply chain aimed at communicating with the goal of attaining an arrangement by
means if needed, compromise. The objective of negotiation in the supply chain is to attain a bargain on
all conditions and terms of procurement encompassing the price to be paid, logistic choice, and the
subject of purchasing. Negotiation plays a vital role in the supply chain, such as:
o Enhancing reaching of a reasonable and fair price
o Ensuring that the agreement is performed in a timely manner and materials delivered on time
o Persuading vendor to offer maximum co-operation to a buyer’s firm, and
o Developing a cordial relationship with competent vendors
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Situations Where Negotiation Is Appropriate
o An organization negotiating with a contractor for a contract on office cleaning is a situation
where negotiation is applicable. Negotiation may be needed with the aim of reaching an
agreement on time for cleaning the office.
o A company negotiating with a vendor for supply of materials
Common Negotiation situations
o Negotiating price between a vendor and a company providing the contract with the aim of
reaching a reasonable and fair price
o Negotiation about service and delivery of materials between a vendor and a company is a
common negotiation situation intended on reaching an arrangement on means of supplying the
services to a firm providing a contract
Desired outcome
Importance of Identifying the Organization's Goals and Objectives
Negotiation planning is vital in determining the success of any contract negotiation. In addition
to attaining an agreement, negotiation planning is among the pivotal aspect of a negotiation meeting.
Poor negotiation planning can culminate in allowing the other negotiating party to take more
concession offered by a company leading to unrealistic expectations of a firm as well as affecting
future terms. Thus, prior to engaging in any contract negotiation, it is essential to identify the
organizational objectives and goals, thereby, having a clear picture of what is expected in during a
contract negotiation. Firstly, identifying enterprise objectives and goals aids in ensuring that a
company negotiator [acting as a representative during contract negotiation] considers a firm's interests.
As a result, this succors in ascertaining that a negotiator does not compromise the terms and condition
in a way that would hurt a company. Additionally, identifying company objectives and goals aids a
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negotiator in coming up with the ‘best alternative to a negotiated agreement' (BATNA) (Daryl, 2012).
Recognizing BATNA will form the bottom line by identifying the far a negotiator can permit
counterpart party takes away during a negotiation process. Thus, identifying the goals and objectives of
a company as part of planning a negotiation would aid the company negotiator to ensure that a
counterpart offers better and reasonable offers that would not affect the company's future negotiation
or reduce its profitability. Importantly, identifying company objectives as part of a negotiation
planning would assist a firm negotiator to set realistic and attainable negotiation goals that align with
organization objectives. For instance, in this scenario, as a negotiator, I would ensure that XYZ
Plastics offers a reasonable price to the materials, thereby, enabling us to sell DELAMIX blenders at a
profit to our customers.
Definition and Description of Most Desirable Outcome
Most Desirable Outcome refers to the best situation a team feels is possible. That is, MDO is
the best outcome a firm wants and would be in a position to defend (Rudzki, 2005). For example, in
this case, the company MDO would be a minimum price for the outsourced materials, shortest delivery
time, services and performance that exceed specification, and guaranteeing a longer term on the price
of materials.
Pertinent information
Importance of Relationships in Negotiations
Too often, individuals believe that negotiation entails only carrying out a deal with a
negotiating party. Nonetheless, conducting a business deal is not enough in the desire of having a
successful negotiation unless there are establishment and preservation of a working relationship (Gan,
2017). Besides, it is unfortunate that most negotiators consider that a signed agreement represents the
consummation of a deal. While this may be true, a deal is not just an agreement, but a successful and
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long-lasting deal extends to a working relationship, which is committed and embodies carrying out the
agreed terms. In respect, therefore, relationships in negotiations aids in providing a foundation for
collaborative problem solving as well as the creation of mutual gains. The relationship in negotiation
aids in promoting better negotiation outcomes, reinforcing a relationship, and supporting future deal
making. A good relationship during negotiation aids in abating adversarial relationships from
worsening before a deal commences. For example, in a case negotiating parties view themselves as
adversaries in a negotiation, both parties become defensive, thereby, interrupting or halting the
negotiation process. Contrary, if both parties share a good relationship, it becomes easier to offer
business dealings in the context of establishing consensus.
Thus, in the course of conducting a negotiation with XYZ Plastic negotiator, it is vital to ensure
that one has the company background, know the company objectives and their offer. To attain this, it is
crucial to listen to the other negotiation party and allow them to table their alternatives before
providing ones BATNA. This will help in establishing trust, which is a key determiner in conducting a
successful negotiation.
Tactics for Managing Conflict during the Negotiation process
When a conflict flares up during a negotiation, it is vital to employ one or more conflict solving
tactics, such as accommodating, avoiding, collaborating, or compromising depending on the nature of
the negotiation process. Accommodating entails providing the other negotiating party what they want.
However, this type of conflict management takes place when one party desires to maintain the peace.
Accordingly, avoiding tactic focuses on putting off a conflict indefinitely. By delaying or abating a
conflict, individuals avoiding the conflict hope that issue will resolve on its own without engaging in a
confrontation. Collaborating is a conflict management strategy involving working and finding an
acceptable solution, which is agreeable to each party. This type of conflict management requires a lot
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of time and commitment from both parties. Lastly, compromising is a conflict management tactic
calling for each party to give up their interests and develop an acceptable solution.
Thus, in the course of conducting a negotiation process with XYZ Plastic, a negotiator can
employ compromising strategy, whereby, both parties will require setting aside their desires and
interests and establish an agreeable solution leading to a successful contract deal making.
Interests/desires/motivations
Comparison and Contrast of Distributive and Integrative Negotiation
Distributive negotiation strategy refers to a bargaining negotiation that entails individuals that
have never met or had a previous negation relationship that is interactive and neither planning to have
a future negotiation. Distributive negotiations take the form of a win-lose basis when involved parties
claim having the maximal value for their interest. On the other, integrative negotiation refers to an
interest-based bargaining strategy that incorporates different tactics aids on enhancing the likelihood
and quality of a certain negotiated contract via the provision of various alternatives.
The negotiating parties will use integrative negotiation
Unlike distributive negotiation that ends up in a situation of win-loss results, thereby, allowing
some parties to have a more gain than others, integrative negotiation mostly ends up in a win-win
situation for involved parties (Maiwald, 2015). The aim of a distributive negotiation is to benefit others
while others suffer, however, the focus of an integrative negotiation is to meet the objectives of the
involved parties and thus, promoting satisfaction. Accordingly, distributive negotiation is a selfcentered negotiation that focuses primarily on meeting personal interests without minding other
people. Nonetheless, integrative negotiation focuses on a mutual gain of both parties. Thus, to attain
each party’s objectives, the strategy will encourage brainstorming for constructive solutions, which
will aid in bringing benefits to both parties. Integrative negotiation promotes the establishment of trust
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leading to the formation of long-lasting relationship for future creative issue solving, which is contrary
to a distributive negotiation whose relationship is easily breakable. Subsequently, distributive
negotiation is often competitive and needs every party involved to view each other as competitors or
opponents. Thus, each party holds an extreme position, which it knows, will not allow surrender to
smallest value once the deal is struck. On the contrary, integrative negotiation will promote
collaboration, thereby, making parties to engage in a negotiation as mutual allies for mutual gain.
Importantly, while distributive negotiation augments conflict, integrate negotiation aids in conflict
management.
To engage in an integrative negotiation, as a negotiator, I will employ various tactics, such as
looking for the difference with the aim of creating value, taking time, offering significance information
about one's circumstances, and inquiring about the other party's interests. Firstly, to reach a mutual
agreement, it is vital to ask about XYZ Plastic interests, needs, concerns, and their willingness to trade
their products with services. Listening carefully will aid in revealing valuable information essential to
facilitating the negotiation. Accordingly, providing information about the company situation will help
in explaining the reason form making a deal. Thus, an effective integrative negotiator states
preferences, interests and other options that would aid in facilitating a deal. Looking for differences
focuses on creating value by understanding each other’s interests and needs. This enhances reaching a
mutual outcome for both parties.
Sources of Power
Power and Influence in Negotiation
Negotiation power refers to the capability of a negotiator to affect a conduct of another person
(Thompson, Wang, & Gunia, 2010). Power is the most significant factor in assessing as well as
determining the outcome of a negotiation process. Power is regarded as a vital element that influences
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and contributes to the outcome of a negotiation. As a result, multinational corporations employ power
to get what they want during the negotiation process. In the case of the company being represented, it
is pivotal for a negotiator to use BATNA when negotiating with XYZ Plastics. This will heighten the
likelihood of a win-win situation leading to closing a successful and fair deal. On the other hand,
influence refers to an intrinsic and elemental element, which affects the negotiation flow and outcome
during the process. Thus, during the negotiation process, it is crucial for the company negotiator to
comprehend the personality type of XYZ Plastic negotiator. This will help in knowing the personality
of a person one is facing, thereby, evaluating one's persuasiveness.
Sources of Power in a Negotiation Process
Various sources of power and influence a negotiator can use include positional based. This is a
source of power derived from holding a legitimate position in a company. Legitimate power makes
people respond quickly due to respect associated with such kind of power. In addition, positional based
power emanates from the negotiator's ability to mobilize resources. Resource mobilization is a
technique used to win the other negotiating party during a negotiation process through the utilization of
both monetary and non-monetary tactics. Contextual is another source of power during a negotiation
process that entails using BATNA and external audiences. Worth noting, during a negotiation process,
the company can utilize BATNA by having more alternatives and backup plans, thereby, culminating
in more negotiation power when engaging with XYZ Plastic negotiators. This will help the company
negotiator to have different options to defend the company stand leading to more power over XYZ
Plastics negotiation representative. Moreover, the company can use external audiences to observe,
assess, and review the negotiation process leading to better outcomes. Relationship-based source of
power and influence is crucial when engaging in a negotiation process. This entails the use of goal
interdependence and referent power. For instance, the company negotiator can use goal independence
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to assess how XYZ Plastic negotiator views his goals, thus, determining how much both parties’ goals
rely on each other’s behaviors. Moreover, a negotiator can employ referent power by getting to know
the XYZ Plastic negotiator order of commonalities. Identifying the similarities between both
negotiators would aid in establishing a bond and strong relationship that is vital in facilitating a fair
agreement. In the case of the company, having a legitimate source of power and strong BATNA will
aid in facilitating a successful agreement between XYZ Plastic negotiators and me.
Walk-Away Alternative
Best Alternative to Negotiated Agreement
Having good options prior to starting a negotiation process is vital since a negotiator feels
confident and empowered to either walk away or reach a mutually beneficial and satisfactory
agreement. BATNA is the most beneficial alternative course of action a negotiating party can pursue if
negotiations fail and there is no agreement attained. Besides, BATNA is vital and a driving force
behind any successful negotiation and thus, a negotiator should not accept a worse offer than its
BATNA. There are several steps that clarifies BATNA, which are (i) listing alternatives if a person’s
present negotiation results in impasse (ii) evaluating alternatives based on the value of pursuing that
alternative (iii)selecting the alternative, which would have the highest anticipated value for the
company, and (iv) computing the lower/reservation deal the company is willing to accept.
Alternative refers to the things a company negotiator will do apart from the deal currently being
worked on by both parties. In this case, the company alternatives would be to search for other suppliers
of DELAMIX blenders in a case XYZ Plastics offers a higher price quotation than the one stated in the
company BATNA. Having an alternative will offer the negotiator power over the XYZ Plastic
representative, thereby, striving to attain the best option for reaching to a successful and fair
agreement. Thus, to design options, both parties will have to agree on the best solution, which meets
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the interests of both parties. Thus, both negotiators should engage in integrative negotiation strategy
that would lead to the establishment of a mutual and long-lasting relationship. Nonetheless, if we fail
to reach an agreement with XYZ Plastic representative, the walk away alternative would be to seek the
services from other suppliers willing to offer the same product at an affordable price. In a case, the deal
proposed is lower than our reservation value, that is, after evaluating my alternatives, BATNA,
interest, computing and finalizing the reservation and lowest value deal our company is willing to
accept, it would be better rejecting and walking away from the deal.
Hardball Negotiation Tactics
Some of the hardball negotiation strategies include extreme demands that are followed up by
slow and small concessions. This type of tactic is employed by dealmakers to protect themselves from
making concession too fast. However, when dealing with such a tactic, a negotiator should have a clear
view of the negotiation goals, BATNA, and keep calm during the negotiation process. Secondly,
commitment tactics is another strategy used by opponents to delay or make the other party agree to the
offered contract terms. Nonetheless, in a case XYZ Plastic representative utilizes such a tactic, the
company negotiator could investigate whether the commitment tactics are true. Take-it-or-leave-it
tactic is a non-negotiable offer. However, to diffuse this, a negotiator can ignore the demand and focus
on the content of the agreement, then try to make a counter-offer that would meet the interest of both
parties.
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Ethical Considerations
(What are the ethical pitfalls or morally ambiguous issues)
Negotiation Team
(Roles & Responsibilities)
Recommended Negotiation Strategy
(identify your preferred Negotiation Strategy)
Reference List
Daryl, Ullman. (2012). How to prepare for a major contract negotiation. The ITAM Review. Retrieved
from https://www.itassetmanagement.net/2012/06/04/prepare-major-contract-negotiation/
Rudzki, R. A. (2005). World-Class Negotiations Management: Best Practices, Tools and Future
Directions.
Gan, I. (2017). Advancing a Distributive-Bargaining and Integrative-Negotiation Integral System: A
Values-Based Negotiation Model (VBM). Social Sciences, 6(4), 115.
Maiwald, André. (2015). Power, Negotiation Type and Negotiation Tactics. Retrieved from
https://essay.utwente.nl/68264/1/Maiwald_MA_Behavioural%20Sciences.pdf
Thompson, L. L., Wang, J., & Gunia, B. C. (2010). Negotiation. Annual review of psychology, 61,
491-515.
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