Today, in the age of networking, strategic alliances
and joint-ventures, the ability of companies and other institutions to negotiate successful deals is becoming evermore important. Every company today exists in a complex network of relationships formed through negotiation. Whether negotiating with suppliers, customers or strategic business partners, taken together, the thousands of negotiations a typical company engages in have an enormous effect on both its strategy and its bottom line. But few companies think systematically about their negotiating activities as a whole. Moreover, negotiation is still largely considered to be an individual rather than corporate skill. The concept of negotiation as a skill manifests itself in training programs directed at sales personnel rather than in a company′s corporate philosophies. Few companies seem to have tried to turn their negotiation skills into a core competency with the objective of building more rewarding customers relationships.
The aim is thus to shift from a situational to an institutional view of negotiation. This requires changes in practice, focus and communication of negotiations. The key is to develop a "negotiation infrastructure" and incorporate it into an organization′s strategy and philosophy. Using the BATNA approach gives salespeople a new source of power in their negotiations. Broadening the measures to judge salespeople′s performance allows them greater freedom to build agreements. However, there is a potential threat to this new approach is that it might turn into another set of rules that are followed without the necessary changes in perspective and behavior. The bottom line is that salespeople have to develop the ability to create strong, lasting, mutually beneficial agreements that meet the needs of all parties in a negotiation and build a negotiation relationship for the future. To this end, the personalities of all the participants and their group objectives and self objectives, which might not be the same, must be recognized. A positive negotiating environment that is based on trust and mutual respect should be developed. This attitude is conducive to reaching mutually acceptable compromises during negotiations.
Table of Contents
1. Negotiation as a Corporate Skill
2. Creating a negotiation infrastructure
3. Broadening the measures of success
4. Distinguishing between the deal and the relationship
5. Learning to walk away from a deal
6. Requirements for effective sales negotiations
7. Conclusion
Objectives & Core Topics
The primary objective of this work is to demonstrate how companies can move from a situational, individualistic view of negotiation toward an institutionalized, corporate-wide capability that fosters long-term, mutually beneficial business relationships.
- Transformation of negotiation from an individual skill to a core corporate competency.
- Development of a structured negotiation infrastructure to improve systematic decision-making.
- Evaluation of negotiation success through long-term relationship health rather than short-term price gains.
- Implementation of interest-based negotiation strategies and the strategic use of BATNA (Best Alternative to Negotiated Agreement).
- Identification of prerequisites for effective, non-adversarial sales environments.
Excerpt from the Book
Distinguishing between the deal and the relationship
As in any communication, it is important in negotiations to draw a clear distinction between the contents of the deal and the relationship. Although negotiators acknowledge this distinction, they commonly view it as a trade-off they have to make. They fear that if they push too hard to get the best possible deal today, they may jeopardize their company’s ability to do business with the other party in the future. Or the negotiators fear that if they pay too much attention to the relationship, they will end up giving away too much and make a lousy deal. Ertel points out that though natural, such a view is dangerous because it leaves the negotiator open to manipulation by the other side. What routinely happens is that companies who offer a small price cut for the sake of the relationship to their customers end up giving continual discounts because that customer will be demanding another price cut in exchange for its continued business. “Without realizing it, many companies have systematically taught their customers the art of blackmail” (Ertel, 1999). Instead of giving away value to loyal customers, salespeople make concessions to “difficult” customers, hoping to improve the relationship with these types of clients.
The source of the problem lies in the notion that there is an inverse correlation between the deal and the relationship: to improve one, one has to be willing to sacrifice the other. The reality is that while relationships and deals indeed correlate, they are more likely to move up and down together. A strong relationship creates trust, which allows the parties to share information more freely, which in turn leads to better agreements and to a greater willingness to continue working together.
Summary of Chapters
Negotiation as a Corporate Skill: Introduces the necessity for companies to shift from viewing negotiation as an individual task to treating it as a core corporate competency to remain competitive.
Creating a negotiation infrastructure: Explains the importance of coordinated management and the implementation of systematic knowledge sharing to overcome the complexity of negotiations.
Broadening the measures of success: Discusses the need to move beyond simple cost and price metrics toward evaluating processes and long-term relationship value.
Distinguishing between the deal and the relationship: Highlights the dangers of the "trade-off" mentality and argues for managing deal contents and relationship health as independent, mutually reinforcing components.
Learning to walk away from a deal: Details the importance of identifying a BATNA to empower negotiators and avoid the cycle of harmful concessions.
Requirements for effective sales negotiations: Outlines the necessity of assessing participant motivations and fostering a non-adversarial, interest-based environment.
Conclusion: Summarizes that institutionalizing negotiation requires fundamental changes in corporate practice, mindset, and performance evaluation metrics.
Keywords
Negotiation, Corporate Capability, Negotiation Infrastructure, BATNA, Interest-based Negotiation, Business Relationship, Strategic Alliances, Sales Personnel, Corporate Competency, Performance Evaluation, Conflict Resolution, Value Creation, Non-adversarial, Customer Loyalty, Deal Making.
Frequently Asked Questions
What is the core focus of this work?
The work focuses on transforming the organizational approach to negotiation from an isolated individual activity into a structured, institutionalized corporate capability.
What are the primary thematic areas?
Key themes include building a negotiation infrastructure, redefining success metrics, balancing deals with long-term relationships, and adopting interest-based negotiation strategies.
What is the main goal of the research presented?
The goal is to provide a framework for companies to achieve more consistent, high-value business results by systematically managing negotiation processes and mindsets.
Which scientific or management methods are suggested?
The text suggests implementing BATNA, moving toward interest-based negotiation, and establishing organizational "negotiation infrastructures" that codify lessons from past experiences.
What topics are covered in the main section?
The main sections cover the importance of corporate skill development, the shift from situational to institutional views, overcoming price-focused constraints, and managing the dynamic between deals and relationships.
How can one define the key concepts of the work?
The work is characterized by terms like corporate infrastructure, BATNA (Best Alternative to Negotiated Agreement), interest-based negotiation, and long-term value-based relationship building.
Why does the author argue that viewing every negotiation as unique is problematic?
The author argues that this view isolates negotiators from organizational learning, feedback, and necessary criticism, hindering the company's ability to develop institutional competence.
What is the "blackmail" trap mentioned in the text?
The "blackmail" trap occurs when companies repeatedly grant discounts to "difficult" customers in a misguided attempt to save a relationship, effectively training the customer to demand concessions.
- Arbeit zitieren
- Christina Kuttnig (Autor:in), 1999, Negotiation as corporate skill, München, GRIN Verlag, https://www.grin.com/document/106416
