Success, Failure and Relationship Building of Business Negotiations - Literature review Example

Business Negotiations Business Negotiations (A review of Success, Failure and Relationship building of Business Negotiations) Business Negotiations2 Introduction Modern century witness changes in every aspect of human life. Fast developing technologies and new thoughts developed after cold war changed the complexion of human life. Scientific methods are applied everywhere and the business arena also not an exception. Rapid changes in business strategies is taking place in order to explore the possibilities of new liberal world as well as due to the competition in the market. The concepts of business negotiation have been changed a lot in the modern century. Earlier the ultimate aim of a business negotiation was the success in getting an order for the organisation at any cost. Now the business negotiation process is nothing but building relationships. Building relationships is the key role of the negotiators nowadays. “Dramatic changes took place during the end of twentieth century in the way many negotiations are conducted. Negotiation changed from a process of conflict to a process of Compromise. Earlier the trend was to win the negotiations at any cost and thereby catch the eyes of the boss of the organization. But in the 2000s, negotiation process has changed its meaning from the conventional one. Now the negotiation means the starting of a business relationship”. (William F. Morrison - The Savvy Negotiator: Building Win-Win Relationships - Questia Media America, Inc. www.questia.com, Publisher: Praeger.Westport CT. Publication Year: 2006. Page Number:iii).Some of the negotiation process may be a success while the other may be a failure. But even a failed negotiation can lead to successful relationships. In order to analyse business negotiation process, few fundamental questions has to be answered first. What is meant by business negotiations? How can a negotiation process be evaluated based on the results? How can a failed negotiation changed to a successful one in future? Why some of the Business Negotiations 3 negotiation process went wrong? In what ways the business negotiation is important to the organisation? Does the business negotiation always lead to a win win relationship? Business negotiations and why they work. “Negotiation is the process by which at least two parties try to reach an agreement on matters of mutual interest. The negotiation process proceeds as an interplay of perception, information processing, and reaction, all of which turn on images of reality (accurate or not), on implicit assumptions regarding the issue being negotiated, and on an underlying matrix of conventional wisdom, beliefs, and social expectations. Negotiations involve two dimensions: a matter of substance and the process”. (http://www.questia.com/read/29043487?title=Cross-Cultural%20Business%20Negotiations) In terms of business, negotiation means the discussion between two parties; one may be a customer and the other a seller, to reach an agreement in order to execute a job or service for mutual benefits. We negotiate to set the ground rules for future relationships and to satisfy our needs. A business negotiation should be carefully designed, in order to get the desired result. The relationship between the customer and the seller is the most important aspect of modern business negotiations. In order to make a successful negotiation one should follow certain important things in the negotiation approach. The negotiator should be hard on the business deal but soft on the people to whom he is dealing with. The proposal should be consistent with the demands of the customer you are dealing with. Each side must have their goals. The negotiators should be sure about their goals, at the same time should discover the goals of others also. In order to take decisions the objectives of both the parties should be considered. The negotiator Business Negotiations 4 should agree the fair demands of the other and should follow the principle not the pressure. Too many issues should not be presented in the negotiations. The negotiator should concentrate more on the stronger issues. “The first step in preparing a sales negotiation is to make a list of the variables affecting the negotiation”. Paul S. Goldner (Author), Peter McKeon (Author)-Red-Hot Sales Negotiation: Everything You Need to Know to Close Deals, Build Relationships, and Create Win-Win Outcomes (Paperback) - Page 30 - Publisher: AMACOM (July 18, 2007). The negotiator should carefully study the list and should prepare answers for the anticipated questions in the negotiation process. The arguments of the negotiator should be supported by logics rather than emotions or any other personal goals. Frequent summarising of the points of agreements reached will make proper understanding. Giving ultimatums are not necessary. The negotiator should be a team player and should admit and appreciate the other party whenever possible. If the validity of a business negotiation is cemented on the factors mentioned above, deal will be a big success and the relationship also starts building up. Customer care is not a technique, it is a mindset. It is a customer-focused corporate mindset and culture that inspires teams to keep creating and delivering extraordinary customer value and thus helps companies acquire new customers, provide superior customer satisfaction, and build customer loyalty. Business negotiations and why they go wrong. “In integrative negotiations you have to be good at both creating value and claiming it” (Harvard (Author) - Harvard Business Essentials Guide to Negotiation (Paperback) by Business Essentials - Publisher: Harvard Business School Press (July 2003) Page 5) One of Business Negotiations 5 the most important aspect of business negotiation is the logic and value behind the arguments the negotiator putting forward. Earlier, in order to capture the work, the marketing people had a gone to any extent. Most of the words and points put forward by them to capture the job might be meaningless. Such negotiations will result in breakage of relationships. Such negotiations may be successful to that particular job only. Once the customer received any bad taste from the seller, he will never approach the seller again. So nowadays the organizations are particular about the offers given to the customers at the time of negotiations. An exaggerated offer at the time of negotiation will result in developing dissatisfaction to the customer at the end of the job. “Some relationships are hurt by competitive negotiation. Hurt feelings and resentment are things to watch out for and try to prevent” (Roy J. Lewicki, Alexander Hiam - Jossey - Mastering Business Negotiation : A Working Guide to Making Deals and Resolving Conflict - Page 78 Bass; 1 edition (July 21, 2006)) Once an Executive working in Dubai has told me one such example. A marketing fellow working in a printing unit, in order to capture the advertising market of Pepsi Cola, approached the advertising agency with some cheap rates for some of their existing projects, which were previously done by another printing unit. Convinced by this marketing fellow’s arguments and offers the agency production manager has allotted this project to him. Mid way through the production this marketing fellow experienced severe technical problem and he could not finish the work due to the complexity of the work. Finally the production manager of the agency had to rely again to the old supplier, but this time the old supplier increased the price and the agency manager forced to accept it since he lost faith in other suppliers. Business Negotiations 6 Business negotiations building a win win relationship “A negotiation process focuses on creating and demonstrating long term business value for both the customer and the seller” (Brian Dietmeyer (Author), Max Bazerman (Foreword), Rob Kaplan (Contributor - Strategic Negotiation: A Breakthrough Four-Step Process for Effective Business Negotiation (Hardcover)- Page 7-by Publisher: Kaplan Business (June 1, 2004) A negotiation can be called a success only if it develops a mutual long term association. Such relationship can be termed as win win relationships. A negotiation succeeded in getting only that particular order cannot be called as a big success in terms of relationships. The status and the role of the negotiators are extremely important. The organization should carefully define the role of the negotiator. Up to what extent the negotiation can go regarding the price, quality, delivery, deadline etc. Today, many worlds smartest and fastest businesspeople have perfected the art – consciously or unconsciously – of paying dumb. "People who try to impress by pretending to be smart generally arent. Truly smart people know that by playing dumb and asking the other party to repeat or explain things several times, asking lots of questions, theyll be better prepared to respond and then make a fast decision." The key to successful selling was knowing, the products and the customers. The smartest marketing people would present his or her product or service in the best possible light, forge a bond with the buyer, and triumph over the competition. Todays customers dont want products; they demand solutions, which must be designed, fashioned to meet the customers specific needs. Making such sales takes a lot more than personal charisma. Todays selling starts from analyzing customer needs, designing alternative solutions, scrutinizing costs, developing and implementing systems, and more. This is not the work of heroic individual sales rep. Modern selling is a team Business Negotiations 7 sport, and a complex one. Such strategy will result in developing a long term association. From the organizational point of view, the effectiveness of the man­ dated structure and relationships depend on the problem-solving qual­ity of the related dialogues and the extent of the bargaining parties commitment to the organizational interest in enveloping consensus. Un­der the effective-negotiation system, the mandated relationship dialogues constitute a potential source of empowerment and influence. In negotiation terms, the dialogues constitute a leverage able element which “can provide special advantage." The advantage is that the mandated dialogues can be conducted using the mandate as a cover for their bar­gaining essence and the vehicle they provide for controlling the relationship Due to the long-term nature of many international negotiations, often members of the teams will change. Discussions may be started with one manager only to have a different manager for the next session. The people who will be dealing with the other side on a continuing basis should be part of the team that negotiates the initial agreement. A stable negotiating team can facilitate negotiations. In addition, being aware of the history of the negotiations helps to clarify what the parties had in mind when they drafted specific provisions of the contract. Conclusion “The person with the most strong points leads the negotiation towards its final outcome at the expense of the other”. (Claude Cellich, Subhash Jain- Global Business Negotiations: A Practical Guide (Hardcover) - Page 60 -South-Western Educational Pub; 1 edition (August 15, 2003) In a business negotiation both the parties try to conserve their interests. The success will be with the one who put forward strong convincing points or arguments. The essence of a business negotiation can be summarized as follows. Some of the negotiations may be a success Business Negotiations 8 which will lead to a win win relationships. Some other negotiations may end up in a failure. But the negotiators should try to focus on building relationships even if that particular negotiation ended in failure. The negotiators role, status and methodology should be decided by the organization. The variables in a negotiation process should be decided before going for it. Negotiation should not lead to hurt the other party in any case. Negotiation should create long term association. Negotiation should follow certain values and logics. Business Negotiations 9 Sources 1. Business Essentials Harvard (Author) - Harvard Business Essentials Guide to Negotiation (Paperback) by Business Essentials - Publisher: Harvard Business School Press (July 2003) Page 5) 2. Brian Dietmeyer (Author), Max Bazerman (Foreword), Rob Kaplan (Contributor - Strategic Negotiation: A Breakthrough Four-Step Process for Effective Business Negotiation (Hardcover)- Page 7-by Publisher: Kaplan Business (June 1, 2004) 3. Claude Cellich, Subhash Jain- Global Business Negotiations: A Practical Guide (Hardcover) - Page 60 -South-Western Educational Pub; 1 edition (August 15, 2003) 4. Paul S. Goldner (Author), Peter McKeon (Author)-Red-Hot Sales Negotiation: Everything You Need to Know to Close Deals, Build Relationships, and Create Win-Win Outcomes (Paperback) - Page 30 - Publisher: AMACOM (July 18, 2007) 5. Roy J. Lewicki, Alexander Hiam - Jossey - Mastering Business Negotiation : A Working Guide to Making Deals and Resolving Conflict - Page 78 Bass; 1 edition (July 21, 2006)) 6. http://www.questia.com/read/29043487?title=Cross-cultural%20Business%20Negotiations) Read More