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NEGOTIATION
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CHAPTER 7
all parties almost always enter a negotiation with the goal of reaching an
agreement. Negotiations are only possible when the parties are willing to move
from their stated positions and when that willingness is made evident at some
point. Negotiations are about the movement of opposing parties towards each
other and towards a mutually acceptable position. Negotiations imply movement.
The relative bargaining strength and skill of the negotiations decides the position
of a settlement point. The skills of the negotiator are directed at moving away
from the minimum. The ideal long-term result should be win-win for all parties.
There are three possible generic negotiation results:
• Win-win is ideal for both parties long term.
• Win-lose is acceptable in the short term for the winner, but seriously
jeopardises further negotiations with the losing party (loser’s desire for
revenge).
• Lose-lose is always unsatisfactory and is not recommended as a negotiating
outcome.
The basic principle of win-win is that the amount of value available within a
negotiation or relationship is not fixed. By working together the parties can
‘grow’ the value pie. In negotiation, win-win bargaining is called integrative
bargaining. The goal is for both parties to increase their advantage (profit)
and satisfaction without hurting each other. Conversely, win-lose negotiation,
also called distributive bargaining, views the amount of value in a negotiation
or relationship to be fixed. The parties compete to see who takes that larger
portion of available value.
The key in creating a win-win outcome is to focus on the interests of the other
party, as opposed to the position they adopt. Pursuing win-win in procurement
will ensure the supplier is willing and able to help an organisation achieve its
goals now and in the future. And, the organisation is able to help achieve the
supplier’s goals.
Table 7.1 reveals that parties to a negotiation often display their willingness to
engage in win-win or win-lose negotiation through their behaviour.
Table 7.1:
Characteristics of win-lose and win-win negotiators.
Negotiation characteristics
Characteristics of win-lose
negotiation
Characteristics of win-win negotiation
• Rigid negotiating positions.
• Parties try and understand each other’s
needs and wants.
• Argument over a fixed amount
of value.
• Parties build on common ground and
work together to develop creative
solutions that provide additional value.