Mastering •A comprehensive guide to negotiation techniques,
Negotiation in strategies, and best practices for purchasing professionals
Purchasing
What is Negotiation?
Definition Origin
Discussion on business Derived from Latin civil laws
transactions leading to meaning "Trading and
Scope
finalization of purchase and Deliberations"
[Link]
2. quantity
sale contracts
3. price
4. time of delivery
5. place of delivery
6. mode of transportation
7. packing and packages
8. after sale service
9. mode of payment, etc.
Core Objectives of Negotiation
1 Protect Organizational Interests 2 Maintain Supply Continuity
Ensure the organization is not put in a Secure reliable supply of raw materials while
disadvantageous position reducing production costs
3 Balance Short and Long-term Benefits 4 Create Clear Agreements
Avoid bargaining distant future for present gains Establish unambiguous terms to prevent
misunderstandings
. What is planned to be What are the assumptions
What for the negotiation is What is going to form the
achieved through such a upon which the negotiation is
being planned? basis of negotiation?
negotiation? going to be negotiated?
The objectives of negotiation
in each case will also differ
1. To see that the interest of 2. To see that the organization
What is intended to be sometimes materially. But
the organization is not is not put in a
negotiated? fundamentally the objective
bartered out. disadvantageous position.
of negotiation will obviously
be:
6. To see that times, etc. are
3. To see that the organization
5. To see that long as well as settled in unambiguous terms
gets all the benefits which can
4. To see that distant future is short term effects are and nothing is left to
easily and comparatively
not bargained for the present. properly measured and pros interpretations which may
come to it in normal
and coins are fully weight. lead to misunderstanding and
circumstances?
bitterness
Essential Negotiation Techniques
Be Well-Informed
Research every detail related to the deal before negotiations begin
Stay Focused
Be specific about what you want and stick to your objectives
Listen Actively
Consider the other party's interests and needs for win-win outcomes
The Professional Negotiator
Core Role Key Responsibilities
Analyzes value and price, Enters discussions,
persuades parties, and interrogates to assess
applies strategic thinking mindset, adopts offensive
to achieve organizational and defensive strategies
success
Strategic Approach
Weighs pros and cons,
investigates thoroughly,
and brings successful
terms to the organization
Qualities of an Effective Negotiator
Optimism
People Skills Sees opportunities and light even in
Gets along with people easily and challenging situations
enthusiastically
Clear Thinking
Possesses logical analysis and
broad ideas
Market Knowledge
Well-versed in market conditions and Patience
organizational policies Demonstrates persistence and
patience throughout negotiations
Strategy vs. Tactics in
Negotiation
Strategy Tactics
Basic plan of action Means adopted to
chosen to achieve implement strategy.
objectives. Planned in Thought out on the spot
advance and followed and changed during
throughout negotiation. negotiation.
Both strategy and tactics are integral parts of successful
negotiation, working together to achieve desired outcomes.
Factors Influencing Negotiation Tactics
01 02 03
Personal Characteristics Management Briefs Negotiation Power
Negotiator's individual traits and Instructions and authority given by Level of authority and decision-
capabilities management making power
04 05
Past History Market Conditions
Previous negotiations between the parties Nature of goods, monopoly situations, and external factors
Three Phases of Negotiation
Pre-Negotiation Phase Meeting Phase Post-Negotiation Phase
Information analysis, objective Actual discussion and negotiation, Order placement, inspection,
definition, strategy development, information collection, bargaining, material receiving, storage, and
and preliminary tactics discussion and agreement formation payment execution
"For every hour spent in negotiation, six should have been spent in preparation." - Peter Baily and David Farmer
Request for Quotation (RFQ)
and Modern Negotiation
RFQ Process
1 Competitive bid process offering prequalified vendors opportunity to
quote on items or services
Extended Negotiations
2 Complex items require negotiation beyond price: warranty,
transportation, technical assistance, payment plans
Professional Training
3 Staff need negotiation training to ensure best prices and favorable
terms in difficult economic climates
Purchasing professionals must master negotiation skills to secure optimal value
and maintain competitive advantage in today's complex business environment.