Selling Hospitality Chapter 7 Phase One PreNegotiation Strategy

Selling Hospitality Chapter 7 Phase One— Pre-Negotiation Strategy: Negotiation Preparation and Planning Copyright © 2006 Thomson Delmar Learning All Rights Reserved

Negotiations are Part of Life People negotiate all the time: Friends negotiate where to have dinner. Lawyers negotiate to settle disputes before they go to court. Nations negotiate to open their borders for free trade. Supervisors negotiate with their employees. Salespeople negotiate with their customers as well as with their counterparts in operations. Copyright © 2006 Thomson Delmar Learning All Rights Reserved

Negotiations Occur for One of Two Primary Reasons To create value for each party through exchange To resolve problems or disputes Copyright © 2006 Thomson Delmar Learning All Rights Reserved

Prepare for Negotiations Know the negotiation process. Have a BATNA (Best Alternative To a Negotiated Agreement). Select an effective negotiation strategy. Copyright © 2006 Thomson Delmar Learning All Rights Reserved

The Negotiation Process Is Similar to the Buying/Selling Process Phase 1—Pre-Negotiation Strategy – Understanding Negotiations – Prospecting – Pre-call Preparation Phase 2—Negotiation Process Strategy – – – Approaching the Buyer Investigating Needs Demonstrating Capability Negotiating Concerns Gaining Commitment Copyright © 2006 Thomson Delmar Learning All Rights Reserved

BATNA (Best Alternative To a Negotiated Agreement) What is a BATNA? Before the negotiation, decide what you will do if nothing comes of the negotiation. Unless you have a plan B, your anxiety may reach dangerous proportions. Research shows that those with a strong BATNA will have better outcomes than those without or those with a fuzzy BATNA. Copyright © 2006 Thomson Delmar Learning All Rights Reserved

BATNA Examples Walking away Prolonging a stalemate Approaching another potential buyer Making something in-house rather than procuring it externally Going to court rather than settling Forming a different alliance Going on strike Copyright © 2006 Thomson Delmar Learning All Rights Reserved

BATNA Dimensions BATNAs set the threshold in terms of the full set of interests that any acceptable agreement must exceed. Both parties doing better than their BATNAs is a necessary condition for an agreement. Thus, BATNAs define a zone of possible agreement and determine the agreement’s location (between each party’s position). Copyright © 2006 Thomson Delmar Learning All Rights Reserved

BATNA Importance With a good BATNA, you are confident in walking away from a negotiation if it does not meet your best alternative to a negotiated agreement. The better your BATNA appears both to you and to the other party, the more credible your threat to walk away becomes, and the more it can serve as leverage to improve the deal. Copyright © 2006 Thomson Delmar Learning All Rights Reserved

Basic Negotiation Strategies Competitive negotiations – Win-lose or hardball bargaining takes place. – Goals of parties are or appear at odds. Collaborative negotiations – Win-win or problem-solving bargaining takes place. – Goals of parties are not mutually exclusive. Copyright © 2006 Thomson Delmar Learning All Rights Reserved

Competitive Negotiations or Bargaining Competitive negotiation strategies and tactics are useful – when a negotiator wants to maximize value obtained in a single deal. – when the relationship with the other party is not considered important. Copyright © 2006 Thomson Delmar Learning All Rights Reserved

Collaborative Negotiations The fundamental structure of a collaborative negotiation is that it allows both sides to achieve their objectives. Although there may initially appear to be a win-lose to the parties, discussion and mutual exploration will usually suggest win-win alternatives. Copyright © 2006 Thomson Delmar Learning All Rights Reserved

Choosing a Negotiation Strategy Is the outcome important? YES Is the future YES of the relationship important? NO Collaboration Accommodation Competition Avoidance Copyright © 2006 Thomson Delmar Learning All Rights Reserved

Negotiating Strategies— Another View High Concern about other’s outcome Accommodating Problem Solving Compromising Avoidance Competing Low High Concern about own outcome Copyright © 2006 Thomson Delmar Learning All Rights Reserved

What About the Other Negotiating Strategies? Accommodating Avoidance Compromising Copyright © 2006 Thomson Delmar Learning All Rights Reserved

Accommodating Negotiation Strategy Accommodating is also known as yielding. Accommodating involves lowering one’s own aspirations to “let the other win” and gain what he or she wants. Accommodating may seem like a strange strategy to some, but it has its definite advantages in some situations. Copyright © 2006 Thomson Delmar Learning All Rights Reserved

Avoidance Negotiation Strategy Avoidance is also called inaction. With avoidance, parties show little interest in whether they attain their own outcomes, as well as little concern about whether the other party obtains his or her outcomes. Avoidance is often synonymous withdrawal or passivity: The party prefers to retreat, be silent, or do nothing. Copyright © 2006 Thomson Delmar Learning All Rights Reserved

Compromising Negotiation Strategy Compromising is a middle way. Some do not believe that compromising is a viable strategy. They see it as a halfhearted attempt to satisfy the two parties’ interest or as a simple accommodation strategy by both parties. Some see compromising as a viable strategy. Copyright © 2006 Thomson Delmar Learning All Rights Reserved

The Negotiation Team Negotiations are conducted (a) individual to individual, (b) team to team, or (c) team to individual. Negotiation team members each play roles that support and complement each other. Leader, good guy, bad guy, hardliner, and sweeper are the classic negotiation team roles. Copyright © 2006 Thomson Delmar Learning All Rights Reserved

The Leader The leader is generally the one with the most experience, not necessarily the most senior member. Role responsibilities: 1. Conducting the negotiation, calling on others when needed 2. Ruling on matters of expertise 3. Orchestrating the other members of the Copyright © 2006 Thomson Delmar Learning All Rights Reserved

The Good Guy The good guy is the person with whom most of the members of the opposing team will identify. Role responsibilities: 1. Expressing sympathy and understanding for the opposition’s point of view 2. Appearing to backtrack on a position previously held by his or her own team Copyright © 2006 Thomson Delmar Learning All Rights Reserved 3. Lulling the members of the opposing team into

The Bad Guy The bad guy is the opposite of the good guy and attempts to make the opposition feel that the agreement could be more easily reached without him or her. Role responsibilities: 1. Stopping the negotiations from proceeding if and when needed 2. Undermining any argument or point of view the opposition puts forward 3. Intimidating the opposition and trying to expose their. Copyright weaknesses © 2006 Thomson Delmar Learning All Rights Reserved

The Hard-Liner The Hard-liner takes a tough line on everything and presents the opposition with complications and is often deferred to by his or her own team members. Role responsibilities: 1. Delaying progress by using stalling tactics 2. Allowing others to retreat from soft offers that they might have made 3. Observing and recording the progress of the negotiations Copyright © 2006 Thomson Delmar Learning All Rights Reserved

The Sweeper The sweeper picks up and brings together all the points of view expressed and then puts them forward as a single cogent case—summarizes. Role responsibilities: 1. Suggesting ways or tactics to get out of a deadlocked negotiation 2. Preventing the discussion from straying to far from the main issues 3. Pointing out any inconsistencies in the opposition’s argument Copyright © 2006 Thomson Delmar Learning All Rights Reserved

Tips for Negotiators Be prepared—do extensive homework. Have a strategy—and recognize the other party’s strategy and tactics and be prepared to flexibly use every negotiation technique/style you know. Develop your BATNA—and, know your opposition’s BATNA. Question and listen carefully—ask probing questions to better understand the other party’s perspective. Play your negotiation team role—ensure that your team operates like a symphony to beautifully and expertly implement your negotiation strategy. Copyright © 2006 Thomson Delmar Learning All Rights Reserved

Why Study Sales/Negotiations? Because as social beings, everybody continuously negotiates—trading one thing of value for something else of value.