What makes negotiation a handful oftentimes is that it is both an art and a science; requiring thorough preparation, emotional intelligence and strategic thinking.
However, even seasoned negotiators can fall prey to common pitfalls that jeopardize favorable outcomes.
In this blog post, we'll explore common negotiation pitfalls and how to fix them.
🌟 Lack of Preparation: A procurement manager negotiates a vendor contract. Without understanding market rates or alternative suppliers, the manager agrees to a price far above industry standards, leaving significant cost savings on the table.
Fix: Don’t go into a negotiation unprepared. Develop a negotiation checklist that includes key objectives, benchmarks, potential concessions and backup plans. This helps ensure every detail is covered.
🌟 Getting Too Emotional: During a supplier negotiation, a buyer becomes visibly irritated when the supplier insists on non-negotiable payment terms. The frustration results in a breakdown of communication, and the deal is ultimately lost.
Fix: To diffuse tension, take deep breaths and practice active listening. Making the effort to understand and acknowledging the other party’s perspective can de-escalate emotional conflicts and encourage collaboration. Too hot to handle? It’s okay to call for a break so that you can calm down and clear your head.
🌟 Overlooking the Long-Term Relationship: A business negotiates aggressively to drive down a supplier’s price, leaving the supplier with razor-thin margins. Over time, the supplier prioritizes other clients and reduces the quality of service provided.
Fix: Regularly revisit long-term objectives during negotiations. A good question to answer is: “How does this decision affect our relationship in the future?”
🌟 Ignoring Cultural Differences: An American company negotiates with a Japanese supplier. The American team pushes for immediate decisions, unaware that the Japanese prefer a consensus-based approach, leading to delays and frustration on both sides.
Fix: When negotiating cross-culturally, it is work consulting a cultural liaison or consultant to help navigate nuances and avoid missteps.
🌟 Focusing Solely on Price: During a procurement meeting, a buyer pushes strongly for the lowest possible price, only to realize later that the supplier charges extra for delivery and customer support, leading to higher total costs.
Fix: Be sure to consider the total value proposition, not just the upfront cost. Consider factors like quality, long-term value and supplier reliability. Focus on building relationships that go beyond transactional exchanges.
🌟 Failing to Recognize Power Dynamics: A small startup negotiating with a large supplier assumes they have more leverage due to the competitive market but overlooks the supplier’s dominance in the industry. This results in the startup accepting unfavorable terms.
Fix: Conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) before entering negotiations to better understand both your position and the market dynamics.
🌟 Lack of Communication Clarity: A buyer and supplier agree to a delivery timeline, but the specific dates are not documented. Later, the buyer expects delivery on the 1st of the month, while the supplier schedules it for the 15th, leading to conflict.
Fix: After finalizing a negotiation, send a summary email outlining all agreed terms and request confirmation from the other party. Documented agreement keeps all parties on the same page.
In conclusion, remember, the goal of negotiation isn’t just to “win” but to create value and build trust.
Need procurement specific training? Reach out to support@efemini.com and we'll get you sorted.
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