Notesale: Turn your study into money

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The various levels of objectives
Corporate Objectives

Objectives of the
Purchasing Function
Negotiation
Objectives

• Goals to be

achieved
• Problems to
be resolved

ITC

M7:U3:3
...
1-1

Setting objectives
Set negotiation objectives for the following three types of
purchases:
A raw material for a manufacturing process:

Conveyor belts for equipment in a factory:

Five lorries (trucks) to be added to your current fleet:

ITC

M7:U3:3
...


Negotiation variables are interrelated & should be
linked to your objective
ITC

M7:U3:3
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2-1

Identifying variables
Write down all the variables that you think could be subject to
negotiation:
1
...


2
...


3
...


4
...


5
...


6
...


7
...


8
...


9
...


10
...


ITC

M7:U3:3
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2-3

Action Point

3
...
One of your
objectives is to achieve continuity of supply of spare parts at
reasonable costs over the life of the equipment, estimated at 10
years
...
2-4

Set targets for your preferred option(s):
Corporate Objectives
Objectives of the
Purchasing Function
Negotiation
Objectives

Best & Worst
Acceptable

Targets

• Goals to be

achieved
• Problems to
be resolved

Options
Variables

Never start a negotiation before having set targets
for each of your negotiation variables
ITC

M7:U3:3
...
3-2

Setting targets - an example
Variable

Quality

Delivery
Price
Payment
Terms

ITC

Best target

Worst acceptable
target

 Specification as
given in our
enquiry

 Accept deviations from
defined tolerances: no
more than +/- 2
...
50 per unit
 Open account

 No more than $4
...
3-3

Action Point

Applying the

3
...
Define your targets for this
negotiation, and specify which criteria apply to your targets:
Product or service purchased:
Variable

Best target

Worst acceptable
target

Criteria which apply to
your targets
relevant
achievable
specific
measurable
impartial
compatible

ITC

M7:U3:3
...
g
...
4-1

Action Point

3
...
Mark where you thing the Negotiable Zone is
...


1
...
4-2

Action Point

3
...
Variable = No
...
4-3

Action Point

3
...
Variable = Delivery period

Buyer
Seller

ITC

M7:U3:3
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4-1 (Cont’d)

Comparing buyer and supplier targets
4
...
4-5

Developing the negotiation strategy
Your own
negotiation
objectives &
targets

The positions
& possible
interests of the
other side

Your
negotiation
strategy
The relative
strengths &
weaknesses
of both sides

ITC

M7:U3:3
...
5-2

Win-Win versus Win-Lose
The approach
...
5-3

Action Point

3
...
5-4

Starting position & the order of the issues
Deciding on your starting position for each variable
What you say you want
What you say you will or won’t do
At what point would you be willing to move
on your position
What would be the advantage of revealing
or not revealing your starting position?
When would you do one or the other?
What would be the best order of discussing the issues?
Have your internal agenda (points in reserve, milestones,
agreed signals
...
5-5

Persuasion techniques:
Emotion
Logic
Bargaining
Compromise
Threat
ITC

M7:U3:3
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5-7

and
White
Snow

arfs
ven dw
the se

Logic:
Using a rational argument based on
facts & figures
Try to keep the argument simple

Bargaining:
The trading of variables: if… then
...
5-8

Compromise
Agreeing to meet somewhere in between
50/50 is not the only compromise
Compromise tends to favour the one who takes the
most extreme position

Threats:
Suggesting the consequences of
not complying with your demands
Use “if”
Use indirect rather than direct threats
Threaten only at business level
ITC

M7:U3:3
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5-10

Action Point

3
...
5-11

Negotiation tactics
The building block technique
Silence
Repeat, repeat
...
5-12

Your negotiation team:
Who should be there?
Decide on roles:
Team leader
Specialised support
Summariser
Observer

ITC

M7:U3:3
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5-14

Where to hold the negotiation?
Access to staff, information etc
...
5-15



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