- September 3, 2012
- Posted by: essay
- Category: Free essays
The negotiation process plays a crucial role in the contemporary business environment because the overall of negotiations can influence substantially the competitive position of the company and its prospects in the future business development. At the same time, there is a variety of negotiation theories which are extremely popular in the contemporary business environment, but still there is no universal negotiation theory that can be equally successful in different business situation. In this respect, I can refer to my personal experience, when I applied successfully different negotiation strategies in different business situations, and I strongly believe that I could not succeed if I used one and the same negotiation strategy in both business situations. Therefore, it seems to be obvious for me that, today, it is necessary to come prepared to negotiate successfully in different business environment and in different situations. The latter can be achieved through understanding and application of various negotiation theories and strategies which can help accomplish negotiations successfully. At this point, I can name BATNA and ZOPA as the two negotiation strategies I have already used successfully and I believe that these strategies can work perfectly well in situations similar to those in which I have applied them.
First of all, it is important to lay emphasis on the fact that I have chosen the negotiation strategy on the basis of the detailed analysis of the environment and circumstances in which I had to conduct negations. Depending on the outcomes of my analysis, i.e. depending on the business environment and circumstances of negotiations, I selected the negotiation strategy which seemed to be the most effective for me.
At this point, I could refer to the example of negotiations with several companies who were supposed to become the suppliers of the company I represented. In fact, the negotiation process involved three companies with which my company negotiated. The overall goal of the negotiation process was signing a contract to provide the regular supply of products by either company to maintain the production process in my company stable. As a negotiator, I was conscious of the fact that we should sign a contract that could bring our company maximum benefits. This means that I needed to minimize the costs and price of the supply of products by the contractor. At the same time, it was important to ensure the reliability of our potential business partner to make the supply stable, eliminating the risk of delays or supply of products of the low quality. For this purpose, I conducted certain researches concerning the reliability of each of the three companies which I involved in the negotiation process and all of them proved to be reliable suppliers. After that I decided to define clearly advantages of our companies or our strength which I could use to sign a contract respectively to our needs and wants. In other words, I defined our strengths to use them in the negotiation process to persuade potential contracts to meet our conditions fully. In this regard, the major advantage of my company, which actually determined the choice of the negotiation strategy, was the dominant position of our company in the market. Due to the dominant position of our company in the market, each of the three companies involved in the negotiation process understood the significance of the contract for the future development. It was obvious that the company which signs the contract with our company will supply its products to the major company operating in the industry for years ahead. This means that the company that would sign a contract with my company could count for a long-term cooperation. The benefits from the cooperation with the industry leader could hardly be underestimated. As a result, I was convinced that I can manipulate with the dominant position of my company to decrease the price of products which were to be supplied by a contractor.
Thus, I decided to use BATNA because I found this negotiation strategy the most effective in such a context. Using BATNA, I could negotiate with each company individually, compare their offers and make my offer to sign the contract which meets fully needs and interests of the company I represented. To put it more precisely, at first, I got the offers of either company. The company one offered me USD 1100 per item supplied to my company. The company 2 offered me USD 1200 per item supplied to my company. Finally, the company 3 offered me USD 1050 per item supplied to my company. Taking into consideration the fact that the quality of products supplied by each company and their reliability were similar, I focused negotiations attempting to decrease the price of items supplied to my company. I used the lowest price to force each company to decrease their original price arguing that other potential supplies can offer my company the same products at lower price. As a result, all the three companies started to decrease the price of their products and eventually I signed the contract with the company 3, which agreed to supply products at the price of USD 950 per item, while other companies involved negotiations decreased their original offer by USD 100-150. In such a way, using the actual position of my company and my knowledge of potential suppliers, I used BATNA successfully in the negotiation process to sign the contract, which met needs and interests of my company.
However, in a different business situation, I could not use BATNA because I understood that this negotiation strategy will not work because I have a little scope to manipulate with my business partner. Instead, I had to find a consensus, an agreement to meet interest of both of my company and of my business partner. In fact, the negotiation concerned the merger of my company and another company. My company entered the new market, while the company I was negotiating with had been already operating in this market, but needed significant investments to maintain its business successfully. My company, in its turn, needed the well-developed network and significant market share to conduct the new market expansion successfully. Therefore, our interests intersected, but I could not use BATNA because I could not determine conditions of the agreement as long as there were potential rivals in my negotiation with the target company. Therefore, I decided to use ZOPA. This negotiation strategy helped me to find the consensus which met both interests of my company and interests of the target company. To put it more precisely, my goal as the negotiator was to reduce the amount of money to be invested in the target company, while the representative of the target company attempted to get substantial investments and the sum exceeded consistently the sum my company was ready to invest. In such a way, there was a substantial gap between our offer and the investments the target company counted for. However, both my company and the target company were interested in the agreement and the merger. As a result, both companies had to focus on the zone of agreement which met interests of both companies. What is meant here is the fact that, in the course of negotiations, we clearly defined the objective needs in investments of the target company and our actual potential and possibilities to invest money in this company. In such a way, we arrived to the realistic sum of investments and, in the course of negotiations, we agreed on the details of the merger defining investments and conditions of the merger that med needs and interests of both companies.
Thus, taking into account all above mentioned, it is possible to conclude that the negotiation process may be very complicated, but the overall success of negotiations is defined not only by skills and abilities of negotiators, but also by the negotiation strategy they use in the course of negotiations. In this respect, the two examples discussed above proved the effectiveness of BATNA and ZOPA as two negotiation strategies, which, though, can be applied successfully in different business environment and different situations. As a result, it is obvious that the negotiation strategy should be chosen on the basis of the current business environment and circumstances of the negotiation process.