Class Nov 2 Student - Class Nov 2 Negotiation Basics...

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Class Nov 2 Negotiation Basics Transportation Basics
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NEGOTIATIONS
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Purchase Negotiation Negotiation is a process of formal communication , either face to face or via electronic means, where two or more people come together to seek mutual agreement about an issue or issues The primary objective of a purchase negotiation is to reach an agreement that satisfies both parties Negotiation involves relationships between people, not just organizations It is a time-consuming process that requires extensive planning and a commitment of resources--90% of the negotiation process involves preparation, not execution Negotiation is an opportunity to create value within the supply chain Good negotiators are not born--they develop their skills through practice and experience
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Develop/confirm company’s vision and objectives Understand suppliers’ potential vision and objectives Establish alternative options Industry reports Internal studies Cost Analysis Trade publications RFI/RFP results Interviews Suppliers Preparation begins with a fact and information based negotiation strategy Know your suppliers better than they know themselves!
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Negotiation Framework The negotiation planning process involves many activities-- Identify specific objectives Analyze strengths and weakness of each party Gather information Recognize counterpart’s needs Identify facts vs. issues Establish a position on each issue Develop appropriate strategies and tactics Determine who will participate Brief other personnel Practice the negotiation
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Determine margins for negotiating/scenarios • Maximum acceptable price that meets profit goals • Market advantage delivery time • Product performance to meet specifications • Price firm for one year • Minimum price in the market • Shorten time from current levels • Performance exceeding specifications • Longer term price guarantee Needs Wants Least Acceptable Agreement (LAA) Most Desired Outcome (MDO) At a minimum, needs (LAA) must be attained/fulfilled to successfully conclude negotiations Range of Acceptability
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BATNA = B est A lternative T o a N egotiated A greement A BATNA is the alternative you’ll be stuck with if you can’t come to an agreement with this party . Examples
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This note was uploaded on 02/08/2011 for the course BUSINESS S 29:630:301 taught by Professor Briangreczyn during the Spring '10 term at Rutgers.

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Class Nov 2 Student - Class Nov 2 Negotiation Basics...

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