Negotiation helps in getting the most out of a deal, and for negotiation to be a success, negotiation tactics have to be applied to the utmost. Tactics, if not applied with the use of a proper plan, will prove to be futile. Asia is a market that is growing steadily and there are a lot business opportunities in the market. The following is a negotiation strategy that should be used:
Dealing with those that are directly responsible for marketing
There is always the urge by other members of the company to be part of the negotiation team. However, care should be taken to exclude them and only deal with the individuals directly responsible for marketing. This will allow for the maximization of the opportunities that may arise in the course of the negotiation process. Engaging exclusively the marketing team helps in getting the best deal. Negotiations carried out with the administrative arm of the company does not yield the desired results.
Being willing to walk away
Even though the company’s negotiators may wish to conclude the negotiations with a win, they should be willing to take the deal on the table. This could happen in the event that the market share being asked for is not right. There might also be a scenario, most likely the worst case, in which the host market demands to be the sole distributor of the company’s services and products. It is required that if the company’s desire to act solely on its behalf cannot be granted, it pulls away and look for friendlier and more accommodating markets.
Even though it may sound tedious and old-fashioned, it is one of the aspects of the company’s negotiating strategy. Every market has something that it wishes to place in another market, which probably has an embargo or has too many stringent laws. If all offers fail to impress, bartering comes in handy. There are products in the Asian market that would do well out of the home market. In exchange for the product launch in their market, the company could find a way for their product to sell on the market the company’s operates. In this way, both parties come out of the negotiation satisfied.
Maintaining control of the negotiation meeting
During the negotiation process, it is important that the company maintain the lead. In as much as the company will be launching its product in a new market, the company should not appear out of choices. The bottom line is either to launch successfully, or to withdraw completely. The other team will make the first offer and the negotiations begin from there. The major thing is to get the most out of the negotiation.
The following are the stages of the negotiation that will be followed to guarantee success:
Exploration: Information on the expectations, responsibilities and duties of all parties involved will be shared with the host. It will not only help in gathering information, but also to create a lasting business relationship, so it must be handled with utmost consideration
Bidding: The secret to good bidding is clarity. There shall be no room for doubt, but it does not mean that the company should over-exploit the host. Being reasonable is advised at this stage. The extreme end of what is acceptable leads the other party to consider, and this is an advantage, especially to the ‘visitor’.
Bargaining: Bargaining is the core of the negotiations. Both parties wish to benefit as much as they can and in this case, it is a win or lose situation. While the market might be new, an equitable deal should be sought above all, especially in view of the launch.
Settling: When the deal has been made, it is formalized so that it is difficult for either party to back out of it. It is important to agree on what has been agreed upon. This stage is characterized by afterthought. A handshake should suffice at this stage.
To facilitate the sealing of the deal with minimum effort, the following are the tactics that will be employed:
The Nibble: This is a way with which the company will get an unexpected response from the host. It will help in maximizing profits while minimizing costs, effectively. The host will feel compelled to allow the product launch to take place for fear of losing out on a profiting venture.
The Vice: This tactic is aimed at reducing the cost and whatever is tied to it. The downside to this tactic is that it can leave the company with little room for bargaining, thereby, no advantage.
The No-Option-Left: This will come in the form of an ultimatum. Considering that it is a new market, the host will be anxious to make good impression. This is hardball which most likely the host will ask a concession for.
In face of all this, there are certain factors, which may affect the negotiation plan.
Before the negotiation or the meeting commences, negotiators must be armed with sufficient information that will give them an advantage. The useful information must include the market’s environment, its tariffs, supply chains, distribution channels, taxes and culture. The major questions to be answered include; is the market viable? Will it support the product for its entire shelf life? What are the competing products? What is the size of the market base? This can be answered by knowing how much the product will cost. It goes a long way in determining which people will be able to purchase the product.
The marketing team in charge of the host market has been known to do their research on the members of the ‘visiting’ negotiating team. This calls for a lot of credibility because as long as there is a member whose credibility is questionable, they will decline to negotiate. The company must therefore take care to pick a negotiation team that has proper marketing and interpersonal skills. Credibility also involves being able to give an honest opinion with regards to the market value of a product, irrespective of what others may wish to hear.
The time factor
Time always determines the success or failure of a negotiation process. In most cases, one of the parties may be in a rush to close the deal and might therefore not give their best during negotiation. Negotiation can never go on endlessly, so, before the process begins, both parties must agree to the time frame of the process. This allows for psychological preparation. Putting pressure on one party is not conducive for business.
Effective negotiation requires that the right things be said at the right time. A good negotiator must have a good command over language and must state, explain and persevere as need be. Under certain circumstances, silence can also be extremely effective. Inappropriate jokes should be avoided because light-hearted comments could be misconstrued for something else.
Bakar, N. A. & Peszynski, K. J. (2010). Factors Influencing Negotiation in the Sourcing Process between Partners in E-Procurement: A Focus on Actors. In PACIS (p. 115).
Fletcher, R., & Fang, T. (2006). Assessing the impact of culture on relationship creation and network formation in emerging Asian markets. European Journal of Marketing, 40(3/4), 430-446.
Lewicki, R. J., Saunders, D. M., Minton, J. W. & Barry, B. (2001). Essentials of Negotiation. New York: McGraw Hill Higher Education.