One can see a great deal of uncertainty in the world financial markets wherever you go - for the first time - regardless of where you find yourself in the world.
Warren Buffet stated that it is only when the tide goes out that one can see who is wearing no swimsuit. In other words, it is easy to be prosperous when the economy is doing well; it is only in tough times that we can clearly discern quality & commitment.
How can you use your negotiation skills, negotiation training or purchasing training to avoid losses in the present economic climate?
Use 'Loss Framing'
We are more interested by evading loss than by attaining the very same gain. Kahneman & Tversky's Prospect Theory work describes how individuals will become risk seeking in an attempt to avoid a loss whilst they are more likely to be risk averse when seeking gains. In the way that we negotiate, we can make our counterparties aware of the unique items that they stand to lose if they don't agree to our requests and otherwise gain if they do.
Create Alternatives
In times of uncertainty it is very important to look at other options so as to support our negotiation position. Creating options are vital in the context of negotiation and the power of alternatives to securing a transaction is the primary driver of our negotiation power.
Usually we wait until we recognise that we are not going to be able to do a transaction before we start thinking about other options. We risk entering into a less than ideal transaction and if we have not studied all the options. Similarly, thinking about the alternatives available to your counterparty in the negotiation will give you a clear view of their relative position of strength in the negotiation. If they have good alternatives available then they will be more competitive and if they don't, they will tend to be more agreeable.
Use Reciprocation
Reciprocation is one of the key principles of powerful influencing skills, because we are most likely to return to others the form of behaviour that they demonstrate towards us. In times of difficulty it is key that we act in the interests of our counterparties if we would like them to perform in ours. You can use this principle to your advantage by acting first and invoking the principle of reciprocation. Be careful and ensure that you register the indebtedness with your counterparty.
Move from price to value
It is important to take the focus off price and home in on the Total Cost of Ownership. For any service, product or solution that we buy or sell, there is always an exchange between value & price. If we only engage on the price, the best that we will do is to haggle and it is only once we start to investigate the total lifecycle of the service, product or solution that we trade, that we begin to discover opportunities for negotiation. Before you state price in negotiation, evaluate your counterparty's long term strategic fit, expertise, switching costs should they wish to change a business partner, financial stability and possible risks or negative consequences that may happen when your counterparty doesn't manage to reach agreement with you.
Remember that the magic in negotiation is found in the quality of your preparation. In times of economic uncertainty it is key to dedicate enough time to planning your negotiations.
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