D4 - 2.0 Approaches In Negotiation Of Comm Agreements W/external Orgs

Front 1

Explain FIVE differences between integrative and distributive approaches to negotiation.

Back 1

• p.72 table 5.1

1. key attitude: I win, you lose/whats they best way to address the needs of all?
2. Goal pursuit: Own goals at the expense of others/pursuit of jointly held goals
3. Relationships: Short-term/Long-term
4. Primary motivation: maximise own outcome/maximise joint outcome
5. Trust and openness: Secretive & defensive/trust & openness

Front 2

Discuss TWO reasons why a buyer might develop a BATNA when preparing for a negotiation

Back 2

- Allow you to be more assertive during negotiation
- Protects you from feeling you have to accept terms that are too unfavourable
- Provide a decision rule to allow you to decide when to take it or leave it
- P.79

Front 3

Discuss how the balance of power may affect commercial negotiations

Back 3

• French & Raven
• legitimate power: position power, authority in an organisation
• expert power: expertise or knowledge
• reward power: resource power, control over resource and rewards
• referent power: personal power, personality, charisma
• coercive power: physical power, threaten punish

Front 4

Explain why negotiators may develop a BATNA when planning for a commercial negotiation.

Back 4

• define BATNA
• three reasons: makes you feel assertive, protections from feeling you have to accept, a definite rule of when to take it or leave it
• p.79

Front 5

Suggest THREE situations when a distributive approach may be appropriate for commercial negotiations.

Back 5

• Routine item / low value
• No relationship required
• Low risk
• Where price is the key
• One-off

Front 6

Explain FIVE ways a buying organisation can improve its leverage with suppliers in a commercial negotiation.

Back 6

• use of persausive methods
• using experts, or bring in power e.g. CEO
• being prepared with information
• aggregated spend
• informing supplier of BATNA

Front 7

Examine FIVE types of supplier relationships, within the ‘relationship spectrum’, that can impact commercial negotiations.

Back 7

• Adverserial
• Arms length
• transactional
• single source
• parternship
• co-destiny

Front 8

Describe THREE sources of personal power that can be used in a commercial negotiation

Back 8

• Charisma
• Inspiring personality
• communication and influencing skills
• attractive

Front 9

Explain the reasons that lead to a monopoly supplier having high power relative to a purchaser in a commercial negotiation

Back 9

• only one supplier of the goods exists
• has absolute power
• makes abnormal profits

Front 10

What is Negotiation in the procurement context?

Back 10

A process of planning, reviewing and analysing used by a buyer and seller to reach acceptable agreements or compromises which include all aspects of the business transaction, not just price.

Front 11

What are alternatives to negotiation?

Back 11

Competitive bidding, persausion, giving in, coercion, problem solving

Front 12

What are the two levels of negotiation?

Back 12

Strategic

Tactical

Front 13

What is strategic negotiation?

Back 13

less freqent and at a higher level by senior mgmt addressing long range issues

Front 14

What is Tactical Negotiation?

Back 14

more frequent at lower level by functional parties addressing short range issues

Front 15

What two roles do Procurement Professionals typically play in negotiations?

Back 15

1. the sole negotiator (for low value non critical items) 2. team leader of cross functional negotiating team

Front 16

Why can conflict be highly desirable?

Back 16

energise relationships, clarify issues, driver for negotiation

Front 17

What are sources of conflict?

Back 17

1. shared resources 2. difference in goals and values 3. power imbalanc 4. ambiguity

Front 18

Where may conflict be experienced?

Back 18

1. with other functions 2. within purchasing team 3. suppliers

Front 19

In what context would negotiation be required relating to employee relations and team management?

Back 19

1. grievance and conflict handeling 2. group problem solving 3. negotiating terms and conditions

Front 20

What serious problems can failed internal negotiation cause? According to Richard Morse

Back 20

1. resources will not be available 2. implementation will falter 3. there is a risk of internal resistance 4. risk of alienating supporters 5. risk of sabotage

Front 21

what are objectives and outcomes in a negotiation?

Back 21

objectives are specific statements of what a negotiator wants to achieve from the process. Outcomes are a broadly, the results of the negotiation

Front 22

what are three possible outcome types of a negotiation

Back 22

1. win-lose: one party gets what he wants at the expense of the other 2. lose-lose: neither party gets what they want 3. win-win: both parties get as close as possible to what they want.

Front 23

Describe the two orientations to negotiation

Back 23

1. Distributive Bargaining: involves the distribution of limited resources, dividing up a fixed pie 2. Integrative negotiation: involves collaborative problem solving to increase the options avaliable (expanding the pie)

Front 24

Describe the conflict handeling styles

Back 24

1. avoiding 2. focing/competing 3. accomodating 4. compromising 5. collaborating

Front 25

What is the key objective of distributive bargaining?

Back 25

maximise our parties share of the particular deal

Front 26

what are the three strategies to achevie a win-lose outcome in distributive bargaining?

Back 26

1. pushing to settle as close as possible to the other parties resistance point 2. make the party lower its resistance point 3. make the other party think it’s the best settlement that could be agreed

Front 27

What are the tactics of distributive bargaining?

Back 27

1. presenting exaggerated opening bids and demands 2. exaggerating the initial distance between the two parties wants 3. withholding information highlighting weakness 4, using all levers to manipulate 5. offering no concessions in return

Front 28

What are the steps to a win-win approach?

Back 28

1. be willing to create a free exchange of information 2. find out why each party needs what it wants 3. find out where the parties interests dovetail 4. design new options where everyone gets more of what they want 5. cooperate, treat the party as a partner not an opponent.

Front 29

what are the tacttcs of integrative negotiation?

Back 29

1. being open about needs, getting all cards on the table 2. collaboratively generating options 3. focusing on areas of common ground and mutual benefit 3. supporting the other party in accepting your proposals 4. maintaining flexibility

Front 30

What are the characteristics of integrative negotiation?

Back 30

1. excellent listening skills 2. holistic orientation 3. added value thinking 4. integrity and trust 5. emotional intellegence

Front 31

what is positional bargaining?

Back 31

each side takes a position arguing in its favour trying to get an outcome as close to that position as possible. Fosters win-lose or lose-lose outcome.

Front 32

What is principled negotiation?

Back 32

parties work collaborativley to maximise the opportunity of a shared problem. Hard on the problem, soft on the people. Shifts negotiation from distributive to integrative.

Front 33

What does principled negotiation require?

Back 33

1. seperating people and problem 2. focus on reconcilling interests 3. generating a variety of ideas and options 4. insisting the agreement reflect a fair standard

Front 34

Describe MIL?

Back 34

An approach to setting objectives by Gavin Kennedy. MUST = deal-breakers INTEND = Target for negotiation but not disasterous if lost LIKE = Icing on the cake

Front 35

What is a walk-away point?

Back 35

Best option is to walk away from negotiation as opposed to making further concessions to complete it.

Front 36

What is the differnece between power and authority?

Back 36

Power is the ability to influence, authority is the scope and discretion given to make decisions by the organisation

Front 37

What is the use of power essential in negotiation?

Back 37

1. secure a win outcome 2. maximise overall gains 3. move the process forward 4. push through barriers 5. secure agreement and commitment

Front 38

What are the types of power in buyer/supplier relationship?

Back 38

1. OVERT = direct tactics, transparent & obvious 2. COVERT = indirect tactics, subtle & implied 3. STRUCTURAL = built into the situation

Front 39

What are the sources of power?

Back 39

according to French & Raven. 1. Legitimate 2. Expert 3. Reward 4. Referent 5. Coercive

Front 40

What source of power are buyers most likely to use?

Back 40

Reward power. As they are in the position to offer contracts

Front 41

What are the characterisitics of adversarial relationships?

Back 41

1. Lack or trust, little information sharing 2. short-term transactional focus 3. use of power and negotiation to get the best win outcome 4. enforced compliance to contract terms 5. little cooperation and recognition of mutual interests

Front 42

What are the characteristics of a collaborative relationship

Back 42

1. joint and mutual search for greater efficency
2. joint planning for the future
3. shared objectives
4. joint effort to eliminate waste
5. openness and transparency
6. understanding each others expectations
7. agreed exit strategy

Front 43

What factors effect what relationship type suits best?

Back 43

1. importance of the item being purchased
2. competence of the supplier
3. geographical distance
4. compatibility
5. purchasings objectives
6. market conditions

Front 44

what are the arguments for a transactional approcah?

Back 44

1. a more adversarial approach may secure the best commerical deal
2. collaborative relationships take time and effort
3. there are risks in long term relationships

Front 45

What are the drivers for collaborative relationships?

Back 45

• should view supply chains as a whole, not individual firms
• IT developments enable networking
• pressure to protect IP
• Transation approach doesnt leverage value adding potential
• helps reduce waste in SC

Front 46

What are relationship drivers?

Back 46

1. quality of interaction
2. trust
3. transparency
4. commitment
5. co-operation
6. reciprocity

Front 47

What are the five key elements to developing high trust supplier relationships?

Back 47

1. model the behaviours you expect
2. keep and exceed commitments
3. develop and measure trust
4. disclose information
5. be empathetic

Front 48

What are the key ethical issues in negotiations and SRM?

Back 48

1. provision of accurate information
2. confidentiality of information
3. fair dealings
4. avoiding conflicts of interest
5. equal opportunity
6. fair trade pricing

Front 49

List the approaches to managing conflict

Back 49

1. problem solving
2. over-aching goals
3. expansion of resources
4. avoidance or smoothing
5. compromise
6. alter human variable
7. alter structural variable

Front 50

What are the approaches to repairing relationships and alternative dispute resolution?

Back 50

1. issues management
2. negotiation

1. concilliation
2. mediation