Eskom Procurement Book 2015

NEGOTIATION

all parties almost always enter a negotiation with the goal of reaching an agreement. Negotiations are only possible when the parties are willing to move from their stated positions and when that willingness is made evident at some point. Negotiations are about the movement of opposing parties towards each other and towards a mutually acceptable position. Negotiations imply movement. The relative bargaining strength and skill of the negotiations decides the position of a settlement point. The skills of the negotiator are directed at moving away from the minimum. The ideal long-term result should be win-win for all parties. • Win-win is ideal for both parties long term. • Win-lose is acceptable in the short term for the winner, but seriously jeopardises further negotiations with the losing party (loser’s desire for revenge). • Lose-lose is always unsatisfactory and is not recommended as a negotiating outcome. The basic principle of win-win is that the amount of value available within a negotiation or relationship is not fixed. By working together the parties can ‘grow’ the value pie. In negotiation, win-win bargaining is called integrative bargaining. The goal is for both parties to increase their advantage (profit) and satisfaction without hurting each other. Conversely, win-lose negotiation, also called distributive bargaining, views the amount of value in a negotiation or relationship to be fixed. The parties compete to see who takes that larger portion of available value. The key in creating a win-win outcome is to focus on the interests of the other party, as opposed to the position they adopt. Pursuing win-win in procurement will ensure the supplier is willing and able to help an organisation achieve its goals now and in the future. And, the organisation is able to help achieve the supplier’s goals. Table 7.1 reveals that parties to a negotiation often display their willingness to engage in win-win or win-lose negotiation through their behaviour. There are three possible generic negotiation results:

Table 7.1: Characteristics of win-lose and win-win negotiators. Negotiation characteristics Characteristics of win-lose negotiation

Characteristics of win-win negotiation

• Rigid negotiating positions.

• Parties try and understand each other’s needs and wants. • Parties build on common ground and work together to develop creative solutions that provide additional value.

• Argument over a fixed amount of value.

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