Eskom Procurement Book 2015

NEGOTIATION

a hidden strength. People who are loyal to their company, its management and its products negotiate more effectively on their behalf. If you believe in yourself and your viewpoint, you stand up more firmly for them. • Knowledge: Knowledge is power. The more a person knows about the seller’s cost, organisation, business standing and product, the better he can negotiate. The more he knows about negotiation, the better will be his position. Always know where the money is coming from. • Information: This is one of the more common forms of power. It relies on persuasion through the use of facts, data and other information. • Willingness to take risks: Security is a goal that humans cherish. We share a desire to avoid risk wherever possible. The person who is willing to accept a greater burden of uncertainty with respect to reward or punishment enhances his/her power. Courage plays a key part in negotiation. The courage to take risks is part of the price and part of the power structure. • Time and effort: Time and patience are power. The party that is most constrained by time limits provides the counterpart with a base of strength. It is for this reason that purchasing executives stress the importance of lead- time and early-warning systems. The party that is most willing to work hard gains power. Some people are simply lazy and thereby forfeit this important source of strength. • Coercion: Coercive power involves the ability to punish another party. Its repeated use can damage relationships or invite retaliation. Its use often relates to the power holder’s belief that another party will comply. • Ability to reward: Reward power involves one party being able to offer something of value to another party. It represents a direct effort to exert control. This is a source of power only if the other party values the rewards. Obviously, a major source of reward power is a buyer’s ability to offer a contract. • Expertise: With this power source an expert has accumulated and mastered vast knowledge and often has the credentials to verify that mastery. Non- experts are less likely to challenge an expert. • Referent: A referent has some attribute(s) that attracts another party. The non-referent wants the referent to look favourably upon him or her. Charisma can be a form of referent power.

7.8.2 LIMITS TO THE POWER OF THE SELLER

As a buyer, it is hard to negotiate against a sole source. When the seller does not have any competition he/she is in a good position to prevail. Yet there are limits to the seller’s power even when he/she is a sole source. The sole-source supplier will behave as though he/she has competition under the following conditions:

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