Eskom Procurement Book 2015

NEGOTIATION

• Seller believes that competition exits even if at the moment it does not. • Seller believes that the client may do without the product. • Seller believes that the client may hire the product rather than buy it. • Seller believes that the client will buy less as a result of the higher rate. • Seller believes that his long-run objectives in relation to the client will be jeopardised. • Seller needs the contract to keep operating. • Seller is worried about encouraging future competition. • Seller is vulnerable to competition within his own organisation or distribution system.

7.8.3 LIMITS TO THE POWER OF THE BUYER

Although the buyer has power to accept or dismiss an offer, he can face a number of constraints that limit the actual number of sellers the buyer is willing to consider:

• Personal biases against some sources. • Some sources are located too far away. • Some sources got the buyer into trouble once.

• Differing abilities and capacities to provide suitable packages. • People who have preferences inside the buyer’s organisation. • Some sources have poor track records. • Some sources demand too much. • Many sources can’t deliver on time. • Some sources offer a full line of services while others don’t. • Some sources offer varied structuring alternatives; others give far fewer or none. • The buyer is used to doing business with some sources and doesn’t want to change. • Some sources are not known to the buyer. • Some sources simply take too long to work with. The buyer has too much other work to do. You have more power than you think. Start by systematically looking for the limits of the other person’s position. If you have limits to your strength, he/she is also likely to have limits. 7.9 GUIDELINES FOR TEAM NEGOTIATING Many procurement negotiations involve a procurement committee sitting opposite potential awardees and, needless to say, the potential for disaster is magnified enormously. A streetwise counterpart can manipulate a badly prepared team to a point where the team is negotiating against itself, with the counterpart’s input limited to a few encouraging noises every now and then. Teams can easily end up talking across each other, setting different levels of demands, disagreeing in full view of the counterpart and thus destroying any credibility the individual team members may have had.

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