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July Ask the Negotiator

By Esther Perez,2014-05-16 21:25
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July Ask the Negotiator

    Ask the Negotiator …

Ask the Negotiator is designed to afford our readers with the opportunity to ask questions

    about any aspect of negotiations and provide them with answers from experienced

    negotiators in future editions of the magazine. Please direct your questions to John

    Baker at editor@negotiatormagazine.com. We will only publish your first name or the

    nom de plume you suggest along with your country when your question is published.

    Your question will be answered either by John Baker or by a member of The Negotiator

    Magazine’s growing list of outside negotiation resources.

John Baker has well over thirty years of active negotiating experience in educational,

    (USA) Fortune 100 corporations and small business companies. He has negotiated

    collective bargaining agreements both for unions and for management. Dr. Baker’s

    experience includes agreements across a broad range of negotiation areas, including

    marketing alliances, purchase and sales contracts, acquisitions, joint ventures, non-profit

    and government services agreements and even the peaceful conclusion of student protest

    sit-ins on more than one occasion. He holds a Ph.D. from Case Western Reserve

    University (USA).

    And now, this month’s letter …

    “Getting Beyond Price Negotiation”

From: Kurt (USA)

Dear Negotiator:

     “Can you give a simple of example of how to move a negotiation beyond price to other

    issues? Thank you.

Dear Kurt,

The way to move from price or any other single element negotiation is to simply identify

    and strategically use all the related components of a deal. Let’s look at one negotiation as

    your example.

A year ago I set out to buy a used particular model of a convertible car. I wanted a white

    body and a tan top in excellent condition.

Cars of this type came on the market every once and a while, but always sold quickly.

    After several disappointments, I found one that just had gone on sale at a dealership for a

    price that was within the going sales range. Of course, as a negotiator, I set out to get the

    best deal possible.

The car looked and drove well and despite some attempts to negotiate the car’s price the

    dealer stood firm. “I can sell this car at this price today or certainly tomorrow,” the sales

    manager stated and I knew he was right.

Rather than continue on the price issue, I told the dealer that my goal was to buy a car in

    excellent shape and I would agree to the asking price so long as the car was in top

    condition. I was assured that they would agree to that caveat.

At this point the salesperson felt the deal was done and was counting his commission as

    the sales manager prepared to mark-up another sale on board. What they did not note

    was that the power in this negotiation had shifted dramatically. Both men had fallen

    under the spell of that dangerous demon the led them to protect their newly-won gains as

    a negotiating priority. Now, of course, the real negotiations were about to begin.

First there was the matter of the condition of the car to be settled. After independent

    inspection by a mutually accepted third party, it was discovered that the brakes needed

    some repair, all fluids were due for an expensive replacement, the tires were somewhat

    worn and the car was missing the cover for the convertible top. The dealer agreed to do

    all the repairs, provide new tires and to order a new top cover. For the dealership, it was

    at their wholesale cost of parts and in-house service labor. For me, improvements

    approaching two thousand dollars at retail brought the vehicle to excellent condition. Its

    price, of course, remained the same.

The next part of the negotiation began as I was ushered into the finance manager’s office.

    It was here that the major profits from the deal were to be clinched for the dealership not

    on the price of the car.

I was told that a protective coating has been sprayed on the car and I would be billed for

    over $300 for that unmentioned add-on. Of course, I refused to pay. The finance

    manager waived the amount as a generous concession. He would call upon it later to

    encourage a reciprocal concession in the larger financial negotiation to follow.

As he turned to financing the car, the finance manager presented his “best rate. Having

    researched and obtained a financing commitment two percent lower than the “best rate,” I

    turned it down. We settled at an interest rate even lower than my alternative offered.

The big ticket item of extended warranty coverage at only $1500 was the next item on the

    finance manger’s agenda. Here was a major profit-maker for the dealership. I refused it,

    of course. After all, we know this car is in excellent condition.

What then has happened in this negotiation? My goal was always to acquire this model

    car in excellent condition at the lowest possible cost. The price of the car was always

    only one component of this purchase. Always negotiate a package.

Best wishes,

    John Baker

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