The art of business negotiation
The primary goal of business negotiations is to achieve a mutually acceptable deal that accomplishes the objectives of the negotiation, without making the other party walk away or damaging a valuable relationship
The word "negotiation" is derived from the Latin term "Negareotium," meaning "to deny leisure." In French and Spanish, "deny leisure" becomes "business." In English, it also means "to successfully travel along or over." So, the word is derived from Latin.
In Oxford English, "Negotiation is a formal discussion between people who are trying to reach an agreement." Negotiation is a type of strategic discussion between two parties to arrive at an acceptable solution for both. It can involve two or more individuals, buyer and seller, employer and employee, two or more agencies or offices, organisations, states, or governments etc.
What is business negotiation?
It is the process of discussing the terms of a business deal involving two or more parties, depending on the subject and organisations involved. If a negotiator approaches with a creative mindset, it will not only preserve a long relationship but also add significant value for both sides, creating win-win solutions.
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As per anthropologists, negotiation is rooted back at least 200,000 years to the very origins of our species. In ancient times, humans had to fight for food, shelter, and security to survive. To do that, they required means of communicating productively to strike deals and exchange value with other primitive humans for mutual benefit. So, negotiation started at the individual level and continued with groups, tribes, small states, nations, business organisations, regions, and superpowers.
Our prophet Muhammad (SM) entered many negotiations with the pagans in Mecca and Medina. The Hudaibiyah Peace Treaty is one of the greatest deals where the Prophet (SM) showed his negotiation skills, leading to the success of peace negotiations.
Let me mention two important business negotiation deals of the present day. Apple products were very popular in China. On 15 March 2013, International Consumers' Day, the state-run Chinese TV reported that Apple gave a shorter warranty period to iPhone consumers in China and charged them for replacing faulty back covers. Apple did not respond timely to these accusations. In April 2013, the CEO of Apple finally informed that, due to a lack of communication between market feedback and the company, it took time to respond.
Secondly, Nokia and Microsoft have been business partners since 2011. In January 2013, Microsoft proposed to buy divisions of Nokia. There was negotiation on the price and owners of Nokia's mapping service.
There was a breakthrough at the negotiation table when Nokia proposed that the deal would proceed if Microsoft agreed to abide by a few negotiation conditions. Microsoft agreed, both CEOs shook hands on the outline of an agreement, and the deal was closed in 2014. Thousands of workers were laid off in July 2015, and the deal proved to be disastrous.
We can learn valuable lessons from the above two negotiations. Firstly, there should be good, timely communication between all parties; secondly, if one party has the power to get what they want, there should be an effort to help counterparts' demands, ensuring a strong relationship in the long run.
There are many more examples of business negotiations between organisations and countries—some proved to be successful and some unsuccessful.
Negotiating effectively can give clients, employees, and employers a positive impression. The primary goal of business negotiations is to achieve a mutually acceptable deal that accomplishes the objectives of the negotiation without making the other party walk away or damaging a valuable relationship.
It is a crucial skill for entrepreneurs who want to achieve success in their business ventures. Other than price, many more issues can be dealt with in business negotiations, such as quality, delivery, after-sales services, future partnerships, financing, relationships, etc.
Due to the complexity of the modern business environment, everyone feels the necessity of constant negotiation at all levels. It helps establish contractual rights, duties, and obligations of parties, forms the basis of relationships between multicultural stakeholders, and serves as a mechanism to resolve conflict and disputes.
It is important to remember that formal or structured processes are not the only way to bring good results; sometimes, informal networks and strong relationships can be tremendously powerful too.
Effective negotiations ensure success in business by building long-term relationships between buyers and suppliers, ensuring an effective supply chain, lowering production costs, improving quality output, winning customer loyalty, increasing sales coverage, etc.
What are the requirements of business negotiation?
It needs a lot of homework, such as asking why negotiation is required, who the parties are, what might be their intention, what their culture and behavioural patterns are, what their own objective is, etc.
There are a few do's and don'ts in business negotiation—too many issues should be avoided, priorities should be set, never give deal lines, be a good listener instead of being too talkative, give a patient hearing to all sides, don't be too rigid, be honest and straight in giving an opinion, there should be recaps in the process of negotiation, don't be emotional, be optimistic and focus the arguments on facts.
The smarter and more skilled the negotiators are, the more advantageous it is for the organisation. It helps to establish a leadership role in a competitive market. A strong negotiation skill makes the difference between a win and a loss. A successful negotiation increases the bottom line of business and goodwill, too.
Negotiation skills are useful in everyone's professional as well as personal lives. Every skilled negotiator will make a plan well in advance, looking for mutual interests and synergies, and encouraging the counterparts to find common issues to discuss before the bargaining starts.
In negotiations, active listening is very important to gauge whether the other party is on board with the proposal, proposing alternatives if necessary, or rejecting it altogether.
A good negotiator must quickly assess the situation and be able to offer alternative courses of action. It is similar to a quick reflex of a goalkeeper during a tiebreaker in football.
Negotiation varies from nation to nation based on culture, customs and etiquette. Americans tend to value clarity in their discussions. Mostly, they prefer straightforward language and express it the same way. They value time management during negotiations.
Russia's negotiation style might be seen as direct and tough. The Russians go by every word of the deal once the business negotiation is completed and a written agreement is signed.
China is known for its effective negotiation skills in the business world. China has a rich history of negotiation and diplomacy. The Chinese primarily follow Confucian principles of harmony and respect during negotiations. Chinese negotiators are very famous for their patience and persistence. They prioritise constructing strong relationships and trust before engaging in business negotiations. Mostly, they seek win-win solutions that benefit both parties.
The Arab world is an important economic region due to its natural resources, geographic location, and political influence. Negotiating with them takes longer, so it needs some patience, and there is no rush to strike a deal quickly. One needs to invest time and effort to establish a personal connection with their Arab counterparts, showing respect for their culture and demonstrating sincerity and integrity.
The negotiation style of Germans is quite formal. The titles of negotiations are very important to the Germans. In general, the German negotiation strategy aims to achieve a satisfactory result for both sides.
Negotiation with the Japanese is normally very quiet. In the negotiation, they sit upright and straight, and put forward their arguments quietly but with high value and depth. Business with the Japanese is built on trust and relationships, so it is important to establish a good rapport before discussing any business with Japanese people.
To negotiate with South Koreans, one needs to be patient, gentle, and firm. Basically, South Koreans are tough negotiators. They give importance to interpersonal relationships. They prepare themselves before negotiations and analyse all details about the counterpart. Other nations have their own style of negotiation.
As a career logistician and procurement specialist, I had the opportunity to negotiate with people of different nations on different occasions. Some are very tough during negotiations, some believe in long-term trust and relationships, some prefer win-win for both parties, etc.
On every occasion, we used to prepare ourselves before the negotiations. A lot of studies were carried out before negotiations. All of us involved studied the subject of negotiation thoroughly, and went in with a strong understanding of the customs, mannerisms, food habits, preferences, likings and dislikings of our counterparts.
We used to rehearse our discussions - like who would lead the discussion, the sequence of our presentation, where to give more preference, where to give space to the counterpart, how to project our logic, how to argue with counter logic, when to engage or disengage, etc. All these helped us make a good deal for our organisation. It ensured savings of public money, as well as the procurement of quality items — and that is the aim of a good negotiator.
Brigadier General Md Munirul lslam, SGP, psc, Ph.D is the Director, Personnel Services and Provost Marshal of Bangladesh Army Headquarters.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.
