Effective negotiation requires thorough homework beforehand so you can put yourself in the most powerful position possible

Negotiation is 90% preparation. Preparation gives you greater power through knowledge and confidence. A clear negotiation strategy requires us to proactively plan our approach, tactics and behaviour, pre-empting the other party's reactions. It requires us to determine what those reactions will be and what they mean, and then plan our response objectively in advance, away from the emotion of the negotiation table. So how should we plan our strategy?

One must understand the current circumstances and where the balance of power sits.

How much do both parties need each other? How much do both parties think they need each other? How is the company performing and what are the individuals' personal circumstances and pressures? What precedents have been set? What is the market/competition doing? Having considered these factors, determine the power balance. Determine how strong you are relative to them: very strong to very weak. If you are very strong you may choose a fairly bullish strategy, often referred to as Demand or Attack. In the middle you may require another strategy where you simply maintain the status quo or look to grow the relationship by sharing value. If you are weak you may consider it appropriate to build value by offering more in favour of increasing their dependence and building your power state.

All of these approaches are proactive. It is not true that conceding is a weak strategy. Conceding is a positive strategy that may be necessary if you are in a weak position. Like the toughest military leaders, the toughest negotiator will concede when necessary rather than allowing ego to lose everything in an attempt to save face.

This strategy is simply the first approach. Starting on this approach will change the circumstances. We must predict these changes and plan our next approach. Almost certainly the balance of power will shift. If a buyer attacks a supplier demanding a margin increase, the supplier will either comply or may withdraw supply. This response will shift the balance of power. Therefore, assuming the buyer does not want the supplier to withdraw supply, they may proactively plan they will move to a strategy that grows value mutually following the withdrawal.

If this fails to achieve the desired result, it may be appropriate to implement a strategy whereby the relationship is dissolved and a new supplier is procured. This is a last resort and it is usually appropriate to leave the door ajar. Alternatively our final strategic approach could be the opposite and we may choose to concede by giving value to rekindle the relationship. This would again be determined by the balance of power. n

Graham Botwright is a partner with The Gap Partnership specialising in commercial negotiation consultancy and development