Business Negotiation Strategies for Small Businesses

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ASSIGNMENT ON BUSINESS NEGOTIATION
ASSIGNMENT ON BUSINESS NEGOTIATION
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ASSIGNMENT ON BUSINESS NEGOTIATION
Table of Contents
Introduction................................................................................................................................3
Task 1.........................................................................................................................................3
1. Negotiation in Business Context............................................................................................3
2. Key steps for negotiation and generation of Business Deals.................................................4
3. Negotiation and importance of key individuals.....................................................................5
4. Best deals/ contracts...............................................................................................................5
5. Generating new business and winning deals..........................................................................6
6. Tendering for contracts:.........................................................................................................7
7. Preparing for negotiation through a request for proposal form:............................................8
8. Responding to RFP:.............................................................................................................10
9. The contractual process and agreement:..............................................................................11
Task 2.......................................................................................................................................12
Conclusion:..............................................................................................................................17
Reference List..........................................................................................................................18
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Introduction
Negotiation skills in business are very important in both formal as well as informal
transactions. This evidentthose good negotiations have significant contribution to business
success as these are assistive in building better relationship. The sole purpose of negotiation
in business is reaching an agreement for facilitating emergence of mutual benefits in business
(Druckman, 2019). Considering the significance of conducting effective business negotiation,
the following guidance document has been developed regarding undertaking effective
negotiation process, its importance, steps and other aspects. The report has been developed
considering from the lenses of a business start-up advisor of a local council. The aim of the
report is to provide advice to small businesses on essentials of business negotiation.
Task 1
1. Negotiation in Business Context
The term Negotiation refers to bargaining process between two or more parties in business,
where all the parties seek reaching a common ground and agreement for settling the
matters through mutual concerns. Therefore, resolving business conflicts is the main
concerns of an effective business negotiation process. As described by Steele and Beasor
(2017), negotiation from perspective of business has specified implications in case of
bargaining, searching for solutions and method of collective decision making in case of
disputes in business. Therefore, Ahammad et al., (2016) has opined that there are three main
purposes of engaging into business negotiation which are,
 Conflict resolution in business
 Trade and financial exchange and business dealings
 Interactive decision making in business
 Drafting the joint rules among parties
Druckman (2019) has further described that negotiation in business context has two different
approaches to be considered, which involve Distributive and Integrative Perspectives of
business negotiation. For effective management and development of the negotiation process,
proper consideration of these cases is quite important for coming up with the desired
solutions for all the parties involved. As per the Distributive approach, the negotiators try
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dominating other parties as they believe in direct conflicts with other parties and the process
is based on thoughts that loss of one is gain for other. Oppositely, in Integrative perspective,
the process is based on the thoughts that all parties might win through mutual beneficial
solutions. Here the principle approach is exchange of information and thoughts for
leveraging identifying core issues and associated outcomes through bargaining process.
2. Key steps for negotiation and generation of Business Deals
According to Khan and Baldini (2019), while indulging in business deals, the business
negotiators mainly avoid the possible circumstances of being predictably surprised or facing
significant concerns in the bargaining table. Therefore, the best effective steps for successful
generation of business deals involve the following parts,
1. Addition of long-term considerations to the conversation: Detail discussion and
conversation is one of the most important approaches to be adopted by the business parties
while preparing for indulging in negotiation. Adoption of an approach of providing
importance to the present situational contexts and the aspects of future concerns will be of
higher importance (Watershedassociates.com, 2019). Therefore, the basic criteria of these
specific steps will be undertaking a long-term consideration approach. Steele and Beasor
(2017) has argued that going for short-term approach or showing impatience are against
appropriate negotiation behaviour during dealing process in business. This is very important
to note that potential risks are involved in ill-thought-out deals or approach to broken
agreements for reaching the desired deal. Hence, ensuring plenty of times and scopes for
developing arguments is necessary in this step.
2. Making effective application of Time for building rapport: Spending more time for
understanding the counterparties and their organizations is one of the most important
necessities in business dealing. This will be helpful in detail accessing the exact aim,
objectives and approach of the counterparty in the dealings. In the thoughts of Shonk (2019),
seeking information regarding business values, norms and approaches of counter parties
would provide opportunity of better knowing and perceiving the opposite parties. Enlarging
the scope of discussion will be important for creating space for considering different areas of
the business operations and matters concerned.
3. Preparing for adverse circumstances: In the process of business dealing, neither of the
parties would be over optimistic regarding reaching the desired solution in future. Therefore,
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no space would be there for any short-term thoughts. The parties are required to be
sufficiently concerned regarding possibility of occurring challenges in the process or arising
of conflicts (Hua, 2015).This is the reason why business dealing is necessarily a subject of
showing insights for dealing sudden adverse situations and conflicts.
Moreover, the specific 5stages of business negotiation involve Preparing, Information
exchange an validation, Bargaining, Concluding and Executing (Preuss and van der Wijst,
2017).
3. Negotiation and importance of key individuals
In the process of negotiation in business, there are key parties concerned and associated
mediators and assistants. As opined by Druckman (2019),in negotiation, involvement of two
of multiple heads is a better approach. As per this opinion, compared to solo negotiators,
team based negotiation is better for development of trade-offs among issues prevailing in the
business dealing process. The importance of key individuals lie in the case that this facilitates
information exchange among counterparts along with making judgements that are more
accurate. Presence of multiple individuals in the negotiation team makes the team more
powerful, less pressures and less competitive has asserted that one of the most significant
necessities of individuals has been in case of challenging one another’s views as well as
monitoring one another’s behaviour (Ahammad et al., 2016). Apart from this, presence of
the key individuals might facilitate the aspect of Group thinking, which is an integral part of
entire negotiation process in business dealings and bargaining. Therefore, sharing opposing
views and facilitating close judgement of thoughts and arguments are the main functions of
key individuals present in business negotiation process.
4. Best deals/ contracts
Gaining the best deal in business negotiation essentially involve setting some very specific
objectives of functions throughout the dealing process. These are as follows,
a. Setting specific objectives of dealing: Some key considerations are required to be
developed while undergoing the business dealing process. Holding certain criteria on
standard price, value, terms, quality, conditions of service and maintenance and importance
of the deal for business is very important for the parties concerned (Steele and Beasor, 2017).
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b. Understanding the counter party with whom to deal: Researching on the motive,
tendency, capability and approach of the counter party will help in understanding overall
potential power of the party to be dealt with. The bargaining power develops with achieving
higher information regarding the counterparty.
c. Development of negotiation strategy: Before entering the bargaining process, detail
development of the dealing process and steps will be highly effective for smooth continuing
the entire process (Steele and Beasor, 2017). This acts as prior precaution regarding the
possible situational hurdles or challenges during the dealing. This will also help in starting
with prioritising the most obvious necessity and aims of the business.
d. Conducting Negotiation: After setting the strategy, this will be easier for the negotiator to
continue the bargaining process in effective ways and to the desired direction as pre-planned
(Preuss and van der Wijst, 2017).Thus, following the previous processes enhanced the scope
of possible smooth development of the process.
e. Negotiating on Price: In business, if the price is concerned, effective dealing the price
procedure and best effective price amount is a necessity for achieving the best result of the
dealing
f. Checking the information provided by counterparty: The arguments and reasons
provided by the negotiator are required to be checked effectively, failing which might lead to
loss of the negotiator as the process of dealing might be based on wrong reasons (Steele and
Beasor, 2017).
g. Drawing up particular contract for desired purchase: After all the points are agreed
upon, final written contract is required to be created, which is important for validation of
exact dealing of the business.
5. Generating new business and winning deals
The generation of the new business and winning deal generation are possible through
the negotiation process. The following steps are essential for the organization-
 Step 1: Focussing towards the core products are essential and the offers that are being
developed from the end of organization needs to be mentioned in the negotiation
form (Preuss and van der Wijst, 2017).
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 Step 2: Keep the pitch simple is essential for the business negotiation process. It
explains the value your product or service provides so the prospect understands why
it is applicable to them.
 Step 3: Maintenance of the business ethics are essential for the organization.
Procrastinate over things that cause discomfort is vital to remove the uncertainties.
 Step 4: Mapping of the capabilities of the target clients are essential and it is essential
to map the skilled employees in the business (Preuss and van der Wijst, 2017).
 Step 5: Utilization of the marketing tools as per selection and it is essential to verify
the tools before use. The participating panel needs to be active in this regard.
 Step 6: Implementing the plan of action is vital so that the appropriate goals of the
organizations can be achieved.
 Step 7: Exercising the plan is vital before the negotiation process to make the deal
comfortable (Steele and Beasor, 2017)
6. Tendering for contracts:
Contract tendering is a very important part of a business that induces other business
organisation to share their goods or services in the exchange of money. In this context Flynn
and Davis (2017) stated that during the time of tendering a small business organisation show
their requirement and time period to accomplish the project for a particular purpose. Inclusion
of the legislative value is required during the time of developing the tender along with the
principle of the organisation. According to Imrie (2016), tender helps to generate good
relationship with the clients and allow to identify the potential customers who can meet up
the general requirements. The awareness of any type of tender is generated by the formal
mode such as invitation to tender and request for a proposal. Along with the requirement
sharing mention of the offered price is also noted that can uplift the policy towards the
possible contracts. Lozano (2016) stated that in case of non-discloser agreement, negotiation
process is one of the most effective weapon to settle a contract in a productive manner. A
number of risk factors are related with the tender notice that comes with the financial
offering. Therefore, for searching of contracts illustration of a tender notice is highly required
to follow the systematic flow for safe and effective tender contacts and accomplishment of
the agreement.
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7. Preparing for negotiation through a request for proposal form:
Project Name or Description: Development of Park beside Milk Shop
Company Name: XYZ Ltd.
Address: 425, wood street
City, State, Zip Code: MNO, 85469
Procurement Contact Person: Harry Johnson
Telephone Number of PCP: XXXXXXXXX
Email Address of PCP: XXXXXXXX@XXX
Fax Number: XXXXXXX
1. Background/Introduction:
It’s a culture of XYZ Ltd. to set up an eco-park beside every milk store of the brand. It’s a
long run business in all over the world and along with the sells the organisation wants to
provide healthy air to all the nearby individuals to enjoy the nature through the park. At
present it’s quite hard to get fresh air and variety to bird’s chirp. A good cause of generating
nature in a busy city area is the ultimate motto of the company.
2. Project Goals and Scope of Services
In order to develop the park for the better health of the local customers and the people or
children of the society the organisation is requesting construction organisations to show their
interest to consider the responsibility by their own. The goal of setting the park is to make a
gathering of greenery and a huge habitat of birds. Along with it seating area and jogging track
is needed to be developed. There is a little lake and modification and proper development of
the lake can make the environment more beautiful. As a new penetration in the state the
contactors will be consider as the permanent one to develop the other sites as per the
requirement of the company.
3. Anticipated Selection Schedule
The eco-park is required to be completed within six months. Therefore, a planning and
capacity of the contractors will be judged before considering as final one. The rainy season is
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best to grow plants hence, for development greenery and further construction activity month
of July has been considered and within December the entire project is needed to complete.
4. Time and Place of Submission of Proposals:
The proposal of every contractor is needed to submit at the given email address within the
month of April. The offline submission will be taken at the corporate office premises of the
organisation within 30th April 2019 to the reception desk.
5. Timeline:
Activities 1st month 2nd month 3rd month 4th month 5th month 6th month
Assessment
of the
ground

Identification
of the draw
backs

Cure of the
present
issues
 
Plantation  
Development
of the lake
 
Development
of the
jogging track
 
Decoration
of the park
 
Final touch
of the
construction
and
inauguration

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6. Elements of Proposal
The proposal needs to contain the following points
1. name of the company
2. address
3. phone number
4. email id
5. fax
6. experience of previous work
7. working capacity
8. number of workers
9. expected cost of construction
7. Evaluation Criteria
The evaluation of the construction companies will be done based on the ultimate match with
the requirement of the company. At the first level of selection the proposal will be elected
and the second round will be meeting with the particular companies before considering one
among them for the final contract.
8. Possible Roadblocks:
The main hindrances are availability of workforce in the construction company that can
restrict them to get the opportunity because to get a chance workload bearing and fulfilment
of the objectives are required on time.
9. Budget:
The budget of the organisation is $50000 to develop the park.
8. Responding to RFP:
A proper RFP response can be perform by following some stages in which understanding of
the entails allow selecting the potential organisation for the contract. Component review is
another important factor that understands the previous experience and valid response of the
local organisation on their performance. In this context, Horne et al. (2018) stated that
formation of checklist induces the scope to collect the potential companies from the bunch of
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applications. The organisation interest to perform with the company can clearly mention their
interest to work in the organisation. Personal assessment is also necessary before making a
proposal for the ultimate illustration off the proposal for the tender agreement. Offline and
online response of RFP both are required to be considered in a serious manner because from
any source a strong contractor can be found to accomplish the project.
9. The contractual process and agreement:
The contract is going to be made after the selection of the contractor through meeting. In the
meeting, negotiation of the deal is performed by making a good relationship. In order to
avoid unwanted issues the negotiation is performed for a trustworthy business deal. Further
through communication the skill assessment and understanding between each other is
generated by the intervention of question answer mode for the ultimate identification of the
situation. In this context Andrlova and Korytarova (2019) mentioned that purpose sharing
and communication about the organisational requirement will help to identify the interest of
the contractor to listen the project. Objective fulfilment is not only dependent on the
agreement but also the actual intention to follow the timeline to meet up the goals.
Clarification of the issue can be possible through sharing hence communication is the only
option to justify a contractor before preparing an agreement. Common interest and
prioritization is very much important to be shared. It has been understand that the
collaboration between the agenda and interest gives a drastic flow to the project. After the
entire situation goes to the favour of the organisational requirement negotiated, agreement is
performed. BATNA takes place in which risks, consequences and two parties sign cost
agreement. However, improvement of BATNA is performed various times that can make the
deal accepted and confirm (Roshchanka and Evans, 2016). A number of legal principles are
followed at this time, which is another importance to come under a particular idea on a
specific project. Commitment between two parties is performed that indicates the beginning
of the deal. At the time, a timeframe is illustrated at a very depth to formulate the planning to
accomplish the project following the objectives. Therefore, followed by the above steps the
agreement and negotiation is completed that can support the organisation and the contractor
to fulfil their requirement.
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Task 2
Cuisine Coffee is a new startup company that wants to expand their business and for this
purpose, they engage in a negotiation with a major bank of London. In order to expand the
business the organization decides to borrow from some established ventures. Loan from an
established bank is the best way that will be helpful for the coffee shop to further expansion
of the shop.
The plan is to develop a core coffee shop that can be utilized for gathering and relax purpose.
However, the main purpose of this coffee shop is to help people to get relaxed and enjoy their
coffee with their friends and families. As stated by Wilson (2016), there are many
organizations associated in this coffee shop business, therefore, it is very important for the
company to establish unique and good quality product so that they will be able to attract more
customers for their coffee shop. Moreover, the place where they decides to set up their coffee
shop is one of the best place for coffee shops and restaurants as the place is quite crowded
and this makes it easy for them to grab more customers for their coffee shop (Agresti and
Girón, 2019). Currently, the coffee shop is in the build out phase along with an anticipated
opening date. Estimated opening date for the coffee shop is six months from now. For the
coffee shop, an open space has been selected and the place has been secured with a lease.
Moreover, the selected place for the coffee shop in the proper neighborhood place where foot
traffic is quite high and this place consists with full of tourists and local peoples. In addition,
there is no good coffee shop in this particular place, thus it enable the coffee shop to attract
more customers (Amit and Zott, 2015). The place that has been selected for the coffee shop is
wide and open along with the facility of open kitchen to show off coffee making. Moreover,
there has ample of space where people can relax. In addition, this coffee shop includes a wide
range of games and other recreational activities that make the place more attractive. Seating
capacity of the place will be near about 50 at a time so that customers can enjoy their space.
The place is famous among tourists for this the price of the coffee shop needs to be moderate
so that they can attract more customers. However, it is also important for the coffee shop to
maintain their profits so that they can provide benefits to their employees as well (Bärnthaler
et al., 2018). It is also decided by the top management that all tips generated by staffs will be
gathered together and distributed equally between the employees based on their functions and
operations.
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