The Negotiator Magazine

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Ask the Negotiator

By John Baker

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 [email protected]. 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 welcomes the opportunity to speak on the field or assist you on negotiation issues.

And now, this month’s letter …

“The Key to Negotiation Success is Preparation ….”

Dear Negotiator:

We are a small company and have been chosen by a large corporation to use our product nationwide. We have at present only 8 employees. We have completed testing of the product in various locations throughout the U.S. They have given their contract person the job of getting a long term agreement with us. Problem is, he does not know what we do, and has no interest in product, other than getting the best deal it seems. The upper level owners have instructed him to get a contract. We have already rejected one proposal and have to respond to another. Should we stay steadfast with our business model or give in to some of their issues, even if it may harm us later?

M. Smith, USA

Dear Mr. Smith,

Congratulations on your selection as the preferred vendor by this large corporation. Given the limited amount of information in your letter, I certainly can not advise you on any specifics, but I can make some general observations about the contract negotiation process in general which you may find helpful.

The key to negotiation success is preparation. We usually know what it means, but for one reason or another many negotiators do not do enough of it. This may be an area you may wish to focus on immediately. If the corporate representative “does not know what [you] do and has no interest in [your] product, other than getting the best deal,” your team certainly needs to be sure that its preparation is adequate to fully address your issues and concerns.

In my opinion, the greatest problem for small companies in negotiations with large corporations is the difference in resources. Unlike the large corporation who may have an assigned staff that handles purchasing contract negotiations, the small firm’s personnel either add negotiations to their “more than full-time day jobs” of keeping the organization going or take on the additional work of hiring, briefing and managing outside negotiation assistance.

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March 2006