Module 1: Negotiation Foundations

Win-Win vs Win-Lose Thinking

Every negotiation involves a choice about how you see the other side. Are they an opponent to beat, or a partner with whom you can create something better than either could alone? Most sales negotiations are not one-off battles. You will deal with the same buyer again for renewals, extra orders and referrals. How you negotiate today shapes every future deal. This lesson explains the two basic approaches and when each applies.

Distributive and integrative negotiation

Negotiation theory describes two broad types:

• Distributive (win-lose): there is a fixed amount of value to divide, usually price. Every shilling the buyer saves is a shilling you lose. Haggling over the price of a used car with a stranger you will never see again is a classic example.
• Integrative (win-win): several issues are on the table, and the parties value them differently. By trading across issues, both sides can end up better off. The total value is expanded before it is divided.

Most business deals contain both elements. Price is often distributive, but delivery dates, payment terms, contract length, volume, service levels and support can create room for integrative trades.

Interests versus positions

The key to win-win negotiation is separating positions from interests. A position is what someone says they want: "We need a 15 percent discount." An interest is why they want it: "Our budget for this year is fixed, and I have to show savings to my finance director."

Positions often conflict directly. Interests often do not. When you understand the interest behind a position, you can find solutions that meet it in other ways. Ask questions such as:

• "Help me understand what's driving that number."
• "What would a good outcome look like for you and your team?"
• "What happens on your side if we can't agree on this point?"

Worked example: expanding the pie

A supplier of branded uniforms is negotiating with a hotel group that wants 600 uniforms. The hotel's procurement manager opens with: "Your price is 15 percent too high. Match the other quote or we can't proceed."

A win-lose response would be to cut the price or refuse. Instead, the supplier's rep asks about the hotel's situation. She learns that:

• The budget for this financial year is fixed, but the hotel will need replacement uniforms every year.
• Staff at a second property are complaining about poor-quality fabric from the current supplier.
• Delivery before the new property opens in three months matters more than anything.

She proposes: the current price per unit, but with delivery guaranteed four weeks before the opening; a two-year supply agreement in which the second-year price is fixed; and payment in two instalments to spread the cost across the hotel's budget periods. The hotel gets certainty, quality and timing. The supplier protects its margin and gains a longer contract. Both sides are better off than with a simple price cut.

When win-lose thinking is appropriate

Win-win is not always possible. Some negotiations really are about one issue, with no future relationship. Even then, keep your behaviour professional and honest. Your reputation travels further than any single deal, especially in close-knit business communities where buyers talk to each other.

Win-win also does not mean giving in. You can be warm with people and firm on substance. A good negotiator protects their own interests fully while looking for ways to meet the other side's interests too.

Common mistakes to avoid

• Treating every negotiation as a fight. Aggression may win one deal and lose the relationship.
• Confusing win-win with being nice. Agreeing to everything is not win-win; it is losing politely.
• Negotiating price alone. A single-issue negotiation forces a win-lose outcome. Bring other issues onto the table.
• Assuming you know their interests. Ask; buyers often care about things you would not guess.