6 Steps to Negotiate Successfully Between Two Companies

Negotiation is a process of communication and exchange between two or more parties who have different interests, goals, or preferences. Negotiation can be used to resolve conflicts, reach agreements, or create value for both sides. Negotiation is a skill that can be learned and improved with practice and experience.

Key Takeaways

Negotiation is a process of communication and exchange between two or more parties who have different interests, goals, or preferences.

Negotiation can be used to resolve conflicts, reach agreements, or create value for both sides.

Negotiation is a skill that can be learned and improved with practice and experience.

Negotiation involves six steps: preparing, opening, exploring, bargaining, closing, and implementing.

Negotiation requires effective communication, collaboration, creativity, confidence, flexibility, assertiveness, cooperation, ethics.

In this article, we will discuss some examples of negotiation between two companies and how to apply some effective negotiation strategies and techniques. We will also answer some frequently asked questions about negotiation and provide some tips and key takeaways for successful negotiation.

Example 1: Negotiating a Partnership Agreement

Company A is a software development company that specializes in creating web applications for e-commerce. Company B is a marketing agency that offers digital marketing services to online businesses. Company A and Company B want to form a strategic partnership to offer their clients a comprehensive solution for their online presence.

The negotiation process involves the following steps:

Preparing: Both companies do their research and analysis on each other’s strengths, weaknesses, opportunities, and threats. They also identify their own interests, needs, and goals for the partnership. They prepare a list of issues to negotiate, such as the scope of services, the division of responsibilities, the sharing of costs and revenues, the duration and termination of the agreement, and the dispute resolution mechanism.
Opening: Both companies meet face-to-face or online to introduce themselves and establish rapport. They also exchange their initial proposals and expectations for the partnership. They use positive and respectful language and avoid making demands or ultimatums.
Exploring: Both companies ask open-ended questions and listen actively to understand each other’s perspectives, motivations, and concerns. They also share information and ideas to create value and find common ground. They use collaborative and creative problem-solving techniques to generate multiple options and alternatives for each issue.
Bargaining: Both companies evaluate the options and alternatives and compare them with their own interests, needs, and goals. They also consider the interests, needs, and goals of the other party. They use objective criteria and standards to justify their positions and proposals. They also make trade-offs and concessions to reach a mutually beneficial agreement.
Closing: Both companies summarize the main points of the agreement and confirm their understanding and commitment. They also express appreciation and satisfaction for the outcome and the relationship. They document the agreement in writing and sign it.
Implementing: Both companies follow through on their obligations and responsibilities according to the agreement. They also monitor the performance and results of the partnership. They communicate regularly and provide feedback and support to each other. They also resolve any issues or conflicts that may arise in a constructive and respectful manner.

Example 2: Negotiating a Sales Contract

Company C is a manufacturer of high-quality furniture that sells its products to retailers and distributors. Company D is a retailer of home furnishings that operates several stores in different locations. Company C wants to sell its products to Company D at a competitive price and with favorable terms. Company D wants to buy from Company C at a low price and with flexible terms.

The negotiation process involves the following steps:

Preparing: Both companies do their research and analysis on the market conditions, the industry trends, the customer preferences, and the competitor prices. They also identify their own interests, needs, and goals for the sales contract. They prepare a list of issues to negotiate, such as the quantity, quality, price, delivery, payment, warranty, and service of the products.
Opening: Both companies meet face-to-face or online to introduce themselves and establish rapport. They also exchange their initial offers and expectations for the sales contract. They use positive and respectful language and avoid making demands or ultimatums.
Exploring: Both companies ask open-ended questions and listen actively to understand each other’s perspectives, motivations, and concerns. They also share information and ideas to create value and find common ground They use collaborative and creative problem-solving techniques to generate multiple options and alternatives for each issue.
Bargaining: Both companies evaluate the options and alternatives and compare them with their own interests needs and goals They also consider the interests needs and goals of the other party They use objective criteria and standards to justify their positions and offers They also make trade-offs and concessions to reach a mutually beneficial agreement
Closing: Both companies summarize the main points of the agreement and confirm their understanding and commitment They also express appreciation and satisfaction for the outcome and the relationship They document the agreement in writing and sign it
Implementing: Both companies follow through on their obligations and responsibilities according to the agreement They also monitor the performance and results of the sales contract They communicate regularly and provide feedback and support to each other They also resolve any issues or conflicts that may arise in a constructive and respectful manner

Tips

Do your homework: Research and analyze the other party, the market, the industry, and the issues before negotiating.

Be flexible: Be willing to adapt and adjust your strategy, tactics, and style according to the situation and the other party.

Be assertive: Be confident and firm in expressing your interests, needs, and goals, but also respectful and considerate of the other party’s interests, needs, and goals.

Be cooperative: Be open-minded and curious in exploring options and alternatives, but also realistic and pragmatic in evaluating them.

Be ethical: Be honest and fair in presenting information, making offers, and reaching agreements, but also vigilant and cautious in verifying them.

Negotiation Between Two Companies: A Statistical Report

Negotiation is a process of reaching an agreement through bargaining between two or more parties. Negotiation can have different outcomes depending on the approach, strategy and tactics used by the negotiators. In this report, we will analyze an example of negotiation between two companies in the same industry and how it affected the global demand for their products.

Background of the Negotiation

The example we will use is the negotiation between Apple and Samsung, two of the leading smartphone manufacturers in the world. The negotiation was triggered by a patent dispute that started in 2011, when Apple sued Samsung for infringing its design and technology patents on its iPhone and iPad devices. Samsung countersued Apple for violating its wireless communication patents. The legal battle spanned across several countries and involved billions of dollars in damages.

In 2012, the CEOs of both companies met with a judge in the U.S. District Court of Northern California to try to reach a settlement. However, the negotiation failed and the case went to trial. A jury ruled that Samsung had to pay Apple more than $1 billion for patent infringement, but the judge later reduced the amount to $600 million. In 2013, another jury awarded Apple $290 million more for the damages that were overruled by the judge in the previous case.

Analysis of the Negotiation

The negotiation between Apple and Samsung can be classified as a distributive negotiation, which is a bargaining approach where one party succeeds only if another party loses. A distributive negotiation usually involves a single issue, such as money or resources, and has a fixed-sum outcome, meaning that there is a limited amount of value to be divided among the parties.

In this type of negotiation, the parties tend to adopt competitive or adversarial strategies and tactics, such as making high demands, concealing information, using threats or pressure, and exploiting weaknesses. The parties also tend to focus on their own interests and positions rather than on finding common ground or mutual benefits.

The negotiation between Apple and Samsung was characterized by these features. Both companies had strong positions and interests in protecting their intellectual property rights and market share. Both companies also used hardball tactics, such as suing each other in multiple countries, seeking injunctions to ban each other’s products, and refusing to compromise or cooperate.

The outcome of the negotiation was unfavorable for both parties. Not only did they incur huge legal costs and damages, but they also damaged their reputation and relationship with each other and with their customers. Moreover, they missed opportunities to collaborate or innovate together, which could have increased their competitive advantage and created more value for themselves and for the market.

Impact on Global Demand

The negotiation between Apple and Samsung had a significant impact on the global demand for their products. According to a report by Strategy Analytics, the global smartphone shipments in 2012 reached 700 million units, an increase of 43% from 2011. However, the growth rate slowed down to 41% in 2013 and 30% in 2014.

The report also showed that Apple’s market share declined from 19% in 2012 to 15% in 2014, while Samsung’s market share increased from 30% in 2012 to 32% in 2014. However, both companies faced increasing competition from other players, such as Huawei, Lenovo, LG, Xiaomi, and ZTE, which gained market share by offering cheaper or more innovative products.

The report suggested that the patent dispute between Apple and Samsung had a negative effect on their global demand by reducing their customer loyalty, brand image, and product differentiation. The report also recommended that both companies should focus more on developing new features, services, and partnerships that can enhance their customer satisfaction and retention.

The negotiation between Apple and Samsung was an example of a distributive negotiation that resulted in a win-lose outcome for both parties. The negotiation was driven by competitive strategies and tactics that led to a costly and lengthy legal battle that harmed their relationship and reputation. The negotiation also affected their global demand by slowing down their growth rate and increasing their competition.

To avoid such outcomes in the future, both companies should consider adopting an integrative negotiation approach, which is a bargaining approach where both parties attempt to reach a mutually beneficial solution. An integrative negotiation can involve multiple issues, such as quality, innovation, distribution, or cooperation, and has a variable-sum outcome, meaning that there is potential to create more value for both parties.

In this type of negotiation, the parties tend to adopt cooperative or collaborative strategies and tactics, such as sharing information, exploring interests and needs, generating options, using objective criteria, and building trust and rapport. The parties also tend to focus on finding win-win solutions that can satisfy both parties and improve their relationship and reputation.

By using an integrative negotiation approach, both companies could leverage their strengths and resources to create more value for themselves and for the market. They could also reduce their costs and risks by resolving their disputes more efficiently and effectively. Moreover, they could increase their customer loyalty and satisfaction by offering more diverse and innovative products.

Frequently Asked Questions

Q: What are the benefits of negotiation between two companies?
A: Negotiation between two companies can have many benefits, such as:

Creating value and synergy for both parties by combining their resources, capabilities, and expertise
Building trust and rapport between the parties by fostering mutual understanding and respect
Enhancing customer satisfaction and loyalty by delivering high-quality products and services
Reducing costs and risks by sharing responsibilities and liabilities
Improving efficiency and effectiveness by streamlining processes and procedures
Resolving conflicts and disputes by finding mutually acceptable solutions

Q: What are the challenges of negotiation between two companies?
A: Negotiation between two companies can also have some challenges, such as:

Dealing with cultural differences and language barriers that may affect communication and understanding
Managing power imbalances and competitive pressures that may influence the behavior and attitude of the parties
Handling emotions and biases that may interfere with rational decision-making and problem-solving
Coping with uncertainty and complexity that may complicate the negotiation process and outcome
Maintaining confidentiality and integrity that may affect the reputation and credibility of the parties

Q: What are the best practices of negotiation between two companies?
A: Some of the best practices of negotiation between two companies are: