Interesting Ways Power And Influence Affect Commercial Negotiations

POWER AND INFLUENCE IN COMMERCIAL NEGOTIATION

Mastering negotiation skills or the art of negotiation for that matter, means knowing, among other things, whether or not you have the needed power. Remember negotiation definition can be summed up as a process where two parties with differences which they need to resolve are trying to reach agreement through exploring for options and exchanging offers and an agreement.

If you pay close attention to the negotiation meaning as summed up above you realize you only get good at it if you have the ability to influence which is what power is. Power is the ability to influence and this is not the same as authority, since authority refers to the scope and amount of discretion given to a person based on the position they hold in an organization. So power is the ability to influence while authority is the right to influence

Why is power important in commercial negotiation?

1. It helps you secure a win outcome, as well as gain the interests that come with the win, for instance if you are negotiating a car lease, you get to keep the car in your own terms.
2. It makes it easy to maximize your share of value gains from an otherwise “win-win” co-operative agreement
3. Keeps the negotiation going forward by forcing an issue
4. Secure agreement, commitment and buy-in to positions or solutions

Shapes taken by power when negotiating

In buyer-supplier relationships, power may take various forms often reflected by the tactics used and such include:

Overt power: Which is obvious and transparent, this kind of power is normally seen through the direct tactics such as competitive leverage, hard negotiation, logical persuasion among others.

Covert power: This kind of power is subtle, basically hidden or implied. It can be seen through tactics such as withholding information or even excluding someone from a negotiation or a network. In this case conflicts of interest are not explicitly stated and may not even be apparent to observers

Structural power-This is contextual, it builds into the situation, simply put, this shape of power will just rise as the commercial agreement occurs

SOURCES OF PERSONAL POWER IN COMMERCIAL NEGOTIATION

In organizational relationships, power can be classified in the following ways;

1. Legitimate power (or position power)- this kind of power is backed by authority, meaning it has to do with the position one has in a given organization for instance if you are a manager then that position comes with ability to influence
2. Expert power– has to do with what you know
3. Reward power (or resources power) you enjoy this power if you have control over resources that are valued by others, this power will depend on how far you control these resources, how scarce they are and how much they are valued by others
4. Referent power – also known as charismatic power. It’s the kind of power which has to do with individual personality and how attractive others find this personality
5. Coercive power– this power is based on the ability to threaten sanctions, hand out punishments or physically intimidate others if compliance is not obtained

An individual can actually portray all these powers it’s just a question of context.

CONCLUSION

While in the course of your commercial negotiation you may want to win at all cost remember Coercive, arbitrary, unfair or abusive exercise of power is generally discouraged on account of it being, Unlawful in most set ups and Counter-productive. Such forms of power may secure short-term compliance, but they generally also cause resentment, resistance and loss of potential for more constructive long-term relationships. This in reality is the reason why adversarial relationships, based on overt competitive leverage, are not considered suitable for all supply situations. They are rarely the basis for long-term best value for money, or potential for mutually satisfying relationship