Powerful roles of stakeholders in commercial negotiation

Stakeholders in commercial negotiation play a powerful role that will in the end shape the direction and results achieved in the negotiation process. But before we look at some these roles lets start by understanding who stakeholders in commercial negotiation are.

WHO ARE STAKEHOLDERS IN COMMERCIAL NEGOTIATION?

Generally, stakeholders are individuals or groups who depend on the organization to fulfill their own goals and on whom, in turn, the organization depends.

A stakeholder of a company is an individual or group that either is harmed by, or benefit from, the company or whose rights can be violated, or have to be respected, by the company.

An organization has both internal and external stakeholders.

Members of an organization (managers and employees) are stakeholders in its activity and success.

So are its supply chain partners (suppliers, intermediaries and customers) and others in direct business relationship with it such as, it owners or shareholders, the banks that lend it money and so on.

In commercial negotiations, stakeholders would be individuals or groups who have ‘stake’ or interest in the process of negotiation, e.g as participant, or the outcome, e.g as parties which will implement or be affected by agreement.

WHAT ROLES DO STAKEHOLDERS IN COMMERCIAL NEGOTIATION PLAY?

In negotiations the role stakeholders play will depend on who they are and for the most part, the outcome they desire, for instance;

1. They can be directly responsible for both the process (how the negotiation is conducted) and the outcome (the content of the deal or agreement and the state of the relationship between the parties)
2. The contract managers will be responsible for monitoring and managing performance of the agreement reached.
3. The members of both negotiating organizations will be responsible for implementing the agreement reached (producing or supplying and paying for goods, or following through on other commitments made, g in regard to implementing environmental policies, arranging for systems integration, providing training and so on). They will have a key interest in the feasibility of the agreement.
4. The users of the products or the services supplied under the agreement, will have a key stake in the effectiveness of the supply contract, conformance to specification, agreed service levels, on time delivery of goods- and so on.
5. The budget holders or financers of the procurement, have a stake in ensuring that the negotiating team secures best value (in terms of price, payment terms, total costs of ownership, discounts and so on)
6. The senior management of both organization (and ultimately, their owners or shareholders), have a stake in the effectiveness of the agreement, the risks it may pose, the value lost or gained through it and so no. The detail of an agreement may affect vulnerability to risk, liability, cashflow, costs, profitability, production capacity and all sorts of factors on the business.

CONCLUSION

Negotiators may need to assess the power and interest of wider stakeholders in the issue or decision, in order to determine:

1. which third-party interests they may be representing in the negotiation
2. whether these strengthen or weaken their bargaining position
3. and what outcomes, once agreed by the negotiating parties, may be supported or resisted by third parties.

Mendelow’s power/interest matrix is a useful tool for mapping stakeholders according to their power to influence a negotiation (or other activity) and the likelihood of their showing an interest in it.