STRATEGIC & TACTICAL NEGOTIATION

STRATEGIC & TACTICAL NEGOTIATION

Negotiation is a basic means of getting what you want from others.

It’s a back and forth communication designed to reach an agreement when you and the other side have some interests that are shared and others that are opposed. (Fisher & Ury, Getting to yes)

As a result of various approaches people will often take when trying to arrive at their objectives in commercial agreements, strategic and tactical negotiation seem to be the two broad levels buyer and seller relationships exist at.

Strategic Negotiation

This kind of negotiation addresses long-range issues involving the direction and objectives of a strategic or long-term supply chain relationship, things like:

• The nature of the collaboration,
• The sources of competitive advantage to be sought,
• The mutual strategic benefits of development and so on.

At this level, negotiation tends to be collaborative (or ‘integrative’) in style, because both parties are seeking mutual commitment and aligned objectives.

 Examples of strategic negotiation, might include negotiations of a joint venture or partnership agreement, for instance Disney and Pixar

This kind of negotiation is usually carried out less frequently and at a higher level, usually by senior management teams from both parties.

Tactical Negotiation

This is your day to day negotiation.  It addresses short-range issues involving:

1. Operations
2. resource allocation
3. performance and risk management ETC

At this level, negotiation tends to be more adversarial and competitive (or distributive) in style, because both parties are seeking to maximize their own organization’s share of the value gains and minimize their own organisation’s share of the risks, within the relationship.

Less attention may be paid to relationship development where the relationship is purely tactical or transactional. The focus may be on opportunistic, short-term gains (eg forcing lower prices or favorable terms).

Example of a tactical negotiation might include:

• negotiation for prices and terms on a supply contract
• negotiation of service levels etc

In pursuit of becoming an effective negotiator, it’s equally important to know when not to negotiate.