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Car Trouble

Horace McDonald
Negotiation Car Call {}

Last week my wife and I spent a few days in the Shropshire countryside. We were invited as guests of her sister and her husband who had been unable to celebrate their respective 60th birthdays due to the pandemic. They had rented a very nice big house to accommodate their blended family and the two of us.

On the journey, I received a message from an old friend asking if I had time for him to pick my brain. Fortunately for him, my wife was driving. She’s one of those strange people who seems to get less tired the more she drives, it’s like having a superpower. As I get older these requests are becoming more frequent, as I have two areas of expertise of which negotiation is one. Outside of these, I can also do footballers with first-class degrees, but don’t get many calls for that expertise.

My friend runs a specialist online marketplace that offers a broad range of products, within a specialist area high-profile niche. The business is going through the familiar growing pains of navigating funding rounds, investors who always want more and unpredictable demand. He called as, despite being under contract, his biggest supplier wanted improved commercial terms. It was clear that the supplier partner was in a position of some power, it accounted for a significant proportion of his business and had other channels to market.

Humans are competitive, it is not uncommon for people in these sorts of situations to want to take an aggressive position and not negotiate. At Scotwork we recognise that negotiation is only one of the options available to resolve conflict and it was clear that whilst this option was available to the supplier partner it was not viable for my friend’s business.

The conversation was not dissimilar to one we'd had many years ago where he found himself In conflict with a business partner. I advised him to take a value-enhancing solution rather than a competitive one, which was the advice he was getting from everyone else he’d spoken to. The situation was successfully resolved and he often mentions it when I see him. Despite this, his ego got the better of him and he wanted to fight, based on the contractual situation. You won’t be surprised to hear that my advice was that whilst this might satisfy his ego, it would likely be damaging in the longer term.

In these situations, both preparation and creativity come to the fore in negotiation. My advice was to create a wish-list of the things his business would need in order to be able to meet some or all of the supplier's demands. If the extent of the demand is unpalatable then the requirements needed to meet it need to be equally so. In complex negotiation scenarios, the demands of both parties typically span different variables, however, this was not the case here. I advised him to link the different areas in his wish-list item to staged increases in margin. In this instance, there is a danger in offering a proposal that gives you the party everything they need in return for everything you need as they tend to become fixated on your ability to meet their demand and less interested in the concessions required to achieve them.

The deal was concluded at the end of last week. As in every negotiation, my friend had to give some things up but kept a very important customer and thankfully my wife has finally stopped driving.

Horace McDonald
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