Purchasing and negotiation skills

If you are the buyer, you will hear the seller ask for a lot more than you expect. If you are the seller, the buyer will offer you far less than you expect.

The intention is to lower your expectations and thereby gain a concession without having to make one in return. Of course, the risk is that you will be offended and enraged, refusing further dealings with the other party.

It is important to note that cultures may dictate this tactic as standard practice. German or American trading in China will grow accustomed to extreme proposals. If the culture in which you must operate dictates extreme opening offers, then you are recommended to blend in and take advice on how to play by their rules.

Experienced negotiators always start with their aspiration base - or opening offer.

We should be prepared to negotiate even if we are presented with the most favourable deal of our life.

Let's say you would like to sell a car and a couple approaches you, offering what seems to be a very good deal - much more than you expected. If you shake hands immediately, you will trigger two kinds of thoughts, also known as buyer's remorse:

• We could have paid less - we shouldn't have offered that much - we could have done better

• There is something wrong with the car.

Always negotiate! Research tells us that trading concessions is the most effective way to gain people's commitment to a transaction. Negotiating concessions is also the best way to ensure all-round deal satisfaction.

Effectiveness at the conference table depends upon overstating one's demands - Henry Kissinger

One key negotiation principle is that you should always ask for more than you expect to get, the obvious reason being that it gives you some negotiating room.

If you are selling, you can always come down, but you will never have a chance to go up in price. If you are a buyer or a seller you may be able to manage your counterparty's expectations by creating an anchor or a frame that the other side will have to deal with.

What you should start with is your 'aspiration base' - your optimal outcome for every single objective goal. Prior to the aspiration base, though, it is critical to identify the other side's underlying needs and interests.

If you negotiate price, for example, any price will be too expensive before you understand what critical issues your product or service will be able to solve. The less you know about your counterparty and supporting benchmarks, the higher your aspiration base should be, for these reasons: you may be off in your assumptions and the other side may be desperate to do business with you.

You may be perceived as more co-operative if you start with larger concessions at the beginning. You might just get it! It increases the perceived value of your offer. It creates an environment where the other side feels she/he has won as a result of gaining concessions from you.

In negotiation most people equate their success with the extent that they are able to gain concessions from their counterparties. Therefore, be prepared to make concessions then!

Alex Borg, MCIPS (Stam), MIM, MILT (UK), is a trainer and consultant in Logistics and Supply Chain Management. He is also director of Support & Supply Management (SSM) Group Ltd, which has branches in the UK and the UAE, and also represents the Chartered Institute of Logistics and Transport of the UK in Malta and overseas. www.ssmgroup.org