The second core concept involves the negotiation cycle, which is shown in Figure 2.1 on page 12. Most business negotiations are, or at least have the potential for being, ongoing. If we have a customer, we’d like to keep them for life. If we are a buyer and have a competent and trustworthy supplier, we want to continue to do business with them. There are a few one-time negotiations such as buying a piece of property or buying a company, but for the most part there is a potential for future negotiations. For this reason we like to think of negotiation as being part of a cyclical process.
The negotiation cycle starts with some preplanning. How much preplanning you’re able to do depends on how much you know about the upcoming negotiation. If you know a great deal, you can do most of your planning before you even meet with the other party. On the other hand, I have been involved in some complex joint venture negotiations where we needed to have a number of preliminary meetings before we could even define what the negotiation should be about. In those situations, you’ll do a lot of planning after you have some initial contact with the other party.
Now, when does the negotiation with the other party actually begin? A negotiation really starts with “Hello,” during initial contact, not when you sit down to formally negotiate the deal. And we will discuss what happens at the initial contact in a lot more detail in a moment. The initial contact can be one or more sessions and they can be in person, over the phone, or sometimes even via e-mail.
The next phase of the cycle is the actual negotiation itself. In Figure 2.1, we have three boxes for the negotiation sessions. Of course some negotiations can be very short and only require one negotiating session. On the other hand, some negotiations can take months and require a great many sessions.
Figure 2.1 The negotiating cycle
Finally, we conclude the negotiation and reach agreement and then we implement that agreement. So when does the next negotiation begin? If you said the moment we reach agreement, you get another gold star. You see, during the implementation phase, we will be doing a lot of things to plan for the next negotiation. That’s when we can gather even more information, set expectations, and generally position ourselves to do well the next time around.