Description

1.0  Understand key approaches in the negotiation of commercial agreements with external organisations

1.1  Analyse the application of commercial negotiations inthe work of procurement and supply

• Definitions of commercial negotiation
• Negotiation in relation to the stages of the sourcing process
• Sources of conflict that can arise in the work of procurement and supply
• Team management and the influence of stakeholders in negotiations

1.2  Differentiate between the types of approaches that can be pursued in commercial negotiations

• Collaborative win-win integrative approaches to negotiations
• Distributive win-lose, distributive approaches to negotiation
• Pragmatic and principled styles of negotiation
• Setting targets and creating a best alternative to a negotiated agreement (BATNA)

1.3  Explain how the balance of power in commercial negotiations can affect outcomes

• The importance of power in commercial negotiations
• Sources of personal power
• Organisational power: comparing the relative power of purchasers and suppliers
• How suppliers gather information on purchasers
• How purchasers can improve leverage with suppliers

1.4  Identify the different types of relationships that impact on commercial negotiations

• The relationship spectrum
• Building relationships based on reputation, and trust
• Repairing a relationship

2.0  Know how to prepare for negotiations with external organisations

2.1  Describe the types of costs and prices in commercial negotiations

• Types of costs: direct and indirect, variable and fixed
• Break-even analysis: cost volume profit formulae
• Costing methods such as absorption, marginal or variable and activity based costing
• Volumes, margins and mark ups and their impact onpricing
• Negotiating prices

2.2  Contrast the economic factors that impact on commercial negotiations

• The impact of microeconomics and market types on commercial negotiations
• Macroeconomics and its influence on commercial negotiations
• Sources of information on micro and macro economics

2.3  Analyse criteria that can be used in a commercial negotiation
Criteria such as:

• Setting objectives and defining the variables for a commercial negotiation
• The bargaining mix
• Positions and interests
• Openings and presenting issues

2.4  Identify the resources required for a negotiation

• Choice of location
• Involving appropriate colleagues
• Use of telephone, teleconferencing or web based meetings
• Room layout and surroundings

3.0  Understand how commercial negotiations should be undertaken

3.1  Identify the stages of a commercial negotiation

• Defining the stages of a negotiation such as: -preparation, opening, testing, proposing, bargaining, agreement and closure
• How behaviours should change during the different stages of a negotiation

3.2 Appraise the key methods that can influence the achievement of desired outcomes

• The use of persuasion methods
• The use of tactics to influence the other party

3.3 Compare the key communication skills that help achieve desired outcomes

• Types of questions
• Effective listening
• Push and pull behaviours
• Nonverbal communication
• The influence of culture in commercial negotiations
• The use of emotional intelligence in commercial negotiation

3.4 Analyse how to assess the process and outcomes of negotiations to inform future practice

• Reflecting on performance
• Opportunities for improvement and development
• Protecting relationships after the negotiation