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This is the beginning of a new series on the skills and language of negotiating in English.
Over the coming months, we'll explore the topic in a series of podcasts that examine several typical business negotiations and the language used in each stage of the process.
Today's show is the first in a two-part sequence on the fundamentals of negotiation strategy.
We'll be hearing an interview with experienced management consultant Brian Fields.
Brian discusses key concepts and important strategic considerations.
The dialogue teaches us both useful vocabulary and helpful skills.
As you listen, try to answer the following questions.
The answers will be posted in a few days on our website at www.businessenglishpod.com.
Listening questions.
1.
What are the top mistakes people make in a negotiation?
2.
What is a BATNA or best alternative to a negotiated agreement?
3.
What does Brian think about the idea of win-win negotiations?
What do you think are some of the top mistakes people make going into a negotiation?
Well, a lot of the most common mistakes usually start before the negotiation even begins.
How do you mean?
For example, in the planning stages there is often an over emphasis on price.
Things like, should I put the first number on the table or wait for them to make the first move?
Should I tell them what we really need?
Or should I include some bargaining chips that we can give away later?
Aren't those things important?
Yes, of course, but they are just tactical questions.
None of them can be answered without developing a coherent strategy first.
So what goes into building a strategy?
There are several factors to consider.
The first one is what you'll do if you don't come to an agreement.
This is often called your BATNA, or best alternative to a negotiated agreement.
Isn't that the same as your bottom line?
Not necessarily.
Your BATNA is what is already available, so your bottom line should be better.
Otherwise, there's nothing to be gained from negotiation.
That makes sense.
And in determining the best alternative, we have to look at more than just the offers that we currently have on the table.
And we have to take other factors into consideration than just the price.
For example, there may be other ways to structure the deal more potential buyers out there or deal sweetness.
So just payment in cash instead of credit.
Is it all about maximizing your own benefit, or do you think there's anything to the idea of a win-win agreement?
Well, win-win has become a bit of a cliché.
But let's take a look at the original meaning of the word.
Of course, we are both trying to get the best deal.
But consider this.
If I am selling and you are buying and my bottom line is lower than the highest price you are willing to pay, then we call that overlap the zone of possible agreement.
Reaching a compromise anywhere in that zone is a win-win solution.
It's just a matter of swapping concessions to get there.
Let's review the vocabulary and concepts that Brian uses to introduce the topic of negotiations.
The interviewer asks Brian about the top mistakes people make in a negotiation.
Surprisingly, Brian replies that the most common mistakes actually start before the negotiation begins.
What are those mistakes?
Listen again.
For example, in the planning stages there is often an overemphasis on price.
Brian says people have an overemphasis, that is too much emphasis, on price.
The verb form is to overemphasise.
This word is useful for describing situations in which someone pays too much attention to something, often to the neglect or detriment of something else.
Let's listen to a few more examples of this expression in use.
In my opinion, in our discussions, there seems to be an over emphasis on price.
If you ask me, we're over emphasizing delivery time.
We should be more focused on quality.
We have to be careful not to overemphasise minor factors.
Brian then goes on to provide two examples of an overemphasis on price.
Things like, should I put the first number on the table or wait for them to make the first move?
Should I tell them what we really need, or should I include some bargaining chips that we can give away later?
What are bargaining chips?
In a game of cards, such as poker, we often bet chips, little round plastic discs, instead of cash.
Each chip represents a certain amount of money.
Idiomatically.
A bargaining chip is anything that you can bet or give away in return for something else.
For example, you may be able to use delivery time as a bargaining chip in order to get a concession on price.
Let's practice this idiom by listening to some more examples.
Since he was very flexible on warranty period, he used this as a bargaining chip to get concessions on delivery time.
They are obviously using their good relationships with local government as a bargaining chip to try to negotiate exclusive rights to sell our product in this market.
It's too early in the negotiation to throw away bargaining chips.
Never give something up without getting something in return.
How does the interviewer respond to Brian's statement that people often overemphasise price?
Aren't those things important?
Yes, of course, but they are just tactical questions.
None of them can be answered without developing a coherent strategy first.
Brian's point here is that price is merely a tactical question which can't be answered until we first develop a coherent, that is, logical and consistent strategy.
What is the difference between tactics and strategy?
They are often used the same way.
But here's one way to think of the difference.
Tactics are what we need to win the battle, whereas strategy is what we need to win the war.
Tactics usually refers to details, whereas strategy often refers to general principles.
Let's listen to some more examples of tactics and strategy.
We always have to keep in mind our long-term strategy of building a good relationship.
Tactical concerns include discount and delivery.
Using this client to establish a relationship in this new market is more of a strategic concern.
It's time to go beyond just thinking about short term tactics and start considering long term strategies.
Next, Brian discusses an important factor in building a strategy your best alternative to a negotiated agreement or BATNA.
The interviewer asks about the difference between a BATNA, or best alternative, and a bottom line, which is also known as your walk-away point, the minimum offer you are prepared to accept.
Isn't that the same as your bottom line?
Not necessarily.
Your BATNA is what is already available, so your bottom line should be better.
Otherwise, there's nothing to be gained from negotiation.
Brian is saying that our BATNA is what we will do if we don't reach an agreement.
So our bottom line, the worst possible agreement we can accept, should be better than that.
Now, listen to some example phrases using BATNA and bottom line.
To determine our BATNA, we have to consider not just the other offers on the table, but also potential buyers that we haven't yet talked to.
Before you can determine your bottom line, you need to put a value on your best alternative.
Sometimes your best alternative is to do nothing at all.
Several not-so-obvious things go into deciding your BATNA, including the timing of the deal.
A bird in the hand may be worth two in the bush.
The last example includes an idiom.
A bird in the hand is worth two in the bush.
This means that gains we have gotten now should be valued more highly than greater gains that are merely promised for the future.
The difference between BATNA and bottom line should now be clear.
But how do we determine our BATNA?
And in determining the best alternative, we have to look at more than just the offers that we currently have on the table.
And we have to take other factors into consideration than just the price.
For example, there may be other ways to structure the deal more potential buyers out there or deal sweeteners, such as payment in cash instead of credit.
As Brian points out, our best alternative is not necessarily the best offer we have on the table or we have received so far.
Also, to decide our best alternative, we have to actually consider a number of factors besides just price.
What are these other important considerations?
The first one is how the deal is structured, that is, for example, credit terms, payment periods, legal aspects and so on.
Second, we may want to think about other potential buyers, not just the ones we have already contacted.
Finally, there may be some deal sweeteners, which refer to factors beyond mere price that make an arrangement sweeter, that is more attractive.
Let's look at some example phrases with this last idiom, deal sweeteners.
If we're going to get them to agree to our offer, we're going to have to think of some ways to sweeten the deal.
Why don't I sweeten the deal a little bit by increasing our discount by 1%?
There's a variety of deal sweeteners that we can use to make buying our company more attractive.
Next, the interviewer asks Brian what he thinks about the idea of a win-win negotiation.
Brian replies that win-win has become a cliché.
That is an expression that is used so much that it becomes meaningless.
But then he encourages us to think about the actual meaning of win-win.
Of course, we are both trying to get the best deal.
But consider this.
If I am selling and you are buying and my bottom line is lower than the highest price you are willing to pay, then we call that overlap the zone of possible agreement.
Reaching a compromise anywhere in that zone is a win-win solution.
It's just a matter of swapping concessions to get there.
What Brian is saying is that all negotiations, to be successful, must be win-win.
If you are buying and I am selling the lowest price I am willing to give you must be under the highest price that you are willing to pay.
This area of overlap between our bottom lines is referred to as the zone of possible agreement.
Any compromise we reach in that zone benefits both of us.
We reach an agreement in this zone by swapping, that is trading, concessions.
First you make a concession, then I make one, until we make a deal.
Let's review agreement, compromise and concessions with some example phrases.
As you listen, pay attention to collocations, word partnerships between nouns and verbs.
If there's going to be any agreement it's necessary for one of us to make a concession.
The only way to reach a compromise is to make a concession.
The negotiation was finally successful when the other party backed down and compromised on a key issue.
From these examples, we notice a couple of things.
First, we usually say to make a concession and to reach a compromise.
A compromise is a kind of agreement and a concession is something we do to reach it.
Note, however, that in the last example, compromise is used as a verb.
In this case, to compromise basically means to make a concession.
For this reason, sometimes we also say to make a compromise has a similar meaning as to make a concession.
Now it's your turn to practice.
First, we'll review some of the verb collocations we just learned.
In a moment, you'll hear a series of sentences with a verb blanked out or replaced with a beep.
Repeat the whole sentence, supplying the missing verb in the correct form.
For example, if you hear... You will say...
The only way forward is if one of us makes a concession.
Let's give it a try.
By trading concessions, we will eventually a compromise.
Answer.
By trading concessions, we will eventually reach a compromise.
I think we can our strong brand name as a bargaining chip.
I think we can use our strong brand name as a bargaining chip.
In last week's negotiation, I
A concession on price.
Answer.
In last week's negotiation, I made a concession on price.
I think that an overemphasis on price is keeping us from an agreement.
I think that an overemphasis on price is keeping us from reaching an agreement.
Next, we'll use the same method to review key vocabulary.
In a moment, you'll hear another series of cues.
As before, one word is blanked out with a beep.
Repeat each sentence, putting in the missing word.
It's too early in the negotiation to throw away chips.
Answer.
It's too early in the negotiation to throw away bargaining chips.
We always have to keep in mind our long-term of building a good relationship?
Answer.
We always have to keep in mind our long-term strategy of building a good relationship.
There's a variety of deal that we can use to make buying our company more attractive.
Answer.
There's a variety of deal sweeteners that we can use to make buying our company more attractive.
That concludes the first in this two-part series on negotiation strategy.
In this episode, we've learned both a variety of useful language and a range of helpful skills.
And full transcripts of this and other episodes.
Thanks for listening and see you next time.
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