Friday, December 11, 2009

Buyer Integrated Bargaining Strategy - Create Value and Deny Suppliers Who Try to Claim It

I'm a buyer, integrated bargaining is my professions craft. Now that I have some knowledge of few bargaining concepts, it's time to dole out some advice.

Business negotiation is the sexy part of being a buyer: real money, decisions that impact a business. Reading an academic thought that ' the real-world dilemma is how to manage the tension between these two concepts, creating value vs claiming value, of bargaining' (Patrick S. Noonan) is deep.

If you find your self observing a supplier doing any of the following, they are claiming value and the best deal has not been reached.
- misleading comments on costs
- changing preferences, risk level, time fences
- maximizing their utility w/o regard to the buyers
- changing the joint benefit possibilities (ZOPA)

Advice
Two choices to consider. Propose creating value so both parties benefit or find another supplier who will.
A supplier who is claiming value needs to have a chance to join the buyer in creating value, there must be a win-win solution (creating benefit for both parties).
The second choice is to have a second source or one that will jointly supply the benefit. It is important to work this alternate source strategy when you know there is a integrated bargaining opportunity.
Don't be intimidated and concede by Suppliers who demonstrate claiming value acts. Use it to your advantage to figure out how much benefit there is for all, then make your move.

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