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50 Cards in this Set

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  • Back

Explain FIVE differences between integrative and distributive approaches to negotiation.

  • p.72 table 5.1

  1. key attitude: I win, you lose/whats they best way to address the needs of all?
  2. Goal pursuit: Own goals at the expense of others/pursuit of jointly held goals
  3. Relationships: Short-term/Long-term
  4. Primary motivation: maximise own outcome/maximise joint outcome
  5. Trust and openness: Secretive & defensive/trust & openness

Discuss TWO reasons why a buyer might develop a BATNA when preparing for a negotiation

- Allow you to be more assertive during negotiation
- Protects you from feeling you have to accept terms that are too unfavourable
- Provide a decision rule to allow you to decide when to take it or leave it
- P.79

Discuss how the balance of power may affect commercial negotiations

  • French & Raven
  • legitimate power: position power, authority in an organisation
  • expert power: expertise or knowledge
  • reward power: resource power, control over resource and rewards
  • referent power: personal power, personality, charisma
  • coercive power: physical power, threaten punish

Explain why negotiators may develop a BATNA when planning for a commercial negotiation.

  • define BATNA
  • three reasons: makes you feel assertive, protections from feeling you have to accept, a definite rule of when to take it or leave it
  • p.79

Suggest THREE situations when a distributive approach may be appropriate for commercial negotiations.

  • Routine item / low value
  • No relationship required
  • Low risk
  • Where price is the key
  • One-off

Explain FIVE ways a buying organisation can improve its leverage with suppliers in a commercial negotiation.

  • use of persausive methods
  • using experts, or bring in power e.g. CEO
  • being prepared with information
  • aggregated spend
  • informing supplier of BATNA

Examine FIVE types of supplier relationships, within the ‘relationship spectrum’, that can impact commercial negotiations.

  • Adverserial
  • Arms length
  • transactional
  • single source
  • parternship
  • co-destiny

Describe THREE sources of personal power that can be used in a commercial negotiation

  • Charisma
  • Inspiring personality
  • communication and influencing skills
  • attractive

Explain the reasons that lead to a monopoly supplier having high power relative to a purchaser in a commercial negotiation

  • only one supplier of the goods exists
  • has absolute power
  • makes abnormal profits

What is Negotiation in the procurement context?

A process of planning, reviewing and analysing used by a buyer and seller to reach acceptable agreements or compromises which include all aspects of the business transaction, not just price.

What are alternatives to negotiation?
Competitive bidding, persausion, giving in, coercion, problem solving
What are the two levels of negotiation?



What is strategic negotiation?

less freqent and at a higher level by senior mgmt addressing long range issues
What is Tactical Negotiation?
more frequent at lower level by functional parties addressing short range issues
What two roles do Procurement Professionals typically play in negotiations?
1. the sole negotiator (for low value non critical items) 2. team leader of cross functional negotiating team
Why can conflict be highly desirable?
energise relationships, clarify issues, driver for negotiation
What are sources of conflict?
1. shared resources 2. difference in goals and values 3. power imbalanc 4. ambiguity
Where may conflict be experienced?
1. with other functions 2. within purchasing team 3. suppliers
In what context would negotiation be required relating to employee relations and team management?
1. grievance and conflict handeling 2. group problem solving 3. negotiating terms and conditions
What serious problems can failed internal negotiation cause? According to Richard Morse

1. resources will not be available 2. implementation will falter 3. there is a risk of internal resistance 4. risk of alienating supporters 5. risk of sabotage

what are objectives and outcomes in a negotiation?
objectives are specific statements of what a negotiator wants to achieve from the process. Outcomes are a broadly, the results of the negotiation
what are three possible outcome types of a negotiation
1. win-lose: one party gets what he wants at the expense of the other 2. lose-lose: neither party gets what they want 3. win-win: both parties get as close as possible to what they want.
Describe the two orientations to negotiation
1. Distributive Bargaining: involves the distribution of limited resources, dividing up a fixed pie 2. Integrative negotiation: involves collaborative problem solving to increase the options avaliable (expanding the pie)
Describe the conflict handeling styles
1. avoiding 2. focing/competing 3. accomodating 4. compromising 5. collaborating
What is the key objective of distributive bargaining?
maximise our parties share of the particular deal
what are the three strategies to achevie a win-lose outcome in distributive bargaining?
1. pushing to settle as close as possible to the other parties resistance point 2. make the party lower its resistance point 3. make the other party think it’s the best settlement that could be agreed
What are the tactics of distributive bargaining?

1. presenting exaggerated opening bids and demands 2. exaggerating the initial distance between the two parties wants 3. withholding information highlighting weakness 4, using all levers to manipulate 5. offering no concessions in return

What are the steps to a win-win approach?
1. be willing to create a free exchange of information 2. find out why each party needs what it wants 3. find out where the parties interests dovetail 4. design new options where everyone gets more of what they want 5. cooperate, treat the party as a partner not an opponent.
what are the tacttcs of integrative negotiation?

1. being open about needs, getting all cards on the table 2. collaboratively generating options 3. focusing on areas of common ground and mutual benefit 3. supporting the other party in accepting your proposals 4. maintaining flexibility

What are the characteristics of integrative negotiation?

1. excellent listening skills 2. holistic orientation 3. added value thinking 4. integrity and trust 5. emotional intellegence

what is positional bargaining?
each side takes a position arguing in its favour trying to get an outcome as close to that position as possible. Fosters win-lose or lose-lose outcome.
What is principled negotiation?
parties work collaborativley to maximise the opportunity of a shared problem. Hard on the problem, soft on the people. Shifts negotiation from distributive to integrative.
What does principled negotiation require?
1. seperating people and problem 2. focus on reconcilling interests 3. generating a variety of ideas and options 4. insisting the agreement reflect a fair standard
Describe MIL?
An approach to setting objectives by Gavin Kennedy. MUST = deal-breakers INTEND = Target for negotiation but not disasterous if lost LIKE = Icing on the cake
What is a walk-away point?

Best option is to walk away from negotiation as opposed to making further concessions to complete it.

What is the differnece between power and authority?
Power is the ability to influence, authority is the scope and discretion given to make decisions by the organisation
What is the use of power essential in negotiation?
1. secure a win outcome 2. maximise overall gains 3. move the process forward 4. push through barriers 5. secure agreement and commitment
What are the types of power in buyer/supplier relationship?
1. OVERT = direct tactics, transparent & obvious 2. COVERT = indirect tactics, subtle & implied 3. STRUCTURAL = built into the situation
What are the sources of power?
according to French & Raven. 1. Legitimate 2. Expert 3. Reward 4. Referent 5. Coercive
What source of power are buyers most likely to use?
Reward power. As they are in the position to offer contracts
What are the characterisitics of adversarial relationships?

1. Lack or trust, little information sharing 2. short-term transactional focus 3. use of power and negotiation to get the best win outcome 4. enforced compliance to contract terms 5. little cooperation and recognition of mutual interests

What are the characteristics of a collaborative relationship

  1. joint and mutual search for greater efficency
  2. joint planning for the future
  3. shared objectives
  4. joint effort to eliminate waste
  5. openness and transparency
  6. understanding each others expectations
  7. agreed exit strategy

What factors effect what relationship type suits best?

  1. importance of the item being purchased
  2. competence of the supplier
  3. geographical distance
  4. compatibility
  5. purchasings objectives
  6. market conditions

what are the arguments for a transactional approcah?

  1. a more adversarial approach may secure the best commerical deal
  2. collaborative relationships take time and effort
  3. there are risks in long term relationships

What are the drivers for collaborative relationships?

  • should view supply chains as a whole, not individual firms
  • IT developments enable networking
  • pressure to protect IP
  • Transation approach doesnt leverage value adding potential
  • helps reduce waste in SC

What are relationship drivers?

  1. quality of interaction
  2. trust
  3. transparency
  4. commitment
  5. co-operation
  6. reciprocity

What are the five key elements to developing high trust supplier relationships?

  1. model the behaviours you expect
  2. keep and exceed commitments
  3. develop and measure trust
  4. disclose information
  5. be empathetic

What are the key ethical issues in negotiations and SRM?

  1. provision of accurate information
  2. confidentiality of information
  3. fair dealings
  4. avoiding conflicts of interest
  5. equal opportunity
  6. fair trade pricing

List the approaches to managing conflict

  1. problem solving
  2. over-aching goals
  3. expansion of resources
  4. avoidance or smoothing
  5. compromise
  6. alter human variable
  7. alter structural variable

What are the approaches to repairing relationships and alternative dispute resolution?

  1. issues management
  2. negotiation

  1. concilliation
  2. mediation