Effective business negotiation is a core leadership and management skill. This is the ability to negotiate effectively in a wide range of business contexts, including deal making, employment discussions, corporate team building, labor/management talks, contracts, handling disputes, employee compensation, business acquisitions, vendor pricing and sales, real estate leases, and the fulfillment of contract obligations.
Business negotiation can make or break a crucial contract deal. It is thus important for procurement or purchasing professionals to be creative when negotiating in a business setting. Business negotiation strategies require breaking the problem into smaller parts, considering unusual deal terms, and having your team to brainstorm new ideas.
Procurement or Purchasing Negotiation
The terminology of procurement versus purchasing can perhaps be best explained using the PP Organogram, as shown in the diagram below. The diagram depicts the focus of purchasing on system and process, whereas procurement is focused on the active interaction with suppliers, as well as with internal customers. Thus, this article will only mention procurement negotiation as the activity of interaction with suppliers.