A Balance of Power, Key to Effective Negotiations

Sep 8, 2016 | Posts, Published Articles | 0 comments

A Balance of Power, Key to Effective Negotiations

It was at the Gordon Institute of Business Science (GIBS) that I learned about Porter’s 5 Forces as a business analysis tool (see image below). It works really well when reviewing the strategic position of any business. The two things it highlights very clearly are points of leverage and the points of vulnerability.

As you will see in the image, two of the five forces are firstly, the bargaining power of suppliers, and secondly, the bargaining power of buyers.
 
It’s important to be able to effectively assess the balance of power in any business negotiation before starting. When a customer or potential client has all the bargaining power, which happens when they have too many options from which to choose, negotiations are bullish and one-sided, and business suffers.

So how do you get the power back?
Here are 3 ways to set yourself apart from your competitors…

 

1. Become a one-off original 
 
Being in a hypercompetitive environment should drive entrepreneurs to think of methods of delivering an offering in a way that sets your business apart. Refining internal processes, becoming more efficient, and identifying opportunities to deliver value that consumers haven’t experienced before will help a business become an original.
 
The question to ask yourself is: Even if my products are exactly the same as those of my competitor, is there a way that I can deliver an overall experience that is unmatched? Customize your products or services in way that sets you apart.
 

2. Become an essential part of your target market’s progress
 
Whether it is your supplier or customer, the key is to know their interests intimately. When you know what drives their business, when you speak their language, and when you show that you are both willing and able to assist them in growing their businesses, you become an essential part of their future plans. I have seen this in action so many times and it is a beautiful sight. I have seen insurance salespeople taking a sincere interest in the lives of their customers and suppliers, creating a fully functional ecosystem where everyone’s interests matter equally.

 
3. Know your worth
 
If you are negotiating from a position of weakness, you have already lost. Nobody buys from a desperate salesperson. Entrepreneurs get into trouble when they start measuring their worth by what they see in their bank accounts. Self-worth is the result of completed assignments. The more you finish the things you start, the more your self-worth will grow, and this will show in negotiations.
 
Before every meeting and every sales call, take cognizance of all the things you have completed, even the small ones. Celebrate even the small tasks you have managed to complete.
 
Take back some of your power today by creating special focus on these three things: Come up with ideas on how to become a one-off original; take a sincere interest in the growth of the businesses in your ecosystem; and above all, know your worth.

Until next time…

With Gratitude
Quinton Douman

Article originally published:

How We Made It In Africa, 8 September 2016 – Quinton Dou

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