When you enter a business negotiation, chances are you have thought about what you want to achieve. Perhaps you have even planned for the negotiation. But are you being strategic or tactical?
Many people trip up on the difference between strategy and tactic, and the easiest way to explain it is that tactics are what allow you to achieve your strategy.
Dr. Chester Karrass talks about three types of planning:
- Administrative planning: Focused on providing information to teams/individuals to ensure the outcome of both strategies and tactics.
- Strategic planning: Focused on achieving your long-range goals
- Tactical planning: Focused on getting the best results from a specific negotiation
In Dr. Karrass’ view, the most important type of negotiation planning involves strategy. Your strategy planning will be centered on information such as: product-market goals; worth analysis, price and cost analysis. Using a strategy planning session, you will formulate goals, from least to most important. With these goals in mind, you can envision where a specific negotiation fits and how it can help achieve those goals.
Strategic decision: After a worth analysis, the company decides to buy parts rather than manufacture them.
Administrative decision: Team will enter a business transaction with ABC parts supplier, based on the quality and reliability of their parts.
Tactical decision: To negotiate a price of no more than $X per part under a two-year exclusive contract.