Business Negotiation March 6, 2024

The Pyramid of Planning

Having looked at the negotiation process in a broader time frame, we are now in a position to consider the building blocks of planning in a systematic way. To do this, we will use the Pyramid of Planning. Each block of the pyramid represents a key step in the planning process to provide a step-by-step way of approaching any negotiation, large or small. The pyramid is divided into two sections: strategy and tactics. Strategy is the foundation because it is concerned with long-range goals and values. Strategy is also concerned with putting together the strengths one has to accomplish these goals. Tactics are the approaches, techniques, and other means to achieve the desired goals. Our first step will be to look at the nine key building blocks of negotiation strategy:

  1. Power Sources and Limits
  2. Product and Market Strategy
  3. Win-Win Strategy
  4. Short- and Long-Term Relationships
  5. Setting Reachable Targets
  6. Selecting the Right Team and Negotiator
  7. Motivation Strategy
  8. Information Gathering Strategy
  9. Decision-Making Strategy

It is well to note that each of these planning blocks applies as much to someone getting ready to buy or sell furniture or a boat as it does to negotiation a billion dollar contract. For example, a couple buying furniture would try to understand the power they have and the limits on the merchant. They would give thought to what product they want to buy and whether it is to be used for many years or not. To guarantee a long-term relationship and full satisfaction, they would select a merchant who not only provides a good warranty but will also be around if things go wrong. They also need to decide what their opening offer will be and what their target price should be. Who should negotiate is another important question to the furniture buyer. Should he negotiate, should she, or should they do it together? Also open to consideration is how to motivate the seller to make the sale at a lower price. We know that knowledge is power. How can they gain the information they need about furniture products and prices in order to make a better source of selection and carry out a successful settlement? Notice how we have given consideration to many of the strategy blocks in the Pyramid of Planning in this relatively simple furniture transaction. In the next post, we will discuss the detailed planning points for each strategy block of the Pyramid.

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PROCUREMENT at AMERICAN EXPRESS

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INTERNATIONAL SOURCING at FMC TECHNOLOGIES

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VICE PRESIDENT at GE

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PLANNER at HONEYWELL

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Stuart B.
CONTRACTS MANAGER at HEWLETT-PACKARD
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