Free English Lessons
How to Negotiate in Business – Video Lesson
by Gina Mares on 15 February, 2019 , Comments Off on How to Negotiate in Business – Video Lesson
In this lesson, you can learn useful language to negotiate in business.
You’ll learn how to make your position clear, how to accept or reject the other side’s proposals, and how to express yourself in clear, professional-sounding English.
In this lesson, you’ll see a scenario where we’ll role-play a negotiation between a clothing wholesaler and a manufacturer’s representative.
Daniel: So, let’s get started. I’ve read your proposals, and I understand you’re looking for unbranded clothing in a variety of styles.
Gina: That’s right.
D: Meaning: t-shirts, tank tops, hoodies, zip-up tops, and long-sleeved tees, right?
D: Alright. So, my first question is: what kind of volumes are we looking at?
G: Well, we’re a reseller, so we rebrand the clothing and sell it on to retailers. We can potentially move quite a lot of product, but I suggest starting small and scaling up later. We’re thinking of starting with around 500 to 1500 units per SKU, with more in popular sizes and colours.
D: And that would be per-month, or…?
G: We’d prefer to keep things flexible to begin with.
D: What do you have in mind exactly? I’m not against flexibility, but logistics require a certain amount of forward planning.
G: Of course! Let me ask you something: what’s the situation regarding production and delivery? How long does it take you to process orders?
D: It’s not completely fixed, but around two weeks. Larger orders can take more time.
G: That’s fine, so here’s our situation: we don’t have a lot of warehousing space. That means we can’t commit to a fixed schedule for deliveries. Instead, we’ll have to make orders once our stock level is low enough and we have the space.
D: Hmm… That’s possible. One thing you should know: we won’t be able to offer the lowest prices if we can’t be sure of your delivery schedule in advance.
G: I understand.
D: And for one product category, for example short-sleeved t-shirts, how many variations of size and colour do you need?
G: We need all the common sizes, from XS to XXL, each in 16 colours. At the beginning of a negotiation, both sides need to make their position clear.
In the dialogue, you saw several ways to do this. Can you remember any? First, you can state what you want directly, like this:
I suggest starting small and scaling up later.
We’re thinking of starting with around 500 units per SKU.
We’d prefer to keep things flexible to begin with.
You can use this language in other ways. For example:
I suggest a six-month contract to begin with.
We’re thinking of opening new branches in 15 cities.
We’d prefer to do the marketing work ourselves.
You can also ask the other side specific questions to find out what they need. In the dialogue, you heard:
What kind of volumes are we looking at?
What’s the situation regarding production and delivery?
Again, you could use these in different situations. For example:
What kind of schedule are we looking at?
What’s the situation regarding minimum order volume?
Finally, you can also use open-ended questions to check information, or to get more information from the other side, like this:
What do you have in mind exactly?
And that would be per-month, or…?
Making a question by leaving a sentence unfinished, with the word ‘or’ at the end, is conversational. You wouldn’t use it in writing. However, in spoken English, it’s an effective way of showing that you need more information, and that you want the other person to finish the idea.
Very often, negotiations depend on setting conditions. What you can offer depends on what the other side can do. Let’s see how you can talk about this.
2. Setting Conditions
Gina: OK, so if we’re ordering around 100,000 units at one time, what kind of per-unit pricing can you offer?
Daniel: That depends if you can commit to a regular delivery schedule or not. Assuming that you need a flexible schedule, we could offer six dollars per unit for tees and tank tops, and fifteen for hoodies and zip-ups.
G: If we need higher volumes, would you be able to go lower?
D: Possibly, but the schedule is more important to us. Supposing you could commit to a minimum monthly volume, we could go down to five-fifty and fourteen.
G: If we commit to a minimum volume over a six-month period, but with a flexible delivery schedule, could you offer us the same price?
D: As long as there were some limitations on the delivery timing, I think that would be acceptable.
The easiest way to express conditions is with if-sentences. For example:
If we’re ordering around 100,000 units at one time, what kind of per-unit pricing can you offer?
If we need higher volumes, would you be able to go lower?
If we commit to a minimum volume over a six-month period, but with a flexible delivery schedule, could you offer us the same price?
If-sentences can be used in many ways; it’s common to use the modal verbs ‘will’ ‘can’ ‘could’ or ‘would’ on the other side of the sentence. Let’s make some more examples:
If we commit to a longer contract, can you offer us a better price?
If we agreed to pay the licensing costs, would that make the deal work for you?
However, there are other ways to talk about conditions. Can you remember any from the dialogue? You heard:
Assuming that you need a flexible schedule, we could offer six dollars per unit for tees and tank tops…
Supposing you could commit to a minimum monthly volume, we could go down to five-fifty…
As long as there were some limitations on the delivery timing, I think that would be acceptable.
All of these have the same basic meaning, which is like an if-sentence, although ‘assuming…’ and ‘supposing…’ are used when you want to suggest something which is more speculative. Using these shows that you’re talking about possibilities, rather than very firm suggestions which need to be accepted or rejected immediately. ‘As long as…’ has the opposite meaning; it sets a very firm condition. If you say, ‘As long as there were some limitations on the delivery timing, I think that would be acceptable’, you mean that these limitations are necessary.
If you can reach an agreement, then that’s great! But, what if there’s a sticking point?
3. Disagreements and Setting Boundaries
Daniel: Let’s work out the details about delivery and scheduling. For us to make this work at the lower price, we’d need to have monthly deliveries, but we could let you adjust the size of the order to some extent, so that you can manage your warehousing space.
Gina: I’ll come right out and say that’s not going to work for us. Flexibility is essential for us; our whole model is based on just-in-time logistics, so there’s no way around this.
D: Well, in that case, we won’t be able to offer you the lower price. I have no problem with flexible deliveries as such, but we can’t offer our best prices without a regular commitment on your part.
G: I’m sorry to be blunt, but this seems a little short-sighted on your part. We’re potentially looking to order millions of units each year. Flexible delivery doesn’t mean that we won’t make orders regularly, it just means that we need to control the timing and quantities.
D: I understand completely, but you need to realise that we have our own logistics issues to deal with. If we don’t know exactly when and how big an order will be, that creates costs for us. We’re not willing to absorb those costs; I feel that if you need this flexibility, then you should be willing to pay for it. I’m sorry but I have to draw a line here. It’s simply too risky for us to give you what you’re asking.
G: It seems like we’ve reached a bit of an impasse. Shall we take a five-minute break?
D: Good idea. If the other side makes a proposal which you can’t accept, you can tell them directly, like this:
We won’t be able to offer you the lower price.
We can’t offer our best prices without a regular commitment on your part.
We’re not willing to absorb those costs.
This language is direct, but it’s often better to be direct if something is important. You can use this language in other ways. For example:
We won’t be able to finish the work in such a short space of time.
We can’t sign a contract if you can’t guarantee a delivery date.
We’re not willing to share this technology for free.
You can also show that you disagree by using phrases like:
I’ll come right out and say that’s not going to work for us.
There’s no way around this.
I’m sorry but I have to draw a line here.
These are general, so you can use them to react to any suggestion which you strongly disagree with. It’s a good idea when negotiating to keep things calm and avoid direct criticisms. If things get confrontational, you could give everyone space to cool off by saying: ‘Shall we take a five-minute break?’
Next, let’s see how you can resolve disagreements in a productive way.
4. Reaching Agreement
Daniel: Right, I’ve spoken to a few people and I have a proposal which I hope can make this work for everyone.
Gina: Sounds good! What’s your idea?
D: The problem for us is that if you don’t maintain a certain monthly volume, we might lose money at the lower prices, which obviously we can’t do.
D: So, here’s my solution: we have an annual contract with a flexible delivery schedule, but with a minimum volume per-quarter. At the end of the quarter, if you haven’t met the volume requirements, you’re liable for the difference in price between your orders and the minimum.
G: I like the basic idea, but earlier I suggested a six-month contract, and this sounds like a much worse deal for us.
D: Well, I want to make this work, but the lower prices only work if we can guarantee orders over a full year. I’ll make another offer: you pay five seventy-five for tees and tank tops and fourteen-fifty for hoodies and zip-up tops. Then, you can have a six-month contract, with minimum volume per-quarter.
G: That’s a good offer, but can we have the minimum over the whole period, just to have more flexibility?
D: I can’t make more concessions that I already have, I’m afraid. I think this is a good compromise which allows us to move forwards.
G: I’ll need to call my team to confirm, but I think this should be feasible.
When you’ve reached an impasse, you need to make suggestions so that you can move forward. To introduce a new idea, you heard this language from the dialogue:
I have a proposal which I hope can make this work for everyone.
Here’s my solution: …
I’ll make another offer: …
You can also ask the other side to suggest their ideas, like this:
What’s your idea?
What would you suggest?
Then, you need to react to the other side’s ideas. If you agree, you could say something like,
That’s a good offer.
I think this should be feasible.
‘Feasible’ has a similar meaning to ‘possible’ or ‘practical’. If something is ‘feasible’, it means that you can do it, and it won’t be difficult or problematic.
Hopefully, at this point you’ve managed to reach an agreement! If so, what else do you need to do?
5. Summarising and Restating
Daniel: Let’s go through the main points: you’ll order a minimum of 500,000 units in a six-month period, at a price of five seventy-five for short-sleeved t-shirts, long-sleeved t-shirts and tank tops, and fourteen-fifty for hoodies and zip-up tops.
Gina: That’s right.
D: Regarding delivery, orders are flexible, but you commit to giving us three weeks’ notice for each order.
G: Yes. We still need to settle the exact details of sizes, colours, and so on.
D: Of course, but from our point of view, that isn’t an issue. Production costs are almost identical.
G: OK, so we can work that out later.
D: There’s also the matter of penalties in case you don’t meet your minimum volume over the course of the contract…
G: I thought we agreed that we would simply pay the unit cost for the shortfall?
D: Yes, but which unit cost? We need to agree separate minimums for the t-shirts and tank tops, and for the heavier items.
G: True, but I don’t see that being a problem.
D: No, me neither. So, we’ll put this in writing and send you a provisional agreement within the next few days. If everything looks OK, we can work on getting a contract drawn up.
Once you’ve reached an agreement, you should summarise what you’ve agreed, and then outline the next steps which you both need to take. You might also mention points which need to be discussed later. To summarise what you’ve agreed, you could say,
Let’s go through the main points: …
Regarding delivery, …
You can use ‘regarding’ to introduce a new idea. So, you could say:
Regarding the pricing…
Regarding the timetable …
…And so on. If there’s something you need to talk about later, you could say,
We still need to settle the exact details of…
There’s also the matter of…
These are flexible phrases, which you can use to talk about many points, like this:
We still need to settle the exact details of the training programme.
There’s also the matter of integration with our existing software systems.
Finally, you need to agree on the next steps. You might say something like,
We’ll put this in writing.
We’ll send you a provisional agreement.
We can work on getting a contract drawn up.
‘Draw up’ is a phrasal verb which means ‘write’, but it’s only used for contracts and other legal documents.