Used effectively, e-mail and the web are good communication channels that business executives can use for negotiations.
Q. What are the advantages of negotiating via the Internet?
A. When negotiating from your office, you save time and money on travel. You also have access to your files, staff and any other expertise you may require to carry out the discussions to your full satisfaction.
Selecting the place of negotiation is no longer a sensitive issue. Executives from small companies with limited travel budgets and restricted office space can use the Internet to bypass these impediments. (Note that despite the benefits of negotiating from your office, it is wise to continue to travel frequently to your markets to maintain personal contact with your clients and to assess the local business environment.)
Knowing who your competitors are and what buyers are looking for are essential before replying to e-mail inquiries. The Internet provides business executives with up-to-date information on competition, buyers’ technical requirements and a plethora of timely marketing intelligence.
Q. Why should I take time to think through the full implications before replying?
A. Once you send a message, the recipient may view it as a “legal” or “binding” document. Written statements tend to be taken more seriously and may come back to haunt you in the future, especially if they are of a negative or unpleasant nature.
Too often, the main consideration is the need to reply as soon as possible, as many executives consider quickness in decision-making a sign of superior management skills. In addition, because e-mail communication is easy and fast, there is a tendency to respond immediately without taking the time to prepare well. In fact, numerous e-commerce manuals recommend replying within 48 hours. For some business transactions, replying within 48 hours may be too long while for others it could be too short.
Payment and security are sensitive issues requiring serious assessment before responding, particularly when such requests originate from unfamiliar markets or unknown parties.
Acting quickly is easier on the Internet as you are facing a screen instead of people. Yet negotiating on the Net is no different to face-to-face negotiations, in that both require planning, preparation, patience, understanding people, knowing the needs of the other party, persuasive skills and problem-solving capabilities. It is important to give each incoming and outgoing message full consideration, including assessing how your message will affect your position vis-à-vis your competition.
If you need more time before replying, send an interim message; it is common sense and good business practice to maintain open communication lines with potential clients, while taking the time to prepare well for upcoming negotiations.
Q. When should I negotiate on the Internet?
A. On a selective basis. Initially, negotiating on the Internet should be limited to exchanging information, clarifying key issues or finalizing specific clauses in an agreement.
It is also an excellent medium to make arrangements for forthcoming face-to-face negotiations, such as travel bookings, fixing the agenda, selecting a location, agreeing on the number of people participating in the discussions and so on.
It is also expedient when negotiating a repeat order or a small transaction which does not justify an investment in time, personnel and financial resources.
Q. Should I negotiate electronically or insist on face-to-face meetings?
A. Do both. Until e-commerce is fully integrated in the global economy and management is committed to this new form of doing business by restructuring their processes, negotiators should combine face-to-face interaction with e-exchanges.
Despite the advantages of doing business on the Internet, when it comes to negotiations, most executives still prefer face-to-face interaction, particularly if the value of the deal justifies it. In dealing with more relationship-oriented cultures, restrict online communication to exchanging background information while discussing the main issues off-line.
Trust and confidence are difficult to establish and maintain solely using the Internet. This is particularly true in situations when one party is only interested in pricing. Competitive pressures can make buyers and sellers limit their exchanges to offers and counteroffers centred on the single issue of price. Sending ultimatums like “this is my last offer” or other competitive moves tend to dominate e-negotiations. Although pricing is always a key issue in any business negotiation, in the end it is the capacity to produce the required quality and quantity, timely delivery and the firm’s reputation that will influence the decision. For this reason, each party should explore in detail what is required and develop sound proposals that will withstand competitive pressures and lead to repeat orders in the long run.
How to use e-negotiations
E-negotiations are best to...
• Negotiate repeat business
• Take and confirm orders
• Initiate trade leads
• Test the market
• Clarify specific points
• Furnish additional information
• Provide after-sales service
• Give details on shipping and deliveries
• Communicate with existing clients
• Check up on competition
• Prepare for face-to-face negotiations
• Send well-crafted e-messages
• Consider long-term implications
• Consult others before replying
• Carefully review your messages before sending them
• Be selective in replying to incoming inquiries
• Refrain from using negative or irritating expressions
• Adopt cooperative strategies
• Avoid discussing pricing issues from the outset
• Prepare thoroughly as for conventional negotiations
• Avoid developing “screen myopia”
But be careful when...
• Dealing with clients directly when you have agents with exclusive territorial rights
• Charging different prices in the same target market
• Collecting payments
Pros and cons of e-negotiations
• Overcome time zones, location and distances
• Minimize social barriers, e.g., age, gender, position
• Obtain instant feedback to your offers and counterproposals
• Use inexpensive and reliable communications
• Reduce the need to deal through intermediaries and agents
• Negotiate simultaneously with several parties
• Negotiate from “home base”
• Can be difficult to build trust, if used in isolation
• Can lead to single negotiation issues centred on pricing
• Insufficient information may be exchanged and shared
• Greater risks due to dealing at a distance with unknown parties and markets
• Intensifies competition
R S Nambi is the CEO,Tejasve Exports India