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Tactical Tuesday: Exclusivity  (aka: Business Marriage)

Posted by Andrew Hupert on Aug 22, 2017 9:51:43 AM
Exclusivity can be a golden cage -- pretty, but restrictive.

Exclusivity

AKA: Business Marriage, You’re All Mine

Description: The negotiation is going well – really well. You are hitting it off with the counter-party, and you really seem to be on the same page. Then he comes up with a great idea – you should be exclusive partners! That will make everything more efficient and will leverage your partnership, right? It may do that, but it also lowers your BATNA and squanders a major source of power – your ability to walk away.

 Sample usage (Alvin and Bob):   Bob – “And of course, the new entity will own all of your creative output in its entirety.”

         Alvin – “Yeah, I guess. But only the work I do for clients, right. I mean, once a client pays or even commissions a design, then it’s off the market. But my design work outside of the office belongs to me.”

         Bob – “This agreement would cover all over you commercial output. If it makes money, then it belongs to the partnership.”

         Alvin – “So you will own 50% of my creative output? That’s doesn’t sound reasonable.”

         Bob – “And I’m offering you the same protection. Any new client that we get will go through you for design work. It’s a two way street.”

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Intent: Lower the counter-party’s BATNA… or create a strategic partnership.

Style: Seems Collaborative, but can be Competitive.

Category: Relationship Manager

PIFH (Power/influence Fear or Hope): Hope – when you are playing on the other side’s desire for bigger gains and a stable partnership.

Counter: Appeal to Reason, Try Baby, Foundation, Stepping Stone, Why?, Policy, Walk Away

Combination/Related: Marry Me , Best Friends, Reciprocity, Policy, Big Lie 

Notes: Exclusivity seems like a natural step in your progression to strategic partnership – and it may be.   But it also acts to lower the other side’s BATNA and constrains his ability to find alternatives.

Exclusivity tactic is like a cage.  Decide which side you want to be on.The positive aspect of exclusivity is that it is an important and serious step towards a strategic relationship. One of the big differences between casual “best efforts” marketing (Try Baby) and real partnership is commitment of an exclusive relationship. This not only means you don’t compete with one another (and may include NDAs, Non-Compete Agreements, and sharing intellectual property), but you are active stakeholders in one another’s organization. The right partnership can unlock tremendous value and give you a big competitive advantage.

 There is, however, a dark side to Exclusivity.   Some use Exclusivity, along with other aspects of the relationship, as their main variable.   If you feel that you have little power in the negotiation and need to either offer concessions, or want to “piggy back” on the other side’s power, network, or resources, then exclusivity may be a good card to play. This tactic can be a natural outgrowth of relationship builds like Best Friends, and Marry Me. The advantages are that you can seriously lower his BATNA since you are constraining his ability to find alternatives. This works best when you are negotiating to be someone’s distributor, logistics manager, or service provider, and you can claim that a non-exclusive relationship is not competitive for you.

International note

Exclusivity takes on added importance when negotiating across cultural boundaries, so be particularly careful what you say during the relationship-build process. Local service providers will maneuver you into a position where they can lock up all your business – even if they can’t do the job themselves.   Negotiators entering a new market will find that not only are they tied up with an exclusive contract with direct counter-parties, but with his entire network of connections.

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 Countering Exclusivity

What if someone tries to push you into an exclusive relationship too early? One of the best counters is to make exclusivity conditional on performance with a Foundation tactic. “I agree that exclusivity is a key goal, and that’s something I look forward to discussing a year from now when we review our results.” If he presses you, switch to a Why? counter, asking what is valuable to him about an exclusive relationship, and if any of his other partners have agreed to these terms.  

Policy can be both a supporting tactic and a counter. You may say, “Our company policy is have a small number of exclusive strategic partnerships” if you want to pressure him into signing away his options. If he tries the same move against you, you can counter that YOUR company policy requires you to have at least 3 sources for every component or service.

 Final Word:

Your biggest source of power is yout ability to find an alternative to the guy across the table.

He knows that.

That’s why he wants the exclusivity.

Strategic Planning for Negotiators:  Mind the Gap

 

Topics: Tactical Tuesday, Tactics, negotiating tactics, international negotiator, exclusivity

Written by Andrew Hupert

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