The Apprentice
Watching the first episode of the UK’s favorite business show the Apprentice last night provided an interesting insight into the way that time and new information can create a change in the balance of power in negotiations.
Lord Sugar ’s first show had two teams in a pitched battle to develop, produce and sell a range of sausages within 18 hours. The boy’s team decided on a range of cheap British Bangers and set off for London’s World famous Smithfield meat market to buy their raw materials.
Opening at 3 A.M. the market has literally 100’s of suppliers plying their trade. The team approached one trader and asked for his “best price” on 15 kilos of pork. He originally said £60 a kilo but eventually agreed on a price of £55, to secure the deal, there and then.
Unsatisfied the boys refused in the hope that they could get a better price elsewhere. Un-phased the dealer reminded the team that once they left the deal was gone.
15 minutes later the boy’s team returned to accept the £55 deal. The trader reminded them that the offer was one time only and the price now was £60.
In some buying/selling situations, particularly in the service, sector buyers will use an RFP to generate the first offer, intending to come back for another bite once the first offer has been received.
Recognize that if the RFP has been successful in getting to the next step, maybe the terms are not quite so far from where the deal may be done as the other side may have you believe.