The three ages of negotiation: an exploration of the evolution of business strategies

April 2024

Commercial negotiation, an essential element of the global economic dynamics, has traversed various epochs, each marked by distinct business strategies aimed at maximizing profits and enhancing competitiveness. This journey through time, from the era dominated by price to the era of value creation, illustrates human adaptability and ingenuity in the face of changing economic challenges. With the expertise of Negos Consulting, specialists in the subtleties of negotiation, let’s delve into these transformations to better grasp the current dynamics of global trade.

The three ages of negotiation: an exploration of the evolution of business strategies

April 2024

Commercial negotiation, an essential element of the global economic dynamics, has traversed various epochs, each marked by distinct business strategies aimed at maximizing profits and enhancing competitiveness. This journey through time, from the era dominated by price to the era of value creation, illustrates human adaptability and ingenuity in the face of changing economic challenges. With the expertise of Negos Consulting, specialists in the subtleties of negotiation, let’s delve into these transformations to better grasp the current dynamics of global trade.

1. The era of price mastery

Since time immemorial, negotiation has revolved around price setting. In antiquity, barter and then the first currencies introduced the concept of price, which has since become the heart of commercial transactions. This era, focused on price negotiation, saw the birth of sophisticated tactics aimed at influencing this critical variable. For example, in the Roman Empire, the fluctuation of wheat prices was already a major issue, highlighting the importance of negotiation for the economy. Even today, while price setting remains central, methods have evolved. The introduction of financial markets has added a layer of complexity, making price mastery not just a matter of direct negotiation but also of speculation and long-term strategy. It’s a world where competition is fierce, but the ability to secure a low price is key to commercial success.

2. The era of cost optimization

The dawn of mass production in the early 20th century, exemplified by Fordism, marked a transition towards cost optimization. The rationalization of production processes and the standardization of products enabled economies of scale, redefining negotiation strategies. In the automotive sector, this era was revolutionized by Toyota‘s lean management approach, which focuses on eliminating waste to reduce costs. This method, by fostering closer collaboration between suppliers and manufacturers, transformed negotiation into a process aimed at maximizing efficiency for all parties involved.
The actors of this new era are often referred to as “cost killers”, negotiators who adopt a rigorous and methodical approach to identify and eliminate wastage, inefficiencies, and superfluous expenses. This goes beyond simple price reduction; it’s about a holistic transformation of processes and business relations to achieve overall cost optimization. This revolution has transcended traditional negotiation schemas by expanding the realm of possibilities. Instead of focusing solely on price, negotiators can now explore avenues such as operational efficiency, inventory management, logistics, and even product design to achieve significant savings, benefiting both the buyer and the supplier alike.

3. The era of value creation

The digital economy of the 21st century favors a negotiation approach focused on creating added value. Information and communication technologies have enabled the development of strategic partnerships where co-opetition (cooperation among competitors) becomes a growth lever. The innovation ecosystem around Silicon Valley perfectly illustrates this era. Startups, often in collaboration with tech giants, negotiate not just on the basis of price or costs but also seek to create new values through innovation and the co-creation of disruptive solutions. This more collaborative and innovation-focused approach is based on companies’ ability to leverage their ecosystem to create mutually beneficial solutions. It is in this dynamic that value negotiation techniques have emerged, paving the way for new collaboration and growth opportunities. Purchasing a software license is merely a matter of value, as the development cost has long been amortized.
Exploiting a company’s ecosystem thus becomes a central element of the negotiation strategy. Companies seek to collaborate with partners, suppliers, and even competitors to create synergies, share resources, and develop solutions that add value for all parties involved. Value negotiation techniques play a crucial role in this dynamic. They allow negotiators to explore new partnerships, identify value creation opportunities, and develop compelling commercial propositions that exceed customer expectations.

Business strategies : towards a collaborative future

The evolution of negotiation strategies reflects a transition from fierce competition to more collaborative and innovative dynamics. Negos Consulting is committed to supporting you in this new era, offering strategies tailored to transform challenges into opportunities in your markets, according to a balanced approach between price, cost, and value. Thanks in particular to training in purchasing negotiation, let’s transform your challenges into opportunities for success in the complex world of commercial negotiation.

We are a company specialising in negotiation, both in consulting and in the transformation of Attitudes and Know-How. We each have more than 15 years’ experience in professional negotiation, which we make available to the business world, in particular to more than 50% of CAC40 companies.

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The three ages of negotiation: an exploration of the evolution of business strategies

April 2024

Commercial negotiation, an essential element of the global economic dynamics, has traversed various epochs, each marked by distinct business strategies aimed at maximizing profits and enhancing competitiveness. This journey through time, from the era dominated by price to the era of value creation, illustrates human adaptability and ingenuity in the face of changing economic challenges. With the expertise of Negos Consulting, specialists in the subtleties of negotiation, let’s delve into these transformations to better grasp the current dynamics of global trade.

The three ages of negotiation: an exploration of the evolution of business strategies

April 2024

Commercial negotiation, an essential element of the global economic dynamics, has traversed various epochs, each marked by distinct business strategies aimed at maximizing profits and enhancing competitiveness. This journey through time, from the era dominated by price to the era of value creation, illustrates human adaptability and ingenuity in the face of changing economic challenges. With the expertise of Negos Consulting, specialists in the subtleties of negotiation, let’s delve into these transformations to better grasp the current dynamics of global trade.

1. The era of price mastery

Since time immemorial, negotiation has revolved around price setting. In antiquity, barter and then the first currencies introduced the concept of price, which has since become the heart of commercial transactions. This era, focused on price negotiation, saw the birth of sophisticated tactics aimed at influencing this critical variable. For example, in the Roman Empire, the fluctuation of wheat prices was already a major issue, highlighting the importance of negotiation for the economy. Even today, while price setting remains central, methods have evolved. The introduction of financial markets has added a layer of complexity, making price mastery not just a matter of direct negotiation but also of speculation and long-term strategy. It’s a world where competition is fierce, but the ability to secure a low price is key to commercial success.

2. The era of cost optimization

The dawn of mass production in the early 20th century, exemplified by Fordism, marked a transition towards cost optimization. The rationalization of production processes and the standardization of products enabled economies of scale, redefining negotiation strategies. In the automotive sector, this era was revolutionized by Toyota‘s lean management approach, which focuses on eliminating waste to reduce costs. This method, by fostering closer collaboration between suppliers and manufacturers, transformed negotiation into a process aimed at maximizing efficiency for all parties involved.
The actors of this new era are often referred to as “cost killers”, negotiators who adopt a rigorous and methodical approach to identify and eliminate wastage, inefficiencies, and superfluous expenses. This goes beyond simple price reduction; it’s about a holistic transformation of processes and business relations to achieve overall cost optimization. This revolution has transcended traditional negotiation schemas by expanding the realm of possibilities. Instead of focusing solely on price, negotiators can now explore avenues such as operational efficiency, inventory management, logistics, and even product design to achieve significant savings, benefiting both the buyer and the supplier alike.

3. The era of value creation

The digital economy of the 21st century favors a negotiation approach focused on creating added value. Information and communication technologies have enabled the development of strategic partnerships where co-opetition (cooperation among competitors) becomes a growth lever. The innovation ecosystem around Silicon Valley perfectly illustrates this era. Startups, often in collaboration with tech giants, negotiate not just on the basis of price or costs but also seek to create new values through innovation and the co-creation of disruptive solutions. This more collaborative and innovation-focused approach is based on companies’ ability to leverage their ecosystem to create mutually beneficial solutions. It is in this dynamic that value negotiation techniques have emerged, paving the way for new collaboration and growth opportunities. Purchasing a software license is merely a matter of value, as the development cost has long been amortized.
Exploiting a company’s ecosystem thus becomes a central element of the negotiation strategy. Companies seek to collaborate with partners, suppliers, and even competitors to create synergies, share resources, and develop solutions that add value for all parties involved. Value negotiation techniques play a crucial role in this dynamic. They allow negotiators to explore new partnerships, identify value creation opportunities, and develop compelling commercial propositions that exceed customer expectations.

Business strategies : towards a collaborative future

The evolution of negotiation strategies reflects a transition from fierce competition to more collaborative and innovative dynamics. Negos Consulting is committed to supporting you in this new era, offering strategies tailored to transform challenges into opportunities in your markets, according to a balanced approach between price, cost, and value. Thanks in particular to training in purchasing negotiation, let’s transform your challenges into opportunities for success in the complex world of commercial negotiation.

We are a company specialising in negotiation, both in consulting and in the transformation of Attitudes and Know-How. We each have more than 15 years’ experience in professional negotiation, which we make available to the business world, in particular to more than 50% of CAC40 companies.