From the course: Corporate Finance: Profitability in a Financial Downturn
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Negotiating with vendors
From the course: Corporate Finance: Profitability in a Financial Downturn
Negotiating with vendors
- In most negotiations, the party that cares the least has the most power. And that's also the case when you're looking at cost-cutting, and boosting profitability of your organization. When you go to your vendors to negotiate, you need to know where you stand. And the first part of that is to know what your BATNA is. BATNA stands for the best alternative to a negotiated agreement. It means, if you can't come to terms on an agreement with someone, what will you do? This is something where, if you have a critical vendor, you're going to have a pretty low BATNA. You don't want to do anything else, except to come to an agreement. But, if you have a vendor that's less importantー maybe you've done a scorecard on, and they score pretty lowー you're going to have plenty of other alternatives. When you care a lot about the outcome of the agreement, your BATNA is something that you're not going to be able to rely on very…
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