The Book of Real-World Negotiations

9Negotiating Effectively in the Face of a Significant Power Imbalance

Based on an interview with Raphael Lapin

There are times when negotiation success in a given context seems almost impossible. The three words that often invoke such a perspective are sole supplier negotiation. When someone has to negotiate with a sole supplier, which means that a supplier has a monopoly on an item or service, they usually have very little leverage to do so. They are typically confronted with a binary decision – to buy on the supplier's terms or not to buy at all. There is often not much choice for the unfortunate buyer, and the stage is typically set for exploitation.

In this case example, the reader will see that negotiations of this type are not always what they seem. Good preparation, constructive questioning of key assumptions, and really creative thinking can alter the balance of power in this kind of negotiation, enabling the parties to reach an agreement. Here is how it was done.

Background and the Negotiation Challenge

The buyer in these negotiations, called Innoagri, was a manufacturer of heavy agricultural implements and mining equipment in Shanghai. In addition to their Chinese clients, Innoagri also exported to clients internationally. Innoagri's current operations were working on outdated machinery, and they needed to purchase new machinery to streamline their processes, and improve their operations and products in order to keep up with their formidable competition, both ...