The Elements of Negotiation

ELEMENT 85Expanding the Pie

You will have a bigger pie to share if you find alternatives where the costs and risks are smaller, or where the profit is greater. This is not magic; there are examples of this in our everyday lives. Consider the following ideas and try to adopt them into your organization.

The IKEA Idea

IKEA's customers have to pick up the furniture they have bought from the store and take it home to assemble it. Their furniture is produced in a different way: the legs are not glued on in the factory; the customers have to put the piece together themselves. The packaging is smaller, and the factory's production costs are smaller, along with the transport and storage costs.

The Ryanair Discount Airline Model

When Michael O'Leary created Ryanair, an innovative discount airline, he first looked at how traditional airlines operated, then changed things to suit himself. He made the following changes and observations:

• The length of the contract between the company and supplier is often overlooked; three-year contracts are now the norm, rather than one-year contracts.
• A supplier who is not ready on time must pay a fine, and the supplier who provides more than was agreed to will receive a bonus.
• The customer researches and buys through the internet.
• Free office space is offered in exchange for looking after the company's accounts.
• Early orders receive a discount.
• Organizations concentrate on their own core activities. The organization that can deliver the best quality ...