Most people imagine that negotiations involve both parties having options — buyers can shop around and sellers can market their products elsewhere. But what happens when one side has a monopoly, or near monopoly? Wouldn’t that mean their hand is so strong that it’s less negotiation and more one side dictating contractual terms? It doesn’t have to be that way, and negotiation is always possible.
Giuseppe Conti has been involved in negotiating for over 25 years. Starting his career in procurement working for major multinational corporations, he took his first job in academia in 2005. He combined the private sector with teaching until 2019 when he became a professor and started teaching full time. Conti now teaches in 15 business schools across three continents, sharing his incredible knowledge and experience with the next generation of negotiators. Giuseppe shares his tips on how to handle these negotiations where it might seem one side has all the advantages.
It may sound obvious, but being prepared is the best advice. Giuseppe points out, “if you don’t plan in advance — whenever you go into the meeting without preparation, without background work — the other party will take advantage of you. They will use their leverage, and will strike a much better deal than the one you could get.”
This doesn’t just mean knowing your numbers or preparing for a specific meeting, it means laying down the necessary groundwork long before you start negotiating.
This includes developing a strong relationship with the other party while also preparing for the worst. If they are a supplier, for example, can you stockpile to avoid a dwindling inventory by adding pressure? Or, even though they are a monopoly, are there alternatives? Could other manufacturers adapt to supply your needs? All of this pre-negotiation preparation puts you in a stronger position.
Shaping the deal
Even if you are in a monopoly position, there are still ways to shape the deal that can help you. Many of these are well-known negotiation techniques.
Can the structure of the deal affect the price? Will the certainty of a longer-term arrangement lower the cost, for example? Or can you bundle items— buying not only just the monopoly item, but also other products they supply that you can source elsewhere— creating a larger purchase for a lower unit-cost?
Essentially, it’s asking yourself: what you can do to be a more attractive partner at the table? Then using that to even up the negotiation so that there is some leverage on both sides.
What to do during the negotiation
Giuseppe also highlights the trust equation, which he explains as: credibility, plus reliability, plus intimacy all divided by self-orientation.
Essentially, trust is the sum of their perception of your professionalism, whether you keep your promises, and the quality of your relationship, with the denominator of how they perceive your behavior. In other words, do you look after yourself first, or will you be a team player with them?
The trust equation is important at every stage of the relationship, but its effects will be at the forefront during the negotiation. High-risk strategies — like arranging accidental encounters with potential competitors— can work for the negotiation, but can still be destructive for the continuing relationship.
Instead, the real benefits come from thinking about how you maximize the result of the trust equation. For example, negotiators will know the concept of the best alternative to a negotiated agreement— otherwise known as your BATNA— but thinking about their BATNA first can help you in your negotiation.
The psychological phenomenon of loss aversion will mean they will place a higher value on what they might lose than what they might gain. Using this knowledge means you can structure your negotiation in a way that offers both sides benefits.
I always highlight the need for empathy in negotiation, it can be a secret weapon. Even in those situations where you think there might be nothing to negotiate, there’s always some room to find that optimal outcome that offers something to both parties, it’s just a case of being prepared, creative and understanding.
Click here to listen to Giuseppe’s episode.