Tag Archives: Analysis

How Do You Introduce New Information into a Negotiation? Five Thoughts

Situation: A company is negotiating an agreement to resell another company’s software. In due diligence the company encountered a customer who was offered a single user license for the same software at one-third the price that they have been asked to pay upfront. What is the best way to approach the vendor for additional information without divulging the source of his intelligence? Does this change the negotiation?

Advice from the CEOs:

  • There is no need to divulge your information source. Just say that you have done some research and quote the price that you found. Ask them to explain this to you. See how they respond. This may tell you a lot about how they operate.
  • What rights do you receive under the arrangement that has been offered by the firm? What exclusivity and guarantees will they offer? Will they write these into the agreement? How will they handle direct inquiries?
  • Perform a careful financial analysis of the opportunity. Model the market and the full cost of sales that you will encounter. What is customer purchase behavior? Is it changing?
  • Counter the vendor’s offer to you with a pay-down option that pays the vendor more over time, but allows you access to the software without a substantial up-front payment. This limits your exposure if sales do not ramp as you anticipate.
  • Visit the vendor and sit down with the President. See how this individual responds to your questions. You may get a much better deal through this approach than through the sales team. You also may develop other partnership options that can benefit you long-term.

Key Words: Reseller, Agreement, Price, Software, Due Diligence, Negotiation, Research, Exclusivity, Guarantees, Direct Inquiry, Analysis, Customer, Behavior, Counter, Visit

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How do you Maintain Morale in the Face of Uncertainty? Three Guidelines

Situation: The industry is changing and the Company must adapt both structure and focus. This may require a layoff of staff not aligned with the new focus. How do you maintain morale in the face of uncertainty and possible layoffs?

Advice from the CEOs:

  • Ask for employee input as to industry trends and what possible directions for the company.
    • Employees are closer to the customer than the CEO and have valuable insights.
    • Gather input in small group meetings to prompt discussion and ideas.
    • Make this a research talk. Leverage the “wisdom of the crowd.”
  • Research other industries that have undergone similar changes.
    • What strategies did the most successful companies pursue? Could these work for you?
    • If faced with protracted uncertainty, what did they do while waiting for market clarity?
  • If a layoff is necessary, conduct it in one day:
    • Monday is better than Friday.
    • Do it early in the day. Give final checks the day of the layoff.
    • Provide instructions for filing for unemployment assistance via the Internet.
    • Hold a company meeting for remaining staff immediately after the layoffs. Focus your message on the future and positioning the company for the future.
    • Prepare a brief summary of your message, to distribute as a take-away.
    • Be prepared for a grieving process following the layoff. Consider outside assistance on grieving to overview the process.
    • Following the company meeting, have key employees conduct smaller group meetings to lead discussions and allay fears about the layoff. Fully prep these individuals about the situation with written responses to likely questions.
    • The benefit of a Monday layoff is that you will see everyone on Tuesday, and the team can continue to address their concerns.

Key Words: Strategy, Layoff, Change, Morale, Employee Input, Analysis  [like]