Michael Mooney

In October 2023, the supermarket chain Lidl rolled out price reductions store-wide for various produce items, frozen foods, and snacks. The price cuts are a beneficial change for shoppers, who experienced an average grocery cost inflation of 20% in early 2023, but may impact the income farmers receive when selling the goods. 

Background

In the last 6 months, Lidl has shown its commitment to taking the ‘cheapest supermarket in Ireland and the UK’ title from its competitor Aldi. Therefore, despite the continuously rising costs of living in Ireland, grocery prices are falling.

Aldi and Lidl have historically kept grocery prices at similar levels. According to Which? Magazine, in October 2023, there was only an average price difference of 17 pence between the two stores. However, despite the narrow margin, Aldi held the “cheapest supermarket” label for the previous 11 months of the year. 

To ensure customer loyalty and satisfaction, both grocery giants are inclined to not only keep prices low but to keep them the lowest. Aldi mirrored Lidl’s cuts in October of last year, meaning consumers saw “the cost of almost 50 products fall by an average of about 7%.”. Soon after, Lidl responded and “significantly reduced prices of more than 600 products” through the end of 2023. The year concluded with Aldi cutting prices on 170 more goods, alongside a statement that there will be “no impact” on producers. 

Where Cost Cutting Hurts: Supply Chain

While these newly affordable prices are beneficial for consumers, there also needs to be awareness of the supply chain implications stemming from the reductions. In December, Darina Allen, founder of The Ballymaloe Cookery School said “stores are forcing farmers to keep prices low”, thereby threatening the financial stability of farmers. 

However, in January 2024, both Lidl and Aldi announced additional price reductions. Aldi cut grocery prices up to 23%, stating that customers would “see the price of a typical trolley of the most popular goods reduced from €121 to €106.” One day later, Lidl cut prices for 100 items. 

Despite Aldi’s claim that price cuts will not affect supplier margins, farmers are acutely aware of the continued price cuts. In January, the Irish Farmers Association stated that farmers “will not tolerate any reduction in the margin they receive”.

As of March 2024, the supply chain has not yet felt the effects of these price cuts, but the threat of reduced income still looms over the industry. Additionally, despite current price reductions and dropping income, the average subsidies provided to farmers is only €18,274 (which is less than in 2012, when it was closer to €20k per farmer, according to the Irish Independent). 

Farmer Concerns: What Next?

Farmers are in a delicate situation, with a lack of effective financial support from both grocery companies and the government in light of potential income cuts. Even the establishment of “An Rialálaí Agraibhia” (The Agri-Food Regulator) in late 2023 has not resulted in improvements. They were declared in charge of enforcing regulations regarding Unfair Trading Practices, but have not commented on Lidl and Aldi’s consistent price reductions and farmer concerns. 

Fortunately, Teagasc, the Irish body related to agricultural research, advisory, and training services, predicted an upturn in income again in 2024 by up to 30% for farmers in sectors such as dairy products, beef, and cereal. This year is predicted to be a “more normal year for weather” and farmers will benefit from expected “reduction[s] in fertiliser, fuel and electricity prices in 2024”, according to Trevor Donnellan, a chief Teagasc economist. Overall, the food production industry appears stable. 

Lidl and Aldi’s effort to maintain affordability despite inflation rates is commendable, particularly in the context of growing cost-of-living issues in Dublin and other cities. However, their responsibility to sustain their producers financially should be better managed by the government and related regulatory bodies. 

With any amount of luck, Ireland has seen the end of Lidl and Aldi’s price-cutting war. Stabilization of food prices in 2024 will allow for a more stable supply chain and will ensure the prosperity of producers alongside consumers in the months to come.

Mariia Kashirina

Myths about negotiations

While the term “negotiation” rolls off most students’ tongues, its true meaning often remains unknown. Many anticipate a verbal clash, each side stubbornly pulling until one wins. However, there is so much more to the  process than meets the eye.

Negotiation is far more complex than a mere exchange of offers and counteroffers; it is an intricate art form that requires a deep understanding of human behaviour, strategic thinking, and communication skills. The ultimate goal is to find a resolution that all parties can agree upon, ensuring that everyone involved feels satisfied with the outcome. This delicate balancing act involves navigating through interests, needs, and priorities to reach a consensus that is mutually beneficial, highlighting the importance of negotiation as a critical skill in both personal and professional realms.

While individuals may be persuaded to act selfishly or employ hardball tactics, the benefits are maximised when negotiations are performed in an integrative way. It is about understanding the other party’s needs, building bridges instead of burning them and crafting agreements that benefit everyone involved.

Another myth about negotiations is that you are born with these skills. The truth is that even if there are some naturally good negotiators, anyone can become successful in it. Mastering the art of negotiation is indeed achievable, however it demands significant dedication to learning and rigorous training.

Why can everyone benefit from negotiation?

Usually, the term “negotiation” is mostly associated with business and legal professionals or even diplomats. However, these skills can benefit anyone as we are all negotiating every day. Consider the dynamics of family decision-making, a familiar setting where negotiation plays a crucial role, whether it is in distributing household chores, deciding on the purchase of a car, or navigating through conflicts. These everyday negotiations, while seemingly mundane, lay the groundwork for honing negotiation skills that are applicable in more consequential scenarios. Now, extend this concept to situations with far-reaching implications on your life—negotiating a job offer, buying a house, or resolving significant family disputes.

Negotiating salary and benefits is common when applying for a job or during performance reviews. Adept negotiation can mean the difference between landing your dream job with a competitive salary package or settling for less than you are worth. It can empower you to advocate for yourself, articulate your value, and secure favourable terms in various transactions. 

Wouldn’t you want to become a negotiation genius and master the art of navigating these situations with confidence and success? If so, this article is for you.

Negotiation basics

According to negotiation courses and books, the process consists of five stages – preparation and planning; definition of ground rules; clarification and justification; bargaining and problem-solving; closure and implementation. Let’s review each stage, using an example of job offer negotiation.

1. Preparation and planning

Knowledge is power, especially in negotiations. To secure the best deal, thorough preparation is crucial. At this stage, it is imperative to define several key elements:

• Target Point: Your ideal outcome. Aim high! In a salary negotiation, it could be 10-15% above the industry average.
• Reservation Value (RV): Your “walk away” point. This is the minimum you will accept (e.g., current salary in a salary negotiation).
• Best Alternative to a Negotiated Agreement (BATNA): Your plan B if the negotiation fails (e.g., another job offer).
• Worst Alternative to a Negotiated Agreement (WATNA): Your least desirable outcome (e.g., unemployment).
• Zone Of Possible Agreement (ZOPA): The range between your RV and the other party’s RV. This is where a mutually beneficial agreement lives.

Example: Picture a salary negotiation. Your RV is $2,000 (your current pay). You suspect the employer’s RV is their budget, say $3,000. The ZOPA lies between $2,000 and $3,000 – your negotiation playground.

While pinpointing the other party’s RV is tricky, meticulous preparation is key. By understanding these concepts and gathering relevant information (industry salary data, company budget info), you will confidently navigate the negotiation and secure the outcome you deserve. Understanding the priorities of the opposing party is crucial. By identifying what they value, you can strategically offer concessions that, while not critically important to you, hold significant value for them. This approach facilitates a negotiation outcome that is optimally beneficial for all involved

2. Definition of ground rules

Before diving into the negotiation, establishing clear ground rules creates a productive and respectful environment for everyone involved. This saves time and ensures your discussions stay focused on achieving a mutually beneficial outcome. These ground rules may encompass basic logistical details such as the meeting location and time yet extend to more significant aspects, particularly in salary negotiations. For instance, considerations might include establishing the timeline for accepting offers, defining the parameters of the initial offer to be presented by the organisation, and outlining the comprehensive list of topics to be addressed beyond just salary, such as bonuses, vacation time, and additional benefits.

In essence, the specifics of these ground rules are tailored to the negotiation type and the preferences of the involved parties. By setting these guidelines beforehand, all parties can approach the negotiation process with clarity and mutual understanding.

3. Clarification and justification

In this stage, both parties can clearly communicate their positions and delve into specific points of discussion. Each party thoroughly discusses their stance, offering explanations and justifications for their requests in an informative manner. Prioritising points of interest based on their significance helps address major issues first.

A key element at this stage is setting an anchor point, which is essentially the initial proposal. This acts as a benchmark that shapes the counterpart’s expectations. Particularly in situations where one party is unsure about what is fair, they tend to gravitate towards any concrete figure that mitigates their ambiguity. It is vital to acknowledge that the anchor often benefits the proposer, usually surpassing their actual target. Therefore, it is wise to refrain from immediately accepting the initial offer.

Whether making a first offer or not, it is essential to substantiate and justify each proposition with evidence. This often involves referencing precedents and objective criteria, such as relevant experience, industry norms, education level, or cost of living in salary negotiations. Therefore, when unsure about what offer to make, it is essential to consider the highest amount you can logically defend.

4. Bargaining and problem-solving

In the bargaining and problem-solving phase, the focus shifts to collaboratively forging an agreement, a process that entails tackling particular disagreements and fine-tuning minor aspects. This stage features the strategy of logrolling, wherein concessions are exchanged in a manner that enhances both the relationship and the final agreement.

For example, this phase might involve you and the HR department negotiating the terms of a job offer. It is vital to frame any concessions as part of a quid-pro-quo arrangement, indicating that these concessions are contingent upon reciprocation. It is advantageous to negotiate on multiple fronts simultaneously and to probe deeply to grasp the other party’s fundamental interests and motivations.

5. Closure and implementation

At the conclusion of the negotiation process, the involved parties consolidate their agreement and finalise the specifics, effectively bringing the discussions to an end. This often requires formalisation through concrete actions such as signing a document, exchanging a handshake, or entering into a legally binding contract. Furthermore, the parties outline the logistical aspects of the agreement’s implementation, detailing the when, where, and how of executing the agreed-upon terms. Should the parties find themselves at an impasse, unable to secure an initial agreement, they may adjourn and reconvene the negotiations at a later date for further deliberation and exploration of potential solutions.

Effective Salary Negotiation Tips

Familiarity with the stages of the negotiation process empowers novice negotiators by providing a structured framework for strategy development. However, mastering negotiation entails more than just understanding the basics. Let’s delve into specific tips and strategies tailored to help students and graduates negotiate effectively.

The famous book “Negotiation Genius” written by two leaders in executive education at Harvard Business, Deepak Malhotra, and M. H. Bazerman offers 15 essential rules for salary negotiations. Following this advice will allow you to boost your confidence in the negotiation process and achieve your best outcome (Malhotra, 2017). 

• Don’t underestimate the importance of likability.

To increase the chances that the other side will seek to get you a better offer, it is crucial to try to win over the other party with likability. This includes asking for what you deserve without seeming ungrateful, addressing offer shortcomings without appearing petty, and being persistent without becoming annoying. To refine the art of likability, the authors recommend practising interviews with friends and gauging how others perceive your approach.

• Help them understand why you deserve what you are requesting.

Justification is critical to ensuring your counterparty believes you deserve what you want. Simply stating a desire, like a 10% salary increase, isn’t sufficient. Explain why – citing consistent excellent performance reviews, extensive experience, etc. If you can’t justify your demands, refrain from making them. Balancing likability with demonstrating value is crucial; asserting your worth can backfire if not communicated tactfully.

• Make it clear they can get you.

When negotiating for a better offer, like salary, ensure genuine interest in the company. Excessive emphasis on other opportunities may signal disinterest, deterring the employer from making efforts. If mentioning other offers, clearly outline conditions under which you would decline them and proceed with the current negotiation.

• Understand the person across the table.

The authors say, “Companies don’t negotiate; people do.” To succeed in negotiation, it is crucial to grasp the underlying interests and concerns of the person across the table. Negotiating with a future boss differs significantly from negotiating with HR. HR may be bound by precedent due to hiring responsibilities for multiple roles, while a boss may advocate for special requests benefiting directly from your joining. Adapting your strategy and approach to the specific individual you are negotiating with is essential.

• Understand their constraints.

Even if your counterpart likes you and believes you deserve your request, they might still be unable to meet it due to rigid constraints like salary caps. Your task is to identify their areas of flexibility and rigidity. For instance, you can discern their constraints by asking questions such as “Could you elaborate on your salary structure?” Once you grasp their limitations, you can negotiate for other benefits like signing bonuses, start times, or vacation days, which the company may be more open to providing, making the deal more appealing.

• Be prepared for tough questions.

How do you respond to questions like, “Do you have any other offers?” or “If we offer you a position tomorrow, will you accept?” Being unprepared for such queries could lead to missteps, reducing your chances. It is essential to anticipate and prepare for tough questions that might catch you off guard, make you uncomfortable, or reveal weaknesses. Your aim is to answer truthfully while still appearing appealing to the employer and maintaining bargaining power. With advanced consideration of addressing challenging questions, you are less likely to compromise on these objectives.

• Focus on the questioner’s intent, not on the question.

Often, a challenging question stems from intent. For example, when an employer asks if you would accept an offer immediately, they might simply want to see your enthusiasm for the job. Don’t jump to negative assumptions if you are uncomfortable with the question. Instead, address what you believe the intent is or seek clarification on the problem the interviewer is trying to address. By engaging in genuine conversation and showing willingness to help resolve any concerns, you and the interviewer will benefit.

• Consider the whole deal.

Negotiating a job offer is often equated with negotiating salary, but it is crucial not to fixate solely on money. Instead, consider the value of the entire package: responsibilities, location, travel, work hour flexibility, growth opportunities, perks, educational support, and more. Reflect not only on how you want to be rewarded but also when.

• Negotiate multiple issues simultaneously, not serially.

When negotiating changes to an offer, it is often best to present all your concerns at once rather than piecemeal. Requesting multiple changes one by one can create the impression that each adjustment will come at cost, potentially limiting your leverage. Additionally, if you have multiple requests, indicate their relative importance to you to ensure your priorities are clear. This approach helps avoid the risk of the other party addressing only the easiest requests and prematurely concluding the negotiation.

• Don’t negotiate just to negotiate.

While logrolling, or trading concessions, is valuable in negotiations, it is crucial not to nitpick over every detail. Pushing too hard for minor gains can sour relationships and hinder future negotiations with the company. Prioritise what truly matters to you, negotiate accordingly, and reflect on your long-term objectives.

• Think through the timing of offers.

Confirming an early job offer can provide a sense of security, especially amidst a competitive job market. However, it can also present challenges, as companies expect prompt responses. To evaluate multiple opportunities effectively, aim to receive offers simultaneously. Adjust the pace of the hiring process with each employer to synchronise your options. Be mindful not to delay excessively or apply too much pressure, which may lead the company to consider other candidates. Subtle strategies, such as requesting a later interview, can help manage this balance effectively.

• Avoid, ignore, or downplay ultimatums of any kind.

Avoid issuing ultimatums in negotiations, as they can be off-putting and counterproductive. Sometimes, they’re unintentional, stemming from a desire to assert strength or frustration. Similarly, if faced with an ultimatum, consider ignoring it, as the issuer may retract it to salvage the deal without losing face. Instead of dwelling on ultimatums, redirect the conversation towards exploring alternative solutions or compromises. Reframing the discussion and not acknowledging the ultimatum prevents the other party from becoming entrenched in their position. If the ultimatum holds weight, it will become apparent over time.

• Remember, they are not out to get you.

Tough negotiations over salary or delays in receiving a formal offer might create the impression that potential employers are out to get you. However, if you have progressed far in the process, it is likely they value you and aim to maintain a positive relationship. Resistance to specific issues may stem from constraints you are unaware of. Stay engaged, but exercise patience. If you are feeling impatient, refrain from contacting in frustration. Instead, seek clarification on timing and inquire about any assistance you can provide to expedite the process.

• Stay at the table.

Authors advise remembering that what may seem non-negotiable today could become negotiable tomorrow. Over time, interests and constraints often change. When someone declines a request, it usually means “No—for now, given the present circumstances.” It is essential to stay open to ongoing dialogue and to encourage others to revisit unresolved issues.

• Maintain a sense of perspective.

Ultimately, the most crucial aspect to consider is excelling in negotiations and ensuring you are in the right negotiation. Factors beyond the negotiation itself heavily influence your satisfaction. Industry, role, career path, and day-to-day environment significantly impact your overall happiness compared to the specifics of an offer. While these negotiation strategies are valuable, they should only be applied after a comprehensive job search aimed at aligning your career path with your goals and aspirations.

Gaining a Deeper Understanding of Negotiations with Professor Burt De Mill

Professor De Mill is a 15-year CLIA/CAP-certified clinical diagnostics industry veteran with a distinguished track record of product launches and commercial success at numerous early-stage companies. 

He currently teaches undergraduate courses in Marketing, Business Ethics & Corporate Social Responsibility, and his passionate Negotiation class at the Rady School of Management. His extensive experience negotiating contracts and business deals fuels his engaging approach to teaching.

He believes negotiation is a valuable life skill and teaches students to uncover underlying interests beyond stated positions to achieve mutually beneficial outcomes in both negotiations and life. Professor De Mill’s popular Negotiation class consistently receives high praise for its effectiveness, with students reporting significant progress in mastering negotiation skills.

Exclusively for Trinity Business Review, Professor De Mill has agreed to answer the most pressing questions many students have regarding negotiations. 

What has been the most challenging negotiation you have had in your career?

Professor De Mill’s most challenging negotiation involved a supply agreement renewal with AMGEN, a major pharmaceutical company. His company was AMGEN’s primary supplier for a critical product, but AMGEN was dissatisfied with both service and price following a recent increase.

The negotiation involved a consortium from AMGEN, including the purchasing agent, VPs of Manufacturing and Quality, and a Senior VP. This complex group employed aggressive tactics, including threats to switch suppliers and brinkmanship. The deal value was significant, nearing $10 million.

Professor De Mill faced a challenging balance: securing a price increase while retaining AMGEN’s business and building a stronger relationship.

His key strategy involved expanding the “pie” of value rather than focusing solely on price. He focused on shared information and goals by informing his own heads of Manufacturing and Quality about the negotiation’s parameters and goals and encouraging them to build rapport with their AMGEN counterparts.

As a result, Professor De Mill secured AMGEN’s agreement to provide support for quality issues they were having, grant access to future AMGEN products, and establish annual summits for ongoing collaboration. 

What practical strategies can individuals employ to overcome insecurities and anxiety during negotiations?

Professor De Mill parallels athletes like Patrick Mahomes and successful negotiators. Just as Mahomes performs exceptionally under pressure because of extensive practice, the more you prepare for a negotiation, the more confident you become. Anticipate potential scenarios, plan your responses, and gather relevant information to feel comfortable with the situation.

Additionally, recognizing your emotional triggers is crucial. Knowing your “tipping point” allows you to proactively manage your emotions and avoid losing your cool. Don’t be afraid to take a short break during the negotiation. This isn’t a sign of weakness; it is a chance to collect yourself, re-evaluate your position, and approach the conversation with a clear head. Taking a few minutes to breathe, gather your notes, and refocus can significantly improve your negotiating abilities and prevent you from making decisions based solely on emotion.

Combining thorough preparation with emotional self-awareness allows you to approach negotiations with greater confidence and clarity, ultimately achieving better outcomes.

What’s the most effective method for beginners to prepare for engaging in the negotiation process?

Individuals new to negotiation can leverage everyday situations as valuable practice opportunities. Professor De Mill encourages viewing everyday decisions made with others as negotiation scenarios since, almost every time, there is a valuable lesson learnt. Whether choosing a restaurant, planning a vacation, or even making household decisions, each interaction can become a training ground for negotiation skills. This approach allows you to gain experience and confidence in a low-stakes environment, preparing you for more formal negotiation settings in the future.

What are your personal strategies or rituals to mentally prepare yourself going into \ a negotiation?

Professor De Mill emphasises the importance of self-awareness and controlled communication in preparing for negotiations. Recognizing this, he mentions two approaches: slowing down the negotiation or disengaging. By deliberately slowing down the counterpart, he slows the negotiation itself, creating space for clear thinking and avoiding impulsiveness for both him and the other party. Pausing allows him to gather his thoughts, assess the situation, and respond thoughtfully instead of reacting emotionally. Additionally, he suggests focusing on the issue at hand and reminding yourself that the disagreement is with the topic, not the individual. This helps maintain a professional and respectful demeanour throughout the negotiation process.

Any advice on how to deal with very competitive, win-or-lose negotiators?

Impasses are likely when dealing with a distributive negotiator who sees negotiations as a zero-sum game. Accept that these roadblocks may be temporary, and conditions could change. Remember, no deal is better than a bad deal.

To navigate this dynamic, focus on building a relationship with the distributive negotiator. Once they trust you, they may become more collaborative. To earn their trust, find ways to create value by offering concessions that feed their ego. They won’t yield until they feel they’ve won, so understanding their unique perception of value is critical. This may involve increasing the size of the pie by offering something that matters greatly to them.

How can individuals effectively develop a mindset that prioritises understanding the other party’s perspective in negotiations?

Developing a mindset that prioritises understanding the other party’s perspective in negotiations requires a shift in focus from immediate gains to long-term value creation. While it may seem counterintuitive to make concessions initially, Professor De Mill emphasises the importance of patience and trust.

De Mill suggests that skilled negotiators find ways to create value for the other party if the conversation is productive. This doesn’t guarantee immediate success but increases the chances of reaching a mutually beneficial outcome. Remember, even if an impasse is encountered, a patient and understanding approach fosters trust, increasing the likelihood of value creation in the future.

How can students effectively prepare for job offer negotiations?

Professor De Mill believes that negotiating a job offer goes beyond just salary. While it is important, consider your second and third priorities like learning opportunities, work-life balance, or professional development. Identifying these broader needs makes you a more creative negotiator with a more comprehensive range of options to discuss.

Research the company and past employees to understand their values and typical offers. This might reveal benefits like educational aid, transportation, meals, or gym memberships that hold significant value for you while having minimal cost for the company. Think about incorporating these into your negotiation strategy.

Finally, do not be discouraged by a lack of experience. If the company interviewed you, they see your potential. Negotiating your worth shows confidence and initiative. Remember, it is not just about the first job; it is about your long-term career journey.

What should be avoided during a job offer negotiation?

In job offer negotiations, avoiding using fake BATNAs (Best Alternative to a Negotiated Agreement) is crucial. Claiming to have better offers from other companies when you don’t can backfire. If you are caught lying about having higher offers, the employer might simply tell you to take the job. Remember, the business community is interconnected, and word travels fast. Dishonesty in negotiations can harm your reputation and future opportunities.

Instead, negotiate in good faith, being sincere about your intentions and expectations. Know your worth and what matters most to you in a job. Consider factors beyond salary, such as opportunities for advancement, work-life balance, or remote work options. Reflect on what you truly want from the position before entering negotiations. Being upfront and honest while advocating for your needs and priorities is key to successful negotiation outcomes.

In conclusion, as we have explored the fundamentals of negotiation in this article and gained insights from Professor Burt De Mill, it is evident that negotiation transcends mere transactional exchanges negotiation transcends simple transactional interactions – it is a complex, multifaceted process shaped by elements like communication, psychology, and strategic planning. While we have covered essential principles and strategies, it is important to acknowledge that mastering negotiation requires continuous learning and adaptation.

To delve deeper into the art of negotiation and enhance your proficiency, we recommend exploring the following resources:

• “Negotiation Genius: How to Overcome Obstacles and Achieve Brilliant Results at the Bargaining Table and Beyond” by Deepak Malhotra and Max Bazerman.
• “Negotiating the Impossible: How to Break Deadlocks and Resolve Ugly Conflicts (without Money or Muscle)” by Deepak Malhotra.
• “Getting to Yes: Negotiating Agreement Without Giving In” by Roger Fisher, William L. Ury, and Bruce Patton.
• The Program on Negotiation (PON) at Harvard Law School.

These resources offer valuable insights and techniques to help you navigate negotiations effectively and achieve successful outcomes.

Edits by Petro Visagé