2 – September 15th
Monday, September 08, 2025
3:11 PM
Date: Monday, September 15th, 2025
Course: GMS701 011 Purchasing and Supply Management I
Instructor: Wallace Whistance-Smith
Lecture Time: 3:00 – 6:00 PM
3– Sep 22 Ch. 3: Fundamentals of Negotiation Strategy 130–147
The objectives of this chapter are to introduce negotiation as a vital managerial skill in purchasing,
distinguish between distributive and integrative approaches, and analyze “Quantifying Worry from a
Managerial Perspective – How to Achieve Your Potential,” 2016 – Dr. W. J. Whistance-Smith
Key Takeaways from Lecture:
• Never close a deal on the first price / offering no matter what. The power of negotiating practices is vital. How
you frame the discussion; framing is absolutely important to frame success.
• Don’t dwell on the obvious when you're negotiating
• Leading the opposition through misinformation and untruth will lead the negotiation 'misleading the opposition'
Chapter 2 – Preparing for Negotiation
Why Preparation Matters
Negotiation isn’t about showing up and winging it—it’s about laying solid groundwork. When you prepare, you define
your goals, set priorities, and map out strategies. Skipping this step often leads to poor deals or strained relationships.
Think of preparation as the foundation that holds up every phase of negotiation.
Researching Your Counterpart
Good negotiators don’t just know their own objectives; they also understand the other side. That means:
• Looking beyond numbers and digging into structure, policies, and culture.
• Studying industry regulations, competitors, and cultural practices.
• Anticipating their likely positions by understanding their history and business pressures.
The more you know, the fewer surprises you’ll face at the table.
Understanding Interests
Every party has values, fears, and hidden pressures. Some are short-term (sales targets, quarterly results) and some
are long-term (market growth, stability). Culture also influences what “good faith” and “fair play” mean. In Canada,
for example, collaboration and consensus are highly valued. The best negotiations focus on creating shared value
rather than one side “winning.”
Setting Your Objectives
Break down your goals into three buckets:
• Must-haves (non-negotiables).
• Should-haves (important, but with some flexibility).
• Would-likes (nice bonuses if possible).
This hierarchy keeps you focused and prevents you from giving up something essential in exchange for
something trivial.
Knowing Your BATNA
Your Best Alternative to a Negotiated Agreement is your safety net. A strong BATNA:
• Gives you confidence and leverage.
• Protects you from settling for a weak deal.
• Lets you compare any proposal against your fallback.
For example, if you’re negotiating with one supplier, but you’ve already identified a reliable backup, you won’t
be pressured into accepting unfair terms.
Knowing Your BATNA
Your Best Alternative to a Negotiated Agreement is your safety net. A strong BATNA:
• Gives you confidence and leverage.
• Protects you from settling for a weak deal.
• Lets you compare any proposal against your fallback.
For example, if you’re negotiating with one supplier, but you’ve already identified a reliable backup, you won’t
be pressured into accepting unfair terms.
Building Your Strategy
Strategy goes beyond goals—it’s the how. Ask yourself:
• Will I approach this collaboratively or competitively?
• What tactics will I use if conflict arises?
• How will I adapt as the negotiation unfolds?
A good strategy is flexible and tailored to the context.
Communicating with Impact
Persuasive proposals need more than just words.
• Use data and visuals (charts, graphs) for clarity.
• Address both your needs and your counterpart’s.
• Anticipate objections and prepare responses.
Communication is not just about what you say, but also how you listen, interpret, and present yourself.
Listening & Nonverbal Cues
• Active listening (focusing, reflecting feelings, asking clarifying questions) builds trust.
• Nonverbal signals—eye contact, tone, posture—often communicate more than words.
• In cross-cultural settings, be careful: what’s polite in one culture may be offensive in another.
Handling Challenges & Conflict
Conflict doesn’t have to derail discussions. Use it as an opportunity to reframe and explore deeper interests. Keep the
focus on issues, not personalities. Collaborative problem-solving and a win-win approach strengthen long-term
relationships.
The Canadian Business Context
Canadian culture emphasizes collaboration, consensus, and inclusivity. Success comes not just from sealing a deal
but from building trust and long-term partnerships. Be prepared to adapt your style to more direct or indirect cultural
norms when dealing internationally.
Ethics & Professionalism
Trust is a negotiator’s most valuable asset. Uphold:
• Honesty and transparency (no manipulative tactics).
• Confidentiality (protect sensitive info).
• Fairness and objectivity (use criteria-based judgments).
Professional conduct—respect, punctuality, emotional control—sets the stage for future deals and repeat
business.
Continuous Learning
Negotiation is not a “one and done” skill. To stay effective:
• Learn from each experience.
• Seek mentorship and feedback.
• Stay updated on best practices, cultural differences, and ethical standards.
Every negotiation is both a test and a training ground.
The Strategic Value of Negotiation
At the end of the day, negotiation isn’t just about contracts—it’s about business growth, sustainability, and
reputation. A company that masters negotiation builds stronger partnerships, secures better deals, and creates longterm success.
Extra Flow to Keep in Mind:
• Think of negotiation as relationship management as much as deal-making.
• Preparation builds power, but adaptability keeps you relevant when things change.
The Strategic Value of Negotiation
At the end of the day, negotiation isn’t just about contracts—it’s about business growth, sustainability, and
reputation. A company that masters negotiation builds stronger partnerships, secures better deals, and creates longterm success.
Extra Flow to Keep in Mind:
• Think of negotiation as relationship management as much as deal-making.
• Preparation builds power, but adaptability keeps you relevant when things change.
• Cultural sensitivity isn’t just politeness—it’s strategy. It prevents missteps and opens doors.
• A win-win approach is not “soft”—it’s smart. It turns one-time deals into ongoing opportunities.
The Impact of Shrinkflation on Purchasing Decisions
(From a Management Perspective)
What Shrinkflation Is
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Shrinkflation = reducing the size/quantity of a product while keeping (or slightly raising) its price.
Historically seen during economic crises (post-WWII, 1970s oil crisis).
Today it’s widespread due to rising production costs, inflation, and global competition.
It helps companies protect margins but comes with ethical and consumer trust risks
Consumer Reactions & Behaviour
• Price vs. Quantity: Research shows consumers notice price increases more than subtle size reductions. That’s
why shrinkflation often “slips under the radar” at first
Backlash: When consumers realize, they feel cheated → leads to loss of trust and brand loyalty.
• Survey Data: 46% of consumers reported feeling “defrauded” when they noticed shrinkflation; 35% said they’d
switch brands
• Long-term → mistrust + erosion of customer loyalty.
Ethical Considerations
• Transparency is key: companies that are upfront about size reductions maintain stronger reputations.
• Ethical responsibility isn’t just legal—it’s about respecting consumers’ right to make informed choices.
• A lack of honesty risks lasting damage to brand equity
Competitive Strategy & Market Dynamics
• Shrinkflation can provide short-term financial relief, but:
○ Risk: If competitors keep value higher (same price, same size), they can capture dissatisfied customers.
○ Balance: Firms must weigh cost savings against long-term consumer trust and brand differentiation.
• Shrinkflation impacts not only consumer psychology but also market share distribution
Case Studies
1. Toblerone (2016): Reduced chocolate bar size by widening gaps → massive consumer backlash, short-term sales
decline, damaged brand trust.
2. Frito-Lay (2018): Doritos bags shrank slightly. Initial tolerance, but social media backlash grew. Despite this,
market share held due to product loyalty.
3. Crest Toothpaste (2021): Tube size reduced (5.1 oz → 4.7 oz). Consumers viewed it as a disguised price
increase.
4. Breyers Ice Cream: From 64 oz to 48 oz containers (25% reduction). Sparked consumer skepticism and debates
on value.
5. Folgers Coffee: Reduced canister size (51 oz → 43.5 oz). Especially tough on fixed-income households who must
buy more frequently.
6. Charmin Toilet Paper (2022): Reduced sheets per roll. Example of subtle changes that add up to big corporate
savings
Best Practices for Managers
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Transparency: Communicate clearly about product changes (e.g., Nestlé has done this).
Consumer Education: Explain the economic pressures behind shrinkflation to avoid mistrust.
Preserve Value: Ensure quality and customer satisfaction remain strong, even if size shrinks.
Strategic Monitoring: Watch competitors’ moves and adjust positioning accordingly.
Ethics: Avoid deception—long-term trust is more valuable than short-term margins
Managerial Implications
• Managers must see shrinkflation as more than finance—it’s about trust, ethics, and brand equity.
• Need proactive consumer engagement and transparency to reduce backlash.
• Shrinkflation can affect entire industries: competitors may seize on consumer dissatisfaction to gain market
share.
• Long-term success depends on balancing economic pressures with ethical responsibility and consumer trust
• Shrinkflation is not just a pricing trick—it’s a strategic, ethical, and managerial challenge.
• Ethics: Avoid deception—long-term trust is more valuable than short-term margins
Managerial Implications
• Managers must see shrinkflation as more than finance—it’s about trust, ethics, and brand equity.
• Need proactive consumer engagement and transparency to reduce backlash.
• Shrinkflation can affect entire industries: competitors may seize on consumer dissatisfaction to gain market
share.
• Long-term success depends on balancing economic pressures with ethical responsibility and consumer trust
• Shrinkflation is not just a pricing trick—it’s a strategic, ethical, and managerial challenge.
• If handled poorly → mistrust, lost loyalty, reputational harm.
• If handled transparently → can soften consumer pushback and preserve brand equity.
• Ultimately, managers must adopt ethical, transparent, and consumer-centric strategies to navigate
shrinkflation sustainably
• Shrinkflation is essentially hidden inflation. It tests the balance between short-term survival and long-term
brand health.
• It reveals how consumer psychology is as important as economics in management decisions.
• Case studies show: even iconic brands aren’t immune to backlash when trust is broken.
• The managerial lesson → treat consumers as partners in navigating tough times, not as unaware buyers.
Rethinking Negotiation – Getting What You Want, Not Just What You’re Offered
The Essence of Negotiation
Negotiation is not just about compromise—it’s about strategically shaping outcomes. Managers need to see
negotiation as both art and science, blending tactics, psychology, and strategy to secure results that align with
organizational goals. Listening, timing, and persuasion are often more powerful than talking.
Common Negotiation Tactics
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Persuasion – Framing facts or arguments to guide decisions.
Deception & Bluffing – Withholding or twisting information to gain leverage (though ethically risky).
Misdirection – Distracting focus from the real issue.
“Give-to-get” – Offering small concessions to secure bigger ones.
Charades – Pretending to negotiate while stalling or avoiding commitments.
Shifting priorities & belabouring issues – Overcomplicating to wear down the other side
Key Tactics Explained
• Manipulating Data: Throwing in selective statistics or forecasts to appear stronger. (Lesson → always question
the source and full context).
• Misleading Opponents: Using misinformation, lies, or “red herrings” to throw them off. (Dangerous—
undermines good faith).
• Emotional Ploys: Exploiting feelings, urgency, or delays to pressure quick decisions.
• Switching Roles: Moving between aggressive, passive, or passive-aggressive stances to keep the other side off
balance
Strategic Questions for Managers
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Is walking away itself a valid strategy?
Should you bluff, and if so, when?
Is it ever wise to give up more now for future benefits?
Does luck play a bigger role than knowledge in certain deals?
These questions underline the fluid, situational nature of negotiation
Powerful Negotiation Strategies for Purchasing & Acquisition
This section uses real-world analogies to highlight different tactics:
1. Pie-Sharing: Be cautious—getting exactly what you want may backfire if the other party feels cheated.
2. Silence is Golden: Don’t rush to speak; silence often pressures the other side into lowering their offer.
3. Low-Balling: Start with an unreasonably low offer to anchor negotiations.
4. Show Me the Money: Cash on the table is persuasive—tangible value sways decisions.
5. FOMO/Last Chance: Limited-time offers push buyers into emotional, rushed decisions.
6. The Blindside: Distract with one topic to sneak in a better deal elsewhere.
7. “My Boss Says”: Blame higher authority to deflect pressure or justify limits.
8. Leaving Money on the Table: Sometimes a “good deal” is enough; pushing for more can backfire.
9. Fait Accompli: Beware of “done deals” that suddenly change at the last minute.
10. Appear Unreasonable: Extreme offers can reframe the negotiation in your favour.
11. Clarity of Position: Use clear, strong statements to anchor expectations.
12. Listing Pros & Cons: Highlight flaws to justify lower offers.
13. The Guilt Play: Vendors may pressure with “you’ll regret missing out”—don’t rush.
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The Blindside: Distract with one topic to sneak in a better deal elsewhere.
“My Boss Says”: Blame higher authority to deflect pressure or justify limits.
Leaving Money on the Table: Sometimes a “good deal” is enough; pushing for more can backfire.
Fait Accompli: Beware of “done deals” that suddenly change at the last minute.
Appear Unreasonable: Extreme offers can reframe the negotiation in your favour.
Clarity of Position: Use clear, strong statements to anchor expectations.
Listing Pros & Cons: Highlight flaws to justify lower offers.
The Guilt Play: Vendors may pressure with “you’ll regret missing out”—don’t rush.
Straw Man: Use flattery to soften before making a lower counter-offer.
Red Herring: Distract with irrelevant details, then negotiate for what you really want.
Resummarizing Facts: Restating terms incorrectly can cause the other side to slip up.
Changing Mid-Deal: Bundling in extras after initial agreement can tilt deals.
Ultimatums/Threats: “Take it or leave it” can close quickly, but risks future relationships.
Walkouts: Walking away forces the other party to reconsider—but may end talks.
Leaving Gracefully: Ending politely keeps the door open for future deals.
Splitting the Difference: A quick way to close, but often uneven if rushed.
Make It Simple: Over-simplification can cost money, but also speed closure
Big Takeaways for Managers
• Negotiation is Psychological: Silence, distraction, or authority references can be as effective as numbers.
• Flexibility Wins: No single tactic works all the time—adapt to the context.
• Good Faith vs. Real-World Tactics: While ethics matter, many tactics blur the line between fair persuasion and
manipulation.
• Don’t Lose the Forest for the Trees: Negotiation is about long-term outcomes, not just short-term wins.
• Know When to Stop: Pushing too hard risks losing deals that were already favourable.
Concluding Thoughts
• Negotiation is about controlling perception—how strong, credible, or flexible you appear.
• “Walking away” is often underestimated; it’s a powerful way to shift leverage.
• Many tactics (red herrings, straw men, blindside) rely on human bias—emotions often override rationality in
deals.
• Ultimately, the best managers know when to use tactics, when to hold back, and how to balance ethics with
results.