Sanctions and Rewards

The possibility of imposing sanctions or distributing rewards on the negotiating partner is of great importance for the success of a negotiation. For the largest possible arsenal of sanctions and rewards, it is again important to have a good overview of the entire network of relationships and contacts between the negotiating parties. Do you have a veto position and are you able to block processes that are important to your negotiating partner elsewhere. In international negotiations between individual states or alliance blocs, there are always examples of such mechanisms. For example, Turkey’s temporary veto of the NATO admission of Finland and Sweden. However, it can also be a simple matter of financial sanctions and rewards, for example a guarantee for a loan. The positive variant would then be the renunciation of a monetary demand. 

Working on the lever of sanctions and rewards: 

In business, the sanctions and rewards lever have a lot to do with the payment flows between the companies involved. Those who can withhold money are at an advantage, those who wait for payments are at a disadvantage. The more extensive the payment flows, the greater the corresponding levers. Modules that limit collaboration with other suppliers provides additional levers for sanctions and rewards. Who is my partner in developing the next generation of products? 

The lever of sanctions and rewards in procurement: 

  • To what extent can I “punish” the negotiating partner monetarily? (Block payments) 
  • To what extent can I make the supplier worse in terms of his chances of winning further orders? (Simply not requesting projects, negative evaluations in supplier management or even blacklisting or delisting). 
  • To what extent can I provide monetary support? (Release payments, or ensure that payments are released in other departments of the company). 
  • To what extent can I support and reward the supplier in general? (Upgrading in supplier management to preferred supplier, giving preference in the next tender, “turning a blind eye” to complaints). 

The lever of sanctions and rewards in sales: 

  • To what extent can I punish the negotiating partner monetarily? (For example, blocking the credit line of the customer’s account because of open invoices). 
  • To what extent can I make the client less favorable with regard to his chances of delivery or collaboration in new projects (not participating in tenders, no support in development projects, latest models only for the competition)? 
  • To what extent can I provide monetary support? (Extend payment terms, increase the credit line on the customer’s account in my own company) 
  • To what extent can I reward the customer? (Exclusivity for new products, support in case of problems with other suppliers, waiving a subsequent claim) 

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