Game theory in negotiation management

What is game theory?

• Fundamentals of game theory and its application to strategic decision-making processes in negotiations and competitive tendering.

The game-theoretical allocation process

• Analysis & relapse offers: Recognizing and analyzing fallback strategies to be prepared for possible scenarios in the negotiation process.
• Monetization: Creating comparability between suppliers by monetizing non-monetary factors in order to achieve the best overall business results.
  • Absolute and relative bonus-malus criteria: Differentiation between absolute and relative bonus-malus criteria and their targeted application for performance evaluation and incentive setting.
  • Fixed and variable bonus-malus criteria: Understanding the differences between fixed and variable bonus-malus criteria and their flexible application depending on the negotiation situation.
  • Approach to bonus-malus workshops: Development and implementation of effective bonus-malus workshops and involvement of all stakeholders.
• The 4 standard auction types: Overview of the four classic auction types and their specific application in the award process.

Award design

• Decision rules for the standard auctions: Understanding the decision rules for each auction type and applying them correctly to select the best bidder.
• Hybrid auction forms: Combination of hybrid auction forms to meet specific requirements and strategic objectives in the award process.
• Exposure problem: The exposure problem and its influence on bidder behavior as well as strategies required to avoid it.
• Multi-product auctions: Differentiating between simultaneous and sequential awards of multiple products and their influence on supplier bidding behavior
• Final approval: Structured process of final approval in the award procedure to ensure that all legal and strategic requirements are met. Importance of commitment for the long-term reputation of the company

Supplier communication

• Special features in the communication of the award design to the suppliers. Importance of preparation time for management approvals

Award event

• Preparation for a successful procurement event by understanding the key steps and best practices for a smooth and transparent process.