Negotiations are always structured – either you give them structure or your counter-party will. If you are not particularly interested in the deal offered, then you have the luxury of waiting for the other side to offer you terms. But if you are serious about getting the best deal then you have to be proactive about packaging and presenting the most favorable negotiating terms. And that is where LIM comes in.
LIM describes your negotiating priorities.
Simply put, LIM is a framework for your negotiating priorities.
L = Like, or your best case scenario for the negotiation.
I = Intend, or what you think is most reasonable.
M = Your bottom line. Anything lower and you will not accept the deal.
How do you arrive at the different targets?
Variables include more than just money
Your first task is to decide on the variable or bargaining points that you will offer and discuss. This is down by analyzing your own goal system to determine what your best case scenario is. Then break down your goal into all its component parts. It may be that your goal really is 100% about the money and you don’t have to include anything else. Usually, however, your variables will include some TIME requirement (shipping schedule, roll-out timetable, delivery dates), TERMS (cash or charge, credit terms, payment dates, late fees) and POWER (who owns 51% of the new venture, contact disputes will be mediated in HK). There are many others, and you have to figure out a LIM for your entire package of variables.
Setting LIM
M is your bottom line. This may be your break-even or it may be the terms that you are already getting from an established partner. In many cases someone higher up in the organization is involved in setting the M or bottom line terms.
L is what you can reasonably expect as your best case scenario. Your L proposal should be ambitious and maybe a little aggressive – but not so crazy that it scares away potential partners or clients. You probably won’t really get your L, but it will give you a chance to state your priorities and establishes a benchmark for your expectations.
I is where you think you’ll probably end up. I could be based on the deal you are getting now or it could be industry standard for similar deals. Some people put I midway between L and M, which is suitable for some negotiations.
The important thing is to put together your LIM after you have developed a comprehensive list of variable and bargaining points. If you try to analyze your variables after you have already submitted an initial proposal, you may come off looking dishonest or disorganized.
Knowing what to ask for is a key to success when it comes to negotiating in China.
