Negotiation • word "negotiation" originated from the Latin expression, "negotiatus", which means "to carry onbusiness". • The process of conferring to arrive at an agreement between different parties, each with their own interests andpreferences. • “A give-and-take decision-making process involving interdependent parties with differentpreferences.”
Defined: Negotiating is the process of communicating back and forth, for the purpose of reaching a joint agreement about differing needs orideas. • It is a collection of behaviours that involves communication, sales, marketing, psychology, sociology, assertiveness and conflictresolution. • A negotiator may be a buyer or seller, a customer or supplier, a boss or employee, a business partner, a diplomat or a civil servant. On a more personal level negotiation takes place between spouse’s friends, parents or children.
What is negotiation? Negotiation takes place when two or more people, with differing views, come together to attempt to reach agreement on an issue. It is persuasive communication or bargaining. “Negotiation is about getting the best possible deal in the best possible way.”
Features OfNegotiation • Minimum twoparties • Predeterminedgoals • Expecting anoutcome • Resolution andConsensus • Parties willing to modify theirpositions • Parties should understand the purpose of negotiation
Why Do We Negotiate? • To reach anagreement • To beat the opposition • Tocompromise • To settle anargument • To make apoint
Types OfNegotiation Distributive Negotiation IntegrativeNegotiation
Types of negotiation • Distributive (win-lose) • Integrative (win-win)
DistributiveNegotiation • Parties compete over the distribution of a fixed sum of value. The key question in a distributed negotiation is, “Who will claim the most value?” A gain by one side is made at the expense ofother. • The Seller’s goal is to negotiate as high a price as possible; the Buyer’s goal is to negotiate as low a price aspossible. • Thus, the deal is confined: there are not much opportunities for creativity or for enlarging the scope of thenegotiation.
IntegrativeNegotiation I I In Integrative Negotiation, parties cooperate to achieve maximum benefits by integrating their interests into an agreement. This is also known as a win-winnegotiation. • The key questions is: “How can the resource best beutilized?” • Integrative negotiations tend to occur in followingsituations: • Structuring of complex long-term Strategic Relationships or othercollaborations. • When the deal involves many financial and non-financialterms. • In an integrative negotiation,, there are many items and issues to be negotiated, and the goal of each side is to “create” as much value as possible for itself and the otherside.
Distributive Versus IntegrativeNegotiations Characteristic Outcome Motivation Distributive Win-lose Individualgain Integrative Win-win Joint andindividual gain Different but not alwaysOpposite Longer orShort-term Multiple Flexible Creative Interests Relationship Issuesinvolved Ability tomake trade-offs Solution Opposed Short-term Single Not Flexible Notcreative
NegotiationProcess PREPARATION INFORMATIONSHARING BARGAINING FINALIZING THEDEAL
BATNA BATNA is; Best Alternative To Negotiated Agreement
The NegotiationProcess BATNA The Best Alternative To a Negotiated Agreement; the lowest acceptable value (outcome) to an individual for a negotiatedagreement.
Why BATNASMatter • BATNAs tell you when to accept and when to reject an agreement • When a proposal is better than yourBATNA: • ACCEPTIT • When a proposal is worse than yourBATNA: • REJECTIT
A persons go for carpurchase. [To negotiate with showroom salesman for lesserprice] The car owner is not agreeing for thelesser price. Example BATNA Than customer can ask for Radial tires[best alternative] with any increase in price further.
Negotiation:ACounter-intuitiveProcess “that’s the opposite of what I do” “I know I should do that, but I find myself doing exactlythe opposite” “Itscounter-intuitive” What are people saying? • • • They recognize the prudence of a particular strategy But they find it difficult to implementit Their natural inclination is to do the opposite of what they recognise is the prudent strategy
Intuitive –Counter-intuitive • Whatare • some of the intuitive things we do in anegotiation • the counter-intuitive thing we might consider as an alternative? Shift intomanual Focus on interests Defer the negotiation to a time of our own choosing, gather informationfirst Automaticgear Focus onPositions Dive into thenegotiation When our proposals are rejected, justify and defendthem Ask why our proposal doesn’t work, and gatherinformation When a proposal is made tous that is unacceptable,rejection Instead of rejecting, ask why their proposal is important, and gatherinformation 17
BasicPrinciplesCommonToAllFormsOf Negotiation There are minimum 2 parties involved in the negotiation process. There exists some common interest, either in the subject matter of the negotiation or in the negotiating context, that puts or keeps the parties incontact. Though the parties have the same degree of interest, they initially start with different opinions and objectives which hinders the outcome ingeneral.
Inthe beginning, parties consider that negotiation is abetter way of trying to solve theirdifferences. Each party is under an impression that there is a possibility of persuading the other party to modify their original position, as initially parties feel that they shall maintain their opening position and persuade the other tochange.
During the process, the ideal outcome proves unattainable but parties retain their hope of an acceptable finalagreement. • Each party has some influence or power – real or assumed – over the other’s ability toact. • The process of negotiation is that of interaction between people – usually this is direct and verbal interchange.
CharacteristicsOfAnEffectiveNegotiator He should be a good learner andobserver. Should know the body language of the people at the negotiationprocess. Should be open and flexible and yet firm. Exercise great patience, coolness and maturity. Should possess leadershipqualities.
Should control emotions and not show his weaknesses. • Should bargain from the position ofstrength. • Should know and anticipate the pros and cons of his each move and itsrepercussions. • Should know how to create the momentum for the negotiations and must know when to exit and where to exit by closing the talkssuccessfully.
Should build trust andconfidence. • Should be confident andoptimist. • Should have clear cut goals andobjectives. • If necessary, he should provide a face saving formula for his counter party. • Should be able to grasp the situation from many dimensions. • Should know human psychology and facereading
Should not be a doubtingThomas. • Should plan and prepare thoroughly with relevant data and information toavoid • blank mind in theprocess. • Should radiate energy and enthusiasm and must be in a position to empathize with his opponents. • Should be a patient listener.
HowToDevelopTheseSkillsAndUseThem Effectively? • what negotiation means and the various forms it can take that negotiating, in the fullest sense, means forging long-term relationships the role that the individual personalities play in negotiating that you must take a variety of approaches to negotiation, since no single set of principles will suffice in allcircumstances
NegotiationStyles competitive collaborative compromising avoiding accommodating
EffectiveNegotiation • Successful relationships are built on communication and trust. • Lack of trust leads to “win-lose” or “lose-lose”result. • Negotiation is one way of creating trust – or deciding whether trust is justified. • Example: “The Negotiator’s Dilemma” a classic risk strategygame
The Negotiator’sDilemma BCooperates BCompetes ACooperates Bothcooperates Both have agood outcome ACooperates BCompetes A hasterrible outcome, B has greatoutcome Both competes Both havemediocre outcome ACompetes A Competes BCooperates A has great outcome, B has terribleoutcome
NegotiationTips; Do not underestimate yourpower. Do not assume that other party knows your weaknesses. It is a mistake to assume you know what the other party wants. Never accept the 1stoffer. Don’t fear tonegotiate.
Skills For EffectiveNegotiation • Preparation and planningskill • Knowledge of thesubject • Ability to think clearly and rapidly under pressure anduncertainty • Ability to express thoughtsverbally • Listeningskill • Patience • General problem-solving and analyticalskills
Preparation Firstly understand what it is youwant? What do you think your opponentwants? What would happen if you didn’t do adeal? Do you know your stakeholders? Do you know who the decision maker is? Are you negotiating with them? If not what affect does thathave? Are there concessions you can build into thenegotiation? Know your product / service inside out? What standards are there in the marketplace? Know your pricepoints? What issues do you think you’ll need toovercome? Prioritize! Practice! Negotiation Skills -Gihan Aboueleish
InformationSharing Company activities and marketposition Opinion on entrypoints What elements are clearly off the table or not up for discussion and why Opponents attitude and commitment Motivational factors (“I want this pricebecause…”) Stakeholders and importantly decisionmakers Problems, issues orrisk An order/structure forproceedings
BARGAINING Bargaining has two basicparts Debating Proposing
DEBATING • To be successful in negotiation you must build relationships andtrust • You need to avoid thefollowing- • Point scoring – “Your company is always late with deliveries so I’m not payingthat!” • Insults – “If you insist on that price you must bestupid” • Provocation – “Keep talking like that and see where it getsyou!” • Threats – “You just wait until your other customers hear aboutthis” • Insteadtry- • Building a relationship – It will make your negotiation mucheasier • Sticking to an agreed agenda – This will help avoid destructivediscussions. • Share information and ask questions – What do you want – what do theywant • Try and be positive and listen – What do they want and why – look for areas of win/win or easycompromise.
PROPOSING • When proposing your offer consider • Consider both your entry and exit – This could include all or some of your wants, and your opponents entry and exitpoints • Consider how you will phrase yourproposal • Consider what will motivate your opponent into making the deal • Consider the likely response – Think about the “if I do that then they will dothat” • Are there alternative proposals? – Once an initial response has been made are you happy or do you need to offer up something new. • Remember the key thing is to propose – don’t argue and try and remain realistic, and invite a response from youropponent. Negotiation Skills -Gihan Aboueleish
Finalizing TheDeal • So when closing the dealconsider • Do you have what youwant? • Do they have what theywant? • Can you signify to your opponent that if certain terms were met the deal could be done. • Do you both understand the potential non deal by not closing or reaching agreement? • Document the agreement quickly and share it with your opponent and get agreement on the details of thedeal. • Do not offer further concessions! • Agree the measures that will be applied to record fulfilment of th deal. e