Negotiation A giveandtake decisionmaking process involving interdependent parties

Negotiation • “A give-and-take decision-making process involving interdependent parties with different preferences. ” • word "negotiation" originated from the Latin expression, "negotiatus", which means "to carry on business". • The process of conferring to arrive at an agreement between different parties, each with their own interests and preferences.

Defined : �Negotiating is the process of communicating back and forth, for the purpose of reaching a joint agreement about differing needs or ideas. �It is a collection of behaviours that involves communication, sales, marketing, psychology, sociology, assertiveness and conflict resolution. �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 Of Negotiation • Minimum two parties • Predetermined goals • Expecting an outcome • Resolution and Consensus • Parties willing to modify their positions • Parties should understand the purpose of negotiation

Why Do We Negotiate ? • To reach an agreement • To beat the opposition • To compromise • To settle an argument • To make a point

Types Of Negotiation � Distributive Negotiation � Integrative Negotiation

Types of negotiation � Distributive (win-lose) � Integrative (win-win)

Distributive Negotiation �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 of other. �The Seller’s goal is to negotiate as high a price as possible; the Buyer’s goal is to negotiate as low a price as possible. �Thus, the deal is confined: there are not much opportunities for creativity or for enlarging the scope of the negotiation.

Integrative Negotiation �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-win negotiation. � � • The key questions is: “How can the resource best be utilized? ” Integrative negotiations tend to occur in following situations: • Structuring of complex long-term Strategic Relationships or other collaborations. • When the deal involves many financial and non-financial terms. 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 other side.

Distributive Versus Integrative Negotiations Characteristic Distributive Integrative Outcome Win-lose Motivation Individual gain Win-win Joint and individual gain Different but not always Opposite Longer or Short-term Multiple Interests Opposed Relationship Issues involved Ability to make trade-offs Solution Short-term Single Not Flexible Not creative Creative

Negotiation Process PREPARATION INFORMATION SHARING BARGAINING FINALIZING THE DEAL

BATNA is ; Best Alternative To Negotiated Agreement

The Negotiation Process BATNA The Best Alternative To a Negotiated Agreement; the lowest acceptable value (outcome) to an individual for a negotiated agreement.

Why BATNAS Matter • BATNAs tell you when to accept and when to reject an agreement • When a proposal is better than your BATNA: ACCEPT IT • When a proposal is worse than your BATNA: REJECT IT

� A persons go for car purchase. [To negotiate with showroom sales man for lesser price] A N T A B e � The car owner is not l p m agreeing for the lesser a x E price. � Than customer can ask for Radial tires[best alternative] with any increase in price further.

Negotiation: A Counterintuitive Process “that’s the opposite of what I do” “I know I should do that, but I find myself doing exactly the opposite” “Its counter-intuitive” �What are people saying ? • They recognize the prudence of a particular strategy • But they find it difficult to implement it • Their natural inclination is to do the opposite of what they recognise is the prudent strategy

Intuitive – Counter-intuitive What are �some of the intuitive things we do in a negotiation �the counter-intuitive thing we might consider as an alternative ? Automatic gear Shift into manual Focus on Positions Focus on interests Dive into the negotiation Defer the negotiation to a time of our own choosing, gather information first When our proposals are rejected, justify and defend them Ask why our proposal doesn’t work, and gather information When a proposal is made to us that is unacceptable, rejection Instead of rejecting, ask why their proposal is important, and gather information 17

Basic Principles Common To All Forms Of Negotiation � There are minimum 2 parties involved in thenegotiation 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 in contact. � Though the parties have the same degree of interest, they initially start with different opinions and objectives which hinders the outcome in general.

�I n the beginning, parties consider that negotiation is b aetter way of trying to solve their differences. �E a c h 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 to change.

�During the process, the ideal outcome proves unattainable but parties retain their hope of an acceptable final agreement. �Each party has some influence or power – real or assumed – over the other’s ability to act. �The process of negotiation is that of interaction between people – usually this is direct and verbal interchange.

Characteristics Of An Effective Negotiator � He should be a good learner and observer. � Should know the body language of the people at the negotiation process. � Should be open and flexible and yet firm. � Exercise great patience, coolness and maturity. � Should possess leadership qualities.

• Should control emotions and not show his weaknesses. • Should bargain from the position of strength. • Should know and anticipate the pros and cons of his each move and its repercussions. • Should know how to create the momentum for the negotiations and must know when to exit and where to exit by closing the talks successfully.

• Should build trust and confidence. • Should be confident and optimist. • Should have clear cut goals and objectives. • 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 face reading

• Should not be a doubting Thomas. • Should plan and prepare thoroughly with relevant data and information to avoid blank mind in the process. • Should radiate energy and enthusiasm and must be in a position to empathize with his opponents. • Should be a patient listener.

How To Develop These Skills And Use Them 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 all circumstances

Negotiation Styles 1. competitive 2. collaborative 3. compromising 4. avoiding 5. accommodating

Effective Negotiation • 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 strategy game

The Negotiator’s Dilemma A Cooperates B Competes Both cooperates Both have a good outcome A Cooperates B Competes A has terrible outcome, B has great outcome A Competes B Cooperates A has great outcome, B has terrible outcome Both competes Both have mediocre outcome

Negotiation Tips; 1) Do not underestimate your power. 2) Do not assume that other party knows your weaknesses. 3) It is a mistake to assume you know what the other party wants. 4) Never accept the 1 st offer. 5) Don’t fear to negotiate.

Skills For Effective Negotiation • Preparation and planning skill • Knowledge of the subject • Ability to think clearly and rapidly under pressure and uncertainty • Ability to express thoughts verbally • Listening skill • Patience • General problem-solving and analytical skills

Preparation 1. Firstly understand what it is you want? 2. What do you think your opponent wants? What would happen if you didn’t do a deal? 4. Do you know your stakeholders? 5. Do you know who the decision maker is? Are you negotiating with them? If not what affect does that have? 6. Are there concessions you can build into the negotiation? 7. Know your product / service inside out? What standards are there in the market place? 8. Know your price points? 9. What issues do you think you’ll need to overcome? 10. Prioritize! 11. Practice! Negotiation Skills - Gihan Aboueleish 3.

Information Sharing 1. Company activities and market position 2. Opinion on entry points 3. What elements are clearly off the table or not up for discussion and why 4. Opponents attitude and commitment 5. Motivational factors (“I want this price because…”) 6. Stakeholders and importantly decision makers 7. Problems, issues or risk 8. An order/structure for proceedings

BARGAINING Bargaining has two basic parts � Debating � Proposing

DEBATING • To be successful in negotiation you must build relationships and trust • You need to avoid the following • Point scoring – “Your company is always late with deliveries so I’m not paying that!” • Insults – “If you insist on that price you must be stupid” • Provocation – “Keep talking like that and see where it gets you!” • Threats – “You just wait until your other customers hear about this” • Instead try • Building a relationship – It will make your negotiation much easier • Sticking to an agreed agenda – This will help avoid destructive discussions. • Share information and ask questions – What do you want – what do they want • Try and be positive and listen – What do they want and why – look for areas of win/win or easy compromise.

PROPOSING • When proposing your offer consider • Consider how you will phrase your proposal • Consider what will motivate your opponent into making the deal • Consider the likely response – Think about the “if I do that then they will do that” • 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 your opponent. Negotiation Skills - Gihan Aboueleish • Consider both your entry and exit – This could include all or some of your wants, and your opponents entry and exit points

Finalizing The Deal • So when closing the deal consider • Do you have what you want? • Do they have what they want? • 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 the deal. • Do not offer further concessions! • Agree the measures that will be applied to record fulfilment of th e deal.