Negotiation Objective Explain What is Negotiation Explain the
Negotiation
Objective • • • • Explain What is Negotiation Explain the Basic Principles of Negotiation Describe the Benefits of Negotiation Explain the Types of Negotiation Strategies Explain the Stages of the Negotiation Process Describe the Concepts of a Win-Win Negotiation Explain the Various Styles of Negotiation Explain What is BATNA Describe Strategies for Developing Negotiation Skills Explain the Types of Third Party Explain the PROBE Technique for Negotiating Describe the Negotiations in Organizations List the Issues in Negotiation List the Characteristics of a Good Negotiator List the Tips for Effective Negotiation
Introduction Globus Inc. is a leading IT giant. Peter Looney is a Project Manager in Globus Inc. He is responsible for meeting the clients for every new software development project that comes to Globus.
Introduction Maxwell Telecommunications, a leading Telecom Service company recently came to Globus to have new SAP based database software to be developed for them.
Introduction Peter carefully reviewed analyzed Maxwell’s requirements and came up with a Project Plan.
Introduction Now, the only thing that Peter needed to go ahead with starting the project and develop the software was the client’s approval of the Project Plan.
Introduction Peter held a meeting with the clients to discuss the Project Plan and gain overall approval for the terms and conditions of the Project.
Introduction The client was in a hurry to get the software. Peter tried to negotiate upon broader deadlines but due to client’s pressure, he ultimately agreed to finish the project as per their requested deadlines.
Introduction When the project was under progress, Peter and his team realized that the deadlines that he had agreed upon are nearly impossible to meet.
Introduction Peter and his team were not able to complete the project as was promised to the client due to which Globus had to pay some penalty for late delivery.
Introduction Also, the client added new requirements that had to be incorporated in the software. However, Peter had not negotiated about the terms with the client for any further enhancements or features being added to the software.
Introduction Hence, Globus had to incur a loss in the project because the scope of work had increased but the terms of the project had not been negotiated well.
Introduction Also, Peter’s team was forced to work 7 -days, even from home to try to complete the project.
Introduction Why do you think Peter’s team had to suffer? Why did Globus have to incur a loss in this Project?
Introduction Yes, all this happened because Peter had not initially negotiated well with the client about the deadlines and the scope of work.
Introduction If Peter had clearly negotiated the terms of the project with the client and negotiated realistic deadlines, Globus would not have needed to pay any penalty.
Introduction Also, if Peter had negotiated the scope of work in detail with the client, then Globus would not have to incur any loss in this project.
Introduction Thus, you can see that ‘negotiation skills’ are a must for anyone to succeed when dealing with people. Let us learn about ‘Negotiatio n Skills’ in detail.
Objective • • • • Explain What is Negotiation Explain the Basic Principles of Negotiation Describe the Benefits of Negotiation Explain the Types of Negotiation Strategies Explain the Stages of the Negotiation Process Describe the Concepts of a Win-Win Negotiation Explain the Various Styles of Negotiation Explain What is BATNA Describe Strategies for Developing Negotiation Skills Explain the Types of Third Party Explain the PROBE Technique for Negotiating Describe the Negotiations in Organizations List the Issues in Negotiation List the Characteristics of a Good Negotiator List the Tips for Effective Negotiation
What is Negotiation? • Negotiation is a discussion between two parties to find out the solution and for the purpose of reaching a joint agreement about differing needs or opinions. • It involves using the art of ‘persuasion’ to get others to understand agree with your viewpoint. It works best when an individual has a win-win attitude.
What is Negotiation? • The key skills that are involved in a successful negotiation are that of good communication skills, sales and marketing skills, good psychological analytical skills, sociology skills, assertiveness and conflict resolution skills. • Therefore, negotiations may take place between various kinds of different people such as between a customer and seller, a boss and employee, two business partners, a diplomat or a civil servant and a foreign diplomat, between spouses, between friends and between parents and children.
Need for Negotiation e. m a s al ctly u a d x i e v i d re nt n a e i r e y e l r f p f di eo eve n p i d o n y l s, a t w t n n h c e a r a No t w e ds, re, e aves diff e o e f e n r t nce n h e e r e The r e b f e f f d i s dif s basic d s an a k h n i d h t thi s an e. s to i n m t o e i i I s t t i. r a s o e-t situ ves aim i m g d i t t n a a m s th belief n people conflict fro ee d ach e betw ement an h t i tw s re i x g e a l as s l i o e d c w y l s tual ssional a u se m e o h t e t f , t r o tha , pr ove l t e a n r n a o t o r be M rs o d l e p u p m o i t a is sh other s level, it eements gr es busin s and disa ct confli d. e resolv
Need for Negotiation nt e m u arg o t d or ea l e y n a o ts m esult in c i l f n r py. co p y e a a s h u m g un eca ich n b h i l s w i e t e s en sf Thi e i m t t r n a e p ed es v d l r e o v d v l n n o a ei inv n e o y h r t e ev ent s all of m p l e e e r et on h nd of ag e i t m a i t o als ego rou d n g n , n a e c o s ent mm Hen o m c e a e k gr to see n the disa ectives. bj ee betw dividual o in their
Objective • • • • Explain What is Negotiation Explain the Basic Principles of Negotiation Describe the Benefits of Negotiation Explain the Types of Negotiation Strategies Explain the Stages of the Negotiation Process Describe the Concepts of a Win-Win Negotiation Explain the Various Styles of Negotiation Explain What is BATNA Describe Strategies for Developing Negotiation Skills Explain the Types of Third Party Explain the PROBE Technique for Negotiating Describe the Negotiations in Organizations List the Issues in Negotiation List the Characteristics of a Good Negotiator List the Tips for Effective Negotiation
Basic Principles of Negotiation There a few common basic principles that apply to all types of negotiations and in all situations. Some of the basic principles of negotiation are as follows: There a lways at least ‘two p arties’ involved an y negotiation process. , the n o i t a i t o g In any ne are at h s s e i t r a two p mmon o c e m o s least the n i r e h t i e interest, r or in e t t a m t c subje iating t o g e n e h t brings t a h t t x e cont ties r a p e h t both in a together n. negotiatio The initiatio n of any negotiation always results due to different opinions an d objective s of the two parties whi ch hinders the outcome in general.
Basic Principles of Negotiation There a few common basic principles that apply to all types of negotiations and in all situations. Some of the basic principles of negotiation are as follows: It is a gener al belief, th at parties do c onsider negotiation as a better way of tryin g to solve their differe nces. arty p y r e v e Each and oa enters int a firm h t i w n Each an o i negotiat d every o d y e h t party t e a nters in belief th t o a neg e of c n w a otiation h i c t a h a f have i r r m e belief th he oth t g t n h i e d a at y u shall m pers r i e h t a intain t odify initial s m o t heir y t r a t p a n c e. and persuad tance original s e to chan the other part y ge.
Basic Principles of Negotiation There a few common basic principles that apply to all types of negotiations and in all situations. Some of the basic principles of negotiation are as follows: The negotia t in a h t t n a tion proces t r impo s i s t I i s a l , w n Every nego a o y i s t a a process of egoti tiation proc n y r e v e d i rect and ve ess involves co e is at m i t rbal e t mpromise o a u q e d a i n terchange w r change of o to r e d r hich o n pinion of on i d n a h i n v olves intera e or both par rious a v e h ction t ties in orde e t a b e e d b h t e r tween part to reach an ac f both o s t ies. n i ceptable fin o p w e i v n al agreement each a r d n a. s e i part t. agreemen Each party has some influence o r power, whether it may be rea l or assumed , over the other’s abil ity to act an d think.
The Art of Negotiation is an art; you can get better and better with it. If you feel that you don’t have an innate talent for negotiations, don’t be disappointed because these skills can be honed and developed with the proper training and practice. People who always speak good things may feel that they are good negotiators, but that is not always the case. Negotiation is all about understanding what you want and what the other person wants, and then coming up with a win-win scenario.
The Art of Negotiation happens everywhere – it’s omnipresent. You may have to negotiate over anything – right from the deadlines of a project to which person will do what chores at home. In the real world, it is sometimes difficult to ascertain whether your negotiation is good or bad. You may think that you are a good negotiator, but in reality, it may be just the opposite. Even before you negotiate, you will have to know what can be negotiated and what cannot be negotiated.
Objective • • • • Explain What is Negotiation Explain the Basic Principles of Negotiation Describe the Benefits of Negotiation Explain the Types of Negotiation Strategies Explain the Stages of the Negotiation Process Describe the Concepts of a Win-Win Negotiation Explain the Various Styles of Negotiation Explain What is BATNA Describe Strategies for Developing Negotiation Skills Explain the Types of Third Party Explain the PROBE Technique for Negotiating Describe the Negotiations in Organizations List the Issues in Negotiation List the Characteristics of a Good Negotiator List the Tips for Effective Negotiation
Benefits of Negotiation The following are some of the benefits of negotiations: Good negotiations help you to gain better control in business as well as personal situations. They help you to identify and understand you’re as well as the other parties’ interests and also understand the differences between both. It helps to reach a ‘Win-Win’ Solution, which is mutually beneficial to all the parties involved in a negotiation. Good negotiations also help to improve interpersonal relationships.
Benefits of Negotiation The following are some of the benefits of negotiations: They help to develop and maintain an overall harmonious and thriving interpersonal environment. It is one of the easiest and quickest ways to solve conflicts and disagreements. Negotiations help to reduces stress and frustration among two conflicting individuals. Negotiations help to reach an agreement in cases where a deadend may be reached if a consensus is not established between two differing needs, wants or opinions.
Objective • • • • Explain What is Negotiation Explain the Basic Principles of Negotiation Describe the Benefits of Negotiation Explain the Types of Negotiation Strategies Explain the Stages of the Negotiation Process Describe the Concepts of a Win-Win Negotiation Explain the Various Styles of Negotiation Explain What is BATNA Describe Strategies for Developing Negotiation Skills Explain the Types of Third Party Explain the PROBE Technique for Negotiating Describe the Negotiations in Organizations List the Issues in Negotiation List the Characteristics of a Good Negotiator List the Tips for Effective Negotiation
Types of Negotiation Strategies There are two main types of negotiation strategies which are as follows: e Distributiv n Negotiatio Integrat ive Negotia tion Let’s look at each in detail.
Distributive Negotiation • • • ‘Distributive Negotiation’ is also known as ‘Positional’ or ‘Competitive’ or ‘Fixed Pie’ or ‘Win-Lose’ Negotiation. It is a type or style of negotiation in which the parties compete for the distribution of a fixed amount of value. The involved parties in a ‘distributive negotiation’ have a ‘win-lose’ attitude towards reaching the goal and is based on an attempt to divide up a fixed pie or amount of resources for oneself. ‘Distributive Negotiation’ involves holding on to a fixed idea, or position, of what you want and arguing for it and it alone, regardless of any underlying interests. e Distributiv n Negotiatio
Distributive Negotiation • • • ‘Distributive Negotiation’ is also known as ‘Positional’ or ‘Competitive’ or ‘Fixed istributive D Pie’ or ‘Win-Lose’ Negotiation. It is a tiation o g e N type or style of negotiation in which the parties compete for the distribution of a fixed amount of value. The involved parties in a ‘distributive The mattitude ain focus in such negotiation’ have a ‘win-lose’ a type of negotia is tion strategy o n a ving immediate g towards reaching the goal and cishie based oals, with little o r e g a r d r no fo r b u on an attempt to divide up a fixed pieild oring future relatio nships. Generally o new creative s , amount of resources fornoneself. olution is reache d in such neinvolves gotiations as the ‘Distributive Negotiation’ parties spend lea st possible time a n d e n ergy in reofsolving holding on to a fixed idea, or position, the conflict. The t h outcome of e n e goittiaand tionitis reached b what you want and arguing for y presentation o s o lu t io f fixed n s a n d alone, regardless of any underlying a decision or choic e is made quickly. interests.
Integrative Negotiation • Integrat ive Negotia tion • ‘Integrative Negotiation’ is also known as ‘Interest-based’ or ‘Cooperative’ or ‘Win-Win’ or ‘Non-zero Sum’ Negotiation. It is a type or style of negotiation in which the parties cooperate to achieve a satisfactory result for both. The involved parties in an ‘integrative negotiation’ have a ‘winwin’ attitude towards reaching the goal and attempt to strive not just for their own outcomes, but for favorable outcomes for both sides. ‘Integrative Negotiation’ involves reaching an agreement keeping into consideration both the parties’ interests which includes the needs, desires, concerns, and fears important to each side.
Integrative Negotiation Integrat ive Negotia tion Roll your mouse over ‘Integrative Negotiation’ is also known the icon, to learn as ‘Interest-based’more. or ‘Cooperative’ or ‘Win-Win’ or ‘Non-zero Sum’ Negotiation. It is a type or style of negotiation in which the parties cooperate to achieve a satisfactory The main foresult involved parties in cus infor sucboth. h a ty. The p e o f negotiation strategy is oan negotiation’ have a ‘winn d‘integrative eveloping m u t u a lly beneficial agreementswin’ the goal baseattitude d on thetowards interestreaching s ofjust the for disptheir utants. and attempt to strive not Generally, nown for favorable ew croutcomes, eative solubut t io n s are reached in such negotiaoutcomes both sides. tions as thfor e parties spend m possible • time‘Integrative aximum involves and energy. Negotiation’ in resolving the c The outcomereaching flict. an agreement keepingoninto of the negotiatio n is ached by collaborationconsideration thereparties’ interests between the both p a r t ie s to find a “winwin" solutionwhich the needs, desires, to theincludes ir dispute. concerns, and fears important to each side. •
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Distributive vs. Integrative Negotiation The given table shows the comparison between Distributive Negotiation and Integrative Negotiation. Distributive Negotiation It involves discussion of only one issue at a time. Involved parties have a ‘Win-Lose’ attitude towards reaching the negotiation outcome. Each party wants to use the negotiation to maximize its own share of ‘fixed pie’. It is an approach usually used in one-time relationship between two people. The involved parties keep their respective interests hidden. Each party expresses a strong position for each issue. Integrative Negotiation It involves discussion of several issues at a time. Involved parties have a ‘Win-Win’ attitude towards reaching the negotiation outcome. Each party wants to use the negotiation to ‘expand its own share of the pie’ by creating and claiming value. It is an approach usually used in a continuing relationship between two people. The involved parties share their respective interests with the other party. Each party expresses and try to come up with as many options as possible per issue to maximize mutual gains.
Distributive vs. Integrative Negotiation The given table shows the comparison between Distributive Negotiation and Integrative Negotiation. Distributive Negotiation Integrative Negotiation The involved parties keep information hidden. The involved parties share information with each other and try to get to the root cause of the ‘why’ of the existence of the issue. The involved parties are adversaries. The involved parties are joint problem-solvers. The aim of such negotiation is ‘winning’. The aim of such negotiation is ‘making a wise decision’. The main focus of involved parties is on their ‘stance or position’. ‘goals and objectives’. The involved parties use pressure to get what The involved parties do not use pressure but they want. strive to get what they want through principles.
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Objective • • • • Explain What is Negotiation Explain the Basic Principles of Negotiation Describe the Benefits of Negotiation Explain the Types of Negotiation Strategies Explain the Stages of the Negotiation Process Describe the Concepts of a Win-Win Negotiation Explain the Various Styles of Negotiation Explain What is BATNA Describe Strategies for Developing Negotiation Skills Explain the Types of Third Party Explain the PROBE Technique for Negotiating Describe the Negotiations in Organizations List the Issues in Negotiation List the Characteristics of a Good Negotiator List the Tips for Effective Negotiation
Stages of the Negotiation Process The following are the stages of any negotiation process: 1 2 3 4 5 Let us look at each in detail.
Meeting 1 Meeting: • The first stage of the negotiation process is the negotiation meeting. • The meeting can be in an informal or formal setting. • When there are two parties meeting, the venue, date and time are decided first. • The meeting begins with introductions.
Inquiry 2 Inquiry: • The second stage of the negotiation process is the stage of inquiry. • During the inquiry stage, both parties exchange information and discuss their concerns. • The main objective of this stage is to ascertain the strengths and weaknesses, needs, wants, desires and issues.
Bargaining 3 Bargaining: • The third stage of the negotiation process is that of bargaining. • During the bargaining stage, both parties make offers and tradeoffs. • At this stage, both the parties consider all the possible options available to find a middle path between their differences.
Closure 4 Closure: • This stage occurs after both the parties have looked at all the options closely. • During the closure stage, both parties restate their positions and confirm their tradeoffs they are willing to negotiate.
Acceptance 5 Acceptance: • The final stage of the negotiation process is acceptance. • During the acceptance stage, both parties would either decide to suspend negotiations or they may reach an agreement.
Real Life Example Let us now look at a real life example to understand the stages of the negotiation process.
Real Life Example You have seen in the introduction scenario how Peter Looney, a Project Manager at Globus Inc. failed to negotiate well with the Maxwell client due to which Peter’s team had to suffer and also his company had to incur a loss in the Project.
Real Life Example Yes, all this happened because Peter had not initially negotiated well with the client about the deadlines and the scope of work.
Real Life Example Stage 1: Meeting Stage 5: Acceptance Stage 4: Closure Stage 3: Bargaining Stage 2: Inquiry Stage 1: Meeting To negotiate well with the client, the first thing that Peter should do is to prepare well for the meeting. Peter could go through the Project Plans of similar projects that Globus had handled in the past, talk to and seek guidance from his superiors and put all the data and information that he gets related to the project at one place.
Real Life Example Stage 1: Meeting Stage 5: Acceptance Stage 4: Closure Stage 3: Bargaining Stage 2: Inquiry Stage 1: Meeting To negotiate well with the client, the first thing that Peter should do is to prepare Peter should also makmeeting. well for the go e a list of. Peter all thcould e queries that he has to clear w h th. Project throughitthe similar e client. Plans , thingof s that he can agree to and can projectsnothat in the t ag. Globus ree to whad ith thandled he client etc. past, talk to and seek guidance from his Also, at the mee tingand superiors Peteput r shall outhe ld cdata ome and client as a cool, c across to the onfidethat information he gets related nt and professio to the nal person. project at one place.
Real Life Example Stage 2: Inquiry Stage 5: Acceptance Stage 4: Closure Stage 3: Bargaining Stage 2: Inquiry Stage 1: Meeting During the inquiry stage, Peter should exchange information with the client and discuss their concerns, scope of work, deadlines, future enhancements etc.
Real Life Example Stage 2: Inquiry Stage 5: Acceptance Stage 4: Closure Stage 3: Bargaining Stage 2: Inquiry Stage 1: Meeting At this stage, Pet er should find ou t the client’s requireme. During nts, hothe inquiry stage, should w, w hich and whe. Peter n ca he fulfil these requexchange irementsinformation then client and any othewith r t e r ms and conditionsdiscuss that mtheir of work, ay noconcerns, t be agreescope able to Globus. deadlines, future enhancements etc.
Real Life Example Stage 3: Bargaining Stage 5: Acceptance Stage 4: Closure Stage 3: Bargaining Stage 2: Inquiry Stage 1: Meeting At this stage, Peter should now agree to terms that are completely acceptable and offer options and tradeoffs for things that are unacceptable as is stated by the client.
Real Life Example Stage 3: Bargaining Stage 5: Acceptance Stage 4: Closure Stage 3: Bargaining Stage 2: Inquiry Stage 1: Meeting Peter should ma ke sure that he a scertains his position a. At ndthis takestage, should now agree to s a sta. Peter n d in a g r e e in g to only possible aterms nd accthat completely acceptable and eptaare ble deadlines, cu rrent scope, terms regaoffer rdingoptions tradeoffs for future eand nhancements etcthings that are unacceptable as is stated by. the client.
Real Life Example Stage 4: Closure Stage 5: Acceptance Stage 4: Closure Stage 3: Bargaining Stage 2: Inquiry Stage 1: Meeting At this stage, it is important that both the client and Peter restate their positions and confirm their tradeoffs they are willing to negotiate.
Real Life Example Stage 4: Closure Stage 5: Acceptance Stage 4: Closure Stage 3: Bargaining Stage 2: Inquiry Stage 1: Meeting So, agreement sh ould be achieved on the agreed deadlines, curren t scope, terms re garding future enhancements e tc. It should be a greedthat it is important the partie. At upoboth n by the both s ththis at tstage, he discussed and agreepositions and Peter restate their terms wouclient d upon and ld now be drafted into a legare al an tradeoffs they willing contract bconfirm d bindto etween their ing the two parties. negotiate.
Real Life Example Stage 5: Acceptance Stage 4: Closure Stage 3: Bargaining Stage 2: Inquiry Stage 1: Meeting At this final stage of the negotiation process, Peter should make sure that both the parties agree to signoff the deal and reach an agreement on the terms of the Project.
Negotiation Outcomes The given image shows the various options of possible outcomes with respect to the parties involved in a negotiation. LOSE WIN We Both Win I Win, You Lose I Lose, You Win We Both Lose ME WIN LOSE YOU
Objective • • • • Explain What is Negotiation Explain the Basic Principles of Negotiation Describe the Benefits of Negotiation Explain the Types of Negotiation Strategies Explain the Stages of the Negotiation Process Describe the Concepts of a Win-Win Negotiation Explain the Various Styles of Negotiation Explain What is BATNA Describe Strategies for Developing Negotiation Skills Explain the Types of Third Party Explain the PROBE Technique for Negotiating Describe the Negotiations in Organizations List the Issues in Negotiation List the Characteristics of a Good Negotiator List the Tips for Effective Negotiation
Critical Concepts of Win-Win Negotiation The following are the five most critical concepts that you should keep in mind for a win-win negotiation: Pause for reflection Control the outcome Agree on factual information Let’s look at each in detail. Search for needs and requirements Clarify your objectives in the beginning
Critical Concepts of Win-Win Negotiation Pause for Reflection Control the outcome Agree on factual information Pause for Reflection Search for needs and requirements Clarify your objectives in the beginning • Ask the questions: o What do you want from this meeting? o What resistances do you envisage? o What will you do to overcome these resistances?
Critical Concepts of Win-Win Negotiation Pause for reflection Control the outcome Agree on factual information Search for needs and requirements Clarify your objectives in the beginning • Ask the questions: o What are my needs and requirements? o What are the needs and requirements of the other party? o What do we have in common? o What are the biggest gaps?
Critical Concepts of Win-Win Negotiation Pause for reflection Control the outcome Agree on factual information Clarify your objectives in the beginning Search for needs and requirements • Ask the questions: o What are the most important issues that need to be discussed? o Clarify your objectives in the beginning o What are the most important issues to the other party? What are the levels of potential outcomes?
Critical Concepts of Win-Win Negotiation Pause for reflection Agree on factual information • Ask the questions: o Have I examined all arguments that I intend to use during the meeting? o o Which of the arguments are assumptions? Which of the arguments are facts? Control the outcome Agree on factual information Search for needs and requirements Clarify your objectives in the beginning
Critical Concepts of Win-Win Negotiation Pause for reflection Control the outcome • Control the outcome Ask the questions: o What elements of timing can you control? o What is the best combination or channel? Agree on factual information Search for needs and requirements Clarify your objectives in the beginning Roll your mouse over the icon, to learn more.
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