Negotiation and Environmental Analysis

8/6/2019 Negotiation and Environmental Analysis

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Birmingham City University 2010/11 MBA FT

Section - 1

A. NegotiationB. Environmental Analysis

To

Mr David Smith

From

Yogesh Bhujbal

Student ID: 10497122

17 December 2010


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Negotiation

Definition

Bargaining (give and take) process between two or more parties (each with

its own aims, needs, and viewpoints) seeking to discover

a common ground and reach an agreement to settle a matter

of mutual concern or resolve a conflict.

[Business dictionary] [2010]

Introduction

Negotiate takes place every time to get the solution for the tasks we have to

perform on. No business can survive without negotiation. For instance, we

have to negotiate with clients, suppliers, buyers to get the tasks on track or

to put it on production floor. Negotiation can be state that compromising or

settling things at right place for the benefit an organisation and customers.

Communication is a mean of negotiation which used to negotiate face-to-

face conversation, arguments, issue, Email, Telephone etc. It involves

numbers of members from one or more organisations and parties and the

people from external groups such as buyers, suppliers and customers etc.

[Biz Help] [2010]


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Characteristics of Negotiation

Negotiation takes place where two or more parties come together to achieve

common desired goals. Parties start communicating with variety of opinion

on desired goals. However, they come with flexible options and objectives

which can later alter by negotiation. If there are differences in opinion and

goals parties make effort to win negotiation by offering new proposal or

compromise on some issues to benefit mutual agreements. Parties think

negotiation is the best way to benefit business. Even though there might be

differences in opinions or an agreements parties make sure they come up

with positive outcome. It is important for both parties to achieve wining

negotiation if one party is gaining little from negotiation it would have little

benefit for second party. Negotiation involved combination of communication

by telephone, email, face to face conversation, letters etc. We cannot deny

personal or emotional attachment while negotiation. After all it is interaction

between people. All matter is attitude towards business progress.

[Ezine articles] [2010]


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Why Negotiate?

There are several reasons why we need to have negotiation along with there

are thousand paths to approach it. If the reason for negotiation is defeating

the opposition it is known as Distributive negotiation. This way you should

prepare to be tactic so that you can turn someone on your way of

approaching but you many not end up with maximum benefits. This is

because your approaches are not following common outcome, which should

benefit both parties, and at the same time both parties are looking for

different results. Your negotiation is more constructive when both parties

agreed towards common pact, it is known as Integrative negotiation. Many

times this way we can come to an outcome where both parties can benefit

highly. In business activity negotiation can be utilized to reach common

desired agreements, such as buying, selling, supplying, acquiring new

customers, transaction, employee services (e. g. contracts, appraisal), and

borrowing (e. g. loans). At the end, we have to achieve win-win situation

where both parties have to benefit from agreements. If one party is not

satisfied (even at certain level) with the outcome of the negotiation it will

lead to destruction in future business transactions also I want to conclude

that this will create bad image for an organization. However, it will not give

right message to the present and prospective shareholders.

[Biz Help 24] [2010]


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Preparing for a successful negotiation

Agreements and disagreements co-exist while negotiating. It is necessary to

prepare well enough to lead constructive negotiation. However, some

negotiation can be destructive in many different ways. For instance,

sometime it can be boost your position and at the same time, it can weaken

other party, at some points it has been consider manipulative and time

consuming as well. Points to be taken into consideration before you start

negotiation:

Goals: What you can achieve from negotiation? Moreover, at the same time

what other party is expecting?

Trades: What you and other party is going to trade? What are the products

you and other party have for trading? What can be compromise by each

other to reach successful negotiation?

Alternatives:What alternatives you and other party have if there are signs of

failing negotiation? How much it can matter to the Business. Does failure is

leading your organization to refrain from further opportunities.

Relationships: We have to take number of things into consideration such as

how old is the relationship with a particular company? Were there any

hidden policies in the past, which had created adverse impact on further


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negotiation? What are the strategies that can be implemented to process

successful negotiation?

Expected outcome: What outcome people should expect from negotiation?

What are the new principles have been set? How it can influence an

organization?

The consequences: What are the consequences negotiations will bring out?

What impact it can have on an organization?

Power: If negotiation could not reach to the desired expectation, what

power other parties have to put most out of least? Moreover, who is losing

most?

Possible solution: From all of the above considerations what compromises

you can bring forward to achieve win-win situation?

[Mind Tools] [2010]


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Stages of Negotiation

Stage 1

Evaluate and selection of a strategy for a problem solving. Finding possible

ways to approach negotiation is by intermediation, reviewing legal issue,

arbitration and facilitation. Select an approach.

Stage 2

Contact and build trust with other parties. Make initial contact with via

telephone or person to person meeting. Explain your plan for desired

negotiation and co-operation approaches. Build trust, credibility, relationship

and rapport among negotiator. Promote commitment procedures and

legitimacy recognition on important issue. Create strategy to handle delicate

or emotional issue.

Stage 3

Collect and analyse past information of negotiation. Collecting data about

people, issues and steps involved in problems. Verify previous documents or

data to reduce inaccuracy in further negotiation. Point out partys main

considerable interests.


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Stage 4

Design plan for Negotiation. Figure out strategies and tactics, these will

steps toward common interest of both parties. Find response for a particular

issue which can eventually lead to the positive way.

Stage 5

Initiate Negotiation. Introduce all parties. Exchange thoughts that are going

to be put forward for consideration. Collect important data to analysis.

Stage 6

Set an agenda and define issues. Point out topics that are going to be

discussed. Set a sequence of an agenda. Initiate or explain how you see a

particular situation and encourage other members present their viewpoint.

Stage 7

Focus on hidden interest. Scrutinise agenda and issues that are main causes

for the disputes. Elaborate needs and interests of other party to make wining

negotiation.

Stage 8

Create options for settlement. Develop required options to create final

settlement. Generate options mutually or individually. Allow private


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discussion for members so that they can have option to discuss their agenda

privately.

Stage 9

Assess options for settlements and final Bargaining. Find how parties

interest can meet from the available options. Assess cost and benefits from

the selected options. Once alternatives have been selected then parties push

up for incremental concession. Alternatives later tailored into desired

solution. Parties then reach to sustentative agreement.

Stage 10

Make a formal agreement of settlement. Agreement then written in the form

of memorandum or legal contract.

[Ezine Articles] [2010]


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Winning Strategies

Ask for smart questions

Many times we tend to assume other partys interest, intentions and

priorities. It is very important to ask questions for the better understanding

of the aim of other party. The more we know about each other we will have

more opportunities to put thoughts together for settlement. We have to

make sure we utilise as much resources as possible to benefit both parties.

Play fair

We have to make healthy environment by creating cooperative mood to

enhance mutual interaction. This is the only way we can progress to find fact

and generate options. Our counterparts are generally a mirror of our own

behaviour. We should not put all cards together at a time better trade one

on one by setting frame of reciprocation at the beginning. It will be a bad

idea to open up best alternatives of negotiation agreement at the initial

stage.

Present multiple offers

Multiple offers tend to stimulate communication among negotiators. On the

other side single proposal or option does not encourage our counterparts.

Negotiation will be more enthusiastic and constructive when numbers of


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options are there on place. This way we can move towards possible and

creative solutions then it would otherwise have been possible.

Third Party assistance

Neutral third party negotiation expert can help to increase resources

effectively. Third party can bring number of assisting proposals or

suggestions that no party have been thought of. Often parties does not

share companys secret policies but with the help of third party negotiators

parties can have options to handle sensitive data with each other. This

prevents one side of wining; generate proper growth for creative process

and also reduce risks.


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Summary

We have to make all possible efforts to generate win-win outcome in our

negotiation. Boundaries, skills set and attitude these are the circumstances

which keeps us in bound what we see as possible. Win-win deals are most

likely achieved by using framing, research and building relationship at the

right levels. If the approaches are up to the mark it is vital to follow win-win

agreement by both parties.


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References

1. (Businessdictionary, 2010), Accessed date: 21 Nov. 2010 [Page:2]2.

(Biz help 24, 2010), [Accessed date: 23 Nov. 2010] [page:2]

3. (Ezine Articles, 2010), [Accessed date: 24 November 2010] [page:2,3]4. (Negotiation , 2010), [Accessed: 23 Nov. 2010] [page:3]5. (Mind Tools, 2010), [Accessed date: 23 November 2010] [Page:4]6. (Ezine Articles, 2010), [Accessed date: 23 November 2010]

[Pages:5,6]

. (Negotiations, 2010), [Accessed on 24 November 2010] [Pages:7,8]

[Words Count: 1547]


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Environmental Analysis

Definition:

Evaluation of the possible effects of external forces and conditions on

an organization's survival and growth strategies.

(Business Dictionary, 2010)

Organisations Environments:

[Boddy] [2005]


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Why Environmental Analysis?

Environment analysis helps to evaluate internal and external factors

affecting an organizations growth and it guides to improve organizational

strategies.

(1000 ventures, 2010)

Two types of evaluation tools:

STEEPLE and SWOT Analysis.

STEEPLE stands for Socio-cultural, Technological,

Economical, Environmental, Political, Legal, and Ethical

SWOT stands for Strength, Weakness, Opportunity, and Threat

STEEPLEAnalysis:

The purpose of STEEPLE analysis is to understand organisations position in

competitive business environment and to develop strategies for the future

development which can lead organisation towards growth.

STEEPLE analysis helps to make understand business operation

environments. With the help of strategic STEEPLE analysis organisation can

increase their opportunity and decrease the threats and also can plan for

broad and long term trends in business environments.

(CIPD UK, 2010)


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There are following sub-category of STEEPLE Analysis.

Socio-Cultural:

Social and cultural surrounding does influence our attitude, interests and

opinions. For example, family, friends, colleagues and different media

channels. These are the forces shape our attitude, the way we behave,

which eventually have impacts on business. For instance, people are

changing their mind towards the food they eat. They are now more

conscious for health and diet regime. As a result many people now days are

joining health and fitness centres. There is huge demand for organic food as

well. Products such as Wii-Fit video game trying to deal with societys

concern about childrens less interest in exercise. Changes in population

structure do have impacts on many different industries. It can affect supply

and demand of goods and services in the economy. Falling rate of younger

population will have huge impact on goods and services that are directly

related to such groups of people. In recent years since there is a shortage of

food economists have come to concluded that there is huge need for

investment in food production industry. Some African countries such as

Uganda are giving a thought for their rejection of genetically modified foods.

An organisation should meet the peoples requirements for products and

services that are designed to benefit their lifestyle and behavior. If the


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organisation does not adapt to the changes in society, it will have no

demand for their goods and services.

(Learn Marketing, 2010)

Technological:

Technological innovation has greatly contributed to the way we operate

business. Many companies are using technology in many ways such as-

Internet, email, telephone, mobile phones, computers photocopier data

machine which sends and receives information.

Softwares which are incorporated with business process are helping to

manage business efficiently.

Technological awareness has increased overall rate at which information is

exchanged among stakeholders. It has created a revolution in the world of

business. Businesses are now able to give prompt reactions to the changes

within organisation as they can now use fastest methods for information

exchange. However, due to this advancement business are now expected

meet their targets within very short period of time.

For instance, the internet is having a profound impact on the marketing mix

strategy of organisations. Customers now can shop 24/7 a day from their


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homes or from their offices even with the help of 3G technology in phones

they can access shop and access products from anywhere. Technology has

been used by all age of groups of people. Children are exposed to

technology from their childhood and new technology savvy people

(pensioner) have emerged. Technology will keep on having impact on

consumers behaviors.


Economical:

The economy goes through many ups and down with general booms and

glooms in the economic activity. An economy going under recession will

result in high unemployment, less spending power in people. On the other

hand growing economy will have lower unemployment; more spending

capability also it will have high confidence in share market. Other changes

can have economical impact such as rate of inflation, bank interest rate, and

level of increasing price of commodity. Business will be more optimistic to

take bigger risks when economic circumstances are accurate.

Labor force from developing countries can affect viability of products from

developed nations. An boost in interest rate in US will have impact on share

price in the UKs share market and unfavorable weather conditions in India

might influence price of tea in the UK. A real economist must have


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knowledge of economic conditions of all important nations in the world which

can eventually make certain guarantees of strategies that shelter and

encourage its economic circumstances right trough the world.

(The Times100, 2010)


Environmental:

Environmental factors are the weather and changes in climate. Changes in

temperature can have influence in many companies such as tourism,

insurance, and farming. The growing climates changes are taking place are

because of global warming and with the help of better environmental

alternatives this exterior factor is becoming a noteworthy issue for firms to

consider. Growing awareness to protect environment will have impact on

industries such as travel and transport industries. For instance, more taxes

to be found at air travel and crossbreed cars). This move is affecting

demand for products and can have loopholes for creating business

opportunities.

(OUP, 2010)


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Political:

Political factors refer to governments policy such as the extent of

involvement in the economy. What are the governments initiatives for the

business supports? What are the services governments wants to provide?

Governments position to back up firms financially? Political decisions can

crash with many ways on different business. For instance, peoples health,

training for workforce and quality of infrastructure of a country like road and

rail network.

(OUP, 2010)

Legal:

These factors are associated with the legal background in which organisation

work. In many ways UK has affected due to the changes in legal

requirements For instance, age and disability discrimination law, minimum

wages law, wastes recycle requirements etc. These are the recent

requirements have an impact on business in the UK. Legal changes can cost

money to a firm. For instance new software or system has to be installed.

There are many different laws such as consumer laws which protect

consumer from fake or misled products. Employment law which prevent

employee from dismissal, uneven wages & working hours and abuse by


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mangers. Health and safety law which help employee to practice or work in

safe and pleasant environments.

(OUP, 2010)

Ethical:

Ethics refers moral ideology overriding the good and bad human conduct. It

is about the principals of right and wrong accepted by individuals. The rules

of ethical principals guide the action of individual and the group. Ethical

actions are doing what is right. Some actions might be legal and benifitial to

the business However are considered to be unethical. There are given

activities considered legal but might be unethical for an individual. For

instance, gambling, goods made by using child labor, fur trading and

experiment on animal.

(Ttutor 2u, 2010)


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Advantages of STEEPLE Analysis:

It is simple and only cost time.

It might point out threats to the project.

It present business environment at large.

It can help organisation to mark further opportunity.

It can help organisation to tackle further complication.

Disadvantages of STEEPLE Analysis:

It is very simple list and not a decisive evaluation.

The critical evaluation might be mere a guess which can be baseless.

Fast changes in the society make it difficult to foresee evaluation that might

have impact on an organisation.

Some factors can not justified by themselves they need combine support of

other factors.

Huge amount of information might confuse to anticipate actual ground.

(Project Smart, 2010)


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SWOT analysis

SWOT analysis used to evaluate the Strengths, Weaknesses,

Opportunities, and Threats involved in the business context. It helps to

identify internal and external factors which believe to be favorable for the

business. SWOT analysis first starts with analyzing critical aspects of

business intention and should achieve desired results at the end. SWOT

analysis used to develop strategy on the following subject of research.

Strengths are those which earn further benefits and goodwill to the business.

Weaknesses are right opposite to the strengths. They can take organisation

at backward.

Opportunities might increase due favorable external factors. Such as boost

in economy, reputation of product.

Threats in the external environments could harm the organisation.

Internal and external factors:

The main purpose of the SWOT analysis is to classify the important internal

and external factors which are crucial in the organisations growth. These

factors come within the organisation and they are divided into two main

groups internal factors and external factors. The strength and weakness are


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internal factors where as opportunity and threats are external factors.

External factors might directly impact to the internal factors. For instance,

changes in laws, technological changes microeconomics.

(Answers, 2010)

The use of SWOT analysis is not restricted to mere profit-seeking

organizations. SWOT analysis possibly will be used in any decision making

circumstance when a preferred end state has been position. For instance,

nonprofit making companies, legislative unit, and individuals. SWOT

analysis may also be used in pre emergency planning and defensive calamity

management.


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References:

1. http://www.businessdictionary.com/definition/environmental-analysis.html [Accessed Date: 4-12-10]

2. http://www.1000ventures.com/business_guide/mgmt_strategic_environmental_analysis.html [Accessed Date: 4-12-10]

3. http://www.cipd.co.uk/subjects/corpstrtgy/general/pestle-analysis.htm [Accessed date: 04 December 2010]

4. http://www.learnmarketing.net/pestanalysis.htm Access date: 11 Dec.2010

5. http://www.learnmarketing.net/pestanalysis.htm Access date: 11 Dec.2010

6. http://www.thetimes100.co.uk/theory/theory--pest-analysis--166.phpAccessed Date: 11 Dec 2010

7. http://www.learnmarketing.net/pestanalysis.htm Access Date: 11Dec.2010

8. http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm Access Date: 11Dec. 2010

9. http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm Access Date: 11Dec. 2010

10.http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm Access Date: 11Dec. 2010


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11.http://tutor2u.net/business/strategy/business-ethics-introduction.htmlAccess Date: 12Dec. 2010

12.http://www.projectsmart.co.uk/pest-analysis.htmlAccessed date: 11 Dec 2010

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Negotiation and Environmental Analysis