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What is Negotiation? Features of Negotiation Why Negotiate ? Types of Negotiation Distributive Vs Integrative Negotiation Negotiation Process BATNA Bargaining Zone Model of Negotiation Negotiating Behavior Issues in Negotiation Third party Negotiations How to achieve an Effective Negotiation Negotiation Tips
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Prepared By : Gihan Aboueleish
Presented By:TARINI- 41002SACHIN- 41001
Negotiation Skills - Gihan Aboueleish 1
Contents • What is Negotiation?
• Features of Negotiation
• Why Negotiate ?
• Types of Negotiation
• Distributive Vs Integrative Negotiation
• Negotiation Process
• BATNA
• Bargaining Zone Model of Negotiation
• Negotiating Behavior
• Issues in Negotiation
• Third party Negotiations
• How to achieve an Effective Negotiation
• Negotiation Tips
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“Change the way you look at things, and the things you look at
change”
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You can’t sail anywhere until you learn which way the wind wants to blow
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What Is Negotiation ? • The 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.
• “A give-and-take decision-making process involving interdependent parties with different preferences.” N
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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.
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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
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Why Do We Negotiate ?
•To reach an agreement
•To beat the opposition
•To compromise
•To settle an argument
•To make a point
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Types Of Negotiation Distributive Negotiation
Integrative Negotiation
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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 expanse 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. N
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Integrative Negotiation In Integrative Negotiation, parties cooperate to achieve maximize 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.
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Distributive Versus Integrative Negotiations
Characteristic Distributive Integrative
Outcome Win-lose Win-win
Motivation Individual gain Joint and individual
gain
Interests Opposed Different but not always Opposite
Relationship Short-term Longer or Short-termIssues involved Single MultipleAbility to make
trade-offsNot Flexible Flexible
Solution Not creative Creative
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PREPARATION
INFORMATION SHARING
BARGAINING
FINALIZING THE DEAL
Negotiation Process
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BATNA
BATNA is ;
Best
Alternative
To
Negotiated
Agreement
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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 N
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Negotiation: A Counter-intuitive Process Title comes from remarks made by participants at some of
my negotiation workshops“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
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Intuitive – Counter-intuitive
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
What are some of the intuitive things we do in a negotiation the counter-intuitive thing we might consider as an
alternative ?
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Basic Principles Common To All Forms Of 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 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.
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In the beginning, parties consider that negotiation is a better way of trying to solve their differences.
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 to change.
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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.
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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.
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• 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.
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• 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
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• 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.
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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
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Negotiation Skills Style Test
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Types Of Negotiation In Organizations
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Managerial Negotiations
Types Parties Involved Examples
Day-to-day/ Managerial Negotiations
1. Different levels of Management
2. In between colleagues
3. Trade unions
4. Legal advisers
1. Negotiation for pay, terms and working conditions.
2. Description of the job and fixation of responsibility.
3. Increasing productivity.
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Commercial Negotiations
Types Parties Involved Examples
Commercial Negotiations
1. Management 2. Suppliers 3. Government 4. Customers 5. Trade unions 6. Legal advisors7. Public
1. Striking a contract with the customer.
2. Negotiations for the price and quality of goods to be purchased.
3. Negotiations with financial institutions as regarding the availability of capital
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Legal Negotiations
Types Parties Involved Examples
Legal Negotiations
1.Government
2.Management
3.Customers
1. Adhering to the laws of the local and national government.
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How To Plan Your Negotiation Agenda
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Preparing For A Successful Negotiation… Depending on a scale of disagreement, the
level of preparation might be appropriate for conducting the successful negotiation.
For a small disagreements, excessive preparation could be counter-productive because it do takes time which is better focused in reaching the team goals.
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If the major disagreement needed to be resolved, preparing thoroughly for that is required, and worthwhile.
Think through following points before you could start negotiating.
• Goals:What you want to get out from the negotiation?
What do you expect from the other person?
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What you and the other person have which you can trade?
• What do you and the other person have so that the other wants it?
• What might you both be prepared to give away? N
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• Alternatives:
• If you do not reach the agreement with him/her, what alternatives you have?
• Are these things good or bad alternatives?
• How much it matters if you do not reach the agreement?
• Will the failure to reach the agreement cut out future opportunities?
• What alternatives may the other person have?
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• The relationship:
• What is a history of relationship?
• Can or should this history impact negotiation?
• Will there be any of the hidden issues that might influence negotiation?
• How you will handle these? Neg
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•Expected outcomes:
•What outcome would people
be expecting from the negotiation?
•What was the outcome in the past, and what precedents been set?
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•The Consequences:
• What are the consequences of winning or losing this negotiation by you?
• What are the consequences of winning or loosing by the other person?
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• Power:
• Who has the power in the relationship?
• Who do controls the resources?
• Who stands to lose most if agreement is not been reached?
• What power does other person have to deliver which you do hope for?
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• Possible Solutions:
•
Based on all considerations, what possible compromises might be there?
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Negotiating And Long-term Relationships
Good negotiators are the people who understand
• how to build key relationships
• how to identify what people need
• how to give them what they need and
• how to get what they want in return, all
in a way that seems effortless.
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Negotiating And Individual Personalities
Autocratic managers typically hold the view that they are going to get what they want when they interact with subordinates, because their inherent authority precludes the need to negotiate.
These managers do not realize that, in the process of handing out orders, they are engaged in a kind of one-sided negotiation that can antagonize others, with the result that the tasks they wish to see completed may be carried out improperly or not at all.
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The Accommodating manager is more concerned with what others want than with their own needs.
In order to avoid conflict, they do not negotiate at all and often end up overriding their own interests.
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B.A.T.N.A
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The Negotiation Process
BATNA
The Best Alternative To a Negotiated Agreement; the lowest acceptable value (outcome) to an individual for a negotiated agreement.
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Your “BATNA “ is the only standard which can protect you both from accepting terms that are too unfavourable and from rejecting terms it would be in your interest to accept.”
In the simplest terms, if the proposed agreement is better than your “BATNA”, then you should accept it. If the agreement is not better than your “BATNA” , then you should reopen negotiations.
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Where Do Use This Skill?
• Everything is negotiated.
• Family and personal
• “ Where should we go for dinner?”
• “ Can I borrow the car?”
• Academic research
• “ Fund my project.”
• “ Publish my paper.”
• Business ventures
• “ I want a raise.”
• “ Invest in my company.”
• “ Pay me a license fee or I’ll sue you.”
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Determining Your BATNA
BATNAs are not always readily apparent. Fisher and Ury outline a simple process for determining your BATNA:
• develop a list of actions you might conceivably take if no agreement is reached;
• improve some of the more promising ideas and convert them into practical options; and
• select, tentatively, the one option that seems best. N
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BATNA Example
A persons go for car purchase.
[To negotiate with showroom sales man for lesser price]
The car owner is not agreeing for the lesser price.
Than customer can ask for Radial tires[best alternative] with any increase in price further.
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CASE STUDY
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Case Study – Application 01
• Highly Brill Leisure Centre has hired you to help them with their marketing decision making. Perform a SWOT analysis on Highly Brill Leisure Centre, based upon the following issues:
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CASE STUDY – Application 02
A community discovers that its water is being polluted by the discharges of a nearby factory.
Community leaders first attempt to negotiate a clean-up plan with the company, but the business refuses to voluntarily agree on a plan of action that the community is satisfied with.
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Issues In NegotiationThe Role of Mood & Personality Traits in Negotiation;
• Positive moods positively affect negotiations
• Traits do not appear to have a significantly direct effect on the outcomes of either bargaining or negotiating processes (except extraversion, which is bad for negotiation effectiveness)
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Gender Differences In Negotiations;
• Women negotiate no differently from men, although men apparently negotiate slightly better outcomes.
• Men and women with similar power bases use the same negotiating styles.
• Women’s attitudes toward negotiation and their success as negotiators are less favorable than men’s.
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The Importance of BATNAs
Once parties establish a BATNA, they must then compare the costs and benefits of the BATNA to all of the settlement options on the table.
Ask, "What's it going to cost you if you don't?" N
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Negotiation Strategies
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• Most of the negotiation literature focuses on two strategies, although they call them by different names.
• One strategy is interest-based(or integrative, or cooperative) bargaining, while the other is positional (or distributive or competitive) bargaining.
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Interest-based Bargaining /Win-win Bargaining
• Integrative bargaining in which parties collaborate to find a “win-win" solution to their dispute.
• This strategy focuses on developing mutually beneficial agreements based on the interests of the disputants.
• Interests include the needs, desires, concerns, and fears important to each side.
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Positional Bargaining
Positional bargaining is one that 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.
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Negotiation Skills Style Test
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Exercise #1
Roles : Rita, a 15 year old girl. The Observer becomes Rita’s parent. Others are Observers to record use/abuse of “win/win” techniques.
Background: Rita is calling home from a payphone on Hwy 401 to tell her parent she is hitch-hiking to Hollywood to be a movie star. She has no money, is a little afraid, and secretly wants to go to drama school. The parent is worried about Rita being out after curfew. Parent picks up the ‘phone, and has 3 minutes to effect a “win-win” approach before the payphone times out.
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Exercises #2
Background:
Suresh has a Programmer off sick, and wants to negotiate two weeks of Kunal’s time to work on the Company’s most important project immediately, because Kunal is the best programmer, and knows the tasks. Delays may affect everyone’s bonus.
Kunal’s Manager is concerned the loss of Kunal will mean he will not be able to complete tasks on another project their department is committed to deliver (requiring one week of work in the next 3 weeks), because Suresh has a reputation of over-utilizing resources (and padding their schedule contingency). Other commitments will also need juggling.
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Exercise #3
Background: Raima is not using the car this weekend, but is concerned the good friend is a fast driver. The friend is generous, and has done Raima several favors for Raima, including a recent birthday gift.Time: 3 minutes
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Use….Competition
When quick, decisive action is vital (in emergencies); on important issues.
Where unpopular actions need implementing (in cost cutting, enforcing unpopular rules, discipline).
On issues vital to the organization’s welfare.
When you know you’re right.
Against people who take advantage of noncompetitive behavior.
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Use …..Collaboration To find an integrative solution when both sets of
concerns are too important to be compromised.
When your objective is to learn.
To merge insights from people with different perspectives.
To gain commitment by incorporating concerns into a consensus.
To work through feelings that have interfered with a relationship.
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Use….Avoidance When an issue is trivial, or more important issues are pressing.
When you perceive no chance of satisfying your concerns. When potential disruption outweighs the benefits of resolution. To let people cool down and regain perspective. When gathering information supersedes immediate decision. When others can resolve the conflict effectively. When issues seem tangential or symptomatic of other issues.
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Use….Accommodation ; When you find you’re wrong and to allow a better position to be
heard. To learn, and to show your reasonableness. When issues are more important to others than to yourself and to
satisfy others and maintain cooperation. To build social credits for later issues. To minimize loss when outmatched and losing. When harmony and stability are especially important. To allow employees to develop by learning from mistakes.
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Use…compromise;
When goals are important but not worth the effort of potential disruption of more assertive approaches.
When opponents with equal power are committed to mutually exclusive goals.
To achieve temporary settlements to complex issues. To arrive at expedient solutions under time pressure. As a backup when collaboration or competition is
unsuccessful.
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Understanding Your Style Of Negotiation
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• Behaviour
• Motivation:
• Assertive-directing, Altruistic-nurturing, Flexible-cohering
• Personal strengths
• Personal weaknesses
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Techniques for Better Negotiation
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1) Prepare, prepare, prepare
2) Pay attention to timing
3) Leave behind your ego.
4) Ramp up your listening skills.
5) If you don't ask, you don't get
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6. Anticipate compromise
7. Offer and expect commitment
8. Don't absorb their problems
9. Stick to your principles
10. Close with confirmation.
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01- Prepare, Prepare, Prepare
Pay attention to timing. Timing is important in any negotiation. Sure, you must know what to ask for. But be sensitive to when you ask for it. There are times to press ahead, and times to wait. When you are looking your best is the time to press for what you want. But beware of pushing too hard and poisoning any long-term relationship. N
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02- Pay Attention To Timing• Pay attention to timing. Timing is important in
any negotiation. Sure, you must know what to ask for. But be sensitive to when you ask for it. There are times to press ahead, and times to wait. When you are looking your best is the time to press for what you want. But beware of pushing too hard and poisoning any long-term relationship.
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03- Leave Behind Your Ego.
• Leave behind your ego. The best negotiators either don't care or don't show they care about who gets credit for a successful deal. Their talent is in making the other side feel like the final agreement was all their idea.
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04 - Ramp Up Your Listening Skills. Ramp up your listening skills. The best negotiators are
often quiet listeners who patiently let others have the floor while they make their case. They never interrupt. Encourage the other side to talk first. That helps set up one of negotiation's oldest maxims: Whoever mentions numbers first, loses. While that's not always true, it's generally better to sit tight and let the other side go first. Even if they don't mention numbers, it gives you a chance to ask what they are thinking.
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- 05if You Don't Ask, You Don't Get
• If you don't ask, you don't get. Another tenet of negotiating is "Go high, or go home." As part of your preparation, define your highest justifiable price. As long as you can argue convincingly, don't be afraid to aim high. But no ultimatums, please. Take-it-or-leave-it offers are usually out of place.
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06- Anticipate Compromise.
• Anticipate compromise. You should expect to make concessions and plan what they might be. Of course, the other side is thinking the same, so never take their first offer. Even if it's better than you'd hoped for, practice your best look of disappointment and politely decline. You never know what else you can get.
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07- Offer And Expect Commitment.
• Offer and expect commitment. The glue that keeps deals from unravelling is an unshakable commitment to deliver. You should offer this comfort level to others. Likewise, avoid deals where the other side does not demonstrate commitment.
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Don't Absorb Their Problems.
• Don't absorb their problems. In most negotiations, you will hear all of the other side's problems and reasons they can't give you what you want. They want their problems to become yours, but don't let them. Instead, deal with each as they come up and try to solve them. If their "budget" is too low, for example, maybe there are other places that money could come from.
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Stick To Your Principles.
• Stick to your principles. As an individual and a business owner, you likely have a set of guiding principles — values that you just won't compromise. If you find negotiations crossing those boundaries, it might be a deal you can live without.
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Close with confirmation.
• Close with confirmation. At the close of any meeting — even if no final deal is struck — recap the points covered and any areas of agreement. Make sure everyone confirms. Follow-up with appropriate letters or emails. Do not leave behind loose ends.
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Handli
ng D
ifficu
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• Speak more quietly than them.
• Have more space in between your words than them.
• If they interrupt, pause for a few seconds after they finish.
• Be critical of foul language.
• Do not rise to a bait if they attack or blame you.
• Ignore all threats.
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Handling EmotionsEmotional Challenges
Anger/exasperation
Insulted
Guilt
False flattery
Recommended Response
Allow venting. Probe for why
What wouldn’t be insulting?
Focus on issues
Re-focus
Tips: • Don’t lose your cool .• Try to defuse with acknowledgement, empathy, patience,
impartiality.• Consider dealing with less emotional issues first• Know your own “Hot Buttons”• Practice
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Know Your Hot Buttons
Exercise: List the last 3 times you felt someone pressed your “Hot Button”.
Subject discussed
Who pushed your buttons?
Why did you feel manipulated?
Next time I will…..
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So why negotiate? Reach an agreement
Get the better of the opposition
Compromise
Settle a dispute
Make a point
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Negotiation Styles
1. competitive
2. collaborative
3. compromising
4. avoiding
5. accommodating
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Key steps
Preparation
Strategy
Control
Close deal
• Build expectations
Who with
Homework
Objectives
Benefits to both
Which style?
Easy first
Manage agenda
Communicate clearly
Confidence
Flexible
• In writing
• Speed
• Enforce
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BARGAINING EMOTION
COMPROMISE LOGICALLY
Negotiation Strategy
INFLUENCE
INT
ITU
TIO
N[A
bilit
y to
mod
ify o
ther
s]
Low
High
Low High
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Bargaining Zone Model Of Negotiation
Your initial point
Your target point
Area of potential agreement
Opponent’s initial point
Opponent’s target point
Your resistance point
Opponent’s resistance point
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Example
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Negotiating Behaviour
Gavin Kennedy describes 3 types of behaviour that we can display and encounter when in a negotiating situation.
RED BLUE PURPLE
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RED Behaviour
Manipulation Aggressive Intimidation Exploitation Always seeking the best for you No concern for person you are negotiating with Taking
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BLUE Behaviour• Win win approach
• Cooperation
• Trusting
• Pacifying
• Relational
• Giving
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PURPLE Behaviour• Give me some of what I want (red)
• I’ll give you some of what you want (blue)
• Deal with people as they are not how you think they are
• Good intentions
• Two way exchange
• Purple behaviour incites purple behaviour
• Tit for tat strategies
• Open
• People know where they stand
• Determination to solve problems by both sets of criteria of the merits of the case and/or the terms of a negotiated exchange
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Third-party Negotiations
1. Investigation
2. Mediation
3. Conciliation
4. Arbitration
5. Adjudication Neg
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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
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The Negotiator’s DilemmaB Cooperates B Competes
A Cooperates Both cooperates Both have a good
outcome
A CooperatesB Competes
A has terrible outcome,
B has great outcome
A Competes A CompetesB Cooperates
A has great outcome,B has terrible outcome
Both competesBoth have mediocre
outcome
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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 1st offer.
5) Don’t fear to negotiate. Neg
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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 Neg
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Preparation1. Firstly understand what it is you want?
2. What do you think your opponent wants?
3. 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!
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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
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BARGAINING
Bargaining has two basic parts
Debating
Proposing
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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.
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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 exit points
• 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.
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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 the deal.
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Cabot Circus - UK
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Negotiation and Relationships
Global marketplace
Long-lasting business relationships
Conflicts with short-term needs
Deals from position of strength
Trust and integrity
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Preparation
Give and take
Shared values
Steady dialogue
Creative solutions
Trust and integrity
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Negotiating in DubaiYour experiences?
Developers
Contractors
Sub-contractors
Consultants
Suppliers
Local government Neg
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Summary
Promises – keeping them is hard
Builds reputation
More Trust = More Wins
Never compromise on integrity
Success is measure over time…
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People always give the most consideration, the best deals, to those people they like and TRUST
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Thank you
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