Negotiation

“Let us never negotiate out of fear, but let us never fear to negotiate.”

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Negotiation

• Negotiation: It is a decision making process among interdependent parties who do not share identical preferences. It is through negotiation that the parties will decide what each will give & take in their relationship/s.

• “It is a face-to-face decision making process between parties concerning a specific issues.”

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Negotiation

• Features of Negotiation:There are a minimum of two parties present.Both parties have predetermined goals.Some of the predetermined goals are not

shared by both the parties.There is an expectation of outcome.Both parties believe that the outcome of

negotiation may be satisfactory.

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Negotiation

Both the parties are willing to modify their positions.

The parties’ incompatible positions might make modification of position difficult.

The parties understand the purpose of negotiation.

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Negotiation

• Objectives of Negotiation:Understand what negotiations are all about.Select a strategy to negotiate effectively.Learn the range of negotiation approaches &

their results based on your interaction/s.Plan for negotiation session.Use communication techniques to avert potential

conflicts.Practice your general negotiation technique.

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Negotiation

Negotiation – Remember two elements are essential:

1.Reasonableness2.Flexibility

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Negotiation

• The basic components:PreparationObjectivityStrategyTechnique.

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Negotiation

• Identification of issues – Factors to consider:The FactsThe ProblemThe ResultThe Reason

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Negotiation

• Types of Negotiation: On the basis of stability aspect of negotiated settlement, the negotiation processes have been divided into two categories:

1.Integrative Approach (Win-Win Strategy)2.Distributive approach (Win-Loose Strategy/

Zero-Sum Strategy)

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Negotiation

• Principles to Integrative Approach:1. Separate people from problem2. Focus on interest, not positions.3. Invent options for mutual gains.4. Insist on using objective criteria.

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Negotiation

• Principles to Distributive approach:1.I want it all.2.Time wrap3.Good cop – bad cop4.Ultimatum

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Negotiation

• The five elements of Negotiation:1.The parties & their interests.2.Interdependency3.Common Goals4.Flexibility5.Decision – making ability/authority

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Negotiation• Need of developing Negotiating Skills:

Following are the key concern areas that are needed to be focused while one begins to build these negotiating skills –

1. Negotiations are rarely pure win-lose or win-win propositions

2. Negotiations takes place under conditions of ambiguity & uncertainty.

3. Most negotiations involve existing or potential sources of conflict that impede reaching an agreement.

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Negotiation4. Negotiations are chaotic & seldom pass sequentially

through distinct phases such as pre-negotiation, deal structuring, detailed bargaining & agreement.

5. Most negotiations are linked to other negotiations.6. Negotiation process comes in, stops & restarts.7. Most complex negotiations takes place between

agents of groups & not the group themselves.8. Complex negotiations often involves a team

approach.9. Negotiating skills can be learned.

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Bargaining Styles

People have different organizing styles – varying from relatively stable to personality driven clusters of behavior and their reaction/s. These styles, when followed in a set pattern leads to the formation of certain specific models known as models of negotiation.

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Dual Concern Model

• This was proposed by Dean G. Pruitt, Jeffery Z. Rubin & Sung Hee Kin. This model explains how one’s behavior while bargaining or during conflict, is influenced by two concerns:

1.The desire to satisfy oneself.2.The desire to satisfy the other party.

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Dual Concern ModelThe bargaining styles associated with Dual Concern Model stems from two personality dimensions:

1. Assertiveness2. Co-operation

These two concerns yield five negotiating styles:i. Avoidingii. Accommodatingiii. Compromisingiv. Competingv. Collaborating

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Five Factor Model

• This is also known as Big-5 Personality Dimension, presented by Zhenzhong Ma. He sought to determine whether personality factors could predict an individual’s bargaining style & whether one’s bargaining style adequately predicts bargaining behavior?The dimensions of personality are also referred to as OCEAN Approach.

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PRAM Model

• Ross & Long developed the PRAM Model to put win-win approach into practice. This model guides the negotiator through four steps of:

1.Planning for Agreement2.Building Relationship/s3.Reaching Agreement/s4.Maintaining Relationship/s

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The Negotiation Process

The process of negotiation has following 4 stages:

• Stage I: Preparation• Stage II: Opening Session• Stage III: Bargaining• Stage IV: Settlement

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The Negotiation Process

• Stage I: Preparation

Identify all the issuesSet prioritiesDevelop supportive arguments

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The Negotiation Process

• Stage II: Opening Session

Ground RulesFramework for SuccessInitial OffersPosturing

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The Negotiation Process

• Stage III: Bargaining

Single Issue NegotiationMultiple Issue Negotiation

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The Negotiation Process

• Stage IV: Settlement

ImpasseThird Party InterventionThe Closing

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The Negotiators/ AgentsNegotiation/s can take place between two individuals who are representing their own interests such as:

Individual & his lawyer who are representing negotiating deal.

Between a group of people engaged in decision making process.

Between parties representing interest other than their own as is typically found in a business transaction between a company & its suppliers.

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Types of Negotiators/ Agents

Broadly we classify the negotiators as:

1.Independent Agents2.Non – Independent Agents

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The ChallengeBargaining is a process that includes:1.Gathering general information2.Learning the priorities of the other side in a

specific negotiation3.Assessing the strengths & weakness of their

own positions.

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The Challenge(cont..)

The challenge in being an agent of the principal party who is not into negotiation, is to make sure the principal party is aware of how the negotiation process is progressing. If the principal party is not a direct part of that process, the agent must discuss the information gathered at the negotiating table & get direction from the principal party on how to proceed.

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