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NEGOTIATION SKILLS

Presented By: TARINI- 41002 SACHIN- 41001

CONTENTS
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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

Where do use this skill?

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Everything
Family

is negotiated.

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 Ill sue you.

WHAT IS NEGOTIATION ?
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The

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

The

FEATURES OF NEGOTIATION
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Minimum two parties Predetermined goals Expecting an outcome Resolution and Consensus Parties willing to modify their positions Parties should understand the purpose of negotiation

Why do we NEGOTIATE ?
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To

reach an agreement To beat the opposition To compromise To settle an argument To make a point

TYPES OF NEGOTIATION
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Distributive Negotiation Integrative Negotiation

1st Type: 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 Sellers goal is to negotiate as high a price as possible; the Buyers 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.

2nd Type: 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 nonfinancial 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

DISTRIBUTIVE VERSUS INTEGRATIVE NEGOTIATIONS

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Characteristic Outcome Motivation Interests Relationship Issues involved Ability to make trade-offs Solution

Distributive Win-lose Individual gain Opposed Short-term Single Not Flexible Not creative

Integrative Win-win Joint and individual gain Different but not always Opposite Longer or Short-term Multiple Flexible Creative

NEGOTIATION PROCESS
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PREPARATION Click here

INFORMATION SHARING Click here

BARGAINING click here

FINALIZING THE DEAL click here

BATNA
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BATNA is an acronym for:

Best Alternative To
a

Negotiated Agreement

Why BATNAs Matter

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BATNAs tell you when to accept and when to reject an agreement

When

a proposal is better than your BATNA: ACCEPT IT a proposal is worse than your BATNA: REJECT IT

When

BATNA
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Best Alternative to a Negotiated Agreement Develop your BATNA

- List your alternatives - Evaluate your alternatives - Establish your best as your BATNA

Consider their BATNA Have a Reservation Point the least you will accept List their alternatives their BATNA

BATNA Example
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Example: [Showroom salesman V/s customers]

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.

NEGOTIATION STRATEGY Berrin By: Kenneth

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High

INTITUTION [Ability to modify others]

BARGAINING

EMOTION

COMPROMISE

LOGICALLY

Low Low

INFLUENC E

High

Bargaining Zone Model of Negotiation

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Your initial point

Your target point

Your resistance point

Area of potential agreement Opponents resistance point Opponents target point

Opponents initial point

EXAMPLE
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NEGOTIATING BEHAVIOUR
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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) Ill 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. 2. 3.

4.
5.

Investigation Mediation Conciliation Arbitration Adjudication

EFFECTIVE NEGOTIATION
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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 Negotiators Dilemma a classic risk strategy game

The Negotiators Dilemma

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B Cooperates A Cooperates Both cooperates Both have a good outcome

B Competes A Cooperates B Competes A has terrible outcome, B has great outcome

A Competes

A Competes B Cooperates

Both competes Both have mediocre outcome

A has great outcome, B has terrible outcome

NEGOTIATION TIPS
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1)

2)

3)

4) 5)

Do not underestimate your power. Do not assume that other party knows your weaknesses. It is a mistake to assume you know what the other party wants. Never accept the 1st offer. Dont fear to negotiate.

SKILLS FOR EFFECTIVE NEGOTIATION

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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

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THANK YOU

PREPARATION
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1. 2. 3. 4. 5.

6.

7.

8. 9. 10.

Firstly understand what it is you want? What do you think your opponent wants? What would happen if you didnt do a deal? Do you know your stakeholders? Do you know who the decision maker is? Are you negotiating with them? If not what affect does that have? Are there concessions you can build into the negotiation? Know your product / service inside out? What standards are there in the market place? Know your price points? What issues do you think youll need to overcome? Prioritize!

INFORMATION SHARING
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1.

2.
3.

4.
5.

6.
7. 8.

Company activities and market position Opinion on entry points What elements are clearly off the table or not up for discussion and why Opponents attitude and commitment Motivational factors (I want this price because) Stakeholders and importantly decision makers Problems, issues or risk An order/structure for proceedings

BARGAINING
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Bargaining has two basic parts

Debating Proposing

DEBATING
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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 Im 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 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.

Instead try

PROPOSING
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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 dont argue and try and remain realistic, and invite a response from your opponent.

FINALIZING THE DEAL

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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.