NEGOTIATION SKILLS

Why Negotiate?
Gavin Kennedy in his book The New Negotiating Edge says..

Animals do not negotiate. They use violence or the threat of violence to get what they want, whether it be food, a mate or territory. Have you ever seen 2 dogs negotiate over a bone? Trade is the human foundation of human civilisation. It is what makes humans different from animals.

Negotiation is anathema to tyrants, who usually want something for nothing and do not recognise a need for another persons voluntary consent before they get what they want

Negotiation What is it?

The process by which we search for the terms to obtain what we want from somebody who wants something from us

Negotiation is an explicit voluntary traded exchange between people who want something from each other
Gavin Kennedy

Gavin Kennedy

To negotiate is to trade something we have for something we want.

Anon

Confer with others to reach a compromise or agreement.

Concise Oxford Dictionary

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.

When do we Negotiate?
When we need someones consent When the outcome is uncertain Deals with suppliers Internal Discussion Stakeholder group Recruiting new people

WHY DO WE

NEGOTIATE

Achieving better outcome Resolving differences in opinion More enduring relationship Reducing cost & overheads To reach an agreement To beat the opposition To compromise To settle an argument To make a point

SOME SKILLS
Creating climate Asking questions Active listening Discipline Flexibility

TYPES OF NEGOTIATION
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 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.

DIFFERENCE
Characteristics Outcome Motivation Distributive Win Lose Individual gain Integrative Win win Joint & individual gain

Interest

Opposed

Different but not always opposed Long term generally Multiple Creative

Relationship Issues Involved Solution

Short term Single Not creative

NEGOTIATION PROCESS
PREPARATION

INFORMATION SHARING

BARGAINING

FINALIZING THE DEAL

PREPARATION
1. 2. 3. 4. 5.

6. 7.

8. 9. 10. 11.

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! Practice!

INFORMATION SHARING
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

Bargaining has two basic parts

Debating Proposing

DEBATING

To be successful in negotiation you must build relationships and trust You need to avoid the followingPoint 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

Instead tryBuilding 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.

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

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.

BATNA
BATNA is an acronym for:

Best Alternative To
a

Negotiated Agreement

WHY BATNAS MATTER

BATNAs

tell you when to accept and when to reject an agreement

When
When

a proposal is better than your BATNA: ACCEPT IT

a proposal is worse than your BATNA: REJECT IT

BATNA
Best

Alternative to a Negotiated Agreement Develop your BATNA

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

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

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.

Example: [Showroom salesman s customers]

V/