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This presentation explain about how to negotiate with people and make win win solution

This presentation explain about how to negotiate with people and make win win solution

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Negotiation Negotiation Presentation Transcript

  • Students to Start-Ups Entrepreneurial Skills Series Chapter 03 Negotiation
  • Negotiation My father said: "You must never try to make all the money that's in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you won't have many deals.” J. Paul Getty
  • Negotiation
    • Much business-to-business selling involves negotiating skills
    • The two parties need to reach agreement
      • Price
      • Others term of sale
    • Salesperson need to win without making deep concessions that will hurt profitability
    • There are 2 exchange in marketing
      • Routinized exchange : administered program of pricing and distribution
      • Negotiated exchange : price and others term area set via bargaining behavior
  • 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’ Gavin Kennedy Confer with others to reach a compromise or agreement. Concise Oxford Dictionary To negotiate is to trade something we have for something we want. Anon ‘ Negotiation is an explicit voluntary traded exchange between people who want something from each other’ Gavin Kennedy
  • Debunking Negotiation Myths
    • Myth 1: There must be a winner & a loser
    • Myth 2: Appears to involve conflict
    • Myth 3: Negotiation is not an option
    • Myth 4: Only cheap, petty people haggle
    • Myth 5: A good negotiator is manipulative
  • Human Needs Manfred A. Max-Neef 1991. Human scale development: conception, application and further reflections. New York: Apex.
  • Negotiation
    • The most frequently negotiated :
      • Price
      • Contract completion time
      • Quality of goods and service offered
      • Purchase volume
      • Responsibility for financing
      • Risk taking
      • Promotion and title
      • Product safety
  • Three Views of Conflict
    • Traditional view - conflict must be avoided
    • Human relations view - conflict is a natural and inevitable outcome in any group
    • Interactionist view - some conflict is absolutely necessary
      • functional conflict - supports the goals of the work group and improves its performance
      • dysfunctional conflict - prevents group from achieving its goals
  • Conflict and Group Performance Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc.
  • Conflict-Handling Styles Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. Uncooperative Cooperative Cooperativeness Assertiveness Unassertive Assertive Forcing Resolving conflicts by satisfying one’s own needs at the expense of another’s Avoiding Resolving conflicts by withdrawing from or suppressing them Collaborating Rewarding conflict by seeking an advantageous solution for all parties Compromising Resolving conflict by each party giving up something of value Accommodating Resolving conflicts by placing another’s needs and concerns above your own
  • 5 Levels of Communication Chris Spies, 2002
  • The Four Ears of Listening Undine Kayser, 2003
  • Active Listening Techniques (1) Centre for Conflict Resolution, Cape Town, South Africa, 1999
  • Active Listening Techniques (2) Centre for Conflict Resolution, Cape Town, South Africa, 1999
  • Active Listening Techniques (3) Centre for Conflict Resolution, Cape Town, South Africa, 1999
  • Active Listening Techniques (4) Centre for Conflict Resolution, Cape Town, South Africa, 1999
  • When to Negotiate ?
    • Based on Lee and Dobler :
      • When many factors bear not only on price, but also on quality and service
      • When business risks cannot be accurately predetermined
      • When a long period of time is required to produce the items purchased
      • When production is interrupted frequently because of numerous change orders
    • 1 . Preparation and planning skill
    • 2. Knowledge of the subject
    • 3. Ability to think clearly and rapidly under pressure and uncertainty
    • 4. Ability to express thoughts verbally
    • 5. Listening skill
    • 6. Judgement and general intelligence
    • 7. Integrity
    • 8. Ability to persuade others
    34 Characteristics of an Effective Negotiator Art & Science of Negotiation - RAIFFA
    • 9. Patience
    • 10. Decisiveness
    • 11. Ability to win respect and confidence of opponent
    • 12. General problem-solving and analytical skills
    • 13. Self-control, especially of emotions and their visibility
    • 14. Insight into others’ feelings
    • 15. Persistence and determination
    • 16. Ability to perceive and exploit available power to achieve objective
    34 Characteristics of an Effective Negotiator Art & Science of Negotiation - RAIFFA
    • 17. Insight into hidden needs and reactions of own and opponent’s organization
    • 18. Ability to lead and control members of own team or group
    • 19. Previous negotiating experience
    • 20. Personal sense of security
    • 21. Open-mindedness (tolerance of other viewpoints)
    • 22. Competitiveness (desire to compete and win)
    • 23 . Skill in communicating and co-ordinating various objectives within own organisation
    34 Characteristics of an Effective Negotiator Art & Science of Negotiation - RAIFFA
    • 24. Debating ability (skill in parrying questions and answers across the table)
    • 25. Willingness to risk being disliked
    • 26. Ability to act out skilfully a variety of negotiating roles or postures
    • 27. Status or rank in organisation
    • 28. Tolerance to ambiguity and uncertainty
    • Skill in communicating by signs, gestures and silence (non-verbal language)
    34 Characteristics of an Effective Negotiator Art & Science of Negotiation - RAIFFA
    • 30. Compromising temperament
    • 31. Attractive personality and sense of humour (degree to which people enjoy being with the person)
    • 32. Trusting temperament
    • 33. Willingness to take somewhat above-average business or career risks
    • 34. Willingness to employ force, threat or bluff
    34 Characteristics of an Effective Negotiator Art & Science of Negotiation - RAIFFA
  • Negotiation Key Concepts
    • BATNA
    • Reservation Price
    • ZOPA
    • Value Creation through Trades
  • Know your BATNA!
    • Best Alternative to a Negotiated Agreement (BATNA)
    • Typical example: negotiate or go to court
    • Improving your situation
      • Improve your BATNA
      • Identify the other side’s BATNA
      • Weaken the other party’s BATNA
  • Reservation Price
    • The least favorable point at which one will accept a deal
    • The “walk-away”
    • Example: you are looking for larger office space. You set your BATNA at $20/SF and your Reservation Price at $30/SF
    • If owner won’t budge from $35, you walk away and take advantage of your BATNA
  • ZOPA
    • Zone of Possible Agreement (ZOPA)
    • The difference between the Seller’s Reservation Price and the Buyer’s Reservation Price
    • What happens if positions below are reversed?
    ZOPA $275k $250k Seller’s Reservation Price Buyer’s Reservation Price
  • Value Creation through Trades
    • Trade things you value less to the other party
    • Examples:
      • For a supplier the greater value may be not price but an extended delivery time
      • For a customer, extended warranty versus price
      • For an employee, working at home versus salary
  • Summary of Negotiation concept
    • Zone of agreement exists
      • Simultaneously overlapping acceptable outcomes for the parties
    • Reservation price
      • Seller’s
        • The minimum will accept
        • Below s is worse than not reaching agreement
        • x > s , seller surplus
      • Buyer’s
        • The maximum will pay
        • x above b is worse than no agreement
        • x < b , buyer surplus
      • If s < b / than a zone of agreement exist = bargaining
  • The Zone of Agreement Seller’s surplus Buyer’s surplus Zone of agreement s x b Seller’s reservation price (seller wants s or more) Seller wants to move x to the right Final Contract Buyer’s reservation price (buyer wants b or less) buyer wants to move x to the left Money ($)
  • Negotiating is about WHY , not WHAT The purpose of negotiating is seeing if you can get your interests met through and agreement, versus an alternative. Positions are WHAT we want Interests are WHY we want something Negotiate the WHY ….not the WHAT
  • Negotiating Behaviour
    • Gavin Kennedy (The New Negotiating Edge) describes 3 types of behaviour that we can display and encounter when in a negotiating situation
    • RED BLUE PURPLE
    7
  • RED Behaviour
    • Manipulation
    • Aggressive
    • Intimidation
    • Exploitation
    • Always seeking the best for you
    • No concern for person you are negotiating with
    • Taking
    People behave in this manner when they fear exploitation by the other party, but by behaving this way to protect themselves, they provoke the behaviour they are trying to avoid. 8
  • BLUE Behaviour
    • Win win approach
    • Cooperation
    • Trusting
    • Pacifying
    • Relational
    • Giving
    Kennedy talks of a ‘behavioural dilemma’, do you cooperate ( blue ) or defect ( red )? Can you trust the other person? And to what extent? Trusting someone involves risk, on the one hand being too trusting is naïve and on the other, not trusting at all can create deceitful behaviour. The answer is to merge blue and red behaviour into purple . 9
  • 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
    To the red behaviourist the message is loud and clear, ‘You will get nothing from me unless and until I get something from you’. 10
  • Formulating a Negotiation Strategy
    • Strategic plan
      • Commitment to an overall approach that has a good chance of achieving the negotiator’s objectives
        • Soft : avoid conflict, make concessions; often end up exploited and feeling bitter
        • Hard : sees any situation as a contest of wills. Exhausts people and resources and harms relationships
        • Other strategies are between hard and soft, but each involves a trade off
    • Making good tactical decisions
  • Starting Point
    • A successful negotiation must have a basic framework
      • The alternative to negotiation
      • The minimum threshold for a negotiated deal
      • How flexible a party is willing to be, and what tradeoffs it is willing to make
  • Principled Negotiation :The Method
    • Separate the people From the problem
    • Focus on interests , Not positions
    • Invent options For mutual gain
    • Use objective criteria
    Modified from material obtained from the Harvard Negotiation Project
  • Separate the people from the problem
    • Relationship Issues:
    • Emotion/reason
    • Understanding
    • Communication
    • Reliability
    • Coercion/persuasion
    • Acceptance/respect
    • Substantive Issues:
    • Money
    • Terms
    • Conditions
    • Concessions
    • Promises
    • Dates/numbers
    Modified from material obtained from the Harvard Negotiation Project
  • Problem
    • Participants are friends
    • The goal is agreement
    • Make concessions to cultivate the relationship
    • Be soft on the people and the problem
    • Trust others
    • Change your position easily
    • Make offers
    • Disclose your bottom line
    • Accept one-sided losses to reach agreement
    • Search for the single answer: the one they will accept
    • Insist on agreement
    • Try to avoid a contest of wills
    • Yield to pressure
    • Participants are adversaries
    • The goal is victory
    • Demand concessions as a condition of the relationship
    • Be hard on the problem and the people
    • Distrust others
    • Dig in to your position
    • Make threats
    • Mislead as to your bottom line
    • Demand one-sided gains as the price of agreement
    • Search for the single answer: the one you will accept
    • Insist on your position
    • Try to win a contest of wills
    • Apply pressure
    SOFT HARD Positional Which game should you play “ Getting to Yes” - Professor R. Fisher & W. Ury
  • Focus on Interests not Positions
    • Interests = desires and concerns that underlie positions
    • Prepare for negotiation:
      • Clarify interests
      • Understand the interests of the other side
    • Focus the negotiation discussion on:
      • Interests – not positions
    Modified from material obtained from the Harvard Negotiation Project
  • Invent Options for Mutual Gain
    • To invent creative options:
    • Separate inventing from judging.
    • Broaden the options on the table, rather than look for a single answer.
    • Search for mutual gains.
    • Invent ways to make their decision easy.
    Modified from material obtained from the Harvard Negotiation Project
  • Insist on using Objective Criteria
    • Frame each issue as a joint search for objective criteria
    • Reason and be open to reason as to which standards are most appropriate and how they should be applied
    • Never yield to pressure, only to principle.
    Modified from material obtained from the Harvard Negotiation Project
  • Negotiation Styles Source: Rollin & Christine Glaser ACCOMODATE Build friendly relationship Characteristics: Promote harmony Avoid substantive differences Give into pressure to save relationship Place relationship above fairness of the outcomes CONCERN FOR RELATIONSHIP CONCERN FOR SUBSTANCE LOW HIGH COLLABORATE Problem solved creatively, aiming for win-win Characteristics: Search for common interests Problem-solving behaviours Recognising both parties’ needs Synergistic solutions Win-win becomes the main purpose of the negotiator HIGH AVOID Take whatever you can get/Inaction Characteristics: Feeling of powerlessness Indifference to the result Resignation, surrender Take what the other party is willing to concede Withdraw & remove = behaviour of negotiator DEFEAT Be a winner at any cost/Competitive Characteristics: Win-Lose competition Pressure/Intimidation Adversarial relationships Defeating the other becomes a goal for the negotiator COMPROMISE Split the difference Characteristics: Meeting half way Look for trade offs Accept half-way measures Aims to reduce conflict rather than problem solve synergistically
  • The Four Phases of Negotiation PLAN DEBATE PROPOSE BARGAIN 11
  • Step One - Prepare
    • Research
    • LIST your objectives and their objectives
    • Those you INTEND to get
    • Those you MUST get
  • Step Two - Debate
    • Listen carefully
    • Ask questions
    • Clarify
    • Summarise
    • Don’t argue, interrupt or assume
    ...BUT
  • Step Three - Propose
    • Make proposals
    • State conditions
    • Express concerns
    • Search for common interests
    • Use positive body language
    AND
  • Step Four - Bargain
    • Key words are IF and THEN
    • Start making concession:
      • Every concession should have a condition (IF you … THEN I will … )
      • Conserve your concessions - don’t give everything away too soon
      • You don’t have to share every piece of information with the opposing side!
      • Don’t be afraid to say no
  • Classic Bargaining Tactics
    • Acting Crazy
    • Big Pot
    • Get a Prestigious Ally
    • The Well is Dry
    • Limited Authority
    • Whipsaw / Auction
    • Divide and Conquer
    • Get Lost / Stall for Time
    • We Noodle
    • Be Patient
    • Let’s Split the Difference
    • Trial Balloon
    • Surprises
  • Classic Bargaining Tactics
    • Acting Crazy
      • Put on good show
      • Visibly demonstrating your emotional commitment to your position
      • Increase credibility
      • Give opponent a justification to settle on your terms
    • Big Pot
      • Leave your self a lot of room to negotiate
      • Make high demand at the beginning
      • After making concessions, you’ll still end up with a larger payoff
    • Get a Prestigious Ally
      • Try to get opponent to accept less
  • Classic Bargaining Tactics
    • The Well is Dry
      • Take a stand and tell the opponent you have no more concessions to make
    • Limited Authority
      • Negotiate in good faith
      • If you ready to sign the deal, say I have to check with my boss
    • Whipsaw / Auction
      • Several competitors know you are negotiating in the same time
      • Schedule competitors with you for the same time and keep them all waiting to see you
  • Classic Bargaining Tactics
    • Divide and Conquer
      • Negotiation with opponent team
      • Sell one member to help you sell the other members of the team
    • Get Lost / Stall for Time
      • Leave the negotiation completely for a while
      • Come back when things are getting better and try to renegotiate
      • Time period can be long or short
    • We Noodle
      • Give no emotional or verbal response
      • Don’t response to his or her force or pressure
    • Be Patient
      • If you can afford to outwait
      • You will probably win big
  • Classic Bargaining Tactics
    • Let’s Split the Difference
      • The person who first suggest this has the least to lose
    • Trial Balloon
      • Release your possible / contemplated decision through a so-called reliable source before the decision is actually made
      • To test reactions to your decisions
    • Surprises
      • Keep the opponent off balance by
        • Drastic
        • Dramatic
        • Sudden shift
      • Never be predictable
        • Keep the opponent from anticipating your move
  • Step Five - Agree
    • Usually final concession : “IF you do that, THEN we have a deal!”
    • Gain commitment
    • Record and agree results
    • Leave satisfied
  • Think about your influencing style Inspirational Logical Personal Forceful
  • 7 Deadly Sins of Negotiating
    • Pride - Be prepared to compromise
    • Gluttony - Don’t bite off more than you can chew
    • Anger - Handle objections calmly
    • Covetousness - Prioritise needs/wants
    • Envy - Know competitors strengths & weaknesses… AND your own
    • Sloth - Do your homework
    • Lust - Don’t look desperate to settle
  • An Unconditionally Constructive Strategy
    • Do only those things that are both good for the relationship and good for us - whether or not they reciprocate
    &quot;Getting Together&quot; Fisher RATIONALITY Even if they are acting emotionally, balance emotions with reason UNDERSTANDING Even if they misunderstand us, try to understand them COMMUNICATION Even if they are not listening, consult them before deciding on matters that affect them RELIABILITY Even if they are trying to deceive us, neither trust them nor deceive them: be reliable NON-COERCIVE MODES OF INFLUENCES Even if they are trying to coerce us, neither yield to that coercion nor try to coerce them, be open to persuasion and try to persuade them ACCEPTANCE Even if they reject us and our concerns as unworthy of their consideration, accept them as worthy of consideration, care about them and be open to learning from them
  • Three Approaches To Resolving Disputes MOVING FROM A DISTRESSED TO AN EFFECTIVE RESOLUTION SYSTEM Distressed System &quot;Dispute Resolution&quot; Goldberg Green Sander Power Rights Interests
  • Three Approaches To Resolving Disputes Effective System Goldberg MOVING FROM A DISTRESSED TO AN EFFECTIVE RESOLUTION SYSTEM Power Rights Interests
  • Salary Negotiation: Best Practices
      • Know what want-prioritize and logroll
      • Conduct research to understand your worth
        • how it compares
        • what you will do if don’t get what you want
      • Know with whom to negotiate and what can
      • be negotiated
      • Find the minimum, midpoint and maximum salary grades for the position
      • Think total compensation
      • Consider enlarging the shadow of the future
  • Salary Best Results
    • What until you have an offer to negotiate
      • allow employer to initiate discussion
      • be prepared to discuss salary at any time
    • Preserve the relationship
      • no ultimatums; appear accommodating; be concerned with their interests
      • ask questions when encountering resistance
    • Consider long term effects of your plan
    • Practice
    • Watch for signals
    • Get offer in writing
  • Salary: Things to Avoid
    • Personal needs or self-serving perks
    • Gamesmanship: one more thing or hard squeeze
    • Multi-company leveraging
    • Appearance of desperation
    • Lying, exaggeration or misleading
    • Quick decisions or countering too soon
    $$$
  • Tip #1 Negotiating is not Compromising It is joint problem solving Our goal is to efficiently reach a satisfying agreement for both parties, and to conclude on a positive note. Fisher and Ury define negotiations as “Back and forth communication to reach agreement where some interests are shared and some interests are opposed. “ Getting to Yes”
  • Tip #2 People Skills Make the Difference
    • What is your “preferred style” of communicating?
    • What is the “style” of the other person with whom you will be negotiating?
    • Are these styles compatible, or are they opposites?
  • Tip #2A: Listening is the most powerful negotiating skill
    • It begins with effective communication…understanding your preferred method and learning the method of the other party.
    • Communicate with them in a way that will be most effective with their style
    • This helps to eliminate the possibility of misunderstanding, as we communicate in many ways
  • Listening is your most powerful negotiating tool
    • But before you can listen, you have to be skilled at asking questions:
    • Three critical questioning skills
    • Know where your questions are going
    • Ask for permission to ask questions
    • State why you want to ask questions
    • Purpose-Process-Payoff
  • Listening is your most powerful negotiating tool If that is the case, why are we such bad listeners? We listen to reply, argue, rebut, make our point, or win. We do not typically listen to understand. As Covey said, “Seek first to understand, then be understood
  • Tip #3: Have a game plan before beginning to negotiate Few people plan before beginning to negotiate If you cannot walk away from the negotiation at any time, you will lose. Knowing your options outside of the negotiation is a direct function of preparation. Without a plan you risk agreeing to something worse than what you may have done on your own.
  • Negotiation Check List 42
    • Interrupting
    • Attacking
    • Blaming
    • Talking too much
    • Sarcasm
    • Threats
    • Taking it personally
    • Closed body language
    • Actively listen
    • Question for clarification
    • Summarising
    • Test commitment
    • Seeking & giving information
    • Encourage two way conversation
    • State and plan your proposal – then summarise
    • Use the ‘if you ….then we’ll’ principle
    Avoid Good Practice
  • Questions
  • To be continued in the next chapter……… THANK YOU kurniawan_260305@yahoo.com
  • Communication Stumbling Blocks (1) Centre for Conflict Resolution, Cape Town, South Africa, 1999
  • Communication Stumbling Blocks (2) Centre for Conflict Resolution, Cape Town, South Africa, 1999
  • Communication Stumbling Blocks (3) Centre for Conflict Resolution, Cape Town, South Africa, 1999
  • Communication Stumbling Blocks (4) Centre for Conflict Resolution, Cape Town, South Africa, 1999