Bijay Jha PGPM/2010-12/06
Debadatta Sahoo PGPM/2010-12/11
Pratim Das PGPM/2010-12/30
Ruru Kumar Sahu PGPM/2010-12/34
Sabeeha Tanweer PGPM/2010-12/35
Siddhartha Priyaranjan PGPM/2010-12/46
Somika Saran pandey PGPM/2010-12/47
Subhashree Ray PGPM/2010-12/49
The word ‘Negotiation’ is derived from the Latin word ‘Negotiationem’ meaning
The act of Negotiation is synonymous with the evolution of the needs and wants
of human individuals. There are absolute evidences that suggest that the early
men used the act of negotiation in conveying their thoughts and ideologies
towards the member of their clans. They used it to acquire possession of a
particular need, keeping in view of others priority as well.
The civilization of man soon manifested in powerful negotiations to bring in
harmony and co-operation among them. The act of bargaining soon evolved into
Consultation. The further democratic development of Consultation led to
The history provided evidences relating to the negotiations taking place between
buyer and seller, kings of territories, social gatherings, etc.
What is Negotiation?
The term ‘Negotiation’ actually means a discussion intended to produce an
agreement. This discussion may encompass parties whose needs being different,
come to an interface where they achieve a common solution.
We certainly find examples of day-to-day negotiations whenever we are in
dire need of buying articles and goods for maintaining our living. A negotiating
party may as well be a consumer at one end and the seller at the other end. A
transaction is not carried out unless the wants and needs of the customer are not
given certain taste of satisfaction, keeping in regard of the profit earned. In order
to add to this agenda of transaction the key point that is fundamental is
The same maybe applied in case of Managers, who make use of their
excellent persuasive and negotiating skills to equip themselves to guide their
employees towards joint problem solving and in joint opportunity finding.
Introduction to Negotiation:
Negotiation is the process of two individuals or groups reaching joint agreement
about differing needs or ideas.
Negotiation applies knowledge
from the fields of
sociology, politics, and conflict
Negotiations become an
important aspect of business
communication when resolving
issues. Business negotiations can
range from a worker's request
for higher pay to discussions of
an international business deal.
There are basically 2 kinds of Negotiation ideologies being followed up in business
(a) Competitive: Competitive strategies assume a "win-lose" situation in which
the negotiating parties have opposing interests. Hostile, coercive negotiation
tactics are used to force an advantage, and pre negotiation binding
agreements are not allowed. Concessions, distorted communication,
confrontational tactics, and emotional ploys are used. It is also called as
adversarial, non cooperative, distributive bargaining, positional, or hard
bargaining— is used to divide limited resources; the assumption is that the pie
to be divided is finite.
(b) Cooperative: Negotiation is based on a win-win mentality and is designed to
increase joint gain; the pie to be divided is perceived as expanding. Attributes
include reasonable and open communication; an assumption that common
interests, benefits, and needs exist; trust building; thorough and accurate
exchange of information; exploration of issues presented as problems and
solutions; mediated discussion; emphasis on coalition formation; pre
negotiation binding agreements; and a search for creative alternative solutions
that bring benefits to all players. This Negotiation is also called integrative
problem solving or soft bargaining.
The goal of business negotiations should be to obtain a win-win outcome. A
win-win outcome leaves all parties of a negotiation satisfied. The first step in
achieving this outcome involves knowing what the other party wants.
The process of negotiation is instrumental in achieving the desired results in the
company’s run of transactions. It is therefore necessary for a business deal to
adhere to strict stages in the negotiation.
The basic stages of negotiation may be enlisted as:
(a) Preparation: The preparation for a negotiation may involve:
• Identifying what the needs are.
• Planning thoroughly.
• Identifying alternatives and prioritizing issues (BATNA-Best alternative
to negotiated alternative).
• Establishing a settlement range (ZOPA- zone of possible agreement).
• Focusing on long-term goals and consequences.
(b) Discussion: The next stage involves further discussion of the issues with
the members so as to choose the best strategies before the actual
negotiation. This again involves the following:
• Being aware that "no" can be the opening position and the first offer
is often above expectations.
• Being aware of the reluctant buyer or seller ploy.
• Revising strategies.
• Considering many options.
(c) Proposal: The proposal that is to be presented depends upon the existing
needs of the presenter and revolves around a set of issues and alternatives
that maybe a threat or opportunity. The proposal is designed keeping in
view that it appeases the parties at the other end of negotiation table. As
such, the ultimate goal being a Win-Win negotiation.
The few key points under this are:
• Increasing power by getting the other side to commit first.
• Adding credibility by getting agreements in writing.
• Being wary of splitting the difference.
• In handling an impasse, offering to set it aside momentarily.
• In handling a stalemate, alter one of the negotiating points.
• In handling a deadlock, bring in a third party.
• When asked for a concession, asking for a tradeoff.
• Being wary if the other party uses a "higher authority" as a rationale
for not meeting negotiating points.
• Being aware of the "vise" tactics.
(d) Agreement: The agreement finally comprises of the accepted negotiated
proposal that is in accordance with the norms of both the negotiating
This agreement follows certain steps as under:
• Counter the other party's asking for more concessions at the end by
addressing all details and communicating the fairness of the deal in
• Do not expect the other party to follow through on verbal
• Congratulate the other side.
Nature/characteristics of negotiation –
Followings are the essential of negotiation, which describe the nature of
• It requires two parties: A negotiation is a meeting between two parties
over issues, which is important in the opinion of both parties. The parties
must be in conflict and it requires the parties to work together to achieve
some desired outcomes.
• It is a continuous process: Negotiation is a continuous process in an
industrial or in a business organization. It occurs between the employers
and the employees on wages, terms and conditions of the employment,
between sales representatives and buyers on price and contracts and
between the departments over resources allocation.
• Usually there is no winner/loser: Negotiation need not have a winner or
loser. In every negotiation, there are opportunities to be created especially
while using social skills and effective communication to bring both parties
together toward win-win outcomes in which mutual interest of the parties
• Require flexibility: The parties which are involved in negotiation need to be
flexible. The areas of the agreement are to be identified clearly. Without
flexibility, there will be very little room to maneuver during the negotiation
process itself. It will result in putting the issue into a corner. Ultimately it
leads to a negative attitude where there is non- co-operation and refusal to
reach a conclusion.
• A process not an event: it is a process involving briefing and creating a
climate of discussion and understanding each other; where the ultimate
objective is to reach an agreement.
• Needs effective communication: Negotiation based on effective
communication. The C’s for its effectiveness are completeness,
consciousness, courtesy, cordial, correctness and consideration.
Types of negotiation –
There are two types of negotiation on the basis of relationship
1. Distributive negotiation
2. Integrative negotiation
DISTRIBUTIVE (the Fixed Pie):-
The term distributive means; there is a giving out; or the scattering of
things. By its mere nature, there is a limit or finite amount in the thing being
distributed or divided amongst the people involved. Hence, this type of
negotiation is often referred to as 'The Fixed Pie'
In the real world of negotiations, two parties face off with the goal of
getting as much as possible. The seller wants to go after the best price they can
obtain, while the buyer wants to pay the lowest price to achieve the best bargain.
A distributive negotiation usually involves people who have never had a
previous interactive relationship, nor are they likely to do so again in the near
future. Simple everyday examples would be when we're buying a car or a house.
Purchasing products or services are simple business examples where distributive
bargaining is often employed. Remember, even friends or business acquaintances
can drive a hard bargain just as well as any stranger. While selling a car both
parties are unknown to each other. Relationship has no value. Only money is
important. One may gain, other may lose.
Secondly, when we are dealing with someone unknown to us, and it's a one-time
only occurrence, we really have no particular interest in forming a relationship
with them, except for the purpose of the deal itself. We are generally less
concerned with how they perceive us, or how they might regard our reputation.
Ours and their interests are usually self-serving.
Distributive Bargaining Basics
• Play your cards close to your chest - Give little or no information to the
other side. The less they know about our interests as to why we want to
make the purchase, our preferences, or the point at which we'd decline
to deal, the better our position. Expressing eagerness or need, reveals a
weakness which could be exploited to our disadvantage.
• The opposite is equally true - Try to pry as much information from the
other side. Any additional information that we uncover can be used as
leverage to negotiate a better deal.
• The only thing you should ever tell - The only information we should ever
reveal are those alternative options, such as other sellers, which shows
we are prepared to walk from the negotiation whenever it suits us.
• Let them make the first offer - Whatever is used as the first offer will
generally act as an anchor upon which the rest of the negotiation will
revolve. Try to get the other side to set the stage from which to start.
• Be realistic - Being too greedy or too stingy will likely result in no
agreement, so keep it real.
INTEGRATIVE:-Everybody Wins Something (usually)
The word integrative means to join several parts into a whole. Conceptually, this
implies some cooperation, or a joining of forces to achieve something together.
Usually involves a higher degree of trust and a forming of a relationship. Both
parties want to walk away feeling they've achieved something which has value by
getting what each wants. Ideally, it is a twofold process. In the real world of
business, the results often tilt in favors of one party over the other because, it's
unlikely that both parties will come to the table at even strength, when they
begin the talks.
In integrative negotiation relationship or reputation is important. Both parties try
to protect the interest of employee and owner. Nonetheless, there are many
advantages to be gained by both parties, when they take a cooperative approach
to mutual problem solving. The process generally involves some form or
combination of making value for value concessions, in conjunction with creative
problem solving. Generally, this form of negotiation is looking down the road, to
them forming a long term relationship to create mutual gain. It is often described
as the win-win scenario.
Integrative Negotiation Basics
• Multiple Issues - Integrative negotiations usually entails a multitude of
issues to be negotiated, unlike distributive negotiations which generally
revolve around the price, or a single issue. In integrative negotiations,
each side wants to get something of value while trading something which
has a lesser value.
• Sharing - To fully understand each other's situation, both parties must
realistically share as much information as they can to understand the
other's interests. You can't solve a problem without knowing the
parameters. Cooperation is essential.
• Problem Solving - Find solutions to each other's problems. If you can offer
something of lesser value which gives your counterpart something which
they need, and this results in you realizing your objective, then you have
integrated your problems into a positive solution.
• Bridge Building - More and more businesses are engaging in long term
relationships. Relationships offer greater security.
MULTIPARTY AND MULTIPHASE NEGOTIATION:-
Some negotiations go through phases and deal is done at last. Some
negotiations have many parties as shareholder. It is multiparty. Business and
professional negotiations commonly involve more than two parties, and generally
more than two people. In multiparty negotiations, coalitions or alliances can form
among the parties and influence the process and outcome. Coalitions have more
power than any individual party involved in the negotiation.
Positive affect in negotiation
Even before the negotiation process starts, people in a positive mood have more
confidence, and higher tendencies to plan to use a cooperative strategy. During
the negotiation, negotiators who are in a positive mood tend to enjoy the
interaction more, show less contentious behavior, use less aggressive tactics and
more cooperative strategies. This in turn increases the likelihood that parties will
reach their instrumental goals, and enhance the ability to find integrative
gains. Indeed, compared with negotiators with negative or natural affectivity,
negotiators with positive affectivity reached more agreements and tended to
honor those agreements more. Those favorable outcomes are due to
better making processes, such as flexible thinking, creative problem solving,
respect for others' perspectives, willingness to take risks and higher
confidence. Post negotiation positive affect has beneficial consequences as well.
It increases satisfaction with achieved outcome and influences one’s desire for
future interactions. The PA aroused by reaching an agreement facilitates the
dyadic relationship, which result in affective commitment that sets the stage
PA also has its drawbacks: it distorts perception of self-performance, such that
performance is judged to be relatively better than it actually is. Thus, studies
involving self-reports on achieved outcomes might be biased.
Negative affect in negotiation
Negative affect has detrimental effects on various stages in the negotiation
process. Although various negative emotions affect negotiation outcomes, by far
the most researched is anger. Angry negotiators plan to use more competitive
strategies and to cooperate less, even before the negotiation starts. These
competitive strategies are related to reduce joint outcomes. During negotiations,
anger disrupts the process by reducing the level of trust, clouding parties'
judgment, narrowing parties' focus of attention and changing their central goal
from reaching agreement to retaliating against the other side. Angry negotiators
pay less attention to opponent’s interests and are less accurate in judging their
interests, thus achieve lower joint gains. Moreover, because anger makes
negotiators more self-centered in their preferences, it increases the likelihood
that they will reject profitable offers. Opponents who really get angry (or cry, or
otherwise lose control) are more likely to make errors: make sure they are in your
favor. Anger doesn’t help in achieving negotiation goals either: it reduces joint
gains and does not help to boost personal gains, as angry negotiators don’t
succeed in claiming more for them. Moreover, negative emotions leads to
acceptance of settlements that are not in the positive utility function but rather
have a negative utility. However, expression of negative emotions during
negotiation can sometimes be beneficial: legitimately expressed anger can be an
effective way to show one's commitment, sincerity, and needs. Moreover,
although NA reduces gains in integrative tasks, it is a better strategy than PA in
distributive tasks (such as zero-sum). In his work on negative affect arousal and
white noise, Seidner found support for the existence of a negative affect arousal
mechanism through observations regarding the devaluation of speakers from
other ethnic origins." Negotiation may be negatively affected, in turn, by
submerged hostility toward an ethnic or gender group.
The negotiation is an art and science:
The negotiation process is both a science and an art. Like most things in life,
there is a learning curve associated with achieving successful results. We don’t
believe that negotiation as a disciplinary science should exist in isolation, but should
instead be interwoven with many other disciplines, including business and social
The negotiation skill is basically the art of nature. It relates the human
behaviour, (the psychology). The science of the negotiation reflects the external
factors (the facts and figure).
The negotiation skills vary from human to human depending on their
psychology. It’s the internal factor which affects the negotiation very much. The
listening skills, the posture and gesture, body movement, décor of the room, mode
of communication and patience are the art of negotiation. It creates an
environment of interest in negotiation.
• Listening skill: The mode and interest of the listening skills among the
negotiating people makes the negotiation successful. Because it
reflects the interest of the parties.
Throughout the whole process of negotiation, the individual parties
listen carefully to each other very carefully in order to make it
• Posture and gesture: The posture and the gesture and the body
movement also have a vital role in negotiation. It enhances the
interest in negotiation.
• Décor of the room: The confined place or the environment of
negotiation affects the whole process entirely. The decoration of that
environment shows the approach of the parties.
• Mode of communication and patience: The parties are involved in
negotiation makes it successful through mode of communication. The
entire negotiation are not bounded by the time period, so lots of
patience required for driving the process towards successful.
• Keep Your Cool: Experts agree on ground rules for communicating
problems—no yelling and no walking away.
• Be Brief: Don't go on and on, says Billikopf. He also suggests avoiding
words such as "we disagree," a phrase that throws a person to the
Negotiation is also a science. It deals with the external environment such as
facts of the negotiation, the details of the topic. If the discussion is regarding any
organization then the details of the organization also regarded as the science of
Before starting any negotiation the parties involved in it, try to get the
information on the topic. One of the most common practices used to accomplish
peace is negotiation. With its elevated role in the dialogue surrounding peace,
negotiation is often steeped in politics and focused on managing parties in
conflict. However, the art and science of negotiation can and should be viewed
more broadly to include a scientifical and cognitive approach. Scientifical and
Political Strategies for Peace Negotiation gather the foremost authors in the field
and combine their expertise into a volume which addresses the complexity of
peace negotiation strategies. To further underscore the importance of successful
negotiation strategies, the editors have also included the unique perspective of
authors with personal experience with political upheaval in Serbia and Lebanon.
Though each chapter focuses on a different topic, they are integrated to create a
foundation for future research and practice. Specific topics included in this
volume embrace: • Changing minds and the multiple intelligence (MI) framework
• Personal schemas in the negotiation process • Escalation of image in
international conflicts • Representative decision making • Transformative
leadership for peace negotiation Scientifical and Political Strategies for Peace
Negotiation is an essential reference for psychologists, negotiators, mediators,
and conflict managers, as well as for students and researchers in international,
cross-cultural and peace psychology studies.
Develop appropriate attitudes towards:
The process of negotiating
Negotiations tend to follow a basic pattern. At the early stages the parties explore
each other’s position; they build a relationship and seek to understand each
other’s concerns. They identify the issues and familiarize themselves with the
other’s negotiating style. They then begin a process in which they begin to move
towards each other. It is a process of exchange and persuasion. They make offers
and respond to offers; they exchange information, seek to persuade the other
side and each side’s stance is modified by what is learned from the other.
Gradually they begin to narrow their differences; they agree on some issues and
identify fresh problems. They begin to see that agreement is at hand and move
towards closure. It is important to be aware of these processes and to plan
accordingly. It is also important to be aware that different strategies may be
appropriate at different phases in the negotiation process. Many negotiations
start off competitively, trading bids and counter-bids, but as deadlock approaches
there is a shift to a cooperative stance to reach agreement. It is important, too, to
recognize that different strategies involve different sequences. A competitive
bargainer in an adversarial negotiation typically exchanges information after
trading bids. Bids will then be modified and concessions made in the light of the
new information. A cooperative bargainer, on the other hand, seeks to exchange
information, first identifying common interests, then working out solutions and
finally moving to a process of bidding.
The vital thing to remember here is that it is the client’s case. Your objectives will
be based on what the client wants, not what you think they want, or what you
think is best for them. Make sure you fully understand your client’s objectives and
interests, needs and priorities. As a competent professional, it is your
responsibility to represent your client as effectively as you can and to support
them in trying to achieve their objectives.
The subject matter of the negotiation
Similarly, you may find yourself out of sympathy with the subject matter of a
negotiation. You may regard the issues as trivial, or they may offend your sense of
right and wrong. Again, it is a part of your professional competence to represent
your client’s point of view.
The other party
You will meet a range of individuals and approaches during your negotiating
career. Some of these will be difficult to deal with. Some may be aggressive, or
rude, for example.
In human relations, the behaviour of one party influences the behaviour of the
other. Aggression invites aggression in response. Your professionalism demands
that you don’t get drawn into this kind of reciprocal behaviour. Remain detached
and remember that you are there to reach an agreement if possible. Make this
clear to your opponent.
Your own role in the process
In a negotiation you can act only with your client’s authority. You must therefore
be clear about the scope of your instructions and must keep your client fully
informed to enable them, not you, to make decisions. You are under a duty to get
the best possible settlement for your client. However, this duty can conflict with
another aspect of your role. Lawyers are repeat players, in the sense that they will
probably meet the same opponents regularly over time. They will therefore want
to maintain good working relationships with their colleagues. If you gain a
reputation as a very competitive negotiator, it could make it difficult when
negotiating on behalf of future clients. On the other hand, maintaining good
working relationships with fellow professionals should not be done at the
expense of getting the best outcome for a client.