Your SlideShare is downloading. ×

Negotiations

1,169
views

Published on


0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
1,169
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
37
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Leigh Thomson Brief Overview “Never negotiate out of fear, but never fear to negotiate”- John F. KennedyPage 1 Pradeep Kumar Vasdev, Edag Technologies Pvt Ltd
  • 2. Preparation is the key for any successful negotiation Crucial steps of Negotiations Identify your key goals Brainstorm your options Plan your opening move “Goal must clearly state your interests and answer the why question.“ Fundamental rules of Brainstorming List all options, however outlandish they may appear Strive for quantity Reserve judgement and evaluation until later Mix, match and combine different options Opening move must clearly articulate the goal ( ideal situation ) and suggest how to reach itPage 2 Pradeep Kumar Vasdev, Edag Technologies Pvt Ltd
  • 3. 5 P‘s- Prior Preparation prevents poor performance Preparation Pattern X Rehearsing your demands Pumping yourself up Making a personal pledge to yourself to act tough Figuring out how to throw off the other party -make them feel uncomfortable Rehearsing phrases like “this is my final offer”, ”my bottom line “ , “ non negotiable “ etc Framing your opening offer as a demand Preparation Pattern Y Listing all issues under consideration ( e.g . Payments , terms and conditions , volume , distribution etc ) Arranging those issues in order of importance or priority to you For each issue , brainstorming all the alternatives ( from one extreme to the other . e.g 0 % advance payment to full down payment ) Brainstorming issues the other party might bring up Identify your most desirable set of terms for each of the issues Identify and prioritize alternate course of action Identify the other party’s alternate course of action Preparing an opening offer as a way of starting discussionsPage 3 Pradeep Kumar Vasdev, Edag Technologies Pvt Ltd
  • 4. If you can‘t prepare , go for guided preparation Steps of Guided preparation 1. List all the issues to be negotiated in the first column 2. For each of the issues listed , in the second column , indicate its relative importance to you , your most desired terms and your underlying interests 3. For all the issues , in the third column make your guess about the other party‘s interests, ranking and most desired termsPage 4 Pradeep Kumar Vasdev, Edag Technologies Pvt Ltd
  • 5. Example List of issues ( General ) Scope of work of the project • Volume • BOM • List of preferred makes ( if any ) • Level of import content ( if any ) • Level of Automation • Soft part • Expatriate support ( if any ) • On Site support • Post SOP support • Customer inputs ( in terms of data , components , on site material , logistics and other support , battery limits of utilities etc ) Time line of the project ( Clear definition of the various milestones ) Price Payment terms ( Advance , after design approval etc )Page 5 Pradeep Kumar Vasdev, Edag Technologies Pvt Ltd
  • 6. Making the opening move Points to remember opening offer Like the game of chess , person making the first move is more likely to win Do not make opening move if the other party knows more about you than you do about the other party Do not make outrageous offer No one is going to accept your first offer (gleefully and immediately )–so making concession is inevitable Try to make an offer as close to other party’s barely acceptable terms Always write down your opening offer If the other party has made an opening offer , before reacting to that , make sure that you have stated your opening offer and that all terms can be discussed. Its possible to be competitive and cooperative at the same time. Always try to create value ( cooperate ) and claim value ( compete ) Do not walk away from the table even if you have made a take it or leave it offer – never close the doors of discussions Always note and remember your walk away point and refer to it before accepting a proposal. Myths about Negotiations Every industry is unique Business people care only about money- “Maximise utility“ Always maintain a poker face- never reveal anything Never make the first offer If you have not prepared an opening offer , you should not be at the bargaining table Always remember tough guys finish lastPage 6 Pradeep Kumar Vasdev, Edag Technologies Pvt Ltd
  • 7. Best alternative to negotiated agreement (BATNA ) Points to rememeber Always create/define one BATNA before going into negotiations Do make attempts to constantly improve your BATNA Always keep playing the field until the deal is signed, sealed and delivered. Do not reveal your BATNA, except under special conditions Do not lie about your BATNA Signal to the other party that you have a BATNA without revealing it in case the party presses for it. Do as much research as possible on the other party’s BATNA Do not engage in bidding war After you identify your BATNA , convert it to a reservation point. Your BATNA tells you when to walk , not when to sign . Do set your target price (aspiration point ) Do not withhold your aspiration until the other party has spokenPage 7 Pradeep Kumar Vasdev, Edag Technologies Pvt Ltd
  • 8. Plan your Concessions Points to rememeber No one is going to accept your first offer -so making concession is inevitable Plan your concessions in advance Do not make concessions too quickly before you explore interests Do not make too large concessions Do not make concession while other party remain intransigent ( static ) Make concessions to only issues which are less important to you Negotiate only with people who have the authority to make deals without consultation with superiors. If the negotiation terms have not been written down take the initiative of writing down and circulating them to the parties involved A win– win negotiation is the one is a negotiated outcome in which parties have reached an agreement that cannot be mutually improved uponPage 8 Pradeep Kumar Vasdev, Edag Technologies Pvt Ltd
  • 9. The truth about negotiations Type of negotiations Fixed sum/Single issue Variable Sum Prevent making any negotiation from becoming a fixed sum negotiation • Add an issue from outside the current negotiation’s scope • Split the issue (s ) at stake into multiple issues ( “ What if I paid with credit ?” ) By unbundling single issue negotiations into multi-issue negotiations , you create more opportunities for win-win trade offs. Win –Win questions satisfy one or more of the triple “ I ” principles- interests, incentives, and inquiry Reveal your interests Negotiate issues simultaneously , not sequentially • It prevents negotiators from being completely positional • It forces them to prioritize their values and preferences across several issues • It may spark a brilliant idea of considering distinct packages or combinations of agreement terms A negotiator needs to be firm about the issue most important to him but flexible on things that are not as important Make multiple offers of equivalent value simultaneously ( shirt and pant worth Rs 1000 / t shirt and jeans worth $ 22 ) Logrolling is the art and science of being firm but flexible- I support your bill in return of reciprocal supportPage 9 Pradeep Kumar Vasdev, Edag Technologies Pvt Ltd
  • 10. The truth about negotiations Type of negotiations Fixed sum/Single issue Variable Sum Prevent making any negotiation from becoming a fixed sum negotiation • Add an issue from outside the current negotiation’s scope • Split the issue (s ) at stake into multiple issues ( “ What if I paid with credit ?” ) By unbundling single issue negotiations into multi-issue negotiations , you create more opportunities for win-win trade offs. Win –Win questions satisfy one or more of the triple “ I ” principles- interests, incentives, and inquiry Reveal your interests Negotiate issues simultaneously , not sequentially • It prevents negotiators from being completely positional • It forces them to prioritize their values and preferences across several issues • It may spark a brilliant idea of considering distinct packages or combinations of agreement terms A negotiator needs to be firm about the issue most important to him but flexible on things that are not as important Make multiple offers of equivalent value simultaneously ( shirt and pant worth Rs 1000 / t shirt and jeans worth $ 22 ) Logrolling is the art and science of being firm but flexible- I support your bill in return of reciprocal supportPage 10 Pradeep Kumar Vasdev, Edag Technologies Pvt Ltd
  • 11. Negotiation Strategy Points to rememeber A postsettlement settlement represents a mutual improvement over a given deal that both parties currently find acceptable Contingent contracts are if – then agreements that specific actions will result in specific outcomes ( if you finish the commissioning by Dec’-09 , you get 10 lakhs extra as bonus ) When there is trust among negotiators , you want the pie to be divided equally and when there is mistrust you want to your pie to be as big as possible which is generally the case We always want to extract the maximum potential value of a deal Win Win negotiation can be used for solely self interest, but it is also the best strategy in completetly altruistic negotiations. Unenlightened negotiator clings to positions and demands as if they were rafts in a stormy ocean Enlightened negotiator realizes that the other party is his identical twin- someone who is every bit as knowledgeable , smart and motivated as he is , thus works for win win situation all the time The reciprocity principle is quite simply the tendency for people to treat others the way they are treated –aggression invites aggression, cooperative and constructive approach invite the same from other party Assume that counterparty is every bit as smart and motivated as you are . Follow reinforcement principle – encourage and appreciate the desired behavior and ignore or even punish the undesired behavior The similarity principle works-there is always an urge to find a point of similarity in others .Page 11 Pradeep Kumar Vasdev, Edag Technologies Pvt Ltd
  • 12. Negotiation Strategy Points to rememeber Anchoring effect refers to the fact that people tend to make judgements based upon an initial starting point and then adjust upward or downward but fail to make sufficiently large adjustments . Anchors have more staying power when they are supplemented with facts , data and logic. – The opening offer often acts as an anchor. Thus it is much more powerful to justify your opening offer with relevant information and facts than simply state the offer. When it comes to choosing among attractive course of action, most people would rather have a bird in the hand than go beating around the bush ( risk aversion ) When it comes to choosing among un attractive course of action, people tend to take action which is risk seeking ( i.e. either I loose both or none ) Indeed, almost any decision in our lives can be framed as a gain or a loss relative to something While negotiating be careful of the temper tantrums- carefully orchestrated display of emotion designed to evoke a response from youPage 12 Pradeep Kumar Vasdev, Edag Technologies Pvt Ltd
  • 13. Negotiation Strategy Points to rememeber Type of moves Power move- Any statement that attempt to force another person to do something he would otherwise not do ( I have to escalate this issue to your seniors ) Rights move – are those that refer to the standards, norms, customs, rules, guidelines, legal rights or precedents ( refer to my RFQ ) Interests- to get past the demands that party might have and focus on the underlying goals and interests. Negotiations need to be trilingual .i.e . You need to be able to use interest , rights , power moves at the appropriate time. The main motive for using power is to move the party off an unreasonable position or stance . But when you use power move you double the probability that the other party will use power with you.Page 13 Pradeep Kumar Vasdev, Edag Technologies Pvt Ltd
  • 14. -We are not going to agree about the past but we might agreeabout the future Face Saving Face is the value we put on our public image , reputation and status in negotiation Saving face is a negotiators most sacred possession. Face saving is important under the following situations • When negotiations are conducted in a public setting • When people are accountable to a group or a superior • When people negotiate in teams • When there are status differences between negotiators • When negotiators have naturally thin skin • In a buyer-seller negotiations fewer win win agreements are reached when the seller has a thin skin ( don’t respond well to direct criticism or get hurt easily ) • Face saving strategies if the other party has a thin skin • Apologize for something • Compliment the person • Say you care about the relationship • Talk about how you have learned important things as a result of this process • Ask for feedback • Point out concessions you have made • Focus on the future not on the pastPage 14 Pradeep Kumar Vasdev, Edag Technologies Pvt Ltd
  • 15. How to negotiate with a person you do not like Three important things to keep in mind when dealing with difficult persons at the negotiation table Replace D ( dispositional ) statements with B ( behavioral ) statements Label your feelings not people Change your behavior not your feelings What is type D statement ( It focus on the other party’s disposition ) Type D ( dispositional ) statement is characterized by the belief that a given person behaves the way he does because of his personality or disposition Type D statement locate the root cause of a persons behavior to that person’s fundamental disposition rather than as a reaction to a situation he might be in Type D statements are character assassination Type D statement Type B statement Jack is impossible to deal with I hate the fact that Jack is consistently late to meetings You are annoying The way you are playing music is annoying me You are bad Breaking DVD disks is very badPage 15 Pradeep Kumar Vasdev, Edag Technologies Pvt Ltd
  • 16. How to negotiate with a person you do not like Label your feelings , not peopleTypical statement with no personal responsibility Reformulation of statements You are making me mad I am feeling short tempered She is too aggressive I feel resentful when I am given ultimatums You are screwing up the deal I feel that it is unwise for me to make a deal Your offer is ridiculous I am disappointed with the progress we are makingPage 16 Pradeep Kumar Vasdev, Edag Technologies Pvt Ltd
  • 17. Negotiation Strategy Points to rememeber When conflict actually exists and people perceive it , that is real conflict . When there is no actual conflict but people believe there is , that is a case of false conflict .When conflict exist but people fail to perceive it , that is latent conflict. Select people who are triathletes in terms of having negotiation expertise, technical expertise and interpersonal skills. When a team negotiates against a lone negotiator claims about one third less than what the team is able to claimPage 17 Pradeep Kumar Vasdev, Edag Technologies Pvt Ltd
  • 18. Think it overLeadership is a matter of Trustworthiness Intelligence Trustworthiness Intelligence Humaneness Humaneness Leadership Courage Sternness Sternness CourageFactors affecting the outcome of any war Moral Influence Leadership Accustomed to conditions Discpline Skill Training Fair Performance Appraisal – Reward and Punishment 5 P’s – “ Prior preparation prevents poor performance”Page 18 Pradeep Kumar Vasdev, Edag Technologies Pvt Ltd

×