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Basic negotiation skills

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this is a customised course for negotiation

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Basic negotiation skills

  1. 1. Dr. Walid El Etriby
  2. 2.  What is Negotiation?  Features of Negotiation  Why Negotiate ?  Types of 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
  3. 3.  The word "negotiation" originated from the Latin expression,"negotiatus", which means "to carry on business".
  4. 4.  The process of conferring to arrive at an agreement between different parties, each with their own interests and preferences.
  5. 5.  “A give-and-take decision-making process involving interdependent parties with different preferences.”  Negotiating is the process of communicating back and forth, for the purpose of reaching a joint agreement about differing needs or ideas.
  6. 6.  It is a collection of behaviours that involves: ◦ communication ◦ Sales ◦ Marketing ◦ Psychology ◦ sociology ◦ Assertiveness ◦ conflict resolution.
  7. 7.  To reach an agreement  To beat the opposition  To compromise  To settle an argument  To make a point
  8. 8.  Distributive Negotiation  Integrative Negotiation
  9. 9.  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?”
  10. 10.  A gain by one side is made at the expanse of other. ◦ The Seller’s goal is to negotiate as high a price as possible. ◦ the Buyer’s goal is to negotiate as low a price as possible.  There are not much opportunities for creativity or for enlarging the scope of the negotiation.
  11. 11.  Parties cooperate to achieve maximize benefits by integrating their interests into an agreement.  This is also known as a win-win negotiation. “How can the resource best be utilized?”
  12. 12.  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.  The goal of each side is to “create” as much value as possible for itself and the other side.
  13. 13. Characteristic Distributive Integrative Motivation Individual gain Joint and individual gain Outcome Win-lose Win-win Interests Opposed Different but not always Opposite Relationship Short-term Longer or Short-term Issues involved Single Multiple Ability to make trade-offs Not Flexible Flexible Solution Not creative Creative
  14. 14. Preparation Opening Position Bargaining Movement Closing
  15. 15.  You need to define 1. what you hope to get out of it 2. what you will settle for 3. what you consider unacceptable.  You also need to prepare yourself personally Preparation
  16. 16.  BATNA Best Alternative to a Negotiated Agreement  WATNA Worst Alternative to a Negotiated Agreement
  17. 17. “Walk Away Price”  it is important that you keep it to yourself.  Especially if it is significantly less than your initial offer
  18. 18. “Walk Away Price”  You should be prepared to walk away if it is not met  You should give the impression to opponents in negotiation that you could walk away at any time
  19. 19.  ZOPA (Zone Of Possible Agreement): is the area in which the final price will sit.  And within that ZOPA you will ideally end up with a price closer to their WAP than yours
  20. 20. BANTAWANTA WAP
  21. 21. During and before negotiation you should always be:  Polite ‐ It never reduces your argument  Firm ‐ Removes Perceptions of Weakness  Calm ‐ Facilitates Persuasion and compromise  Do not take things personally
  22. 22.  Both sides state their positions on the issues being addressed in a non‐confrontational way.  The tricky part of this phase is deciding what to reveal and what to hold back. Too much information given away can really come back to bite you. Opening Position
  23. 23. Getting Off on the Right Foot  it’s a good idea to engage in a little small talk with the other participants in the negotiation.  This will help set a positive tone.  You might find that you have some things in common (such as hobbies or favorite teams)
  24. 24. Getting Off on the Right Foot Being “human” and easy to relate to is far less likely to persuade the other party than that you are someone who needs to be kept in check, and may work to your advantage.
  25. 25.  What to Share  you don’t want to give a detailed statement about your position on bargaining issues.  If the other party tries to rush you into stating your bargaining position prematurely “That’s an important question. Before we get to that, let’s make sure we agree on the issues we’re discussing today.”
  26. 26.  What to Share  why the other party would be in a hurry to get you to state your position? ◦ they have been worrying about it for some time beforehand. ◦ They want to get negotiations over and done with without having to worry about giving away more than they will need to.
  27. 27.  What to Keep to Yourself  Holding back information can be a tricky business.  You don’t want to appear secretive or deceptive  but at the same time you don’t want to give away your bargaining position prematurely.
  28. 28.  What to Do  The best way is to set the agenda for the negotiation.  Say something like: “Let’s get a few general issues settled before we get into specifics.”
  29. 29.  What to Do  Agreeing on the topics for discussion is something that allows both parties to find common ground.
  30. 30. Your success in negotiations depends on knowing :  what to say.  when to say it  when to be silent.
  31. 31.  The heart of the negotiation process.  You should know: ◦ what to expect when you begin to bargain. ◦ Bargaining techniques used by experienced negotiators. ◦ what to do if you run into an impasse Bargaining
  32. 32. What to Expect  Try to know about the pressures, targets, and needs that might influence your opponents.  Try to get some idea of their usual negotiating approach. ◦ Do they typically start out with an unreasonable offer? ◦ Do they try to rush the negotiation? ◦ Do they try to frame the issues to their own advantage?
  33. 33. Example  opponent has a reputation for always looking to rush the negotiation.  Use that to your advantage. ◦ By remaining firm on your bargaining position you will be able to place pressure on them to get the deal done on your terms. ◦ If they want it to be over quickly, they will be less likely to spend time bargaining with you and will have to either spend longer in negotiations
  34. 34. Bargaining Techniques  As long as you recognize the technique when it is used.  you can actually turn them to your advantage in a pressurized negotiation setting.
  35. 35. Bargaining Techniques  The Exaggerated First Offer “silly one” ◦ An offer will not be met ”extremely high” ◦ Usually respond with what may be an equally exaggerated counter‐offer which undercuts what actually is worth.
  36. 36. Bargaining Techniques  1. Prepare, prepare, prepare.  2. Pay attention to timing.  3. Leave behind your ego.  4. Ramp up your listening skills.  5. If you don't ask, you don't get.  6. Anticipate compromise  7. Offer and expect commitment.  8. Don't absorb their problems.  9. Stick to your principles.  10. Close with confirmation
  37. 37. Bargaining Techniques 1. Prepare, prepare, prepare
  38. 38. Bargaining Techniques 2. Pay attention to timing.  There are times to press ahead, and times to wait.  Look for your best is the time to press But beware  of pushing too hard and poisoning any long- term relationship.
  39. 39. Bargaining Techniques 3. Leave behind your ego.  The best negotiators either don't care or don't show they care about who gets credit for a successful deal.  Their talent is in making the other side feel like the final agreement was all their idea.
  40. 40. Bargaining Techniques 4. Ramp up your listening skills.  Active listeners who patiently let others have the  floor while they make their case.  They never interrupt.
  41. 41. Bargaining Techniques 4. Ramp up your listening skills.  Encourage the other side to talk first.  negotiation's oldest maxims: “Whoever mentions numbers first, loses.”  Even if they don't mention numbers, it gives you a chance to ask what they are thinking.
  42. 42. Bargaining Techniques 5. If you don't ask, you don't get. "Go high, or go home."  Define your highest justifiable price and don't be afraid to aim high. But Please No “Take-it-or-leave-it offers”
  43. 43. Bargaining Techniques 6. Anticipate compromise  Never take their first offer. Even if it's better than you'd hoped for.  Practice your best look of disappointment and politely decline.  You never know what else you can get.
  44. 44. Bargaining Techniques 7. Offer and expect commitment. “The glue that keeps deals from unravelling is an unshakable commitment to deliver. “  You should offer this level of commitment to others.  Avoid deals where the other side does not demonstrate commitment.
  45. 45. Bargaining Techniques 8.Don't absorb their problems.  don't let other side's problems and reasons they can't give you what you want.  deal with each as they come up and try to solve them. ”to certain extend??”
  46. 46. Bargaining Techniques 8.Don't absorb their problems.  Example “The "budget" is too low.“ “May be there are other places that money could come from. “
  47. 47. Bargaining Techniques 9. Stick to your principles. “values just don't compromise.”  If you find negotiations crossing those boundaries.  it might be a deal you can live without.
  48. 48. Bargaining Techniques 10. Close with confirmation  Even if no final deal is struck  Recap the points covered and any areas of agreement.  Make sure everyone confirms.  Follow-up with appropriate letters or emails. “Do not leave behind loose ends.”
  49. 49. How to Break an Impasse The dictionary says an impasse is a noun which describes: “a situation in which no progress is possible, especially because of disagreement; a deadlock”.
  50. 50. How to Break an Impasse  The risk with an impasse in negotiations is that it can become a point where any movement from either party will be seen as weakness  If you want to get around an impasse it will necessitate need chang something about the way you are negotiating
  51. 51. How to Break an Impasse  A few ways to break an impasse in negotiations: 1. If the impasse involves money, change the terms: a larger deposit, a shorter pay period, etc. 2. Change a team member or the team leader. 3. Agree on easy issues and save the more difficult issues for later. 4. Change the list of options being considered. 5. Agree to puse for a fixed period of time to try to come up with other options.
  52. 52.  Once the parties in a negotiation commit themselves to a position, they feel that changing their position represents failure.  The parties in a negotiation should focus on their interests. What can we get out of the negotiation that will further our interests? Movement
  53. 53. Achieving mutual gain. Positional Bargaining: Soft  Participants want to be friends  The goal is agreement  Participants trust each other  Participants are soft on the people and the problem  Participants change positions readily  Participants state their bottom line  Participants make  concessions  Participants search for one solution
  54. 54. Achieving mutual gain. Positional Bargaining: Hard  Participants are adversaries  The goal is victory  Participants stick to a position  Participants conceal their bottom line  Participants distrust each other  Participants are hard on the people and the problem  Participants demand concessions  Participants demand one solution
  55. 55. Achieving mutual gain. Interest Bargaining  Participants are problem solvers  The goal is an outcome that will satisfy the interests of the participants  Participants treat trust and distrust as irrelevant  Participants are soft on the people, hard on the problem  Participants focus on interests, not positions  Participants don’t have a bottom line  Participants invent options for mutual gain  Participants develop multiple options
  56. 56. Negotiating Behaviour  3 types of behaviour that we can display and encounter when in a negotiating situation. 1. Red 2. Blue 3. purple
  57. 57. Negotiating Behaviour  RED Behaviour  Manipulation  Aggressive  Intimidation  Exploitation  Always seeking the best for you  No concern for person you are negotiating with  Taking
  58. 58. Negotiating Behaviour  BLUE Behaviour  •Win win approach  • Cooperation  • Trusting  • Pacifying  • Relational  • Giving
  59. 59. Negotiating Behaviour  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
  60. 60.  The final phase of a negotiation is a time for reaching consensus and building an agreement.  A little hard work in this phase can ensure that the negotiation achieves it desired results Closing
  61. 61.  Closing a negotiation can mean two different things:  First it may be a question of how to bring different ideas to a mutually agreed conclusion.  Second is a mean negotiating parties can use to acknowledge or formalize the idea that agreement has been reached
  62. 62. Reaching Consensus  Consensus usually involves substantive agreement on key issues.  Not everyone needs to be completely satisfied to reach consensus.  BUT everyone needs to feel that the outcome of the negotiation is something they can live with.
  63. 63. Building an Agreement  They should try to create an agreement based on a fair and accurate interpretation of the consensus the parties have reached.  At the same time they want to be careful they do not inadvertently give something up by not paying close enough attention to the written agreement.
  64. 64. Setting the Terms of the Agreement  All the essential terms must be clearly stated in writing.  To have an agreement in theory without the practicalities is meaningless.  The agreement which emerges at the end of negotiations needs to be backed up with the “how” factor.
  65. 65. Setting the Terms of the Agreement Without the firm details of how you are going to put everything in place you can agree whatever you want and it will not matter.

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