Negotiation in business communication(2)


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  • Negotiation is get what you want from People. so It is all about People! not agreement.
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Negotiation in business communication(2)

  1. 1. Group members 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
  2. 2. Brief History: The word ‘Negotiation’ is derived from the Latin word ‘Negotiationem’ meaning Bargaining. 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 Negotiation. 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 Negotiation.
  3. 3. 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 communications, sales, marketing, psychology, sociology, politics, and conflict resolution. 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. Negotiation Styles: There are basically 2 kinds of Negotiation ideologies being followed up in business communications:- (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
  4. 4. 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. Goals: 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. Negotiation Process: 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).
  5. 5. • 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.
  6. 6. (d) Agreement: The agreement finally comprises of the accepted negotiated proposal that is in accordance with the norms of both the negotiating parties. 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 closure. • Do not expect the other party to follow through on verbal promises. • Congratulate the other side. Nature/characteristics of negotiation – Followings are the essential of negotiation, which describe the nature of negotiation: • 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 is involved.
  7. 7. • 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.
  8. 8. Types of negotiation – There are two types of negotiation on the basis of relationship 1. Distributive negotiation 2. Integrative negotiation DISTRIBUTIVE (the Fixed Pie):-
  9. 9. 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.
  10. 10. • 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,
  11. 11. 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
  12. 12. 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 forsubsequentinteractions. PA also has its drawbacks: it distorts perception of self-performance, such that performance is judged to be relatively better than it actually is.[18] 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
  13. 13. 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 sciences. 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 successful. • 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.
  14. 14. • 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 defensive. 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 negotiation. 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,
  15. 15. 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.
  16. 16. 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. Your client 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
  17. 17. 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. Negotiation 155 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.
  18. 18. Personal Reviews