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NEGOTIATION SKILLS
Presented By:
TARINI- 41002
SACHIN- 41001
CABM Pantnagar 2010-12 Sachin&Tarini 1
CONTENTS
 What is Negotiation?
 Features of Negotiation
 Why Negotiate ?
 Types of Negotiation
 Distributive Vs Integ...
Where do use this skill?
 Everything is negotiated.
 Family and personal
 “ Where should we go for dinner?”
 “ Can I b...
WHAT IS NEGOTIATION ?
 The word "negotiation" originated from the Latin
expression, "negotiatus", which means "to carry
o...
FEATURES OF NEGOTIATION
 Minimum two parties
 Predetermined goals
 Expecting an outcome
 Resolution and Consensus
 Pa...
Why do we NEGOTIATE ?
 To reach an agreement
 To beat the opposition
 To compromise
 To settle an argument
 To make a...
TYPES OF NEGOTIATION
 Distributive Negotiation
 Integrative Negotiation
CABM Pantnagar 2010-12 Sachin&Tarini
7
1st Type: Distributive
Negotiation
 Parties compete over the distribution of a fixed sum of
value. The key question in a ...
2nd Type: Integrative
Negotiation
 In Integrative Negotiation, parties cooperate to achieve
maximize benefits by integrat...
DISTRIBUTIVE VERSUS
INTEGRATIVE NEGOTIATIONS
Characteristic Distributive Integrative
Outcome Win-lose Win-win
Motivation I...
NEGOTIATION PROCESS
PREPARATION
INFORMATION SHARING
BARGAINING
FINALIZING THE DEAL
CABM Pantnagar 2010-12 Sachin&Tarini
11
BATNA
BATNA is an acronym for:
Best
Alternative
To
a
Negotiated
Agreement
CABM Pantnagar 2010-12 Sachin&Tarini
12
Why BATNAs Matter
 BATNAs tell you when to accept and when to reject
an agreement
When a proposal is better than your BA...
BATNA
 “Best Alternative to a Negotiated Agreement”
 Develop your BATNA
 - List your alternatives
 - Evaluate your alt...
NEGOTIATION STRATEGY
BARGAINING EMOTION
COMPROMISE LOGICALLY
INFLUENC
E
INTITUTION
[Abilitytomodifyothers]
By: “Kenneth Be...
Bargaining Zone Model of
Negotiation
Your initial
point
Your target
point
Area of
potential
agreement
Opponent’s
initial p...
EXAMPLE
CABM Pantnagar 2010-12 Sachin&Tarini
17
NEGOTIATING BEHAVIOUR
Gavin Kennedy describes 3 types of
behaviour that we can display and encounter
when in a negotiating...
RED Behaviour
 Manipulation
 Aggressive
 Intimidation
 Exploitation
 Always seeking the best for you
 No concern for...
BLUE Behaviour
 Win win approach
 Cooperation
 Trusting
 Pacifying
 Relational
 Giving
Kennedy talks of a ‘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 th...
ISSUES IN NEGOTIATION
 The Role of Mood & Personality Traits in Negotiation
 Positive moods positively affect negotiatio...
THIRD-PARTY
NEGOTIATIONS
1. Investigation
2. Mediation
3. Conciliation
4. Arbitration
5. Adjucation
CABM Pantnagar 2010-12...
EFFECTIVE NEGOTIATION
 Successful relationships are built on
communication and trust.
 Lack of trust leads to “win-lose”...
The Negotiator’s Delemma
CABM Pantnagar 2010-12 Sachin&Tarini
25
B Cooperates B Competes
A Cooperates good outcome A has t...
NEGOTIATION TIPS
1) Do not underestimate your power.
2) Do not assume that other party knows your
weaknesses.
3) Don’t be ...
SKILLS FOR EFFECTIVE
NEGOTIATION
 Preparation and planning skill
 Knowledge of the subject
 Ability to think clearly an...
SKILLS FOR EFFECTIVE
NEGOTIATION
 Ability to lead and control members of own team or group
 Previous negotiating experie...
THANK
YOU
CABM Pantnagar 2010-12 Sachin&Tarini
29
PREPARATION
1. Firstly understand what it is you want?
2. What do you think your opponent wants?
3. What would happen if y...
INFORMATION SHARING
1. Company activities and market position
2. Opinion on entry points
3. What elements are clearly off ...
BARGAINING
 Bargaining has two basic parts
– Debating
– Proposing
CABM Pantnagar 2010-12 Sachin&Tarini
32
DEBATING
 To be successful in negotiation you must build relationships
and trust
 You need to avoid the following-
 Poi...
PROPOSING
 When proposing your offer consider
 Consider both your entry and exit – This could
include all or some of you...
FINALIZING THE DEAL
 So when closing the deal consider
 Do you have what you want?
 Do they have what they want?
 Can ...
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  1. 1. NEGOTIATION SKILLS Presented By: TARINI- 41002 SACHIN- 41001 CABM Pantnagar 2010-12 Sachin&Tarini 1
  2. 2. CONTENTS  What is Negotiation?  Features of Negotiation  Why Negotiate ?  Types of Negotiation  Distributive Vs Integrative 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 CABM Pantnagar 2010-12 Sachin&Tarini 2
  3. 3. Where do use this skill?  Everything is negotiated.  Family and personal  “ Where should we go for dinner?”  “ Can I borrow the car?”  Academic research  “ Fund my project.”  “ Publish my paper.”  Business ventures  “ I want a raise.”  “ Invest in my company.”  “ Pay me a license fee or I’ll sue you.” CABM Pantnagar 2010-12 Sachin&Tarini 3
  4. 4. WHAT IS NEGOTIATION ?  The word "negotiation" originated from the Latin expression, "negotiatus", which means "to carry on business".  The process of conferring to arrive at an agreement between different parties, each with their own interests and preferences.  “A give-and-take decision-making process involving interdependent parties with different preferences.” CABM Pantnagar 2010-12 Sachin&Tarini 4
  5. 5. FEATURES OF NEGOTIATION  Minimum two parties  Predetermined goals  Expecting an outcome  Resolution and Consensus  Parties willing to modify their positions  Parties should understand the purpose of negotiation CABM Pantnagar 2010-12 Sachin&Tarini 5
  6. 6. Why do we NEGOTIATE ?  To reach an agreement  To beat the opposition  To compromise  To settle an argument  To make a point CABM Pantnagar 2010-12 Sachin&Tarini 6
  7. 7. TYPES OF NEGOTIATION  Distributive Negotiation  Integrative Negotiation CABM Pantnagar 2010-12 Sachin&Tarini 7
  8. 8. 1st Type: Distributive Negotiation  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?” 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.  Thus, the deal is confined: there are not much opportunities for creativity or for enlarging the scope of the negotiation. [is it required?] CABM Pantnagar 2010-12 Sachin&Tarini 8
  9. 9. 2nd Type: Integrative Negotiation  In Integrative Negotiation, parties cooperate to achieve maximize benefits by integrating their interests into an agreement. This is also known as a win-win negotiation.  The key questions is: “How can the resource best be utilized?”  Integrative negotiations 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.  In an integrative negotiation,, there are many items and issues to be negotiated, and the goal of each side is to “create” as much value as possible for itself and the CABM Pantnagar 2010-12 Sachin&Tarini 9
  10. 10. DISTRIBUTIVE VERSUS INTEGRATIVE NEGOTIATIONS Characteristic Distributive Integrative Outcome Win-lose Win-win Motivation Individual gain Joint and individual gain 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 CreativeCABM Pantnagar 2010-12 Sachin&Tarini 10
  11. 11. NEGOTIATION PROCESS PREPARATION INFORMATION SHARING BARGAINING FINALIZING THE DEAL CABM Pantnagar 2010-12 Sachin&Tarini 11
  12. 12. BATNA BATNA is an acronym for: Best Alternative To a Negotiated Agreement CABM Pantnagar 2010-12 Sachin&Tarini 12
  13. 13. Why BATNAs Matter  BATNAs tell you when to accept and when to reject an agreement When a proposal is better than your BATNA: ACCEPT IT When a proposal is worse than your BATNA: REJECT IT CABM Pantnagar 2010-12 Sachin&Tarini 13
  14. 14. BATNA  “Best Alternative to a Negotiated Agreement”  Develop your BATNA  - List your alternatives  - Evaluate your alternatives  - Establish your best as your BATNA  Strengthen your BATNA  Consider their BATNA  Have a Reservation Point – the least you will accept  List their alternatives – their BATNA CABM Pantnagar 2010-12 Sachin&Tarini 14
  15. 15. NEGOTIATION STRATEGY BARGAINING EMOTION COMPROMISE LOGICALLY INFLUENC E INTITUTION [Abilitytomodifyothers] By: “Kenneth Berrin” Low High Low High CABM Pantnagar 2010-12 Sachin&Tarini 15
  16. 16. Bargaining Zone Model of Negotiation Your initial point Your target point Area of potential agreement Opponent’s initial point Opponent’s target point Your resistance point Opponent’s resistance point CABM Pantnagar 2010-12 Sachin&Tarini 16
  17. 17. EXAMPLE CABM Pantnagar 2010-12 Sachin&Tarini 17
  18. 18. NEGOTIATING BEHAVIOUR Gavin Kennedy describes 3 types of behaviour that we can display and encounter when in a negotiating situation. RED BLUE PURPLE CABM Pantnagar 2010-12 Sachin&Tarini 18
  19. 19. 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. CABM Pantnagar 2010-12 Sachin&Tarini 19
  20. 20. 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. CABM Pantnagar 2010-12 Sachin&Tarini 20
  21. 21. 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’. CABM Pantnagar 2010-12 Sachin&Tarini 21
  22. 22. ISSUES IN NEGOTIATION  The Role of Mood & Personality Traits in Negotiation  Positive moods positively affect negotiations  Traits do not appear to have a significantly direct effect on the outcomes of either bargaining or negotiating processes (except extraversion, which is bad for negotiation effectiveness)  Gender Differences in Negotiations  Women negotiate no differently from men, although men apparently negotiate slightly better outcomes.  Men and women with similar power bases use the same negotiating styles.  Women’s attitudes toward negotiation and their success as negotiators are less favorable than men’s. CABM Pantnagar 2010-12 Sachin&Tarini 22
  23. 23. THIRD-PARTY NEGOTIATIONS 1. Investigation 2. Mediation 3. Conciliation 4. Arbitration 5. Adjucation CABM Pantnagar 2010-12 Sachin&Tarini 23
  24. 24. EFFECTIVE NEGOTIATION  Successful relationships are built on communication and trust.  Lack of trust leads to “win-lose” or “lose-lose” result.  Negotiation is one way of creating trust – or deciding whether trust is justified.  Example: “The Negotiator’s Dilemma” a classic risk strategy game CABM Pantnagar 2010-12 Sachin&Tarini 24
  25. 25. The Negotiator’s Delemma CABM Pantnagar 2010-12 Sachin&Tarini 25 B Cooperates B Competes A Cooperates good outcome A has terrible outcome, B has great outcome A Competes A has great outcome, B has terrible outcome Both have mediocre outcome
  26. 26. NEGOTIATION TIPS 1) Do not underestimate your power. 2) Do not assume that other party knows your weaknesses. 3) Don’t be intimidated by status. 4) Don’t be intimidated by statistics, precedents, principles, or regulations. 5) Most negotiation will require some concession making. 6) It is a mistake to assume you know what the other party wants. 7) Never accept the 1st offer. 8) Don’t fear to negotiate. CABM Pantnagar 2010-12 Sachin&Tarini 26
  27. 27. SKILLS FOR EFFECTIVE NEGOTIATION  Preparation and planning skill  Knowledge of the subject  Ability to think clearly and rapidly under pressure and uncertainty  Ability to express thoughts verbally  Listening skill  Judgement and general intelligence  Integrity  Ability to persuade others  Patience  Decisiveness  Ability to win respect and confidence of opponent  General problem-solving and analytical skills  Self-control, especially of emotions and their visibility  Insight into others’ feelings  Persistence and determination  Ability to perceive and exploit available power to achieve objective  Insight into hidden needs and reactions of own and opponent’s organization CABM Pantnagar 2010-12 Sachin&Tarini 27
  28. 28. SKILLS FOR EFFECTIVE NEGOTIATION  Ability to lead and control members of own team or group  Previous negotiating experience  Personal sense of security  Open-mindedness (tolerance of other viewpoints)  Competitiveness (desire to compete and win)  Skill in communicating and co-ordinating various objectives within own organisation  Debating ability (skill in parrying questions and answers across the table)  Willingness to risk being disliked  Ability to act out skilfully a variety of negotiating roles or postures  Status or rank in organisation  Tolerance to ambiguity and uncertainty  Skill in communicating by signs, gestures and silence (non-verbal language)  Compromising and trusting temperament  Attractive personality and sense of humour (degree to which people enjoy being with the person)  Willingness to take somewhat above-average business or career risks  Willingness to employ force, threat or bluff  Learn to flinch.  Maintain your walk away power  Have a Purple attitude CABM Pantnagar 2010-12 Sachin&Tarini 28
  29. 29. THANK YOU CABM Pantnagar 2010-12 Sachin&Tarini 29
  30. 30. PREPARATION 1. Firstly understand what it is you want? 2. What do you think your opponent wants? 3. What would happen if you didn’t do a deal? 4. Do you know your stakeholders? 5. Do you know who the decision maker is? Are you negotiating with them? If not what affect does that have? 6. Are there concessions you can build into the negotiation? 7. Know your product / service inside out? What standards are there in the market place? 8. Know your price points? 9. What issues do you think you’ll need to overcome? 10. Prioritize! CABM Pantnagar 2010-12 Sachin&Tarini 30
  31. 31. INFORMATION SHARING 1. Company activities and market position 2. Opinion on entry points 3. What elements are clearly off the table or not up for discussion and why 4. Opponents attitude and commitment 5. Motivational factors (“I want this price because…”) 6. Stakeholders and importantly decision makers 7. Problems, issues or risk 8. An order/structure for proceedingsCABM Pantnagar 2010-12 Sachin&Tarini 31
  32. 32. BARGAINING  Bargaining has two basic parts – Debating – Proposing CABM Pantnagar 2010-12 Sachin&Tarini 32
  33. 33. DEBATING  To be successful in negotiation you must build relationships and trust  You need to avoid the following-  Point scoring – “Your company is always late with deliveries so I’m not paying that!”  Insults – “If you insist on that price you must be stupid”  Provocation – “Keep talking like that and see where it gets you!”  Threats – “You just wait until your other customers hear about this”  Instead try-  Building a relationship – It will make your negotiation much easier  Sticking to an agreed agenda – This will help avoid destructive discussions.  Share information and ask questions – What do you want – what do they want  Try and be positive and listen – What do they want and why – look for areas of win/win or easy compromise. CABM Pantnagar 2010-12 Sachin&Tarini 33
  34. 34. PROPOSING  When proposing your offer consider  Consider both your entry and exit – This could include all or some of your wants, and your opponents entry and exit points  Consider how you will phrase your proposal  Consider what will motivate your opponent into making the deal  Consider the likely response – Think about the “if I do that then they will do that”  Are there alternative proposals? – Once an initial response has been made are you happy or do you need to offer up something new.  Remember the key thing is to propose – don’t argue and try and remain realistic, and invite a response from your opponent.CABM Pantnagar 2010-12 Sachin&Tarini 34
  35. 35. FINALIZING THE DEAL  So when closing the deal consider  Do you have what you want?  Do they have what they want?  Can you signify to your opponent that if certain terms were met the deal could be done.  Do you both understand the potential non deal by not closing or reaching agreement?  Document the agreement quickly and share it with your opponent and get agreement on the details of the deal.  Do not offer further concessions!  Agree the measures that will be applied to record fulfilment of the deal. CABM Pantnagar 2010-12 Sachin&Tarini 35

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