This document discusses key concepts in negotiation including: - Defining negotiation as a process of communication between parties to reach agreement on differing needs or ideas. - The importance of understanding one's Best Alternative To a Negotiated Agreement (BATNA), which is the lowest acceptable outcome. - How the bargaining zone or zone of possible agreement exists between the buyer's reservation price and seller's reservation price. - Other concepts like reservation prices, target prices, and stretch goals which influence negotiations.

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(Negotiation Skills)
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BATNA

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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.”

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Defined :
 Negotiating is the process of communicating back and forth, for the
purpose of reaching a joint agreement about differing needs or ideas.
 It is a collection of behaviours that involves communication, sales,
marketing, psychology, sociology, assertiveness and conflict
resolution.
 A negotiator may be a buyer or seller, a customer or supplier, a
boss or employee, a business partner, a diplomat or a civil
servant. On a more personal level negotiation takes place
between spouse, friends, parents or children.

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Negotiation Process

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BATNA
The Best Alternative To a Negotiated Agreement; the lowest acceptable value (outcome) to an
individual for a negotiated agreement.
Your BATNA "is the only standard which can protect you both from accepting terms that are
too unfavourable and from rejecting terms it would be in your interest to accept.”

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• The reservation price is the least favourable point at which you will accept a
deal. If you are a buyer, it is the maximum you will pay. If you are a seller, it is
the minimum you will accept.
• The reservation price in this instance must be at least one value unit above the
BATNA. There are other times when the gap between the two is more
pronounced ie: when you don’t have a BATNA (BATNA = zero).
Reservation Price:

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The Negotiation Bargaining Zone
Buyer’s Reservation Price
(BR) (e.g.,40 Lakhs )Buyer’s Target Price
(e.g., 30 Lakhs)
Seller’s Reservation Price
(SR)
Seller’s Target
(e.g., 45
Lakhs)
(e.g., 35 Lakhs)
The bargaining zone is the space between the buyer’s
reservation price (BR) and the seller’s reservation price
(SR) – that is, the zone of possible agreement.
If BR > SR, then a Positive Bargaining Zone exists.
The zone of agreement is from SR to BR (e.g., 5 Lakhs).
ZOPA

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A Negative Bargaining Zone
Seller’s Reservation Price
(SR) (e.g., 45 Lakhs)
Buyer’s Reservation Price
(BR) (e.g., 40 Lakhs)
If BR < SR, then there is no zone of possible agreement.

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Your TP Dealer’s RP Your RP Dealer’s TP
5 Lakhs 8Lakhs 10Lakhs 12Lakhs
Bargaining Zone
9 Lakhs=probable compromise

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outcomes that are The range of negotiated
acceptable to all parties
Your
RP
RS.200
Your
TP
240
Customer
TP
Rs.210
Customer
RP
250
Your Bargaining Range
Customer Bargaining Range
Your
Stretch
Goal
260
Selling our VCI Product

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L&T TP
Rs.160 Rs.200
L&T RP
Rs.180
Your RP Your
TP
Rs.240
L&T
Bargaining
Range
Your
Bargaining
Range

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Based on situation, identify BATNA clearly
•Better BATNA=more negotiation power
•Improve your BATNA
Consider other side’s BATNA
•Know the deal’s ZOPA
•Let other side perceive you have strong BATNA
•Consider disclosing own BATNA, if strong
Use Stretch Goals
•Make 1st offer to Anchor above your target
•Else re-anchor
•Prepare objective arguments

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Choice is yours!
NEGOTIATIONS ARE KEY TO SUCCESS

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Thank You
02/01/19