Basics of negotiation

1. Basics of Negotiation
By: Carlo Senica

2. Dealing with
Differences
Negotiation is a process by which people deal with their differences.
To negotiate is to seek a mutual agreement through dialogue.
Outcome will be either win-win or win-lose.
It can be a formal or a non-formal affair.

3. Types of Negotiation
Characteristics DISTRIBUTIVE INTEGRATIVE
Outcome Win - Lose Win - Win
Motivation Individual gain Joint gain
Interests Opposed Congruent
Relationship Short-term Long-term
Issues involved Single Multiple
Ability to make trade-offs Not flexible Flexible
Solution Not creative Creative

4. Four Key Concepts in
Negotiation
1. BATNA or Best Alternative To a Negotiated Agreement
2. Reservation Price or “Walk Away Price”
3. ZOPA or Zone Of Possible Agreement
4. Value Creation Through Trades

5. B A T N A
Your BATNA is your preferred
course of action in the absence
of a deal.
It is critical to know your BATNA
before entering into any
negotiation.
It determines the point at which
you can say NO to an
unfavorable proposal.

6. Reservation Price
The least favorable point at
which you would accept a deal.
Should be derived from your
BATNA, but not necessarily the
same thing.

7. Z O P A
ZOPA is a range in which a deal can take place.
Each party’s reservation price determines the end of the ZOPA. ZOPA exists
between the parties’ reservation price.

8. Value Creation Through
Trades
The idea that negotiating parties
can improve their positions by
trading the values at their
disposal.
It occurs in the context of win-
win negotiation.
Each party gets something what
it wants in return of something
it values much less.

9. Steps in Negotiation
1. Determine satisfactory outcomes
2. Identify opportunities to create value
3. Identify your BATNA and reservation price
4. Improve your BATNA
5. Assess who has authority
6. Study the other side
7. Prepare for flexibility in the process
8. Gather objective criteria to establish fairness
9. Alter the process in your favor

10. Barriers to Agreement
1. Lack of trust
2. Potential saboteurs of a good deal
3. Differences in gender
4. Diferences in culture
5. Difficulties in communication
6. Die-hard bargainers