Negotiation skills: BATNA; ZOPA;

1. NEGOTIATION SKILLS
Presented By:
TARINI- 41002
SACHIN- 41001
CABM Pantnagar 2010-12 Sachin&Tarini 1

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. 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. 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. 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. 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. TYPES OF NEGOTIATION
 Distributive Negotiation
 Integrative Negotiation
CABM Pantnagar 2010-12 Sachin&Tarini
7

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. 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. 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. NEGOTIATION PROCESS
PREPARATION
INFORMATION SHARING
BARGAINING
FINALIZING THE DEAL
CABM Pantnagar 2010-12 Sachin&Tarini
11

12. BATNA
BATNA is an acronym for:
Best
Alternative
To
a
Negotiated
Agreement
CABM Pantnagar 2010-12 Sachin&Tarini
12

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. 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. 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. 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. EXAMPLE
CABM Pantnagar 2010-12 Sachin&Tarini
17

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. 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. 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. 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. 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. THIRD-PARTY
NEGOTIATIONS
1. Investigation
2. Mediation
3. Conciliation
4. Arbitration
5. Adjucation
CABM Pantnagar 2010-12 Sachin&Tarini
23

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. 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. 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. 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. 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. THANK
YOU
CABM Pantnagar 2010-12 Sachin&Tarini
29

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. 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. BARGAINING
 Bargaining has two basic parts
– Debating
– Proposing
CABM Pantnagar 2010-12 Sachin&Tarini
32

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. 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. 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