Negotiation

1
What Is Negotiation?
Direct:
• A process of formal communication, either face-to-face or via
electronic means, where two or more people come together
to seek mutual agreement about an issue or issues
• Involves the management of time, information, and power

between individuals and organizations who are
interdependent
Indirect:
• Relationships between people, not just organizations
• Persuasion
• Negotiation skills can be honed and practiced
2
Terms Used in Negotiation

• Positions
• Interests
• Needs
• Wants
• BATNA (Best Alternative To a Negotiated Agreement)

3
Interests
• The unspoken motivation or reason that underlies any
given position
• Unlikely to be expressly stated or acknowledged
during the negotiation
• May not be directly germane to the position
• May be personal in nature
Key Points on Interests

• Play detective and try to discern the other party’s
interests through a series of open-ended, probing
questions
• Always focus on the other party’s underlying interests, not
his/her stated positions
4
BATNA (Best Alternative To a Negotiated Agreement)

• What is BATNA:
• Negotiating Without Giving In.
• A party should generally not accept a worse resolution than its
BATNA.
• Need to ensure that a negotiator’s BATNA is never
revealed to the other party
• All settlements must be judged in light of all other viable
alternatives
5
Triangle Talk
Step 3:
Propose Action in a Way that They Can Accept
The
Step 1: Negotiation Step 2:
Know Know
Process
Exactly Exactly
What You What They
Want Want
6
Know Exactly What You Want

• Determine and write down specific goals and objectives
• Can be referred during the negotiation
• The more clearly defined, the more likely that can be
achieved
7
Know Exactly What They Want

• Attempt to discern the other party’s likely needs and
wants
• Estimate underlying interests to the other party’s stated
positions
• Beware of expecting the other party to think in the same
way
• Ask open-ended questions to confirm or counter
preconceived notions
8
Propose Action They Can Accept

• Frame your own needs in terms of the other party’s needs
• Make it easy for the other party to say, “Yes”
• Remain fair, flexible, and reasonable
9
Negotiation Framework
Identify or anticipate a purchase requirement
Determine if negotiation is required
Plan for the negotiation
Conduct the negotiation
Execute the agreement

10
Why Negotiation Required?

• Whole purchase process Secure my rights?
• Are many non-price issues involved?
• Are technical requirements complex?
• Will supplier perform value-adding activities?
• Will there be high risk or uncertainty?
11
Plan for the Negotiation

• Identify participants
• Develop objectives
• Analyze strengths and weaknesses
• Gather information
• Recognize other party’s needs
• Identify facts and issues
• Establish positions
• Develop strategies and tactics
• Brief personnel
• Practice the negotiation
12
Establish Positions
Example is a buyer-seller price negotiation
Aspiration Buyer
Aspiration
B.A.T.N.A.
B.A.T.N.A.
Point
Point
Zone of Likely
Agreement
Seller
Zone of Likely Agreement = Zone of Possible Agreement (ZOPA)

13
Face-to-Face Negotiation Phases

• Fact finding and information sharing
• Recess to:
• Reassess relative strengths and weaknesses
• Review and revise objectives and positions
• Reorganize the negotiation agenda
• Narrow differences
• Seek agreement and conclusion
• May involve several iterations
14
Guidelines for Making Concessions

• Give yourself enough room to make concessions
• Try to get the other party to start revealing its needs and
objectives first
• Be the first to concede on a minor issue but not the first
on a major one
• Make unimportant concessions and portray them as
valuable
• Make the other party work hard for every concession you
make
• Use tradeoffs to obtain something for every concession
you make
15
Guidelines for Making Concessions

• Generally, concede slowly and give a little with each
concession
• Do not reveal your deadline to the other party – ever
• Occasionally, say “No” to the other party
• Be careful trying to take back concessions, even tentative
ones
• Keep a record of concessions made to try and identify a
pattern
• Do not concede too often, too soon, or too much
16
Negotiation Tactics
• Low ball • High ball
• Honesty and • Best and final offer
openness • Silence
• Questions • Planned
• Caucus concessions
• Trial balloon • Venue
• Price increase
Win-Win Negotiation
18
Barriers and Obstacles

• Miscommunication due to language
• Time limitations
• Cultural differences
• Limited authority of international negotiators
Characteristics to Overcome Barriers
• Patience
• Knowledge of the contract agreement
• Honest and polite attitude
• Familiarity with foreign cultures and customs

Negotiation

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1

• Involves the management of time, information, and power

Terms Used in Negotiation

• BATNA (Best Alternative To a Negotiated Agreement)

Key Points on Interests

BATNA (Best Alternative To a Negotiated Agreement)

Know Exactly What You Want

Know Exactly What They Want

Propose Action They Can Accept

Determine if negotiation is required

Plan for the negotiation

Conduct the negotiation

Execute the agreement

Why Negotiation Required?

Plan for the Negotiation

Zone of Likely Agreement = Zone of Possible Agreement (ZOPA)

Face-to-Face Negotiation Phases

Guidelines for Making Concessions

Guidelines for Making Concessions

Barriers and Obstacles

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