Introduction to Negotiations :Introduction to Negotiations


Master Sun Drona :Master Sun Drona Meaning of Negotiation Successful Negotiation/Negotiator Your Style of Negotiating Process of Negotiation : Preparation Process of Negotiation : Opening Process of Negotiation : Bargaining Process of Negotiation : Closing Common Negotiation Problems The End


Negotiate for Success :Negotiate for Success Two parties who may disagree but intend to come to some sort of agreement


Why Negotiate ?Small Changes in Price =Dramatic Effect on Profits. :Why Negotiate ?Small Changes in Price =Dramatic Effect on Profits.


Master Sun Drona :Master Sun Drona Meaning of Negotiation Successful Negotiation/Negotiator Your Style of Negotiating Process of Negotiation : Preparation Process of Negotiation : Opening Process of Negotiation : Bargaining Process of Negotiation : Closing The End


A Successful Negotiator :A Successful Negotiator Good Analytical & Interpersonal Skill Perceives negotiation as an experience of sharing rather than competition Seen as successful by both sides and not by one party Track record of successful implementation Stability of the outcome is important rather than people pulling out at the last moment Listens & questions


Master Sun Drona :Master Sun Drona Meaning of Negotiation Successful Negotiation/Negotiator Your Style of Negotiating Process of Negotiation : Preparation Process of Negotiation : Opening Process of Negotiation : Bargaining Process of Negotiation : Closing The End


Negotiating Style :Negotiating Style


Personal Negotiating Style :Personal Negotiating Style Need for Others’ Approval


Negotiation Style :Negotiation Style Competing : Yell to the person sitting across from you that he should run over and get behind your chair and that you’ll share the money with him if he does Aggressive style – win/lose Intimidation / threats / hostility First instinct is to see “zero sum” allocations Likes to “win” May even lie if he’s asked to get up and move, claiming he has a sprained ankle When to Use Use if you need a quick decision Mutually exclusive objectives Dealing with a Competitor Be positive and focus on your target Be prepared to trade information Let him/her talk to collect more information Avoid being side tracked Take Notes Summarize what has been discussed Slow down the negotiation process Do not give in Learn to say “No”


Soviet Style in Cold War :Soviet Style in Cold War What ours is ours, what’s yours is negotiable


Negotiation Styles :Negotiation Styles Accommodating : Run over and stand behind the chair of the person opposite you, trusting that she will give you a fair share of the 10,000 Relationship over objectives Sacrifice now / gain later Resolves conflict by solving the other party’s problem If the counterpart is similar, he shares the wealth If the counterpart is not similar, the Accommodator may end up with nothing When to Avoid Don’t use on key issues Don’t use if other party is lying


Negotiation Style :Negotiation Style Collaborative : Suggest to the person opposite you that you BOTH get up and stand behind each other’s chair, so you BOTH get 10,000 Working together Time-consuming Collaborating / brainstorming Tries to find a way for both parties to get the best outcome Willing to be creative and brainstorm When to Avoid May not be successful against a strong competitor Don’t use on minor points Dealing with a Collaborator Build and use the agenda to keep it moving Take an interest in the ‘facts’ presented Make sure any information provided is accurate Emphasize mutual gain Show respect for his/her expertise


Negotiation Styles :Negotiation Styles Avoiding: Decide not to play Passive – lose/lose Prefers not to get involved in the dispute at all Dislike stress Avoids situations with “winners” and “losers” Can be (surprisingly) very difficult to negotiate against Creates frustration / anger When to Use Use on minor issues Use if you would lose Use if you want to buy time Don’t use in complex situations


Negotiation Style :Negotiation Style Compromising : If the person across from you is offering you 5,000 to stand behind her chair, take the deal (even if you made the same offer to her) Uses Cooperation Concedes minor objectives Divides needs to satisfy both parties Favors deals that give something to each party Interested in maintaining relationships Tends to “split the difference” When to Use Mutually exclusive objectives Dealing with Compromiser Build trust but keep the distance Trade information to get them on your side Put pressure only if necessary Go slowly and continue with caution Check that he/she can deliver on whatever is being offered


Master Sun Drona :Master Sun Drona Meaning of Negotiation Successful Negotiation/Negotiator Your Style of Negotiating Process of Negotiation : Preparation Process of Negotiation : Opening Process of Negotiation : Bargaining Process of Negotiation : Closing The End


Preparation: Seven Commandments :Preparation: Seven Commandments Set High Goals Understand Partner’s Goals Find Common Ground Understanding the Relationship Between You & Partner Ask Questions Assess your BATNA. Improve your Leverage List all concessions and in order of importance


What are Your Goals :What are Your Goals Research shows that you increase your likelihood of achieving your goals if you start systematically setting them Balance the Long Term with the Short Term Akio Morita & Sony radios, Bulova Brainstorming Helps Goals should be SMART Value of Commitment Beach Neighbour


The Situational Matrix:Type of Relationship :The Situational Matrix:Type of Relationship High Low High Low Perceived Conflict over Stakes Importance of Future Relationship Between Parties


Information-Gathering Behavior as a % of All Behaviour Observed :Information-Gathering Behavior as a % of All Behaviour Observed


Best Alternative :Best Alternative Best Alternative to Negotiated Settlement (BATNA) Leverage = Counterpart’s Need Level – Your Need Level +Your BATNA – Counterpart’s BATNA


Assess Your Leverage :Assess Your Leverage Weak : Leverage ==+1 Leverage = Counterpart’s Need Low- Your Need High+ Your BATNA Average – Counterpart’s BATNA Average= 0-1-0-0= -1 Leverage of Congress in Cong-NCP Alliance for Assembly Seat Sharing Leverage of TATA in TATA-Corus Deal with CSN an a Bidder


How to Improve Leverage :How to Improve Leverage What if you have a weak Leverage Improve your BATNA Identify other side’s BATNA Weaken other side’s BATNA Create more alternatives and turn them into practical possibilities Flexi Job Episode Strike when your leverage is hot


Concession Listing :Concession Listing As BST Sayona, what are the concessions that you can offer to your customers Rank them in order of importance As India, what are the concessions that you can offer to Pakistan on the Kashmir Issue . Rank them in order of importance


Master Sun Drona :Master Sun Drona Meaning of Negotiation Successful Negotiation/Negotiator Your Style of Negotiating Process of Negotiation : Preparation Process of Negotiation : Opening Process of Negotiation : Bargaining Process of Negotiation : Closing The End


Opening First -Advantages :Opening First -Advantages Sets Expectations Your most aggressive and yet realistic offer Elicit genuine information Good if timing is right


Opening First- Disadvantages :Opening First- Disadvantages When one side puts an offer or draft agreement on the table, the other side now has the initiative, Lack of information to set the price Edison & his Stock Ticker


Open with Tough & Credible Opening :Open with Tough & Credible Opening Open with a tough but credible opening stance Weak Opening Ridiculous Position Too accommodating A confident opening can demonstrate confidence in your position Imply trust in the other side to which they may respond favourably Dressing for the occasion Avoid revealing too much and try to disguise the importance that you attach to different issues


Asking Other Side to Open :Asking Other Side to Open Likely to be influenced by your relationship with them Strong position then you have the advantage and more options will be available to you. If you are in the weak position asking the other side to open is more difficult Adopt a friendly or questioning style.


Analyze Opening Statement :Analyze Opening Statement Opening Statement of the Other Side Analyzing their opening statement will help you to evaluate the strengths and weaknesses of their arguments Important to try to identify areas that the other side considers to be non-negotiable These can often be identified by what the other side omits from their opening statement


Reject Opening which is Not Credible :Reject Opening which is Not Credible


Listen Carefully to Other Side’s Opening :Listen Carefully to Other Side’s Opening


Non-negotiating items can be powerful bargaining levers :Non-negotiating items can be powerful bargaining levers


Using Shock Opening :Using Shock Opening Use of a shock opening can compel the other side to adjust their expectations Easier if you are in the strong position In the weak position, a shock opening can endanger the whole negotiation If you can get the other side to accept your extreme opening position then you will create the opportunity to use a split the difference approach later on


Master Sun Drona :Master Sun Drona Meaning of Negotiation Successful Negotiation/Negotiator Your Style of Negotaiting Process of Negotiation : Preparation Process of Negotiation : Opening Process of Negotiation : Bargaining Process of Negotiation : Closing The End


Bargaining Begins :Bargaining Begins Almost never say yes to First offer Or Counter Offer


Taper your Concessions :Taper your Concessions


Negotiators tend to gravitate towards centre of two starting points :Negotiators tend to gravitate towards centre of two starting points


Trading Concessions :Trading Concessions Concessions are pre-planned and offered in reverse priority order Each concession made, may be read either as: a goodwill gesture a sign of weakness Important to avoid making the first major concession Other side will gain a significant psychological advantage Get the other side used to making concessions Get them to make a few minor concessions at the start Avoid making concessions when you are under pressure and always make them contingent


Avoid making unilateral concessions :Avoid making unilateral concessions


Bargaining Phase – Explicit Communication :Bargaining Phase – Explicit Communication Vital that both sides understand one another. Always be explicit about: What point you are discussing Each offer you make to the other side What objections your side has to a given offer What changes remove or negate a current point of contention. What terms you think you are agreeing to Try to draft notes about points of disagreement and about each point that is agreed on.


Bargaining :Bargaining Be willing to make small concessions Anticipate the other side’s objections - and use this information to diffuse them Assertions of fact will have far more impact if they are backed up with published information Before you attempt to counter the other side’s argument it listen carefully to what they are saying Don't talk too much yourself, as you may end up giving too much away Don't just say no .Try to offer an alternative package Don't highlight your own shortcomings Don't deny obvious weaknesses in your position


Bargaining – Hot Buttons :Bargaining – Hot Buttons Never verbally attack the other side Always be polite If possible provide them with an escape route. Disagree firmly but don’t try to make the other side look small Abhor personal attacks


Master Sun Drona :Master Sun Drona Meaning of Negotiation Successful Negotiation/Negotiator Your Style of Negotiating Process of Negotiation : Preparation Process of Negotiation : Opening Process of Negotiation : Bargaining Process of Negotiation : Closing The End


Closing :Closing When Closing is Happening Difference in the position of the narrows significantly. Objections and counter arguments have faded out Other side indicate that they would like to see a draft final agreement or contract In complex negotiations it can sometimes be necessary to wait before making a final commitment. Allows both sides time to think, to digest the whole proposal


Handling Last Minute Tactics :Handling Last Minute Tactics A Last Minute Tactical Maneuver Premise that you have invested a lot of time and energy More likely to accommodate such a request, rather than jeopardize the whole deal


Asking for Commitment :Asking for Commitment When closing try to carry out a high level review of the major points Ask questions that you think will illicit a positive response Remember, once you’ve finished your closing statement, obey the golden rule of selling and keep quiet


Post Closure :Post Closure You should try to manage both side’s feelings of success with diplomacy. You will create maximum stability if you make the other side feel that they have negotiated a good deal from their perspective


Master Sun Drona :Master Sun Drona Meaning of Negotiation Successful Negotiation/Negotiator Your Style of Negotiating Process of Negotiation : Preparation Process of Negotiation : Opening Process of Negotiation : Bargaining Process of Negotiation : Closing The End