Negotiation
Negotiation
Negotiation is a process in which groups with
conflicting interests meet together to make
offers, counteroffers, and concessions to each
other in an effort to resolve their differences.
Third-party negotiator is an outsider skilled in
handling bargaining and negotiation.
– Mediator - a neutral third party who tries to help
parties in conflict reconcile their differences.
– Arbiter - a third party who has the authority to
impose a solution to a dispute.
Characteristics of Negotiation
• An explicit and deliberate event
• Takes place between the representatives of
the parties concerned
• The process which intends to settle the
disputes and differences between parties
involved
• Outcome of negotiation is dependent on the
relative power relationship between the
parties involved
Importance of Negotiation
• Dynamic nature of business
• Interdependence
• Competition
• Information age
• Globalisation
Pre-conditions for Negotiations
• Two or more parties which have either conflict or
disagreement
• Perceived conflict of needs, positions and interests
• Interdependence so that the outcome must be
satisfying to all parties
• Agreement must be required to be reached within
reasonable time so that it becomes beneficial to both
parties
• The success of negotiation depends on the facts that
the issue is negotiable; the negotiators are not only
taking but giving also; trust between negotiating
parties; fear that failure may lead to crisis
Assumptions in Negotiation
• It is a process of give and take with no room
for threat and coercion
• People come for negotiation believing that the
other group can be persuaded
• Equal status of the parties during negotiation
• Fairness in the process of negotiation
• Negotiation is more beneficial for resolving
differences compared to other methods
PLANNING FOR NEGOTIATION
Three stages of negotiation plan
• Pre-negotiation planning
• During negotiation behaviour
• Post-negotiation understanding
Pre-negotiation Planning
It requires consideration of following factors
[Link] yourself
[Link] the adversary
[Link] your goals and objectives
[Link] arguments and alternatives
[Link]/ procedures
Behaviour during negotiation
1. Opening move
2. Frequency and size of proposal (Negotiation
Dance)
3. Influence mechanisms (referent power and
expert power)
Post-negotiation understanding
1. Implementation plan
2. Role responsibilities
3. Review teams
STRATEGIES AND TACTICS OF
NEGOTIATION
Bargaining Strategies
Distributive versus Integrative
Bargaining
Distributive Negotiation
Tactics used in distributive negotiation are:
[Link]
[Link]
[Link] job (giving long list of issues for
discussion)
[Link] tantrums
[Link] authority
Staking Out the Bargaining Zone
Bargaining Zone and Negotiation
Dance
Principles for slicing the pie
1. Assess your Best Alternative to Negotiated Agreement (BATNA) and
improve it
2. Determine your reservation point but do not reveal it
3. Reach the other party’s BATNA and estimate their reservation point
4. Set high aspirations but that are realistic
5. Make the first offer if you are prepared
6. Immediately re-anchor if the other party offers first
7. Plan your concessions
a. Pattern of concessions
b. Magnitude of concessions
c. Timing of concessions
8. Use an objective-appearing rationale to support your offers
9. Appeal to norms of fairness
Wise – pie - slicing
Qualities to live by while slicing the pie
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Integrative Negotiation
Pitfalls in integrative negotiation
[Link] fixed pie, can be expanded to the
maximum advantage of all parties
[Link] may shift from issue to position, ego
and face saving
[Link] in one’s own position may
lead to neglecting the need of other people
Beliefs conducive to integrative
bargaining
1. Belief in availability of a mutually acceptable
solution
2. Belief in cooperation rather than competition
3. Belief that everyone is of equal value and status
4. Belief in the view expressed by others
5. Belief that differences in opinion are helpful
6. Belief in the trustworthiness of the other
member
7. Belief that other party can compete but chooses
to cooperate
Steps in Integrative Negotiation
Process
1. Identify and define the problem
Define the problem in the way mutually acceptable to both sides
2. Understand the problems
a. State problem with eye towards practicality and comprehensiveness
b. State the problem as a goal and identify obstacles to attaining the goal
c. De-personalise the problem
d. Bring interests and needs to the surface
e. Separate the problem definition from the search from solutions
3. Generate alternative solutions to the problem
a. Expand the pie
b. Use non-specific compensation
c. Cut the costs for compliance
d. Find a bridge solution
e. Generating alternative solutions
f. Brainstorming
Contd.
4. Evaluate and select alternatives
a. Narrow the range of solution options
b. Evaluate solutions on the basis of quality,
standards, and acceptability
c. Agree to the criteria in advance for
evaluating options
d. Use sub groups to evaluate complex options
Win-win negotiation is not:
• Compromise
• Even split
• Feeling good
• Building a relationship
The
Negotiation
Process
Common mistakes to be avoided
1. Inadequate Preparation
2. Ignoring the give/get principle
3. Use of intimidating behavior.
4. Impatience.
5. Loss of temper.
6. Talking too much, listening too little, and
remaining indifferent to body language.
7. Arguing instead of influencing.
8. Ignoring conflict.
Third-Party Negotiations
Third-Party Negotiations (cont’d)
