NEGOTIATIO

DEFINITION

The word "negotiation" originated from the Latin

expression,"negotiatus", which means "to carry
on business".
The process of conferring to arrive at an agreeme
nt between different parties, each with their own i
nterests and preferences.
Negotiation is a process where each party involved
in negotiating tries to gain an advantage for
themselves by the end of the process.

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 neg
otiation

WHY DO WE NEGOTIATE ?

To reach an agreement
To beat the opposition
To compromise
To settle an argument
To make a point

TYPES OF NEGOTIATION

Distributive negotiations

Integrative negotiations

DISTRIBUTIVE NEGOTIATIONS

Parties compete over the distribution of a fixed sum of v

alue. The key question in a distributed negotiation is,
Who will claim the most value? A gain by one side is
made at the expense of other.

The Sellers goal is to negotiate as high a price as possib

le; the Buyers goal is to negotiate as low a price as poss
ible.

Thus, the deal is confined: there are not much opportuni

ties for creativity or for enlarging the scope of the negot
iation.

INTEGRATIVE NEGOTIATION

In Integrative Negotiation, parties cooperate to achieve maxi

mize 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 collaboratio
ns.
When the deal involves many financial and non-financial terms.

In an integrative negotiation,, there are many items and issue

s to be negotiated, and the goal of each side is to create as
much value as possible for itself and the other side.

THREE STAGES OF NEGOTIATION

Initial Stages

Middle Stages

Ending Stages

INITIAL STAGES

Plan thoroughly.

Organize the issues.

Focus on mutual principles and concerns.

Be aware that the first offer is often above expe

ctations.

Focus on long- term goals and consequences.

MIDDLE STAGES

Revise strategies.

Consider other options.

Increase power by getting the other side to comm

it first.

Add credibility by getting agreements in writing.

To get through with dead ends, just set it aside m

omentarily.

ENDING STAGES

Counter a persistent negotiator by withdrawi

ng an offer.

Do not expect in verbal promises.

Congratulate the other side.

BATNA

BATNA is ;
Best Alternative To Negotiated Agreement

BATNAs tell you when to accept and when to reje

ct an agreement
In the simplest terms, if the proposed agreement
is better than your BATNA, then you should acc
ept it. If the agreement is not better than your
BATNA , then you should reopen negotiations.

CHARACTERISTICS OF AN EFFECTIVE N
EGOTIATOR

He should be a good learner and observer.

Should know the body language of the people at the neg
otiation process.
Should be open and flexible and yet firm.
Exercise great patience, coolness and maturity.
Should possess leadership qualities.
Should control emotions and not show his weaknesses.
Should have clear cut goals and objectives.
Should be able to grasp the situation from many dimensi
ons.

COMMON NEGOTIATING MISTAKES

Entering negotiation with a preset mental mindset,

Not knowing who has final negotiating authority,

Not knowing precisely what power they possess,

Entering negotiation with only a general goal,

Failing to advance positions and arguments of substanc

e,

Losing control over factors such as timing and the orde

ring of issues,

Failing to let the other side make the first offer,

Ignoring time and location as a negotiating weapon,

Giving up when negotiation seems to have reached a d

eadlock,

Not knowing the right time to close

MAIN NEGOTIATION STRATEGIES

AVOIDANCE STRATEGY
COMPETITIVE STRATEGY
COLLABORATIVE STRATEGY
ACCOMMODATIVE STRATEGY

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1.

AVOIDANCE STRATEGY
(THE NON-ENGAGEMENT STRATEGY)

Reasons of why negotiators might

choose not to negotiate:
1.
If one is able to meet ones needs without n
egotiating at all, it may make sense to use a
n avoidance strategy.
2.
It simply may not be worth the time and eff
ort to negotiate.

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AVOIDANCE STRATEGY
3.

The decision to negotiate is closely related to t

he desirability of available alternatives.

Alternatives are the outcomes that can be achieve

d if negotiations dont work out.

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2.

COMPETITIVE STRATEGY

Distributive

Bargaining
Win-Lose Bargaining (I win, you lose)
Zero-sum game: whatever extent one party
wins something, the other party losses

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EXAMPLES OF DISTRIBUTIVE BARGAINING

A wage negotiation
A price negotiation
A boundary or territor
ial negotiation

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3. COLLABORATIVE STRATEGY

Integrative Bargaining
Win-Win Bargaining (I win, you win)
Positive-sum situations are those where
each party gains without a corresponding loss
for the other party.

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INTEGRATIVE BARGAINING
The law of win/win says Lets not do it your
way
or my way; lets do it the best way
Integrative Bargaining is about searching for common
solutions to problems that are not exclusively of intere
st to only one of the negotiators.

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CONCEPTS FOR INTEGRATIVE BARGAINING

Separate people from the problem

Focus on interests, not positions
Invent options for mutual gains
Insist on using objective criteria

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4.

ACCOMMODATIVE STRATEGY

Win-lose strategy (I lose, you win)

The negotiator wants to let the other win, keep t
he other happy, or not to endanger the relationshi
p by pushing hard to achieve some goal on the sub
stantive issues.

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ACCOMMODATIVE STRATEGY
Accommodative Strategy is often used;

When the primary goal of the exchange is to build

or strengthen the relationship and the negotiator
is willing to sacrifice the outcome.

If the negotiator expects the relationship to exten

d past a single negotiation episode.

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