basics of negotiation shish mba sams ibm varanasi india

8/14/2019 Basics of Negotiation Shish Mba Sams Ibm Varanasi India

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Basics of Negotiation

BCN 4712

Leading & Managing ConstructionOperations


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Overview

Importance of negotiating skills Types of negotiation

Four Key Concepts

Preparation

Negotiation Tactics

Barriers to Agreement Mental Errors

Building Organizational Skills


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Importance of Negotiating

Skills

Personal Homes, cars, everything you buy Your job, salary, working conditions Your spouse and kids!

Professional Clients Design teams Subcontractors Suppliers Employees


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Negotiation, Harvard Business School Press, 2003.

Getting to Yes: Negotiating Agreement WithoutGiving In, Roger Fisher and William Ury & BrucePatton, 2nd Edition, Houghton Mifflin, 1991

Getting Past No: Negotiating with Difficult People,

William Ury, Bantam Books, 1991

References on Negotiation


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Distributive Negotiation

Win-lose, zero sum, constant sumA dollar more to one side is a dollar less

to the other

Carpet sale where buyer and seller haveno relationship

Wage negotiations between businessowners and union employees

Cards are played close to your vest


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Integrative Negotiation

Both sides work to increase the value ofthe solution

Goals are to: Create as much value for yourself and the

other side

Claim value for yourself

Open about information andcircumstances


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Positional Negotiating

When negotiators bargain overpositions they tend to lock themselvesinto those positions.

Modified from material obtained from the Harvard Negotiation Project.

Copyright 2000 by the Presidents and Fellows of Harvard College. All rights reserved.


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The more you clarify your position anddefend it against attack, the morecommitted you become to it.




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The more you try to convince the otherside of the impossibility of changingyour opening position, the more difficult

it is to do so.




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The result is frequently an agreementthat is far less satisfactory to each sidethan what it could have been.




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Positional Negotiation

Pros

Easy to understand

Simple communication

Can be quick andefficient

Very operational

Requires littlepreparation

Universally understood

Often expected

Cons

Rewards stubbornnessand deception

Discourages explorationof interests and options

Promotes arbitraryoutcomes

Takes longer in complexsituations




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Principled Negotiation:

The Method Separate thepeople

From theproblem

Focus on interests,

Notpositions

Invent options

For mutual gain

Use objective criteria




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Separate thepeople

from theproblem

Relationship Issues: Emotion/reason

Understanding Communication

Reliability Coercion/persuasion

Acceptance/respect

Substantive Issues: Money

Terms Conditions

Concessions Promises

Dates/numbers


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Focus on Interests

not Positions

Interests = desires and concerns thatunderlie positions

Prepare for negotiation: Clarify interests

Understand the interests of the other side

Focus the negotiation discussion on:

Interests not positions




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Invent Options

for Mutual Gain

To invent creative options: Separate inventing from judging.

Broaden the options on the table,rather than look for a single answer.

Search for mutual gains.

Invent ways to make their decisioneasy.




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Insist on using

Objective Criteria

Frame each issue as a joint search forobjective criteria.

Reason and be open to reason as towhich standards are most appropriate

and how they should be applied. Never yield to pressure, only to

principle.




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Starting Point

A successful negotiation must have abasic framework

The alternative to negotiation

The minimum threshold for a negotiateddeal

How flexible a party is willing to be, andwhat tradeoffs it is willing to make


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Four Key Concepts

BATNA Reservation Price

ZOPAValue Creation through Trades


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Know your BATNA!

Best Alternative to a Negotiated Agreement(BATNA)

Typical example: negotiate or go to court

Example of Louis XI in 1475 (p. 16)

Improving your situation

Improve your BATNA Identify the other sides BATNA

Weaken the other partys BATNA


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ZOPA Zone of Possible Agreement (ZOPA)

The difference between the SellersReservation Price and the Buyers

Reservation Price What happens if positions below are

reversed?ZOPA

$275k$250k

BuyersReservation Price

SellersReservation Price


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Value Creation through Trades

Trade things you value less to the otherparty

Examples: For a supplier the greater value may be not

price but an extended delivery time

For a customer, extended warranty versusprice

For an employee, working at home versussalary


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Preparing for a Negotiation

BATNA: yours and theirs, know them Identify value creation opportunities

Determine negotiation authority levels Understand the people and their culture

Prepare for flexibility Show fairness in your position

Alter the process in your favor


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Nine Steps to a Deal1. Know what would be good outcomes

2. Identify value creation opportunities

3. Identify BATNA and RPs

4. Shore up your BATNA5. Anticipate the authority issue

6. Learn all you can about the other side

7. Prepare for flexibility

8. Gather external standards and criteria for fairness

9. Alter the process in your favor


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Getting Off to a Good Start

Express respect for the other side Frame the task positively, as a joint

endeavor

Emphasize openness to the other sidesinterests and concerns

Start by breaking bread


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For Win-Lose Negotiations Anchoring: an attempt to establish a

reference point around which negotiationswill make adjustments The first offer is often important

Studies show that outcomes correlate to the firstoffer

Counteranchoring: what you do if the other

side sets the anchor Be prepared for Concessionary Moves: avoid

the impulse to make them, may indicateweakness or additional flexibility


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Closing the deal

Signal the end before you get thereAllow flexibility if you anticipate going

beyond the final round

Discourage the other side from seekingfurther concessions

Write down the terms

basics of negotiation shish mba sams ibm varanasi india

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