Download - Negotiation Skills-Pankaj Sinha
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Negotiation Skills
By Pankaj K SinhaHead- Commercial
Essar Offshore Subsea Ltd.
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Vision Statement of EOSSL
To be the most preferred solution provider in Shallow and Deep water Construction
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Mission Statement of EOSSL
Essar Offshore Subsea Ltd is committed to:
• Make customers, employees and otherstakeholders happy by deliveringvalue consistently
• Ensure that services and solutionsprovided by EOSSL are safe, costeffective and environment friendly
• Fast track growth in the Shallow &Deep water Construction space, acrossthe globe
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What is Negotiation
Negotiation involves the art and science of drawingup deals that create lasting value.
David A. Lax and James K. Sebenius
Negotiation is the process by which people deal withtheir differences.
Harvard Business School.
The virtue of efficient Negotiation is that you don’t leave money on the table… how you splitthe money is up to you and your counterpart.
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Essar Essentials- From being to becoming
1. Entrepreneurial Orientation
2. Project Management
3. Operational Excellence
4. Negotiation– The ability to leverage interpersonal relationships in the best interest of
work/organization. This individual always looks for greater efficienciesin any business transactions.
– An individual demonstrating this capability builds rapport with internaland external customers; has exhaustive understanding of businessenvironment and knows how to leverage this; believes in win-winscenarios and relentlessly tries to achieve the same; appreciates workingrelationships and contributes to effective team work across extendedteam.
– The ability to build strong relationships with both internal and externalcustomers and look at every day tasks from service
5. Customer Focus
6. Nurturing
- Quoted from Section 5.2- Essar’s Corporate Induction Manual
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Let us never negotiate out of fear
But let us never fear to negotiate
John F Kennedy
Negotiation
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Evolution of Negotiation
1970 to 1985
1985 to 2000
2000 to _____
What Tools do you Carry in Your
Negotiation Toolbox?
Power
Side by Side
Problem Solving
A Learning
Conversation
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Evolution of Negotiation
�Give and Take Dr. Chester Karrass
�Getting to Yes Fisher and Ury
�3D Negotiation Lax and Sebenius
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Types of Negotiation
1. Distributive Negotiation
2. Integrative Negotiation.
3. Most negotiations combine elements of both types,
but for the purposes of understanding, it’s
important to examine each type in its pure form.
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Distributive Negotiation
1. Parties compete over the distribution of a
fixed sum of value. The key question in a
distributed negotiation is, “‘Who will claim
the most value?" A gain by one side is
made at the expanse of other.
2. The Seller’s goal is to negotiate as high a
price as possible; the Buyer’s goal is to
negotiate as low a price as possible.
3. Thus, the deal is confined: there are not
much opportunities for creativity or for
enlarging the scope of the negotiation.
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Integrative Negotiation
1. In Integrative Negotiation, parties cooperate toachieve maximize benefits by integrating theirinterests into an agreement. This is also knownas a win-win negotiation.
2. Integrative negotiations tend to occur infollowing situations:
– Structuring of complex long-term StrategicRelationships, JV or other collaborations
– When the deal involves many financial andnon-financial terms
3. In an integrative negotiation,, there aremany items and issues to be negotiated,and the goal of each side is to “create”as much value as possible for itself andthe other side.
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Distributive versus Integrative Negotiations
Characteristic Distributive Integrative
Outcome Win-lose Win-win
Motivation Individual gain Joint and individual gain
Interests Opposed Different but not always Opposite
Relationship Short-term Longer or Short-term
Issues involved Single Multiple
Ability to make trade-offs Not Flexible Flexible
Solution Not creative Creative
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Negotiation Concepts
1. BATNA (Best Alternative to a Negotiated Agreement): youroptions if you fail to reach agreement during a negotiation.
2. Reservation Price: the least favorable point at which you’llaccept a negotiated deal; the “walk-away” price.
3. ZOPA (Zone of Possible Agreement): the range in which apotential deal can take place; defined by the overlap betweenthe parties’ reservation prices.
4. Value Creation Through Trades: the trading of goods orservices that have only modest value to their holders butexceptional value to the other party.
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ACCOMODATE
Build friendly relationship
Characteristics:
Promote harmony
Avoid substantive differences
Give into pressure to save relationship
Place relationship above fairness of
the outcomes
Type of Negotiation Styles
CO
NC
ER
N F
OR
RE
LA
TIO
NS
HIP
CONCERN FOR SUBSTANCELow
HighCOLLABORATE
Problem solved creatively, aiming for win-win
Characteristics:
Search for common interests
Problem-solving behaviours
Recognising both parties’ needs
Synergistic solutions
Win-win becomes the main purpose of the negotiator
High
AVOIDTake whatever you can get/Inaction
Characteristics:
Feeling of powerlessness
Indifference to the result
Resignation, surrender
Take what the other party is willing to concede
Withdraw & remove = behaviour of negotiator
DEFEAT
Be a winner at any cost/Competitive
Characteristics:
Win-Lose competition
Pressure/Intimidation
Adversarial relationships
Defeating the other becomes a goal for the negotiator
COMPROMISE
Split the difference
Characteristics:
Meeting half way
Look for trade offs
Accept half-way measures
Aims to reduce conflict rather than problem solve synergistically
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Pre-Negotiation
Negotiation
Post-Negotiation
Percentage Time
80%
5-10%
10-15%
Negotiation Strategy- Time Factor
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Negotiation Strategy
1. Best Alternative To a Negotiated Agreement (BATNA).
• Absolutely essential to know whether to accept alternative arrived at through negotiation versus ending negotiation.
• Must consider other side’s BATNA as well as your own.
2. Develop your BATNA:
• Invent a list of actions possible if no agreement.
• Improve some of ideas from list, create practical alternatives.
• Select the alternatives that seem best.
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Negotiation Strategy ……
3. Strengthen your BATNA• make BATNA easier, more probable, or better at satisfying
interest. • If you only accept a deal that is better than BATNA, improving
BATNA leads to better result, either through better agreement or going to the BATNA.
4. Consider their BATNA: • Understanding BATNA helps you understand how to make
agreement easier. • Understanding their BATNA allows you to estimate whether
agreement is possible.
5. Reservation Price: Translation of the BATNA into a value at the table—the amount at which you are indifferent between reaching a deal and walking away to your BATNA. .
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Negotiation Strategy ……
Min Willingness to Accept Max Willingness to PaySeller’s Res. Price Buyer’s Res. Price
ZOPA
6. Zone of Possible Agreement (ZOPA):
The bargaining range created by the twoReservation Values. The ZOPA defines a“surplus” that must be divided betweenthe parties
• Assess the ZOPA
• Change the ZOPA
• Take the ZOPA
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Strategy-templates
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Strategy-templates
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Body Language
Body language plays a critical role incommunication Accurate interpretation of bodylanguage is required for successfulnegotiations. Body language is expressed by:
� Eye and facial expressions
� Arm and hand positions
� Leg and foot positions
� Posture and body position
As important as it is to accurately interpretbody language, it’s also important torecognize that there are exceptions to everyrule - body language can help to support, orcontradict a message, or mean nothing at all.For example, the term ‘poker face’ describesan individual that has mastered the ability toshow no emotion regardless of the situation.
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Negotiation Process
Opening
Closing
Bargaining
Preparation
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Preparation
1. Define your goals, the other party’s goals, and the conflict.
2. Identify the goals you share with the other party.
3. Define the things you are willing to trade and their value to the
other party. Do the same for the other side: what they might offer
you and how much it is worth to you.
4. Anticipate Alternatives to determine how important it is for you to
reach a settlement.
5. Realize that you are no weaker or stronger than the other party. The
two sides share goals and both sides are willing to trade to attain
their objectives.
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Opening
� Most important opportunity to
influence the other side
� Active Listening Skills
– Body Language
– Intelligent Listening
�Non-negotiable items
�Flexibility
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Bargaining
1. Explore Key Commitments
2. Summarize Arguments and Seek
Acceptance
3. Look for Signals of Possible Movement
4. Identify and Highlight Common Ground
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Bargaining
1. Remember: You Win ≠ They Lose
2. Negotiate Interests, not Positions
3. Focus on what you don’t know… exchangeinformation
4. Explore all the ways in which they can create valuefor you
5. Find out all the ways in which you can create valuefor them
6. Add issues
7. Negotiate multiple issues simultaneously
8. Exchange information regarding priorities
9. Trade based on differences of all kinds to createvalue
10. Search for Post-Settlement Settlements
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Closing
� Be Prepared to Concede
� Begin with those of Low Priority and seek High Priority Items
� Never Concede on More than possible by your Brief
� Use your Concessions Wisely
� Don’t just give these away expect and receive something in return
� Look for Contingent Agreement, if required
� Never burn the bridge
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Thank You
Q&A