importance of negotiation-ppt

1Source: Harvard Business Essentials

Ekta Manghwani (33)

Importance of Negotiation

NegotiationBasics of negotiationBasic elements of negotiationNegotiation processTable tacticsNegotiating for othersAgency issues5 ways to negotiate effectively


Agenda

Source: Harvard Business Essentials 3

“Let us never negotiate out of fear. But let us never fear to negotiate.”

-President John F. Kennedy

Negotiation is a basic means of getting what you want from others by interactive communication designed to reach an agreement.


Negotiation

1. There must be at least 2 or more parties involved.

2. There is a common interest between parties.3. Have definite goals & objectives.


Basics of negotiation

Positive attitude Knowledge of the negotiation subject An understanding of people A grasp of your subject Communication skills


Basic elements of successful negotiation

1. Relate: Building a relationship2. Explore: Interests of both the sides3. Propose: 1 concrete proposal addresses all

underlying interests4. Agree: Compromising & creating

alternatives


Negotiation process

Getting the other side to the table1. Offer incentives:-Find out the reluctant

person’s needs(money, time, your support) & then pose them as potential benefits of negotiations.

Example:-If your boss, Sales Manager, is reluctant to give you time to work on a redesign of the company’s inventory system, explain how an improved system will help solve 1 of his problems-lost sales from out-of-stock conditions.


Table tactics

2. Put a price on the status quo:-Spell out the cost of negotiating.

Example of a woman whose boss promoted her & had her take on additional work, but was forever delaying any discussion of a pay rise. Frustrated by his inaction-she secured a job offer from another company. Now the boss was suddenly very keen in dealing with her long overdue pay rise. He had to negotiate or face the costly & time-consuming process of replacing an effective subordinate. In other words, he realized the price of the status quo.


Contd..

3. Enlist support:-Allies can sometimes accomplish what other measures cannot.

Example:-if the Sales Manager still does not gives you time off to improve the inventory system, look for allies who have organizational power & a reason to favor your goal. The CFO will likely favor any plan to improve inventory management. The CFO knows that better inventory management means lower working capital requirements, which makes him look good. Once the Sales Manager realizes that the issue has risen to the senior management level, he’s likely to bargain. 10Source: Harvard Business Essentials

Contd..

1. Independent agents:- They are charged with representing the interests of another (principal) in negotiations with a third party. Examples: lawyers, accountants, brokers

2. Reasons for hiring independent agents: (a)Greater expertise

(b)To put some distance between oneself & the other party(to avoid relationship conflicts with a friend or valued business associate)


Negotiating for others

2. Non-independent agents:-Some individuals act as non-independent

agent representatives in negotiations.A Purchasing Manager negotiates regularly

with suppliers on behalf of his employer.He acts as the employer’s agent & is a part of

the organization on whose behalf he is negotiating

Examples:-Union representative, Corporate Advertising Manager


Contd..

1. Information Asymmetries:- It means that 1 party has more information than the other which can be a problem.

If the principal has more knowledge than the agent, then the agent may not know how to represent the principal. Generally, the agent possess the greater of information. The agent’s greater information can create a problem of trust between the principal & the agent.


Agency issues

2.Divided interests:- Many agents face the challenge of serving

divided internal interests.

Not all the organizations are of 1 mind as to its core interests.

This fact puts those who represent the principal into a difficult position.

Best solution-communication with constituents-communication that aims for consensus regarding priorities. In such cases, the agent has to act as an educator. 14Source: Harvard Business Essentials

Contd..

3.Conflicts of interests:-Agent’s personal agenda may conflict with the principal’s agenda.

Example: Generally companies use incentives (bonuses, profit-sharing & stock options) to align the interests of agents with their own interests.

The idea is simple: Agents only do well if the organizations they represent do well.


Contd..

1. Learn to flinch2. Recognize that people often ask more than

they expect to get3. The person with the more information often

does better


5 ways to negotiate effectively

A. Self-confidentB. PatientC. Aware of non-verbal communication


The negotiator must be:

Source: Harvard Business Essentials 18

THANK YOU!!!

importance of negotiation-ppt

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