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Finance and Administrative Services Department
Negotiations:
It’s All in The Preparation
What is Negotiation?
The art and science of drawing
up deals that create lasting value
The process by which
people deal with their differences
Conferring to arrive at an agreement between different
parties, each with their own interests and preferences
Why Negotiate?
• To reach an agreement
• To compromise
• To settle an argument/dispute
• To make a point
• To create value
Learning Objectives
• Prepare for negotiations
• Identify intelligence-gathering activities
• Apply four key negotiations concepts
• Differentiate two primary negotiations strategies
Negotiation Phases
Pre-Negotiation Negotiation Post-Negotiation
Negotiation Phase Activities
Intelligence gathering
Formulation
Strategy development
Preparation activities
Information sharing
Bargaining
Closing and agreement
Implementation
Monitoring
Post-NegotiationPre-Negotiation Negotiation
Pre-Negotiation Phases
#1 Intelligence
Gathering
#2
Formulation
• BATNA =
• Target or Goal =
• RP =
• ZOPA=
• Creating Value through Trades
Best Alternative to a Negotiated Agreement
Your ideal outcome
Reservation Price/Resistance Point
Zone of Possible Agreement
BATNA
• Knowing it allows you to know what you will do if you fail
to reach agreement
• To develop your BATNA:
1. List your alternatives
2. Evaluate your alternatives
3. Establish your best alternative as your BATNA
BATNA Guided Notes
• Your BATNA tells you when to accept and when to reject
an agreement
– When a proposal is better than your BATNA: ACCEPT IT
– When a proposal is worse than your BATNA: REJECT IT
• Your BATNA is your biggest source of power in a
negotiation!
– Options make you stronger; they allow you to walk away
– Do everything you can to improve your BATNA
Improving Your Position
1. Improve your BATNA
2. Identify the other party’s BATNA
3. Weaken the other party’s BATNA
Target or Goal
Focus on achieving
your Target or Goal
Reservation Price
• Lets you know when to
“walk away”
ZOPA #1
$250,000 $275,000
ZOPA #3
ZOPA #4
#3
Strategy Development
#4
Preparation
Activities
Finance and Administrative Services Department
Negotiations:
It’s All in The Preparation