the art of negotiating

The Art of NegotiatingThe Art of Negotiating

T. SivasankaranAdvesh Consultancy Services

Chennai [email protected]

Mobile: 09790971951

1The Art of Negotiating Advesh Consultancy Services04/07/23

mailto:[email protected]

Mastery

Skill

Knowledge

Awareness


BASICS OF BASICS OF NEGOTIATIONNEGOTIATION


◦ We all negotiate, all the time- at home, with friends, at office, in public

◦ These negotiations can be about anything◦ Negotiation is the most effective way of resolving

conflicts and securing agreement ◦ A two way discussion to agree terms◦ Conferring for the purpose of mutual agreement◦ A process of discussion aimed at reaching

agreement◦ Establishing consensus amongst two or more

parties


Negotiation IsNegotiation IsA dialogue between two or more parties,

with the intent of coming to a mutually agreed solution, because each party has something the other wants.

A communication process between two or more people in which they consider alternatives to arrive at mutually agreeable solutions or mutually satisfactory objectives


Setting Goals Balancing Outcome and

Relationships


SETTING GOALS SETTING GOALS

BATNARESERVATION PRICEZOPA


BATNABATNA

Best Alternative To a Negotiated Agreement


WHAT IS BATNA?WHAT IS BATNA?How do the proposals match your

realistic alternative if you cannot come to a deal?

The more attractive your BATNA is compared with the proposals you receive, the more POWER you have; the less attractive your BATNA is compared to the deal on offer, the less power you have.


BATNABATNARetain the existing supplierGo to another supplierStrike/LockoutNot an immediate requirement


DEVELOPING BATNADEVELOPING BATNAList what you would do if you fail to reach an

agreementConvert the most promising options into

practical choices.Select the single best option; that is your

BATNACompare your BATNA to all proposals If an offer is better than your BATNA,consider

improving or accepting it If an offer is worse than your BATNA, consider

rejecting it If they will not improve their offer consider

exercising your BATNA


BATNABATNA

Know your BATNA

Work with all the BATNAs

Be ready to walk


BATNABATNA

Developed by

Roger Fisher and

William Ury


RESERVATION PRICERESERVATION PRICE

Reservation Price is

the least favourable point at which

one will accept a deal


ZOPA ZOPA ZONE OF POSSIBLE ZONE OF POSSIBLE AGREEMENTAGREEMENTZOPA is the area or range in

which a deal that satisfies both parties can take place.

It is the set of agreements that potentially satisfy both parties.


EXAMPLEEXAMPLE

Sellers Expectation

Buyers Expectation


BATNA Exercise 1BATNA Exercise 1You have a good motor cycle which is

4 years old. It gives good mileage. However you want to replace it with a new one.

You have Rs 30000 cash in hand You want the balance to be arranged thru loan

You have 12% interest in your mind.The financier is asking for 15%What is your BATNA?


BATNA EXERCISE 3BATNA EXERCISE 3You are attending an interview for

change of job. You are in salary negotiation stage. You are concerned about your child’s education. Currently you are on a transferable job.You are demanding 30% increase. The new company is offering the same salary.

What is your BATNA?


BALANCING OUTCOME BALANCING OUTCOME AND RELATIONSHIPSAND RELATIONSHIPS

DISTRIBUTIVE NEGOTIATION

INTEGRATIVE NEGOTIATION


Distributive NegotiationDistributive NegotiationA negotiation in which the parties

compete over the distribution of a fixed sum of value.

Key question here is “Who will claim the most value?”

A gain by one party is at the expense of the other.

Win-lose situation


Integrative NegotiationIntegrative NegotiationA negotiation in which the parties

cooperate to achieve the maximum benefits by integrating their interests into an agreement.

These deals are about creating value and claiming it.

Win-win situation.


STAGES OF NEGOTIATIONSTAGES OF NEGOTIATIONPhase 1: Preparation

Phase 2: Interacting

Phase 3: Agreement


Negotiation ProcessNegotiation Process

Opening

Closing

Bargaining

Preparation


PREPARATIONPREPARATION


PREPARATIONPREPARATION

Understanding one’s own position

and interests of the other party or parties

the issues at stake, and

alternative solutions.


PREPARATIONPREPARATION1. Consider What a good outcome

would be for you and the other side.

2. Identify potential value creation opportunities

3. Identify your BATNA and Reservation Price and do the same for the other side.

4. Shore up your BATNA26

The Art of Negotiating Advesh Consultancy Services04/07/23

PREPARATIONPREPARATION5. Anticipate the Authority Issue6. Learn All you can About the

Other Side7. Prepare for Flexibility in the

Process8. Gather External Standards and

Criteria Relevant to Fairness9. Alter the process in your favour


CRITICAL ELEMENTS/DIMENSIONS CRITICAL ELEMENTS/DIMENSIONS OF NEGOTIATIONOF NEGOTIATIONKnowledge or information

Time or Deadline Pressure

Strength or Power

All the above are inter-twined


INFORMATIONINFORMATIONMore information you have, the better

you will be able to negotiateInformation and facts help you to

generate alternatives, strategies and convince the other party

Information about the other party, market information, trends, technologies

Published Standards, guidelines, data equip you to put your points effectively


TIMETIMETime plays a critical role in

NegotiationPareto’s Law 80/2080% of results are generally

agreed upon in the last 20% of the time

Time / Deadline pressure weakens you / builds tension


POWER / STRENGTHPOWER / STRENGTHThe ability to influence / control the group

and the eventsBesides the authority of your position,

knowledge is your strengthThe balance of power keeps shifting from

one side to the other during the negotiation process

Negotiation will end when -The balance of power shifts totally to one side – a Win-Lose situation

When the balance of power is shared equally – a Win-Win situation


INTERACTINGINTERACTING


INTERACTINGINTERACTINGGetting the other side to the

TableGetting off to a good startPower of AnchoringUsing Concessionary movesTactics for Distributive

negotiationGeneral Tactics


Getting the other side to the Getting the other side to the TableTable

Offer incentives

Put a price for on the status-quo

Mobilise Support


Getting off to a good startGetting off to a good start

Express respect for the other side’s experience and expertise

Frame the task positively, as a joint endeavour

Emphasise your openness to the other side’s interests and concerns.

Start with the agenda


Getting off to a good startGetting off to a good startSome tipsSome tips“Breaking Bread” Have coffee,

snacks or light drinks available.

Use small talk to dispel tension

If the other side is very formal, don’t speak casually. If the other side is decidedly informal, speak in a more casual way.


ACCOMMODATE

Build friendly relationshipCharacteristics:Promote harmonyAvoid substantive differencesGive into pressure to save relationshipPlace relationship above fairness of the outcomes

COLLABORATEProblem solved creatively, aiming for

win-winCharacteristics:

Search for common interestsProblem-solving behaviours

Recognising both parties’ needsSynergistic solutions

Win-win becomes the main purpose of the negotiator

AVOIDTake whatever you can get/InactionCharacteristics:Feeling of powerlessnessIndifference to the resultResignation, surrenderTake what the other party is willing to concedeWithdraw & remove = behaviour of negotiator

DEFEATBe a winner at any

cost/CompetitiveCharacteristics:

Win-Lose competitionPressure/Intimidation

Adversarial relationshipsDefeating the other becomes a

goal for the negotiator

COMPROMISE

Split the difference

Characteristics:Meeting half wayLook for trade offs

Accept half-way measuresAims to reduce conflict rather than

problem solve synergistically

LOW

HIGHCO

NCE

RN F

OR

RELA

TIO

NSH

IP

CONCERN FOR SUBSTANCE HIGH


Distributive NegotiationsDistributive NegotiationsWin-Lose NegotiationsAnchoring is an attempt to

establish a reference point around which negotiations will make adjustments.

When should you anchorCounter anchoringBe prepared for concessionary

moves38


Integrative NegotiationsIntegrative Negotiations Slower and more explorative opening Don’t start with numbers. Making a good start is critical Ask open ended questions Probe the other side’s

willingness to trade off one thing for the other. Inquire about the other party’s underlying

interests Listen closely Be an active listener Express empathy Work to create a two-way exchange of information Continue relationship building efforts Refrain from personal attacks. Maintain a sense of humour


The Art of ListeningThe Art of Listening


NONVERBAL NONVERBAL BEHAVIOURBEHAVIOUR

What is going on in the inside shows on the outside

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Face and HeadFace and HeadBroken Eye Contact(Hide)Looking pat you(Bored)Piercing(Angry)Steady(Honest)Head Turned slightly(Evaluating you)Tilted Head(Uncertain about what you

said)Nodding(In agreement)Smiling(Confident)


Arms and HandsArms and HandsArms folded tightly(not receptive)Arm over the back of the chair(need

for dominance or negative reaction)Open palms(Positive)Hands clasped behind head(Need for

dominance)Steeling of the fingers(Need to control

negotiation)Hand wringling(Nervousness)Self touching(General nervousness)


LegsLegsCrossing your legs has a

devastating effectOut of 2000 videotaped sales

meetings, not one sale was made by people who had their legs crossed

Source How to Read a Person like a Book by Gerard I. Nirenberg and Henry H. Calero


Dominance/PowerDominance/PowerMaking piercing eye contactPutting hands behind head or

neckPlacing hands on hipsStanding while counterpart is

seatedSteepling


Submission/NervousnessSubmission/NervousnessFidgettingMaking minimum eye contactTouching hands to face , hair etcUsing briefcase to “guard” bodyClearing throat


Disagreement/AngerDisagreement/AngerGetting redPointing a fingerSquintingTurning body awayCrossing arms or legs


Boredom and Lack of Boredom and Lack of InterestInterestFailing to make eye contactPlaying with objectsStaring blanklyPicking at clothesLooking at watch/door


Uncertainty/IndecisionUncertainty/IndecisionCleaning glassesLooking puzzledPutting fingers to mouthBiting lipTilting head


Suspicion/DishonestySuspicion/DishonestyTouching nose while speakingCovering mouthAvoiding eye contactCrossing arms/legsMoving body away


EvaluationEvaluationNoddingMaintaining good eye contactTilting head slightlyStroking chinTouching index finger to lips


Confidence, Cooperation and Confidence, Cooperation and HonestyHonestyLeaning forwardKeeping arms and palms openMaintaining great eye contactPlacing feet flat on floorSitting with legs uncrossedSmiling


Challenges & ObstaclesChallenges & Obstacles


TACTICS REGARDING TACTICS REGARDING PRICEPRICEShould I ever state my acceptable

range?

Should I ever tell the other side my bottom line?

Suppose that the other side opens with an incredibly unreasonable number, should I counter with an equally unreasonable number, or decline to counter at all?


TACTICS REGARDING TACTICS REGARDING PROCESSPROCESSIs it acceptable to make two

moves at a time?Is it smart or fair to bluff?In a complex deal, is it better to

reach agreement issue by issue or wait until the end?

Is it better to deal with difficult or easy issues first?


TACTICS REGARDING TACTICS REGARDING PEOPLEPEOPLECollaborative negotiator vs. positional

hard bargainer?How should I react if the other side

seeks to change something in its offer after a deal has been reached?

What should I do when the negotiator on the other side has a temper tantrum?

I don’t believe in what the other side says.

Is it essential to negotiate face to face?How should I react when the other side

challenges my credentials, status or authority to make a deal?


CLOSURECLOSURE


ClosingClosing

Be Prepared to ConcedeBegin with those of Low Priority and seek High Priority ItemsNever Concede on More than possible by your BriefUse your Concessions WiselyDon’t just give these away expect and receive something in return 58


Being Confident Being Prepared Being Willing to Walk Away


Convince Collaborate Create


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