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NBOK Guide 2016

NEGOTIATION BODY OF LANGUAGE

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NBOK Guide 2016

NEGOTIATION BODY OF LANGUAGE

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Sam

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A Guide to the

NEGOTIATION BODY OF KNOWLEDGE

(NBOK™ Guide)
2016 Edition

A Comprehensive Guide for Negotiation

Published by:
NGstudy®, a brand of VMEdu®, Inc.
12725 W. Indian School Road
Suite F-112, Avondale,
AZ – 85392, USA
Website: www.ngstudy.com

“NBOK” and the NGstudy logo are trademarks of VMEdu®, Inc. For a comprehensive list of VMEdu® marks, contact the
VMEdu® Legal Department.

A Guide to the Negotiation Body of Knowledge (NBOK® Guide) is provided for educational purposes. NGstudy® or VMEdu,
Inc. does not warrant that it is suitable for any other purpose and makes no expressed or implied warranty of any kind and
assumes no responsibility for errors and omissions. No liability is assumed for incidental or consequential damages in
connection with or arising out of the use of the information contained herein.

NGstudy® welcomes corrections and comments on its books. Please feel free to send comments on typographical,
formatting, or other errors. You can make a copy of the relevant page of the book, mark the error, and send it to the above
address or send an e-mail to support@vmedu.com.

No part of this work may be reproduced or transmitted in any form or by any means, electronic, manual, photocopying,
recording, or by any information storage and retrieval system, without prior written permission of the publisher.

10 9 8 7 6 5 4 3 2
PREFACE
The NBOK™ Guide (also referred to as A Guide to the Negotiation Body of Knowledge) is a comprehensive
process-oriented framework for conducting successful negotiations. The NBOK™ Guide can be used by
anyone wanting to gain knowledge of the basic principles of negotiation as well as those who want to
improve their existing negotiation skills. The concepts defined in the NBOK™ Guide are applicable to all
types of negotiations, and the content is organized for easy reference for anyone undertaking the role of a
negotiator.

Negotiation occurs in every facet of life. The process of negotiation and the skills involved are fundamentally
the same, be it a simple or complex negotiation, But if you have not learned the language of negotiation
formally, you can find it difficult to conduct successful negotiations. The NBOK™ Guide treats negotiation as
a science. It helps you understand the negotiation process and improve the skills that will enable you to
negotiate better deals.

The NBOK™ Guide describes negotiation in terms of Aspects and Processes. The Aspects of Negotiation
are the seven main facets that help you understand negotiation in principle. They are the fundamental
features that must be understood in order to relate and compare the different forms of negotiation. The
processes described in the NBOK™ Guide offer a systematic approach to negotiation that helps you achieve
your preferred outcomes. These processes describe the specific activities and flow of a typical negotiation
from preparing for a negotiation to conducting a negotiation. Each process is described in detail including
their associated inputs, tools, and outputs.

Effective use of the Negotiation framework is expected to lead to greater thought and deliberation in
planning and conducting negotiations. Further consideration and practical use of the processes and tools
detailed in the NBOK™ Guide will in turn contribute to expanding and enriching the Negotiation Body of
Knowledge and consequently lead to future additions and enhancements to this framework.

I would like to thank the 41 co-authors, subject matter experts, and reviewers who greatly contributed to the
creation of this body of knowledge. Their combined efforts and collaborations have resulted in a
comprehensive, highly effective, and unique approach to understanding, planning, and conducting
negotiation.

Tridibesh Satpathy
Lead Author, NBOK™ Guide
TABLE OF CONTENTS

TABLE OF CONTENTS

1. INTRODUCTION................................................................................................................................. 1
1.1 Overview of Negotiation .................................................................................................................. 2
1.2 Why Use Negotiation? .................................................................................................................... 6
1.3 Purpose of the NBOK™ Guide ....................................................................................................... 7
1.4 Certification Schema for NGstudy Certifications ............................................................................. 7
1.5 Framework of the NBOK™ Guide ................................................................................................... 9
1.5.1 How to Use the NBOK™ Guide? ............................................................................................ 9
1.5.2 Negotiation Aspects.............................................................................................................. 10
1.5.3 Negotiation Processes .......................................................................................................... 15
2. ASPECTS OF NEGOTIATION .......................................................................................................... 23
2.1 Justification ................................................................................................................................... 24
2.1.1 Why Negotiate? .................................................................................................................... 24
2.1.2 Benefits of Negotiation ......................................................................................................... 27
2.2 Distributive vs. Integrative ............................................................................................................. 32
2.2.1 Distributive Negotiation (Win-Lose) ...................................................................................... 32
2.2.2 Integrative Negotiation (Win-Win) ......................................................................................... 33
2.2.3 Difference between Distributive and Integrative Negotiation ................................................ 35
2.3 Customization ............................................................................................................................... 37
2.3.1 Multi-phase Negotiation ........................................................................................................ 37
2.3.2 Multi-party Negotiation .......................................................................................................... 38
2.4 Non-linear Process with Uncertain Outcomes .............................................................................. 41
2.5 Human Relations Issues in Negotiation ........................................................................................ 43
2.5.1 Negotiation Styles................................................................................................................. 44
2.5.2 Perception and Cognition ..................................................................................................... 48
2.5.3 Communication in Negotiation .............................................................................................. 52
2.6 Organization for Negotiation ......................................................................................................... 54
2.6.1 Negotiating for self or through agents................................................................................... 54
2.6.2 Authority of person negotiating ............................................................................................. 54
2.7 Ethics ............................................................................................................................................ 56

3. PREPARE FOR SINGLE-ISSUE NEGOTIATION ............................................................................. 59

3.1 Understand Your Negotiation Situation ......................................................................................... 61
3.1.1 Inputs .................................................................................................................................... 62
3.1.2 Tools ..................................................................................................................................... 67
3.1.3 Outputs ................................................................................................................................. 84
3.2 Understand Negotiation Situation of the Other Party .................................................................... 89
3.2.1 Inputs .................................................................................................................................... 90
3.2.2 Tools ..................................................................................................................................... 92
3.2.3 Outputs ................................................................................................................................. 98
4. CONDUCT SINGLE-ISSUE NEGOTIATION .................................................................................. 103
4.1 Plan for Negotiation .................................................................................................................... 105
4.1.1 Inputs .................................................................................................................................. 106
4.1.2 Tools ................................................................................................................................... 108
4.1.3 Outputs ............................................................................................................................... 113
4.2 Conduct the Negotiation ............................................................................................................. 120
4.2.1 Inputs .................................................................................................................................. 121
4.2.2 Tools ................................................................................................................................... 123
4.2.3 Outputs ............................................................................................................................... 132
5. PREPARE FOR MULTI-ISSUE NEGOTIATION ............................................................................. 135
5.1 Understand your Negotiation Situation ....................................................................................... 137
5.1.1 Inputs .................................................................................................................................. 138
5.1.2 Tools ................................................................................................................................... 140
5.1.3 Outputs ............................................................................................................................... 155
5.2 Understand Negotiation Situation of the Other Party .................................................................. 159
5.2.1 Inputs .................................................................................................................................. 160
5.2.2 Tools ................................................................................................................................... 162
5.2.3 Outputs ............................................................................................................................... 168
6. CONDUCT MULTI-ISSUE NEGOTIATION ..................................................................................... 173
6.1 Plan for Negotiation .................................................................................................................... 175
6.1.1 Inputs .................................................................................................................................. 176
6.1.2 Tools ................................................................................................................................... 180
6.1.3 Outputs ............................................................................................................................... 189

II © 2016 VMEdu® Inc. A Guide to the Negotiation Body of Knowledge (NBOKTM Guide)
TABLE OF CONTENTS

6.2 Conduct the Negotiation ............................................................................................................. 192

6.2.1 Inputs .................................................................................................................................. 193
6.2.2 Tools ................................................................................................................................... 195
6.2.3 Outputs ............................................................................................................................... 204
APPENDIX A.1: MARKETING RESEARCH TECHNIQUES....................................................................... 207
APPENDIX B. AUTHORS AND REVIEWERS OF THE NBOKTM GUIDE .................................................... 223
REFERENCES ............................................................................................................................................ 225
GLOSSARY ................................................................................................................................................. 227
INDEX.......................................................................................................................................................... 247

LIST OF FIGURES

Figure 1-1: Prepare for Single-Issue Negotiation—Inputs, Tools, and Outputs ............................................. 17
Figure 1-2: Conduct Single-Issue Negotiation—Inputs, Tools, and Outputs .................................................. 18
Figure 1-3: Prepare for Multi-Issue Negotiation—Inputs, Tools, and Outputs ............................................... 20
Figure 1-4: Conduct Multi-Issue Negotiation—Inputs, Tools, and Outputs .................................................... 21
Figure 2-1: Communication Model................................................................................................................. 53
Figure 3-1: Prepare for Single Issue Negotiation—Inputs, Tools, and Outputs ............................................. 60
Figure 3-2: Understand Your Negotiation Situation—Inputs, Tools, and Outputs .......................................... 61
Figure 3-3: The Situational Matrix.................................................................................................................. 71
Figure 3-4: Understand Negotiation Situation of the Other Party—Inputs, Tools, and Outputs ..................... 89
Figure 4-1: Conduct Single Issue Negotiation—Inputs, Tools, and Outputs ................................................ 104
Figure 4-2: Plan for Negotiation—Inputs, Tools, and Outputs ..................................................................... 105
Figure 4-3: Car Purchase Negotiation Path ................................................................................................. 115
Figure 4-4: Government Contract Award Negotiation Path ......................................................................... 116
Figure 4-5: Conduct the Negotiation—Inputs, Tools, and Outputs .............................................................. 120
Figure 6-1: Conduct Multi-Issue Negotiation—Inputs, Tools, and Outputs .................................................. 174
Figure A.1-0-1: Types of Scales .................................................................................................................. 213

IV © 2016 VMEdu® Inc. A Guide to the Negotiation Body of Knowledge (NBOKTM Guide)
LIST OF TABLES

LIST OF TABLES

Table 2-1: Differences between Distributive and Integrative Negotiation ...................................................... 36

Table 6-1: Comparison of Arbitration and Mediation ................................................................................... 184
Table 6-2: Issues Matrix .............................................................................................................................. 186

1. INTRODUCTION
A guide to the Negotiation Body of Knowledge (NBOK™ Guide) delivers guidelines for conducting
successful negotiations. It provides a comprehensive framework that includes aspects and processes for 1
preparing and conducting negotiations.

Negotiation, as defined by the Merriam Webster Dictionary is a formal discussion between people who are
trying to reach an agreement. According to the NBOK™ Guide, negotiation is the process of discussion
between two or more individuals or groups, where one individual or group seeks to gain something from the
other individual or groups, and vice versa. Negotiation is a common skill used by individuals, businesses,
and governments all the time as they communicate with others—and it is a skill that can be improved over
time.

The first chapter describes the purpose and framework of the NBOK™ Guide and provides an introduction to
the key concepts of negotiation. It contains a summary of negotiation aspects and processes. Chapter 2
expands on the seven Aspects of Negotiation that are integral to any negotiation process. In Chapters 3
through 6 negotiation processes are described in detail. Chapters 3 and 4 address processes related to
preparing and conducting single-issue negotiations and chapters 5 and 6 address processes related to
preparing and conducting multi-issue negotiations. All processes are explained through inputs, tools, and
outputs. Some inputs, tools, and outputs are mandatory and are indicated as such; others are optional
depending on the negotiation scenario and other resources. Finally, Appendix A.1 contains details about
Marketing Research, which is discussed briefly within the negotiation processes.

This chapter is divided into the following sections:

1.1 Overview of Negotiation

1.2 Why Use Negotiation?

1.3 Purpose of the NBOK™ Guide

1.4 Certification Schema for NGstudy Certification

1.5 Framework of the NBOK™ Guide

1.1 Overview of Negotiation

Negotiation takes place to arrive at an agreement or to resolve a conflict. When negotiation is conducted
between two or more people or groups to arrive at an agreement or a mutually understood outcome, it
enables them to realize benefits or goals that would not be achievable independently. The interdependency
of benefits or goals creates incentives for both parties to reach a negotiated agreement. The complexity of a
negotiation depends on the level of interdependency among the negotiating members.

Conflict is generally perceived to be negative, since the existence of conflict implies that issues exist that
need to be resolved. However, it is important to understand that there is value associated with every
negotiation, irrespective of the conflicts involved. Parties may gain or lose value depending on the outcome
of a negotiation, but all of the parties stand to lose if they do not negotiate to resolve the conflict. Therefore,
in general, it is in the interest of all parties to negotiate and agree on a solution that is acceptable to all
involved.

Negotiation can take place in various situations and forms, but the concepts of negotiation as defined in the
NBOK™ Guide are valid for any negotiation and can be customized to any business or personal negotiation
for either an individual or organization in any country. The simplest form of negotiation is a two-party
negotiation over a single issue. However, a negotiation may involve more than two parties and multiple
issues, and may be held over multiple phases. The seriousness of the issues discussed can also range from
deciding your child’s allowance to levying international sanctions. Therefore, it is necessary to customize the
concepts of negotiation according to the situation. With the help of numerous examples, exercises, and case
studies, the NBOK™ Guide illustrates how the concepts of negotiation can be applied to various situations
and scenarios.

Every negotiation will have two or more parties each believing they can influence the other party and get the
best outcome possible for themselves, in terms of realizing benefits or resolving conflicts. A multi-party
negotiation involves more than two parties and is more complex than a two-party negotiation, since parties
must gather information about the goals, interests, negotiation style, and positions of more than one party. It
can be difficult to assess the possible negotiation scenarios and outcomes when two parties are involved; it
becomes even more difficult to assess when the number of participants increases.

It is important for each party to recognize the unpredictable and non-linear nature of negotiations and remain
flexible during the negotiation process. Negotiations rarely follow a linear path where you are able to
completely plan for or predict the opportunities and outcomes that arise. You should remain open to new
developments that may not have been anticipated at the start of the process. It is therefore important to
exercise patience during the process and treat the new challenges that present themselves as learning
opportunities.

Some basic concepts related to negotiation are defined below. These will be discussed in detail in later
chapters.

2 © 2016 VMEdu® Inc. A Guide to the Negotiation Body of Knowledge (NBOKTM Guide)
1 – INTRODUCTION

Types of Negotiation

There are mainly two main approaches considered for negotiation—distributive and integrative.
1
Distributive, or win-lose negotiation, is a strategy directed toward the distribution of a fixed resource between
two or more parties. Also known as positional or hard-bargaining negotiation, this type of negotiation often
results in a win-lose scenario. In other words, distributive negotiation takes place when two or more parties
try to claim the maximum amount of value for themselves from a given resource. In this type of negotiation, a
gain for one party is a loss for the other. It is primarily used when only one issue (for example, price) is
discussed. Given the nature of this strategy, few negotiations are truly distributive.

Integrative, or win-win negotiation, is a strategy directed toward developing mutually beneficial agreements
by discussing and addressing various concerns—such as needs, desires, and expectations—of the
negotiating parties. Also known as interest-based or principled negotiation, this type of negotiation is carried
out with the objective of achieving a win-win scenario. Conceptually, this type of negotiation connotes
cooperation or collaboration to achieve something together. It emphasizes building a long-term relationship
and arriving at a solution that benefits each party. Integrative negotiations may be time-consuming and may
involve intermediaries and agents. The deals negotiated with this strategy are meant to create and deliver
value for both parties by integrating both parties’ interests. Two or more issues are discussed simultaneously
in this type of negotiation.

Negotiation Styles

Negotiation style is your approach to negotiation. It is critical to understand your preferred negotiation style
as well as the preferred negotiation style of the other party. No particular negotiation style is good or bad in
all scenarios, and each style has its own positives and negatives. Expert negotiators usually adopt one of
these styles during a negotiation based on factors such as the context of the negotiation and the interests of
the other party. Kenneth W. Thomas1 identified five styles of responses to negotiation. These five styles are
based on the dual-concern model. According to this model, your strategy for dealing with conflict is based on
two dimensions:

 a concern for self (assertiveness)

 a concern for others (cooperativeness)

In this model, individuals balance the concern for personal needs and interests with the needs and interests
of others. Depending on your preference for the two dimensions, you use one of the following five styles:

 Accommodating—You emphasize personal relationships and consider another party’s problems

during negotiation.
 Avoiding—You do not enjoy negotiation and try to avoid its confrontational aspects.

1 Thomas, K.W. (1992). Conflict and negotiation processes in organizations. In Dunnette, M.D. & Hough, L.M.
(Eds.) Handbook of industrial and organizational psychology, Vol. 3 (2nd ed.). pp. 651-717. Paulo Alto, CA:
Consulting Psychologists Press.

 Collaborating—You enjoy problem solving and tend to use creativity to come to a mutual
agreement.
 Competing—You enjoy and dominate the negotiation process.
 Compromising—You are eager to close the deal by being fair to all the parties involved.

Alternatives

Alternatives are possible approaches to reaching the objectives of the negotiation, in the event that the
negotiation fails or the outcomes of the negotiated agreement do not meet the expectations. Before starting
any negotiation you should analyze your alternatives and prepare a list of feasible alternatives that you have
for the current negotiation. This list should be prepared from the other party’s perspective also.

Best Alternative to a Negotiated Agreement (BATNA)

BATNA is the next best option that a negotiating party has if the current negotiation fails. You should not
accept any deal that makes you worse off than your BATNA. You should know your BATNA before entering
into any negotiation and should use it as a point of leverage during the discussions. It is also a good strategy
to research and find out the BATNA of the other party to gain an upper hand during the discussions. If your
BATNA is weak compared to that of the other party, you can do either of the following:

 Improve the BATNA by trying to find alternatives. For example, a manufacturing company can look
for alternative suppliers.
 Decrease the BATNA of the other party. For example, if a supplier acquires all of its competitors to
establish a monopoly, customers who need the supplier’s products cannot source products
elsewhere. The BATNA of the customers is therefore reduced, as customers have no alternative but
to purchase products from the one supplier.

Walk-Away Point

Walk-away point in a negotiation is the lowest price that the seller is ready to provide and the highest price
that the buyer is ready to pay. It is the price beyond which your BATNA becomes preferable to the
agreement being negotiated and you are willing to walk away from the negotiation. You should assess the
other party’s walk-away point also to formulate a proper strategy for the negotiation.

Example of Walk-away Point:

 If the cost of manufacturing a widget is $5, the walk-away point of the seller could be $5 (assuming
the seller is prepared to sell at no profit). Anything less than this price would not be acceptable to the
seller.

4 © 2016 VMEdu® Inc. A Guide to the Negotiation Body of Knowledge (NBOKTM Guide)
1 – INTRODUCTION

Zone of Possible Agreement (ZOPA)

ZOPA is the range in which the agreement is possible without causing loss to any of the parties in the
negotiation. It is the “bargaining range” within which an agreement can be reached. Once your walk-away 1
point is calculated and the other party’s walk-away point is clear, you can determine the zone of possible
agreements. You should adjust the ZOPA as you learn more about the other party. Although the ZOPA gives
a range of all possible agreements, it does not assure an agreement that is best for the group.

Example of ZOPA:

 If a manufacturer is willing to sell a part for a minimum of $1,700 and a customer is willing to pay up
to $2,000, then the ZOPA for this negotiation is $1,700 to $2,000.

1.2 Why Use Negotiation?

Negotiation occurs in every facet of life. You negotiate all the time, be it in your personal or professional life.
Take a moment to reflect on how many times during your life you have been involved in negotiation. It could
be a simple negotiation, such as getting your kids to do what you want, buying a gift for your spouse, talking
with your travel agent, etc. or a complex negotiation, such as buying a house or car, negotiating for a job or
promotion, or negotiating multi-million dollar deals for your company.

Whether it is a simple or complex negotiation, the process of negotiation and the skills involved are
fundamentally the same. So, understanding the process and improving the skills will enable you to negotiate
better deals. Imagine how much can be gained from becoming a good negotiator; even minor improvements
in your negotiation skills could bring huge returns on your investment.

Young children find it difficult to communicate because they have not yet mastered the language of
communication. Similarly, if you have not learned negotiation formally, you can find it difficult. After this
course, you will have learned the “alphabet of the language of negotiation” and you will have the foundation
to master your negotiation skills over time. The NBOK™ Guide treats negotiation as a science and defines
each term specifically. Thus, the NBOK™ Guide provides a common language of negotiation that you can
use when negotiating within your organization and with other external organizations.

6 © 2016 VMEdu® Inc. A Guide to the Negotiation Body of Knowledge (NBOKTM Guide)
1 – INTRODUCTION

1.3 Purpose of the NBOK™ Guide

The NBOK™ Guide was developed as a necessary guide for individuals and organizations to understand
and effectively practice negotiation. The NBOK™ Guide can be used by anyone wanting to gain knowledge 1
of the basic principles of negotiation as well as those who want to improve their existing negotiation skills.
The NBOK™ Guide describes negotiation in terms of aspects and processes. The Aspects of Negotiation
are the seven main facets that help you understand negotiation in principle. They are the fundamental
features that must be understood in order to relate and compare the different forms of negotiation. The
processes described in the NBOK™ Guide offer a systematic approach to negotiation that helps you achieve
your preferred outcomes.

The NBOK™ Guide is especially valuable:

 To create a common understanding of important terms and concepts used in negotiation

 To understand the most common factors that influence effective negotiation
 To share the best practices of negotiation with participants
 To improve organizational capability to effectively negotiate with outside parties
 To provide a comprehensive framework for conducting successful negotiations
 As a guide for organizations and individuals who want to improve their negotiation skills
 As a guide for individuals who have no prior experience or theoretical knowledge of negotiation, but
want to learn

The content of the NBOK™ Guide is also helpful for individuals preparing to take the NGstudy
certification exams.

1.4 Certification Schema for NGstudy Certifications

The certifications related to the NBOK™ Guide are managed by NGstudy.com. The following is a brief
description of each level of certification:

 Associate Level Certifications (NGstudy Certified Negotiation Associate)—The introduction

modules are available at no charge to interested individuals. The certification exams are free and
not proctored, and candidates have one hour to complete each exam. The prerequisite is an
understanding of the basic concepts of negotiation which are discussed in the first two chapters of
NBOKTM Guide. There is no work experience requirement and no mandatory educational hours in
addition to the recommended study.

 Professional Level Certifications (NGstudy Certified Negotiation Professional)—The

certification exams are proctored and candidates have two hours to complete each exam. The
prerequisite is an understanding of all the inputs, tools, and outputs for each process relevant to

single-issue negotiation. There is no work experience requirement and no mandatory educational

hours in addition to the recommended study.

 Specialist Level Certifications (NGstudy Certified Negotiation Specialist)—The certification

exams are proctored and candidates have three hours to complete each exam. The prerequisites
are a study of all of the relevant inputs, tools, and outputs for both single-issue and multi-issue
negotiation, three years of related work experience, and twenty mandatory educational hours.

 Expert Level Certifications (NGstudy Certified Negotiation Expert)—The certification exams are
proctored and candidates have four hours to complete each exam. The prerequisites are attaining
the Specialist level certification, a study of all of the relevant inputs, tools, and outputs for both
single-issue and multi-issue negotiation, five years of related work experience, forty mandatory
educational hours, and recommendations from two peers and a manager.

8 © 2016 VMEdu® Inc. A Guide to the Negotiation Body of Knowledge (NBOKTM Guide)
1 – INTRODUCTION

1.5 Framework of the NBOK™ Guide

The NBOK™ Guide is broadly divided into the following two sections:
1
 Aspects of Negotiation—The seven main facets that help you understand negotiation in principle.
They are the foundation of the associated processes and can be applied to any type of negotiation.
Aspects of Negotiation are covered in chapter 2.

 Processes—The theoretical concepts involved in conducting single- and multi-issue negotiations.

These processes and their associated inputs, tools, and outputs are described in detail in chapters
3 and 4

1.5.1 How to Use the NBOK™ Guide?

The NBOK™ Guide can be used as a reference and knowledge guide by all negotiators, be they a
professional or an amateur and whether they are negotiating simple or complex issues in any facet of life.
The concepts defined in the NBOK™ Guide are applicable to all types of negotiations, and the content is
organized for easy reference for anyone undertaking the role of negotiator.

In order to facilitate the best application of the negotiation process, the NBOK™ Guide has clearly
differentiated the mandatory inputs, tools, and outputs from the non-mandatory. Inputs, tools, and outputs
denoted by asterisks (*) are mandatory while others with no asterisks are deemed optional. It is
recommended that those being introduced to negotiation focus primarily on the mandatory inputs, tools, and
outputs, while more experienced negotiators should read the entire process chapters.

1.5.2 Negotiation Aspects

The Aspects of Negotiation are the seven main facets that help you understand negotiation in principle. They
are the fundamental features that must be understood in order to relate and compare the different forms of
negotiation. The Aspects of Negotiation are the foundation of the associated processes and can be applied
to any type of negotiation. Before beginning the processes described in this book, it is recommended that
you develop a strong familiarity and understanding of the Aspects of Negotiation.

1.5.2.1 Justification

The need for negotiation does not arise until there is an issue that needs intervention in order to find a
resolution while combining cost, time, and people. Negotiating an issue depends on the value associated
with it. So, the justification of negotiation is precisely measured by the gravity of the issue and the resultant
value the negotiation would provide to the negotiating parties. Assessing the justification for negotiation
enables the involved organizations to determine whether it is viable or desirable to negotiate. The primary
reasons to proceed with negotiation are as follows:

 to arrive at a deal or a mutually understood outcome

 to resolve a conflict

Negotiating to Arrive at a Deal or a Mutually Understood Outcome

Negotiation can occur between two or more people or groups aiming to agree on a deal or a mutually
agreeable outcome. Negotiation in this instance enables the involved parties to realize the benefits or goals
that would otherwise not have been achievable by either party on their own. Interdependency of goals
requires the parties to negotiate toward an agreement.

Negotiating to Resolve a Conflict

Conflict can be defined as a disagreement or an opposition of ideas and interests among the parties
involved in negotiation. Conflict can occur for numerous reasons such as the divergent needs of the parties
concerned; misunderstanding among the parties involved; or differences in opinions, interests, or
preferences among the parties.

10 © 2016 VMEdu® Inc. A Guide to the Negotiation Body of Knowledge (NBOKTM Guide)
1 – INTRODUCTION

1.5.2.2 Distributive vs. Integrative Negotiation

Distributive Negotiation 1
Distributive, or win-lose negotiation, is a strategy directed toward the distribution of a fixed resource between
two or more parties. In this type of negotiation, a gain for one party is a loss for the other. Distributive
negotiation is common in situations where the people involved do not share an existing relationship and are
not likely to collaborate in the near future.

Integrative Negotiation (Win-Win)

Integrative, or win-win negotiation, is a strategy directed toward developing mutually beneficial agreements
by discussing and addressing various concerns—such as needs, desires, and expectations—of the
negotiating parties. Integrative negotiation aims at building a long-term relationship and arriving at a solution
that benefits each participating party.

Most integrative negotiations have two elements: creating value and claiming value. They are described as
follows:

 Creating Value—Value may be created through two parties negotiating with each other to discover
areas to collaborate so that each can gain from the relationship.

 Claiming Value— Because the potential to create value through the negotiation is understood, the
negotiating parties attempt to claim the value created for maximum return. Some of this negotiation
may involve elements of distributive negotiation where the negotiating parties may win or lose on
specific issues.

1.5.2.3 Customization

Negotiation can take place in many forms and situations. The simplest form of negotiation is a two-party
negotiation over a single issue. However, a negotiation may involve more than two parties, multiple issues,
and multiple phases. It is necessary to customize the concepts of negotiation according to the situation. With
the help of numerous examples, exercises, and case studies, the NBOK™ Guide illustrates how the
concepts of negotiation can be applied to various situations and scenarios.

1.5.2.4 Non-linear Process with Uncertain Outcomes

Most negotiations are complex and follow an unpredictable, non-linear path. The unpredictable nature of a
negotiation is primarily due to the fact that various events or changes may take place during the course of a
negotiation. New alternatives or opportunities; a change in negotiators, negotiation process, nature of
relationship; and a change in the involved parties’ situations can alter the path of a negotiation. Such

uncertain events or sets of events that can affect the objectives of a negotiation process are considered
risks. Risks that are likely to have a positive impact on the negotiation process are referred to as
opportunities, whereas risks that can affect the negotiation in a negative manner are considered threats.
Negotiators should follow standardized steps to ensure that these events are identified, evaluated, and
addressed with an appropriate course of action. Each party should recognize the unpredictable and non-
linear nature of negotiations and remain flexible during the negotiation process.

1.5.2.5 Human Relations Issues in Negotiation

Negotiations, simple or complex, are ultimately conducted by people. Thus, it is important to understand
various factors associated with human relations such as negotiation styles, perception and cognition, and
communication. Understanding these issues in regards to your situation as well as the other party’s situation
helps in the negotiation process.

Negotiation Styles

It is important for negotiators to understand their personal negotiation style and also the negotiation style
used by the other party. Kenneth W. Thomas identified five styles of approaches to negotiation:

 Accommodating
 Avoiding
 Collaborating
 Competing
 Compromising

Each style has its own positives and negatives, and expert negotiators usually adopt one of these styles
during a negotiation based on factors such as the context of the negotiation and the interests of the other
party.

Perception and Cognition

Perception and cognition are integral factors that influence how negotiators construct and interpret a
message received during negotiation. Perception is the process of assigning meaning to the messages
received by the listener. In negotiation, it is largely related to how one party interprets the other party’s
messages and behavior in the given environment. Shortcomings in perception, which may be influenced by
an individual’s own needs, desires, and past experiences, are referred to as distortions or errors in
perception. The major errors in perception are classified as follows:

 Stereotyping
 Halo effect
 Selective Perception
 Projection

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Cognition refers to the way a person processes information received. Errors made in information processing
are called cognitive biases and can impede one’s negotiation outcomes. The following cognition biases can
impact the negotiation process:
1
 Irrational escalation of commitment
 Winner’s curse
 Overconfidence
 Information availability bias
 Self-serving bias
 Overvaluation

Communication in Negotiation

As negotiation is an interpersonal process, communication plays a crucial role. Various models are used to
explain the process of communication. One of the simplest ways to represent how communication works in
any interaction was developed by Shannon and Weaver2. This model is based on the following elements:

 Sender and receiver

 Transmitter and receptor
 Message
 Encoding
 Channels
 Decoding
 Meanings
 Feedback
 Noise

1.5.2.6 Organization for Negotiation

Organization for negotiation considers who will be negotiating and what their authority level will be during the
negotiation. You can negotiate on your own or hire another individual or company to negotiate on your
behalf. You can also have a team of negotiators rather than an individual negotiator. A primary decision
when entering a negotiation is choosing the negotiator or the negotiating team. Hired negotiations are called
“agents.” When hiring agents, one should consider factors such as information asymmetry, conflict of
interest, and miscommunication.

Another important factor is the authority level of negotiators. It is important to assess and determine the
authority level of your negotiator as well as that of the other party’s negotiator. You should be clear about
any financial and agreement limits and required approvals for your negotiator before assessing the other

2 Warren Weaver and Claude Elwood Shannon (1963). The Mathematical Theory of Communication. Univ. of
Illinois Press

party’s situation. Ideally, both negotiators will have similar levels of authority, but sometimes this is not the
case. Assessing the level of authority for both negotiators helps to prepare for such situations.

1.5.2.7 Ethics

Ethics are social standards that define what is right or wrong in a particular situation. The subjective nature
of these standards may lead to ethical questions and dilemmas during the process of negotiation. Whether a
negotiation practice is ethical or not depends on the ethical standards followed by the people or
organizations involved in the negotiation process. Some believe in rules while others are led by the social
norms of their society. Each belief has its own supporters and detractors.

Unethical practices are generally used to gain an upper hand in negotiations or to “seal the deal.” Even if
they help in achieving the desired outcome, unethical practices may lead to negative consequences such as
guilt, loss of reputation, and souring of relationships. Some unethical practices include the following:

 misrepresenting facts or providing limited information while communicating to the other party
 distorting or misrepresenting information about the opposite party among peers to gain unfair
advantage
 inappropriate information gathering through unfair means
 bluffing or making threats or promises that are insincere

An understanding of ethical issues in negotiation is essential to bringing an ethical approach to the

negotiation process. It also prepares you to identify and fend off unethical tactics from other negotiators.

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1.5.3 Negotiation Processes

Negotiation processes describe the specific activities and flow of a typical negotiation. There are eight 1
processes presented in chapters 3 through 6 of the NBOK™ Guide. While the first four processes deal with
single-issue negotiations, the next four processes cover multiple-issue negotiations, which are more
complex. The processes are explained from your perspective but consider both you and the other party,
where the other party can also mean multiple parties based on the negotiation context. The chapters
describe each process in detail including their associated inputs, tools, and outputs. In each process, some
inputs, tools, and outputs are mandatory (those with an asterisk [*]), while others are optional.

1.5.3.1 Prepare for Single-Issue Negotiation

This chapter discusses the theoretical concepts involved in preparing for single-issue negotiation. The two
processes in this chapter deal with understanding your own negotiation situation and understanding the
negotiation situation of the other party. Although most negotiations are multi-issue negotiations, where
several issues are negotiated at the same time, understanding the theoretical concepts related to single-
issue negotiation provides a firm foundation for understanding multi-issue negotiations in future chapters.
Figure 1-1 provides an overview of the processes associated with this chapter. They are as follows:

3.1 Understand your negotiation situation—In this process you assess your situation for the upcoming
negotiation.

3.2 Understand negotiation situation of the other party—In this process you assess the other party’s
situation for the upcoming negotiation.

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1 – INTRODUCTION

3.1 Understand Your Negotiation 3.2 Understand Negotiation Situation

Situation of the Other Party

INPUTS INPUTS 1
1. Issue for Negotiation* 1. Issue for Negotiation*
2. Your Negotiation Capabilities 2. Your Negotiation Capabilities
3. Past Negotiation Results 3. Past Negotiation Results
TOOLS 4. Other Party Negotiation Capabilities
5. Your Resource Availability for Negotiation
1. Aspects of Negotiation*
6. Your Walk-Away Point*
2. Analysis of Alternatives*
7. Your Alternatives*
3. Primary Research
8. Your BATNA*
4. Secondary Research
9. Your Negotiation Reference Frame
5. Meetings and Discussions
10. Your Negotiation Aspects
6. Framing
11. Your Outcome Preferences
7. Assessing Constraints
8. Understanding your Negotiation Leverage TOOLS
9. Risk Assessment 1. Aspects of Negotiation*
OUTPUTS 2. Analysis of Alternatives of the Other Party*
3. Primary Research
1. Your Resource Availability for Negotiation
4. Secondary Research
2. Your Alternatives*
5. Meetings and Discussions
3. Your BATNA*
6. Assessing Constraints of the Other Party
4. Your Walk-Away Point*
7. Understanding Negotiation Leverage of the
5. Your Negotiation Reference Frame
Other Party
6. Your Negotiation Aspects
8. Risk Assessment of the Other Party
7. Your Outcome Preferences
OUTPUTS
1. Expected Other Party Resource Availability
2. Expected Other Party Alternatives*
3. Expected Other Party BATNA*
4. Expected Other Party Walk-Away Point*
5. Expected ZOPA*
6. Expected Other Party Negotiation Reference
Frame
7. Expected Other Party Negotiation Aspects
8. Expected Other Party Outcome Preferences

Figure 1-1: Prepare for Single-Issue Negotiation—Inputs, Tools, and Outputs

1.5.3.2 Conduct Single-Issue Negotiation

This chapter discusses the theoretical concepts involved in conducting a single-issue negotiation. After
preparing for negotiation by understanding the negotiation situation, the next step is to conduct the
negotiation. To conduct a successful negotiation, proper planning is required. Decisions will need to be
made regarding logistics such as the time, place, and mode of negotiation. Potential roadblocks should be
identified and an action plan created for the same. While conducting the negotiation, you will need to know
when and how to make an offer. Based on available information and your understanding of the situation, you
may either take the initiative and propose a first offer or respond with a second offer. There may be
subsequent offers made that follow the first and second offer that will need to be addressed by the
negotiator. You also have to think of suitable tactics according to your situation. Figure 1-2 provides an
overview of the processes associated with this chapter. They are as follows:

4.1 Plan for Negotiation—In this process, you will create a negotiation plan consisting of logistics, expected
negotiation paths, potential bottlenecks, calibration of outcomes, and negotiators.

4.2 Conduct the Negotiation—This process deals with offers and tactics that should be used in the
negotiation process.

4.1 Plan for Negotiation 4.2 Conduct the Negotiation

INPUTS INPUTS
1. Your Resource Availability for Negotiation 1. Logistics for Negotiation*
2. Your Alternatives* 2. Calibration of Outcomes
3. Your BATNA* 3. Expected Negotiation Paths
4. Your Walk-Away Point* 4. Your Negotiators*
5. Your Negotiation Reference Frame 5. Other Party Negotiators*
6. Your Negotiation Aspects 6. Potential Bottlenecks
7. Your Outcome Preferences 7. Your BATNA
8. Expected Other Party Resource Availability 8. Your Walk-away Point
9. Expected Other Party Alternatives* 9. Expected Other Party BATNA
10. Expected Other Party BATNA* 10. Expected Other Party Walk-Away Point
11. Expected Other Party Walk-away Point* 11. Your Negotiation Reference Frame
12. Expected Other Party Negotiation Reference 12. Expected Other Party Negotiation Reference
Frame Frame
13. Expected Other Party Negotiation Aspects TOOLS
14. Expected Other Party Outcome Preferences 1. Opening the Negotiation
TOOLS 2. First Offer*
1. External Expertise 3. Second Offer*
2. Negotiation Planning Session* 4. Subsequent Offers*
3. Negotiation Research 5. Tactics for Negotiation
OUTPUTS 6. Managing Agents
1. Logistics for Negotiation* OUTPUTS
2. Calibration of Outcomes 1. Negotiated Deal*
3. Expected Negotiation Paths 2. Negotiated Deal Terms and Conditions
4. Your Negotiators* 3. Satisfied Parties
5. Other Party Negotiators* 4. Potential for Future Deals
6. Potential Bottlenecks

Figure 1-2: Conduct Single-Issue Negotiation—Inputs, Tools, and Outputs

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1.5.3.3 Prepare for Multi-Issue Negotiation

This chapter discusses the theoretical concepts involved in preparing for multi-issue negotiation. The two
processes in this chapter deal with understanding your own negotiation situation and understanding the 1
negotiation situation of the other party. Most negotiations are multi-issue negotiations where several issues
are negotiated at the same time. In such a scenario it is important to understand and clearly define the
issues prior to negotiation. You also need to analyze the importance placed on issues by the other party.
Figure 1-3 provides an overview of the processes associated with this chapter. They are as follows:

5.1 Understand your negotiation situation—In this process you assess your situation for the upcoming
negotiation.

5.2 Understand negotiation situation of the other party—In this process you assess the other party’s
situation for the upcoming negotiation.

5.1 Understand Your Negotiation 5.2 Understand Negotiation Situation

Situation of the Other Party

INPUTS INPUTS
1. Existing Understanding of Issues* 1. Your Issues for Negotiation*
2. Your Negotiation Capabilities 2. Your Negotiation Capabilities
3. Past Negotiation Process 3. Past Negotiation Results
4. Past Negotiation Results 4. Defined Negotiation Process
TOOLS 5. Other Party Negotiation Capabilities
1. Issues Analysis* 6. Your Resource Availability for Negotiation
2. Aspects of Negotiation* 7. Your Alternatives*
3. Analysis of Alternatives* 8. Your BATNA(s)*
4. Primary Research 9. Your Walk-Away Point(s)*
5. Secondary Research 10. Your Negotiation Reference Frame(s)
6. Meetings and Discussions 11. Your Negotiation Aspects
7. Assessing Constraints 12. Your Outcome Preferences
8. Understanding your Negotiation Leverage TOOLS
9. Risk Assessment 1. Analysis of Issues of the Other Party
OUTPUTS 2. Aspects for Negotiation*
1. Your Issues for Negotiation* 3. Analysis of Alternatives of the Other Party*
2. Defined Negotiation Process* 4. Primary Research
3. Your Negotiation Timeline 5. Secondary Research
4. Your Resource Availability for Negotiation* 6. Meetings and Discussions
5. Your Alternatives* 7. Assessing Constraints of the Other Party
6. Your BATNA(s)* 8. Understanding Negotiation Leverage of the
7. Your Walk-Away Point(s)* Other Party
8. Your Negotiation Reference Frame(s) 9. Risk Assessment of the Other Party
9. Your Negotiation Aspects OUTPUTS
10. Your Outcome Preferences 1. Expected Other Party Issues*
2. Expected Other Party Resource Availability
3. Expected Other Party Negotiation Process*
4. Expected Other Party Negotiation Timeline
5. Expected Other Party Alternatives*
6. Expected Other Party BATNA(s)*
7. Expected Other Party Walk-Away Point(s)*
8. Expected Other Party Negotiation Reference
Frame(s)
9. Expected Other Party Negotiation Aspects
10. Expected Other Party Outcome Preferences

Figure 1-3: Prepare for Multi-Issue Negotiation—Inputs, Tools, and Outputs

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1.5.3.4 Conduct Multi-Issue Negotiation

This chapter discusses the theoretical concepts involved in conducting a multi-issue negotiation. After
preparing for negotiation by understanding the negotiation situation, the next step is to conduct the 1
negotiation. To conduct a successful negotiation, proper planning is required. Decisions will need to be
made regarding logistics such as the time, place, and mode of negotiation. Potential roadblocks should be
identified and an action plan created for the same. In multi-issue negotiation you need to further analyze
issues and decide the tactics that you need to use. Multi-issue negotiations involve framing policies and
conditions. Offers are made through different techniques and agreement has to be arrived at on numerous
issues. Figure 1-4 provides an overview of the processes associated with this chapter. They are as follows:

6.1 Plan for Negotiation—In this process, you will create a negotiation plan consisting of logistics, expected
negotiation paths, potential bottlenecks, calibration of outcomes, and negotiators.

6.2 Conduct the Negotiation—This process deals with offers and tactics that should be used in the
negotiation process.

6.1 Plan for Negotiation 6.2 Conduct the Negotiation

INPUTS INPUTS
1. Your Issues for Negotiation* 1. Logistics for Negotiation*
2. Your Resource Availability for Negotiation* 2. Calibration of Outcomes
3. Your Alternatives* 3. Expected Negotiation Paths
4. Your BATNA(s)* 4. Your Negotiators*
5. Your Walk-Away Point(s)* 5. Other Party Negotiators*
6. Your Negotiation Aspects 6. Potential Bottlenecks
7. Your Outcome Preferences 7. Your BATNA(s)
8. Expected Other Party Issues for Negotiation* 8. Your Walk-Away Point(s)
9. Expected Other Party Resource Availability 9. Expected Other Party BATNA(s)
10. Expected Other Party Alternatives* 10. Expected Other Party Walk-Away Point(s)
11. Expected Other Party BATNA(s)* 11. Your Negotiation Reference Frame(s)
12. Expected Other Party Walk-Away Point(s)* 12. Expected Other Party Negotiation Reference
13. Expected Other Party Negotiation Reference Frame(s)
Frame(s) TOOLS
14. Expected Other Party Negotiation Aspects 1. Opening the Negotiation
15. Expected Other Party Outcome Preferences 2. Offers*
TOOLS 3. Tradeoffs*
1. External Expertise 4. Formulating Policies, Terms, and Conditions
2. Issues Matrix* 5. Tactics for Negotiation
3. Negotiation Planning Session* 6. Breaking a Deadlock
4. Negotiation Research 7. Managing Agents
5. Framing OUTPUTS
OUTPUTS 1. Negotiated Deal*
1. Logistics for Negotiation* 2. Negotiated Deal Terms and Conditions
2. Calibration of Outcomes 3. Satisfied Parties
3. Expected Negotiation Paths 4. Potential for Future Deals
4. Your Negotiators* 5. Lessons Learned from Negotiation
5. Other Party Negotiators*
6. Potential Bottlenecks
7. Your Negotiation Reference Frame(s)

Figure 1-4: Conduct Multi-Issue Negotiation—Inputs, Tools, and Outputs

2. ASPECTS OF NEGOTIATION

Aspects of Negotiation are facets that help you understand negotiation in principle and facilitate the relating
and comparing of different forms of negotiation. The Aspects of Negotiation discussed in the NBOKTM can be
applied to any type of negotiation and help you gain a strong understanding of the processes described as
part of negotiation. Before you begin the processes associated with negotiation as described in this book, it 2
is recommended that you develop a strong familiarity and understanding of the Aspects of Negotiation.

The Aspects of Negotiation discussed in this chapter include:

2.1 Justification

2.2 Distributive vs. Integrative

2.3 Customization

2.4 Non-linear Process with Uncertain Outcomes

2.5 Human Relations Issues

2.6 Organization

2.7 Ethics

2.1 Justification
Justification provides the primary reasons for negotiation, answering the questions “Why should one
negotiate?” and “What value is gained by negotiating, rather than taking the offer made by the other party?”
Negotiation may require a significant investment of an organization’s resources, so it is important to identify
the value that negotiation provides. Preparing for and conducting negotiation may involve costs. Each party
in the negotiation should assess the value that can be gained from successful negotiation and compare the
gain with the costs of negotiation. For some negotiations, justification need not be formally conducted. For
example, negotiation between a parent and a child over a domestic issue may not involve any monetary
gains and will require no formal justification. Conversely, negotiations on climate talks between countries
and World Trade Organization (WTO) negotiations are complex and costly, and the justification for
negotiation should be conducted formally. Assessing the justification for negotiation enables the
organizations involved to determine whether it is viable or desirable to negotiate.

2.1.1 Why Negotiate?

Negotiation involves creating value and eventually enables the involved parties to reach a mutually
acceptable agreement. Value is anything that stakeholders find useful or desirable. It can be defined in
financial or non-financial terms. When there is value in negotiation, the involved parties feel they are better
off with an agreement than without. However, the value perceived by each party involved in a negotiation
may vary. For example, when you walk into a dealership to buy a new car, you may simply accept the sticker
price, or you may decide to spend time and negotiate with the seller to reduce the price. The lower the price
you negotiate, the higher the value you perceive. The person selling the car may perceive value in simply
gaining the sale, and may assess the price difference as negligible. Both parties perceive value and an
agreement is made.

There are often several reasons both for and against moving forward with a negotiation. Assessing the
anticipated value gained provides the justification to proceed with or cease the negotiation.

In some situations, it is in fact better not to negotiate. Such situations include the following:

 when the demands of the other parties are unethical, illegal, or contrary to the stated policies of
your organization. In such situations, you may decide not to go ahead with the deal, or certain parts
of the deal might be considered non-negotiable.
 when you have little to gain but risk losing everything
 when you are hard pressed for time. There is a higher probability of making mistakes when there is
inadequate time for preparation.
 when there is a lack of trust in your relationship with the parties in the negotiation

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The primary reasons to proceed with negotiation are as follows:

 to arrive at a deal or a mutually understood outcome

 to resolve a conflict

2.1.1.1 Negotiating to Arrive at a Deal or a Mutually Understood Outcome 2

Negotiation can occur between two or more people or groups aiming to agree on a deal or a mutually
agreeable outcome. Negotiation in this instance enables the parties involved to realize the benefits or goals
that would not have been achievable by either party on their own. Interdependency of goals requires the
parties to negotiate toward an agreement. For example, an author and a publisher would negotiate to reach
a mutually agreeable set of terms for their contractual arrangement.

The complexity of a negotiation depends on the level of interdependency among the negotiating members.
Complexity of negotiation is lower if one party in a negotiation has more bargaining power and fixed terms
compared to the other party. The party that has more bargaining power, also referred to as the independent
party, will not compromise significantly, but they may provide a few concessions during the negotiation
process. The other party, referred to as the dependent party, would have to make compromises for an
agreement to be reached.

Examples of Negotiation between independent and dependent parties:

 Public utilities for water, telecommunications, and energy are usually government supervised
monopolies and consumers have no direct ability to negotiate the price of their services.

 If a job aspirant’s goal is to work for an organization that is the industry leader, then he or she would
likely have to compromise on certain aspects and accept the terms set by the company in order to
secure the job.

In some cases the negotiating parties are interdependent, with neither having the independent advantage.
Negotiation is these cases may be very complex and a challenge for either party to achieve their respective
goals completely. The level of interdependency of the negotiating parties determines the strategies and
approaches they can adopt during negotiation. This determines the range of possible outcomes each party
can expect. The parties know that they can influence each other’s outcomes, and they try to do this
throughout the process to maximize benefits. The tactics employed by the negotiators to influence the
outcomes for other parties often change during the negotiation process. The negotiators should take into
consideration how their actions to influence will be perceived by the other parties, anticipate the other
parties’ response, and prepare a counteraction. Thus, understanding the nature and level of
interdependence among the negotiating members is critical for the success of a negotiation.

Examples of Negotiation to Arrive at a Deal or a Mutually Understood Outcome:

 Negotiation between an author and a publisher

 Negotiation between companies to fund a joint research project

 Negotiation of action plans between a manager and an employee to address performance shortfalls
or to promote development planning

 Negotiation of deliverables in a customer-supplier agreement, including quality specifications,

delivery dates, project timelines, authority, and approval levels

 An agreement between a trade person and sub-contractor or customer to complete a building

project, including project timelines and customer approvals

 Negotiation of a starting salary and vacation entitlement between a new employee and a hiring
manager

 Negotiations led by United Nations for countries to decrease their carbon emissions

2.1.1.2 Negotiating to Resolve a Conflict

Conflict can be defined as a disagreement or opposition in ideas and interests among the parties involved in
negotiation. Conflict can occur for numerous reasons, such as the divergent needs of the parties concerned;
misunderstanding among the parties involved; or differences in opinions, interests, or preferences among
the parties. Conflict can also occur when the parties involved are trying to achieve the same outcomes or
goals for their respective organizations.

Example of Negotiation to Resolve a Conflict:

 Negotiation between countries to resolve a boundary dispute

 Negotiation between companies regarding copyright infringement issues

 Negotiation of compensation for a patent or copyright infringement between a plaintiff and defendant

 A parent-child dispute

 Negotiation between a husband and wife to divide assets during divorce proceedings

 Negotiation between smartphone manufacturers regarding patent infringements

 Negotiation between BP Oil and several business operators, states, and environmental agencies,
resulting in a $20 billion settlement to compensate for lost income and the costs associated with a
massive oil spill in 2010.

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Types of conflict

Four types of conflict are commonly identified:

 Intrapersonal Conflict—This refers to the conflict that occurs within an individual due to a clash of
his or her ideas, thoughts, assumptions, beliefs, emotions, or values. One’s inability to express
emotions such as anger or admiration due to the fear of repercussions from how other parties will
2
perceive the expression is an example of intrapersonal conflict.

 Interpersonal Conflict—This refers to conflicts between negotiating individuals due to

misunderstandings, lack of coordination, inaccurate perceptions, pre-conceived notions, or biases.
For example, an individual may misunderstand a joke that leads him to assume things about the
other individual, which might lead to a conflict, or a conflict might arise between two project
managers during allocation of limited resources.

 Intragroup Conflict—These types of conflicts occur at a group or team level where there is lack of
coordination, lack of information exchange, or too many interpersonal conflicts among members of
the group or team. Conflicts that occur among members of a family, class, union, project team, or
committee are examples of intragroup conflict. Intragroup conflicts, if not resolved in time, can
severely affect the ability of the team to negotiate effectively and achieve their collective goal.

 Intergroup Conflict—This refers to conflicts between groups or teams that can be due to situations
such as the presence of interpersonal conflicts, clash of objectives or ideas, and poor dissemination
of information leading to lack of trust or faith. Examples of intergroup conflict include conflicts
between unions and management, or between nations.

Conflict is generally perceived to be negative as it indicates that there are issues that need to be resolved.
However, it is important to understand that there is value associated with every negotiation, irrespective of
the conflicts involved. Parties may gain or lose value depending on the outcome of a negotiation, but all
parties stand to lose if they do not negotiate to resolve the conflict. Therefore, it is generally in the interest of
all parties to negotiate and agree on a solution that is acceptable to all involved.

2.1.2 Benefits of Negotiation

For every negotiation, parties can determine the benefits that each would gain from a successful negotiation,
and compare it with the cost of negotiation. The benefits of negotiation should outweigh the costs associated
with negotiation. Costs of negotiation can be due to any of the following:

 Use of resources—At times, negotiations can be taxing and may require you to invest a lot of time,
money, and effort. Investment is required in terms of hiring people with the necessary negotiating
skills, selecting and renting a venue and other logistics, carrying out research to gather necessary

information when preparing for a negotiation and during the negotiation process, and so on. When
parties want the best deal they can get, the negotiation can take a long time because parties invest
time and effort to gather information, engage in lengthy discussions, and conduct multiple rounds of
negotiation. As a result, the use of resources that could have been invested in other purposes can
be one of the costs of negotiation.

 Loss of trust or relationship—Negotiation requires all parties involved to present their concerns or
ideas about the deal without subverting facts or truth. All parties in the negotiation should trust the
information provided by one another. Long and drawn-out negotiations can result in the
misunderstanding or misreading of information. This can lead parties to perceive that they are in a
win-lose situation. Some parties may feel that they did not get a fair deal, which may result in the
souring of relationships between the parties. Thus, loss of trust or damage to the relationship can
be another cost of negotiation.

Examples of Costs associated with negotiation:

 An automobile manufacturer may incur additional costs associated with a dedicated vendor
management team to negotiate with various suppliers in order to gain the benefit of better prices
and credit terms.

 External experts may be hired and senior management of the company may be involved in the
negotiation of sales and profitability objectives between a parent company and an operating unit.

 To ensure successful completion of a project, the project manager may spend significant time to
negotiate for resources (budgets, timelines, staffing levels, etc.) with senior management and other
departments within the company.

Benefits of negotiation can be classified as financial or non-financial:

 Financial benefits3

These benefits may be in the form of a better price, reduced cost, or any form of benefit that results
in a better financial position. The tools used to calculate financial benefits include Cost Benefit
Analysis (CBA), Return on Investment (ROI), Net Present Value (NPV) and Internal Rate of Return
(IRR):

o Cost-Benefit Analysis (CBA)—This is a simple but effective tool which can help you decide
whether negotiation is required or not. In order to conduct a CBA you need to be able to
monetize both the costs associated with negotiation and the benefits that can accrue as a result
of it. Negotiation is feasible if monetary benefits exceed the cost of conducting it. A drawback of
this technique is that it does not take in to account the present value of future returns.

3 A Guide to the Scrum Body of Knowledge (SBOKTM Guide) (2015). VMEdu, Inc.

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Example of CBA:

 A company plans to conduct negotiation with another party using the services of an agent. The
costs include agency fees as well as the cost to arrange for logistics of the negotiation including
venue, transportation, and documentation. In addition, it also needs to consider the cost of time and
effort that its management team will spend for preparing and participating in the negotiation. The
benefits of a successful negotiation however include a new business opportunity that greatly 2
outweighs the costs. As well, a better relationship with the other party provides a scope for new
business opportunities in the future. The company therefore decides to go ahead with the
negotiation.

o Return on Investment (ROI)—ROI assesses the expected net income to be gained. It is

calculated by deducting the expected costs or investment from the expected revenue and then
dividing this (net profit) by the expected costs in order to obtain a return rate. Other factors such
as inflation and interest rates on borrowed money may be factored into ROI calculations.
ROI = (Revenue – Cost) / Cost

Example of ROI:

 The ROI for a deal that will cost $125,000 with expected financial benefits estimated at $300,000 is
calculated as follows:

ROI = ($300,000 - $125,000) / $125,000 = 1.4

Therefore, the ROI is 1.4 times the investment (or 140%).

o Net Present Value (NPV)—NPV is a method used to determine the current net value of a future
financial benefit, given an assumed inflation or interest rate. In other words, NPV is the total
expected income or revenue from a deal, minus the total expected cost of the deal, taking into
account the time-value of money.

Example of NPV:

 Which of the following two plans is better to select if NPV is used as the selection criterion?

o Plan A has a NPV of $1,500 and will be completed in 5 years.

o Plan B has a NPV of $1,000 and will be completed in 1 year.

Solution: Plan A, since its NPV is higher; the fact that Project B has a shorter duration than Plan A
is not considered here, because time is already accounted for in the NPV calculations (i.e., due to
the fact that it is the current, not future value that is being considered in the calculation).

o IRR—Internal Rate of Return (IRR) is a discount rate on an investment in which the present
value of cash inflows is made equal to the present value of cash outflows for assessing a deal’s
rate of return. When comparing deals, one with a higher IRR is typically better.

Example of IRR:

 Based on IRR, which plan is most desirable?

o Plan A, which has an IRR of 15% and will be completed in 5 years.

o Plan B, which has an IRR of 10% and will be completed in 1 year.

Solution: Plan A, since its IRR is higher; the fact that Plan B has a shorter duration than Plan A is
not considered here because time is already taken into account in the IRR calculations.

Examples of Financial Benefits:

 Better negotiation can lead to less expensive options provided by a supplier to a customer for a
product or service.

 Effective negotiation in a real estate transaction between a buyer and seller and their agents can
help improve the financial terms, and decrease penalties and costs.

 Non-financial benefits

Non-financial benefits are not easily quantified but are also important for the negotiation. Some of
the major non-financial benefits include the following:

o Reducing risk
o Building trust
o Building a better relationship
o Establishing better communication
o Expanding the scope of future business

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Examples of Non-financial Benefits:

 Setting a framework for more collaborative and creative negotiations between two parties in the
future by making and keeping agreements

 Negotiating beyond price and costs to reach an agreement (e.g., better access to technology,
markets, leading-edge research, relaxed timelines for delivery, flexible payment schedules,
2
packaging, after-sales service, training support)

 Negotiations between countries to reduce the probability of future armed conflict

Exercises for Justification for Negotiation:

 Role play—An individual is selling a mountain bike online. He has had the bike for eight years and
paid $300 for it. Now the bike is used and the minimum amount that the seller will accept is $100.
The buyer knows that the bike is worth $100 but wants to negotiate because he would like to get it
for less than $100. Both sides should work toward negotiating the price.

 Role play—A parent and child address the child’s poor grades at school.

 Role play—A car salesman sells a used car without a performance guarantee or warranty and the
car breaks down on the buyer. The buyer returns to angrily confront the salesperson and demand a
refund.

 Role play—A real estate management company is negotiating the rate for their cleaning and
janitorial services. The cleaning contractor is unwilling or unable to lower the monthly rate. Some
creative, non-financial solutions will need to be explored to reach an agreement.

2.2 Distributive vs. Integrative

Negotiation is typically classified as distributive or integrative based on the approach taken toward the
negotiation. This Aspect describes distributive and integrative negotiation in detail and highlights the key
differences between the two.

2.2.1 Distributive Negotiation (Win-Lose)

Distributive, or win-lose negotiation, is a strategy directed toward the distribution of a fixed resource between
two or more parties. In other words, distributive negotiation takes place when two or more parties try to claim
the maximum amount of value for themselves from a given resource. In this type of negotiation, a gain for
one party is a loss for the other. Distributive negotiation is common in situations where the people involved
do not share an existing relationship and are not likely to collaborate in the near future. It is primarily used
when only one issue (for example, price) is discussed.

Examples of Distributive Negotiation:

 The rate for hotel rooms where the buyer and seller do not know each other and do not expect
future business

 The sale of a house where the only issue being discussed is the price of the house

 Sale of widgets or goods based solely on one parameter (usually price)

 Purely distributive negotiations are common at several tourist attractions such as public beaches or
famous monuments. Vendors approach tourists to sell gifts, blankets, hats, and other souvenirs.
Both the vendors and tourists know that these transactions are a one-time deal with no warranty, no
return policy, and no receipt. Future business is not a consideration. The only objective of the
vendors is to receive the highest possible price for their merchandise, while the tourists want to
bargain for the lowest possible prices.

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2.2.2 Integrative Negotiation (Win-Win)

Integrative, or win-win negotiation, is a strategy directed toward developing mutually beneficial agreements
by discussing and addressing various concerns—such as needs, desires, and expectations—of the
negotiating parties. Conceptually, this type of negotiation connotes cooperation or collaboration to achieve
something together. It emphasizes building a long-term relationship and arriving at a solution that benefits
each party. 2

Most integrative negotiations have two elements: creating value and claiming value. They are described as
follows:

 Creating Value—Value may be created through two parties negotiating with each other to discover
areas to collaborate so that each can gain from the relationship.

Examples of Creating Value in Integrative Negotiation:

 An employee and employer relationship creates value for both parties, since the employee gets a
job that he or she wants, and the employer gets a qualified employee for a specific role within the
company.

 Mergers and Acquisitions are conducted typically to create value for both parties. Both parties
believe that the deal will be valuable.

 The relationship between a manufacturing company and its suppliers provides value to the
manufacturer who may not have the ability or intention to manufacture all parts. In return, the
supplier gains a market for its products.

 Claiming Value—Because the potential to create value through the negotiation is understood, the
negotiating parties try to claim the value created so the returns for their party are maximized. Some
of this negotiation may involve elements of distributive negotiation where the negotiating parties
may win or lose on specific issues.

Examples of Claiming Value in Integrative Negotiation:

 In an employee and employer relationship, as the employer decides to hire an employee, the
employee may want to maximize her expected salary and benefits; the employer, on other hand,
may have an objective to keep the salary within specific limits and thus offers a salary based on the
expected value the company anticipates gaining from the new hire. The employer may also consider
offering variable pay or incentives so that high performing employees receive more remuneration.

 As an acquisition transaction is moving forward, the acquiring party may want to offer a lesser
amount for the acquisition. On the other hand, the company to be acquired may want a higher
valuation and may negotiate with multiple interested companies to improve its perceived value.

 As a manufacturing company negotiates a deal with a supplier, the manufacturing company may
want to pay the lowest price and get the best terms when finalizing the deal with the supplier. The
supplier may want to change the price to maximize its profits.

It is important to understand that a skilled negotiator may do a good job creating value for both parties as
well as claiming significant value created through the negotiation process.

Integrative negotiations may be time consuming and may involve intermediaries and agents. It is important
to discover the interests of all other parties in the negotiation. While identifying interests, negotiators must
also realize that each party may have multiple interests and, if the scenario involves negotiating with a
group, each group member may have multiple interests. The negotiating parties should have a good
understanding one another’s perceptions and demands and, specifically, the points on which their positions
differ.

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Examples of Integrative Negotiation:

 Software outsourcing contracts

 Negotiation between married couples about a vacation

 Proctor & Gamble (P&G) executive Tom Muccio pioneered a new supplier-retailer partnership
between P&G and Wal-Mart. The new relationship focused on cooperation and collaboration, 2
including forming a joint vision and sharing the problem-solving process as well as other
information. From 1987 to 2003, the worth of their relationship grew from $350 million to $7.8 billion
for P&G.

 A multinational chemical company had a need that could only be met by a single supplier. When the
chemical company wanted to increase its order, the supplier demanded a price increase due to
processing limitations. The chemical company put together a financial package that would enable
the supplier to earn 15 percent on capital investments. The supplier countered with an offer to limit
price fluctuations to less than 10 percent annually. In their new multiyear contract, the chemical
company received a 10 percent discount.

2.2.3 Difference between Distributive and Integrative Negotiation

The primary differences between distributive and integrative negotiation can be based on the following
factors:

Value

Value, a measure of benefit, is something that may be gained from offering or procuring products or
services. It’s the value of a product or service that brings two or more parties to the table for a negotiation
aimed at achieving optimum profitability in their respective business processes. Negotiation seals a business
deal, and each deal holds a certain value for the organization. This helps the organization grow and sustain
itself in the business environment. Value plays an important role in differentiating the two types of
negotiation. In distributive negotiation, value is divided among parties; however, in integrative negotiation,
value is often both created and divided among parties to enable a long-term business relationship and a
better business value proposition. Although value is created for both parties in an integrative negotiation, a
good negotiator for a party can claim more of the value created.

Issues

In a negotiation, the negotiating parties discuss issues and arrive at a deal through negotiation. It is typical in
a distributive negotiation to discuss only a single issue (e.g. price), and in an integrative negotiation to
discuss multiple issues at the same time. Since multiple issues are involved in an integrative negotiation, it
provides an opportunity for the negotiating parties to play-off one issue against the other, because an issue
which is very important to one party may not be as important to another party. For example, for a company

hiring employees, the key issues that the employee may want to negotiate are salary and benefits; but for
the company, salary and benefits may not be as important as hiring the ‘right’ person with proper
qualifications for the job, and the company may be willing to pay more for the person who they believe is
more suited for the role. Issues are not always specific or clear and often require extensive investigation to
clearly identify. For example, low company morale can be the result of any number of issues. An
experienced and skilled HR professional should be able to discover underlying issues in order to negotiate
for changes in the workplace that could lead to improved morale.

Relationship

Building a relationship in a negotiation is justified only when a party foresees future benefits in an
association. In distributive negotiation, relationship building is not important. Parties do not expect future
contact and the primary objective of each party is to gain the most out of the current negotiation. In
integrative negotiation the parties collaborate with each other to arrive at a solution that is beneficial to all
parties. Long-term relationships are built or improved during the integrative negotiation process.

Information Exchange

Information exchange occurs in the negotiation process so that each party gains an understanding of the
needs of the other party. In distributive negotiation, parties are not well known to each other and are not
interested in building relationships. There is a limited scope for information exchange in these scenarios;
only information that is pertinent to the negotiation is shared. Integrative negotiation, on the other hand,
provides ample opportunities for lengthy discussion, information exchange, and relationship building.

Table 2-1 lists the major differences between Distributive and Integrative Negotiation.

Type

Distributive Negotiation Integrative Negotiation

Criteria

Value Fixed value divided among parties Create value and divide among parties

Issues Usually single issue Usually multiple issues are involved

Relationship Short-term relationship is sought Long-term relationship is sought

Less information exchanged, no Significant information may be

Information
need for parties to know each other exchanged; parties need to know each
Exchange
well other well

Table 2-1: Differences between Distributive and Integrative Negotiation

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2.3 Customization
The concepts of negotiation as explained in the NBOK allow the user to understand and use it irrespective of
the nature and type of negotiation he or she is involved in. The basic concepts of negotiation as defined in
the NBOK are valid for any negotiation and can be customized to any business or personal negotiation by
any individual or organization, in any country.
2
Negotiation can take place in many forms and situations. The simplest form of negotiation is a two-party
negotiation over a single issue. However, a negotiation may involve more than two parties, multiple issues,
and multiple phases. The seriousness of the issues discussed can also range from deciding a child’s pocket
money to levying international sanctions. Therefore, it is necessary to customize the concepts of negotiation
according to the situation. With the help of numerous examples, exercises, and case studies, the NBOK
illustrates how the concepts of negotiation can be applied to various situations and scenarios.

2.3.1 Multi-phase Negotiation

A multi-phase negotiation occurs in many stages or phases. Different phases may be used to discuss and
agree on different issues, and any agreement reached can be implemented after each phase. Parties can
also monitor the implementation of previous agreements. For example, complex mergers and acquisition
negotiations may be divided into phases: initial purchase price, staff retention and wage, and future
competition limits. This is to set limits on the scope and minimize the complexity of each negotiable area. It
also provides walk-away points in the negotiations, where each party may decide to terminate a negotiation
if specific target criteria are not met. For example, if agreement cannot be reached on the overall purchase
price, there is no need to discuss how existing staff will be handled.

Negotiating in multiple phases leads to a better understanding and trust. Often, later phases of negotiation
are more fruitful, since both sides are familiar with each other and understand what will and will not work.
Diplomatic relations between countries may be approached in phases. Negotiating success in each phase
establishes trust and helps increase the likelihood of success in subsequent phases.

Examples of Multi-phase Negotiations:

 On October 21, 1994, the United States and the Democratic People’s Republic of Korea (DPRK)
signed the “Agreed Framework” nuclear deal. The central issue between the two countries was
North Korea’s autonomy in their own nuclear capabilities and the desire of the United States to see
North Korea’s nuclear program halted. The phased approach was intended to provide measureable
steps for success to improve relations. The framework was broken into four steps:

1. Both sides will cooperate to replace the DPRK’s graphite-moderated reactors and related
facilities with light-water reactor (LWR) power plants.

2. The two sides will move toward full normalization of political and economic relations.

3. Both sides will work together for peace and security on a nuclear-free Korean peninsula.

4. Both sides will work together to strengthen the international nuclear non-proliferation
regime.

Each phase would involve negotiations over the terms and criteria of that phase. The goal of the
U.S. was to impose the non-proliferation treaty upon North Korea. Due to the complexity of the
relationship, the U.S. realized that this was an impossible starting point. By dividing the negotiation
into phases, it was hoped that trust and improved relations could be established to improve the
potential acceptance of that final goal.3

2.3.2 Multi-party Negotiation

A multi-party negotiation involves more than two sides. It is more complex than a two-party negotiation. The
parties must gather information about the goals, interests, negotiation style, and positions of more than one
party. It is difficult to assess the possible negotiation scenarios and outcomes when only two parties are
involved; it becomes more difficult when the number of participants increases.

Multi-party negotiation also differs in terms of how information exchange takes place. In a two-party
negotiation, both parties can take turns exchanging information. In a multi-party situation, an order should be
established for information exchange; otherwise, the negotiation may be unsuccessful. An agenda should
also be set for each meeting. Sometimes neutral parties are brought into the process to ensure that there is
no bias while setting the agenda or sequence of information exchange. Also, parties may have different
levels of authority, power, or interest in the negotiation.

Another important facet of a multi-party negotiation is the formation of coalitions. A coalition can be of two
types:

4 Bureau of Arms Control. (1994, Oct 1). Agreed Framework Between the United States of America and the
Democratic People's Republic of Korea. Retrieved from http://2001-2009.state.gov/t/ac/rls/or/2004/31009.htm

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 Natural Coalition —Members of natural coalitions have the same viewpoint on multiple issues. It is
very difficult to break a natural coalition. For example, a coalition of USAID and NGOs working for
development in Africa is a natural coalition.

 Single-issue Coalition —Members of a single-issue coalition reach an agreement over one issue
while holding dissimilar viewpoints about other issues. It is easier to break a single-issue coalition
compared to a natural coalition. For example, a temporary coalition of normally hostile nations while 2
voting on a particular issue in the UN is a single-issue coalition.

A coalition provides numerous benefits, such as the following:

 leverage for advancing a party’s interests or blocking the opposition’s interests, especially when
voting is involved
 additional resources such as people, money, connections, and information
 an opportunity to overcome your specific constraints
 more people or parties provide more credibility and visibility, potentially leading to more supporters

Parties need to develop or break a coalition depending on their interests. While forming a coalition each
party should look beyond natural coalitions. Sometimes a party’s interests may be better served by
partnering with parties or people with dissimilar interests.

Example of Coalitions:

 Various nations have formed coalitions to negotiate and influence decision-making for different
objectives such as better trade benefits, improved security and defense, and information exchange.
Examples of such organizations include NATO, BRICS, SAARC, OPEC, and APEC.

In a multi-party negotiation, each party should be prepared for the following challenges:

 Chaotic process—As there is no natural order, the negotiation may descend into a chaotic process
leading to a stalemate. This can be prevented by deciding on agendas, goals, and procedures
before starting the process.

 Groupthink—Groupthink is a phenomenon that occurs when a group of people desires to get along
well with each other and all members conform to the group norms. At times, this may lead to
irrational decision-making. When people try to get along, they may not think of all the counter
alternatives or issues, as such issues may lead to disagreement within the group. This is especially
true for coalitions. Groupthink is also seen in stock markets and private equity deals, where certain
stocks get a significantly higher valuation than that which can be justified from their fundamentals.

 Managing interpersonal relationships—The number of interpersonal relationships that has to be

managed increases with the number of parties in the negotiation. Each party must understand the

interests, goals, and styles of more than one party. If coalitions are formed, then parties must also
manage relationships within the coalition.

Example of Multi-party, Multi-phase Negotiation:

 An airline attempting to acquire a competing airline may find they have to negotiate both with the
ownership group and the union representing the airline’s workers. The first phase in this negotiation
will be to establish an agreement in principle between the owners. The second would be to establish
a purchase price for the assets (i.e., planes, maintenance equipment, and infrastructure). The third
phase would be to jointly negotiate the sale with the union representatives. In this third phase, the
ownership groups for both the buying airline and the airline being acquired would put forth their
proposal to the worker’s union. At this point, the value of the deal has been established for the buyer
and the seller, and now they have a mutual need to see the acquisition accepted by the union.

A negotiation process can range from a two-party negotiation over a single issue to a multi-party negotiation
over multiple issues. Multi-party and multi-phase negotiations have been discussed in this section while
multiple-issue negotiation will be discussed in subsequent sections. The basic concepts for these types of
negotiations remain the same, but need to be customized depending on the negotiation scenario.

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2.4 Non-linear Process with Uncertain Outcomes

A negotiation is often thought of as a linear process following a predictable path. While this may be true for
simple interactions, it is hardly the case for most negotiations. Most negotiations are complex and follow a
non-linear and unpredictable path. The unpredictable nature of a negotiation is primarily due to the fact that
various events or changes may take place during the course of a negotiation. Uncertain events or sets of
2
events that can affect the objectives of a negotiation process are called risks. Risks may contribute to the
success or failure of a negotiation. Risks that are likely to have a positive impact on the negotiation process
are referred to as opportunities, whereas risks that can affect the negotiation in a negative manner are
considered threats. Some of the factors that can alter the path or the result of a negotiation are as follows:

 New alternatives or opportunities—In a negotiation, the parties involved are continually trying to
evaluate the situation and identify beneficial outcomes. Thus, new alternatives may open up or new
opportunities may arise that were not available at the start of the negotiation. The introduction of
such alternatives often changes the linear or predicted path of a negotiation process.

 Change in negotiator—One of the negotiators may be replaced during the course of a negotiation
for various reasons, which intentionally or unintentionally can alter the negotiation path and change
the outcomes of the negotiation.

 Change in negotiation process—The negotiation process itself may be changed if the process
being followed is not delivering the required results within the planned time frame.

 Change in nature of relationship—The nature of the relationship between the parties can affect
the negotiation. The nature of the relationship may regress during the course of negotiation,
sometimes leading to a complete stall in the process.

It is important for each party to recognize the unpredictable and non-linear nature of negotiations and remain
flexible during the negotiation process. Negotiators should ensure that risks are identified, evaluated, and
addressed with an appropriate course of action. It is important to exercise patience during the process and
treat the new challenges that present themselves as learning opportunities. However, while being flexible
and open-minded, parties must not lose sight of the larger goal for which they primarily entered the
negotiation process.

Examples of Non-linear Process with Uncertain Outcomes:

 Most criminal legal cases follow a non-linear process as more information about each party
becomes available.
 Civil liberty challenges, negotiations over personal rights and freedoms
 Legal reforms
 Challenges to a constitution or other governing statutes
 Land claim and self-governance rights disputes have occurred between the First Nations and
the Canadian federal government for over a hundred years. Though the primary issues often
vary, as do the parties directly involved, the main issue has been the interpretation of the
“Indian Act” that was first introduced in 1876. While there has not been an ultimate agreement
reached on this, each round of negotiations does produce changes to the Act itself.

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2.5 Human Relations Issues in Negotiation

Negotiation is an interpersonal activity, and gathering information about the other party when possible is 2
advisable. Such information can be used to negotiate more effectively to gain a better result. Seasoned
negotiators try to learn as much as possible about the other party as it gives them an advantage in the
negotiation process. Some questions to ask include the following5:

Who are the people on the other side?

Knowing the participants in the negotiation always offers an advantage because information about the other
party always comes in handy when devising negotiation strategies. Seasoned negotiators prefer to have this
information beforehand, as it puts them in a position of advantage during the negotiation process. At times,
the success of a negotiation may be directly dependent on determining the decision makers in the opposing
party and negotiating with the appropriate persons of authority in the opposing party.

Are they experienced negotiators or novices?

Experienced negotiators know the nuances of the negotiation process and can readily perceive their
counterparts’ motives. If a negotiator’s counterparts are novices, he or she is in a better position to steer the
negotiation in his or her favor. Training in negotiation and understanding negotiation tactics will help novices
negotiate and reduce this advantage.

Are they aggressive competitors or compromisers?

Negotiation style must be altered to adapt to the nature of the other parties participating in the negotiation. If
the party to negotiate with is an aggressive business competitor, a negotiator needs to be very clear about
concerns and expectations. This approach must be combined with concrete justification for entering into the
negotiation. If the other parties involved are perceived to be compromisers or people who definitely want the
deal, the negotiator can change his or her negotiation strategy accordingly. Specifically, the negotiator may
wish to speed up the timeframe of the negotiation to put additional pressure on the other negotiators.

5 Singh, B.D. (2012). Negotiating and Counselling: Text and Cases. Excel Books

2.5.1 Negotiation Styles

Kenneth W. Thomas identified five styles or approaches to negotiation6. It is important for negotiators to
understand their personal negotiation style and also the negotiation style used by the other party in the
negotiation. Individuals are not limited to using just one of Thomas’ five styles. No particular negotiation style
is good or bad in all scenarios, and each style has its own positives and negatives. Expert negotiators
usually adopt one of these styles during a negotiation based on factors such as the context of the
negotiation and the interests of the other party. In addition, styles can change over time, and an expert
negotiator can change his or her negotiation style depending on the developing situation. The negotiation
style of an individual is also dependent on personal and professional experiences, beliefs, personality traits,
gender, and culture. The five negotiation styles are as follows:

 Accommodating
 Avoiding
 Collaborating
 Competing
 Compromising

Accommodating—In this negotiation style, the negotiators believe in the long-term value of negotiation and
would prefer to solve the other party’s problems. Accommodators place greater emphasis on preserving
personal relationships than winning the negotiation.

 Positive—Accommodators come across as likeable individuals who are sensitive to the other
party’s problems and thus establish and foster stronger inter-personal relationships.
 Negative—Accommodators can be taken advantage of in situations when the other party is aware
of the negotiator’s accommodating style and is less focused on retaining the relationship.

6 Thomas, K.W. (1992). Conflict and negotiation processes in organizations. In Dunnette, M. D. & Hough, L. M.
(Eds.) Handbook of industrial and organizational psychology, Vol. 3 (2nd ed.). pp. 651-717. Paulo Alto, CA:
Consulting Psychologists Press.

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Examples of Accommodating Negotiation Style:

 Call center employees for banks are often empowered to resolve issues up to a certain point. They
tend to be very accommodating as their primary goal is to resolve conflicts quickly.

 Small business owners will often be more accommodating with distributors in the start-up phase of
their business. They are more concerned with getting their products to market and do not want to
2
risk damaging relationships that they perceive as valuable.

 Real estate agents are often accommodating in order to speed up the close of a sale. The minimal
gain they might make on commission is not enough to justify a lengthy process.

 An employee with a major airline can waive the standard fee for changing a flight to satisfy a
customer who is upset with having to pay the fee. This maintains good customer relations but can
be easily exploited. Once a customer experiences this quick accommodation, they will be more
likely to attempt to negotiate each aspect of ticket prices in the future.

Avoiding—In this negotiation style, the negotiators intrinsically do not like to negotiate and would prefer to
avoid negotiation altogether unless it is absolutely necessary. Such negotiators prefer to explore areas
where there is potential for the negotiating parties to be in agreement, but they typically avoid the points on
which the two negotiation parities might differ, preferring to avoid confrontation. People who follow this style
of negotiation are not considered to be good deal-makers.

 Positive—Avoiders may, at times, come across as tactful and diplomatic, since they avoid
contentious issues, while getting parties to discuss areas where there could be agreement.
 Negative—Negotiation is a skill that can be learnt and developed over time. However, avoiders
intrinsically do not enjoy negotiating and so, do not keep learning from their past negotiation
experience—more often than not, they do not negotiate good deals.

Examples of Avoiding Negotiation Style:

 Junior or first-time employees often avoid negotiating over wages and benefits.

 Individuals representing a company, but without the needed experience and authority to make major
decisions, often avoid negotiations by stating that they “have to talk to their manager.”

 Information technology professionals usually enjoy solving problems that involve technical aspects,
but some of them may be uncomfortable negotiating with external parties for procuring software or
hardware.

Collaborating—In this negotiation style, the negotiators enjoy the negotiation process, particularly when the
scenario involves solving complex problems. They enjoy discovering innovative alternatives to solve
negotiation challenges.

 Positive—Collaborators try to understand the concerns and interests of the other parties, and are
creative in solving complex negotiation challenges.
 Negative—Collaborators may, at times, change simple negotiation scenarios into more complex
ones, sometimes introducing more issues than required to reach agreement.

Examples of Collaborating Negotiation Style:

 Union representatives with a collaborating style can be beneficial to the negotiation process. The
relationships between the union and employers are long term, complex, and can require an
individual willing to see both sides of any dispute.

 Mediators in private equity deals are valued, based on their ability to find consensus and creatively
work through issues.

Competing—In this negotiation style, the negotiators enjoy the negotiation process, and thrive in scenarios
where they can compete and win a good deal.

 Positive—Competitors enjoy negotiation and hone their negotiation skills over time. They have
strong instincts for negotiation and may win good deals.
 Negative—Competitors may put a lower emphasis on personal aspects of relationships and
maintaining long-term relationships with the other parties in the negotiation process. If the other
party values personal relationships, the competing negotiator may antagonize the other party while
trying to win a good deal.

Examples of Competing Negotiation Style:

 Internal legal departments often have a win-lose view of negotiating. They are educated and
proficient in the tactics of negotiating and usually enjoy the challenge.

 Commission-based sales teams can be very competitive. Their professional goals are more aligned
with a positive distributive outcome. There may be internal competition to produce sales results and
this leads to an even greater competitive approach to negotiations.

 A competitive negotiator secured himself a lucrative wage, well above industry standards. In
addition to the wage, he was given a signing bonus, generous housing allowance, and first class
airfare to the new facility. His negotiation style benefited him greatly in the short term. However, it
also strained the working relationship by framing him as a competitor rather than a team player.

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Compromising—In this negotiation style, the negotiators prefer to close a deal quickly and may
compromise quickly in order to provide a solution that they believe to be fair and equal for all parties.

 Positive—Compromisers can complete negotiations quickly, which is helpful when there is limited
time or resources available.
 Negative—Good negotiators usually take time to negotiate their deals. At times, compromisers may
provide concessions quickly to close the deal. They can be taken advantage of if the negotiator 2
from the other party understands that they can easily get concessions from the negotiation.

Example of Compromising Negotiation Style:

 Homeowners seeking to close quickly on the sale of their house will often compromise on price,
particularly if their house has been listed for a lengthy period of time or if they have already
purchased another house.

Exercises for Negotiation Styles:

 A printer and publisher are working to reach a deal for the printing of 2000 units of a children’s book.
The publisher needs to keeps costs to less than $5 per unit. The printer needs to ensure a
reasonable profit margin and is dealing with increasing paper prices. In pairs, role play the
negotiation using the competing and avoiding styles and discuss the outcome of the negotiation.
Then, try the collaborating style for the same negotiation. What are the advantages in this case of
each particular negotiation style? What are the disadvantages?
 .A teenager is negotiating for a new car. In pairs, role play the negotiation using the competing and
accommodating styles. Then try again with the compromising style. What are the advantages in this
situation of using each style? What are the disadvantages?

2.5.2 Perception and Cognition

Perception and cognition are integral factors that influence how negotiators construct and interpret a
message received during negotiation. These factors are key to the negotiation process since negotiation is
essentially an interpersonal activity. A good understanding of how people communicate and perceive helps
negotiators understand reasons for any particular kind of behavior during the negotiation process.

Negotiators tend to approach a negotiation with certain existing perceptions and attitudes formed by
situations in the past. Perception is the process of assigning meaning to the messages received by the
listener. In negotiation it is largely related to how one party interprets the other party’s messages and
behavior in the given environment. The complexity of the environment makes it difficult to perceive all the
available information thus making perception a selective process. Shortcomings in perception, which may be
influenced by an individual’s own needs, desires, and past experiences, are referred to as distortions or
errors in perception. The major errors in perception are classified as follows:

 Stereotyping—This occurs when a person assigns attributes to another person based on his or her
association to a particular socio-cultural or demographic group. This may be due to a general non-
factual belief that assigns specific qualities to a group, or due to a personal experience that led to a
generalization when considering that particular group. Examples include attribution of qualities
based on age as well as characterizing people based on their nationality, gender, or race.

Examples of Stereotyping:

 An individual may have had a successful negotiation in the past with one person from a particular
demographic group. This may lead them to assume that all representatives of that demographic
group will have the same approach or desire to reach a mutually beneficial agreement.

 A woman having her car repaired at an auto repair center may be perceived as an “easy sell” and a
compromising negotiator if the auto repair center staff assumes that, given her gender, she is
unlikely to know a lot about cars.

 Halo effect—This occurs when a person generalizes and associates a number of attributes with
another person based on the knowledge of one trait of that person. If the trait is perceived as
positive (e.g., the individual is considered congenial) then the person is judged in a positive way,
regardless of other behaviors. Similarly, a trait that is perceived as negative (e.g. the person is
disorganized) creates a negative impression that impacts the overall judgment of the individual.
Under the influence of the halo effect a person tends to rapidly form opinions or impressions of the
other party based on limited information.

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Example of Halo Effect:

 Ex-athletes are often used as company representatives. The public’s perception of athletes as
competitive and successful is transferred to the individual, despite the fact that there is no direct
correlation between athletic abilities and business acumen.

2
 Selective perception—Selective perception occurs when a person filters and selects only those
facts or pieces of information that easily integrate with or support a particular belief. This tends to
further exacerbate the effect caused by stereotyping or the halo effect, since the person not only
forms a quick judgment about the other party, but also filters out any events or evidence that
suggests otherwise.

Examples of Selective Perception:

 The support of politicians often requires selective perception. If they are associated with a favored
political party, or have had successes in certain areas, areas of deficiency are more easily
overlooked.

 When researching a particular environmental issue, people will gravitate towards articles that
support their own beliefs, and avoid or discredit opposing articles.

 Projection—This occurs when a person projects his or her own characteristics or state of mind on
the other party. Projection often occurs as a result of an individual’s need to protect his or her own
self-concept. In a negotiation scenario, a person is projecting if, for example, he or she believes that
the other party will behave or react in the same way that he or she would in the same situation.
When such assumptions are made, the negotiator is often unprepared for a scenario where the
other party does not respond in a way that is consistent with the negotiator’s expectations.

Example of Projection:

 It is common to overvalue a product or service based on an individual’s personal involvement in

developing that product. When demonstrating a product for sale, negotiators might project their
inherent belief in the product’s value on a purchaser. This can lead to underselling the product’s
benefits, as the seller assumes that the purchaser already understands the value.

 Irrational escalation of commitment

 Winner’s curse
 Overconfidence
 Information availability bias
 Self-serving bias
 Overvaluation

Irrational escalation of commitment—This happens when a person commits to a course of action, even if
it constitutes irrational behavior.

Examples of Escalation of Commitment:

 During acquisitions, a buying company may go beyond the rational price limit because it perceives
the acquisition as an opportunity it cannot lose. A major reason for this is the irrational escalation
bias of the decision makers in the company.

 Auctions often result in an escalation of commitment, as the intensity of the process can lead to an
irrational commitment to winning the right to purchase. The winner may overpay due to heavy
bidding. Although the purchaser has “won” the negotiation, they have paid more than the actual
value.

Winner’s curse—Often in a negotiation when one reaches a deal quickly, he or she subsequently feels let
down or dejected on reaching the deal easily. This tendency to feel let down with a completed deal is
referred to as the winner’s curse. A person may feel later that the other party had information or insight into
an unseen benefit and thus gained from the deal. It is possible to avoid this by proper investigation and
preparation before the negotiation so that there is no information asymmetry.

Example of Winner’s curse:

 A management consultant may increase their chargeable rate based on past experience. If they
have had little resistance to their negotiated rates, they may believe that they have been
undercharging. This can lead to an over-estimation of their value, or a feeling that they are
committing to projects and not receiving the full payment they deserve.

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Overconfidence—Overconfidence is the tendency to believe that one’s own opinions and beliefs are more
accurate than those of others. This can lead to rejecting other opinions as well as going ahead with an
incorrect belief for negotiation.

Example of Overconfidence:

 When negotiating a merger or considering an acquisition by another company, the selling company 2
can be faced with a decision to accept an amount of stock options as opposed to capital in
exchange for the sale of their company. If the seller is overconfident in the future value of the stock,
he or she may trade real assets for an unrealistic future stock value.

Information availability bias—Sometimes people have a favored way of representing information or tend
to accept information that is represented in a particular format. This is referred to as information availability
bias. Information availability bias can make a party take less notice or even ignore other available
information or information that is not clearly put forth.

Example of Information Availability Bias:

 The value of a particular product or service can be manipulated with a focus on its positive
properties. This selective use of statistics is often used to demonstrate the business success of a
company. An individual company may have increased revenue over a stated time period that looks
good, but the overall profitability may have dropped over the same time period due to increased
costs. By focusing on the revenue increase, the value is inaccurately perceived as high.

Self-serving bias—Persons with self-serving bias attribute success to their own skills while failure is
considered to be caused by external factors. When considering the other party’s behavior this effect is
reversed; the internal or personal qualities of the opposing side are considered the primary cause of success
or failure and external factors are discounted.

Example of Self-serving biases:

 A distributor is entering into negotiations with a supplier. In an effort to demonstrate the company’s
growth, the negotiator may boast a significant revenue increase year over year, attributing the
increase to a skilled sales team and successfully executed strategy, when, in fact, external factors,
including a significant change in the competitive landscape and a change in the foreign exchange
rate were the primary contributors to the inflated figures.

Overvaluation—People tend to value their own products or services higher than they actually are and
inflate their price. In a negotiation the other party often does not agree to the inflated price point and a deal
may not be reached. It is important to overcome an over-valuation bias during negotiation to reach a
mutually beneficial outcome. The reverse of this situation is devaluing the other party’s product or service,
which may be due to a lack of trust, lack of understanding, or a dislike, based on emotional reasons.

Example of Overvaluation:

 Homeowners when listing their homes often perceive the value of the house to be higher than the
market rate. Against their agents’ wishes, they list the house at a price that is significantly higher
than other similar houses on the market, and as a result they have a difficult time selling the house.
When lower than asking offers are made, the homeowners often turn the offers back as they are
unwilling or unable to assess the true value of their home.

2.5.3 Communication in Negotiation

Because negotiation is an interpersonal process, communication plays a crucial role. Various models are
used to explain the process of communication. One of the earliest and most commonly used models of
communication was put forward by Shannon and Weaver7. This model is based on the following elements:

 Sender and receiver

 Transmitter and receptor
 Message
 Encoding
 Channels
 Decoding
 Meanings
 Feedback
 Noise

7 Warren Weaver and Claude Elwood Shannon (1963). The Mathematical Theory of Communication. Univ. of
Illinois Press

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Figure 2-1: Communication Model

This is a simple way to represent how communication works in any interaction. The sender usually encodes
a thought in her or his mind in the form of a message that is transmitted to the receiver. The receiver
decodes the message and interprets meanings and provides feedback to the sender that the message was
received and confirms the meaning of the decoded message. The communication may be affected by
external or environmental factors called noise, which prevents the message from being transmitted or
received correctly. In addition, communication may also be subject to distortions or biases as discussed in
detail in the previous section.

A negotiator needs to understand the information that will be communicated during a negotiation. Typically,
in a negotiation scenario, information regarding offers and counteroffers, alternatives, and possible
outcomes is exchanged. In addition, the negotiating parties communicate about the process that needs to be
followed, and explanations of specific circumstances or details of negotiation points are discussed and
reframed throughout the negotiation.

During communication negotiators, generally communicate verbally. Parties also need to be aware of their
own and the other party’s non-verbal cues, such as body language or eye contact. The channels used may
be face-to-face, over the phone, in writing, or through electronic media, which is increasingly common in
today’s negotiations.

2.6 Organization for Negotiation

Some important factors that need to be considered when selecting teams for negotiation are as follows:

 Will negotiation be carried out by an internal team, an external team, or by a team with both internal
and external members?
 How much authority will be granted to the negotiating personnel?

2.6.1 Negotiating for self or through agents

A primary decision when entering into a negotiation is whether it is best to negotiate on your own or hire
another individual or company to negotiate on your behalf (e.g. lawyers negotiate on behalf of their clients;
brokers negotiate real estate deals; merchant bankers negotiate finance deals; and merger and acquisition
deals involve multiple persons in various levels of authority). Such external entities who are hired for
negotiation are called “agents.” When hiring agents, one should consider factors such as information
asymmetry, divided interests, and conflict of interests that may lead to agency issues.

Sometimes negotiation is conducted by a team of negotiators instead of a single negotiator. A team of

negotiators has more skills and resources at its disposal. When deciding the composition of the negotiating
team, some of the factors to consider are as follows:

 Magnitude or importance of the issues that will be negotiated

 Functional areas affected by the terms of negotiation and the eventual agreement
 Cultural intelligence and language skills
 Technical and specialist skills
 Size of the team

2.6.2 Authority of person negotiating

When deciding the authority of the negotiators, one should consider the following factors:

 Do the people you are negotiating with have relevant authority?

 How do you deal with the situation when the negotiators of the other party do not have the
required authority?
 Should you insist that the negotiator of the other party have similar authority?

It is important to assess and determine the authority level of the person one is dealing with so that the
negotiation can be structured accordingly. Three situations may arise:

1. Negotiators of both parties have similar authority. This is the typical situation in most negotiations.

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2. The negotiator of one party has less authority than the negotiator of the other party: If the negotiator on
the other side has less authority and is not listened to by persons in the company, you may decide to do
any of the following:

 Your negotiator may tactfully suggest that he or she will bring in a manager with more formal
authority and request that the other party do the same.
 Your negotiator may tactfully use this opportunity to gain more information about the other 2
party, their negotiation process, and motivations—without revealing too much information about
his organization. This can enable your team to gather sensitive information that might not be
revealed by a senior or experienced person from the other party.
 If promises made by the negotiator of the other party are not materializing, or if the negotiation
is taking much longer than anticipated, your negotiator may not be talking to the right person. In
such situations, you may even decide to stop the negotiation and seek access to people with
the appropriate authority.

3. The negotiator of the other party has more authority than the negotiator of your party.

The following advantages can be gained by negotiating with the person with decision-making authority:

 Your effort at negotiation is effectively heard by the appropriate person from the other party
 There is less possibility for disputes or misunderstanding

Although there are advantages, your negotiator should understand that the other party may take advantage
of their higher authority.

In addition to understanding the authority level of the other party in a negotiation, you should also clarify the
level of authority of your negotiator. What aspects of negotiation can they commit to, and when will
approvals be needed? Some companies set financial limits, beyond which approval from the next level of
management will be required. Negotiations can be successfully conducted even if a negotiator does not
have all the authority required to finalize the agreement. It is simply necessary to understand the authority
issues and the limits related to negotiation and explicitly manage these issues.

2.7 Ethics
Ethics are social standards that define what is right or wrong in a particular situation. The potentially
subjective nature of these standards can lead to ethical questions and dilemmas during the course of
negotiation. Ethical conflict is a fundamental issue; therefore, ethics form an integral part of any negotiation
process.

It is important to have an ethical approach to negotiation. Whether a strategy or tactic used in negotiation is
ethical or not depends on the ethical standards followed by the people or organizations involved in the
negotiation process. William D. Hitt (1990)8 proposed four ethical frameworks that can be used to guide
decision-making during negotiation:

 End-result ethics—The rightness of an action is determined by the consequences. A person

following this framework believes that the end justifies the means. So, as long as the individual
achieves his or her goal, any action taken toward reaching that goal is ethical.

 Rule ethics—The rightness of an action is determined by rules. A person who believes in rule
ethics will make decisions on the basis of rules such as laws, the company code of conduct, and
association bylaws.

 Social contract ethics—The rightness of an action is determined by customs and social norms.
Those who believe in social contract ethics will make decisions on the basis of norms prevalent in
their society. For example, rules of war in ancient cultures were based on social norms.

 Personalistic ethics—The rightness of an action is based on one’s conscience. People who

believe in personalistic ethics will not do anything that is unethical according to their own moral
standards.

These frameworks can go beyond the law of the land. An action might be perfectly legal but unethical
according to a person’s own moral standards or company rules.

Any ethical dilemma arising in the process of negotiation can be answered by following any of these
frameworks. Each framework has its own supporters and detractors. So, while an action can be ethical for
one person it may be unethical for another.

8
Hitt, W.D. (1990). Ethics and leadership: Putting theory into practice. Columbus: Battelle Press.

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Example of Ethical Dilemma:

 Euthanasia may be perceived to be wrong according to rule ethics that state one cannot kill, while it
may be right according to one’s personalistic ethics if a person believes that it is better to put an end
to unbearable pain.

2
Some negotiation practices are thought of as unethical or marginally ethical by most negotiators. Such
practices include the following:

 misrepresenting facts or providing limited information while communicating to the other party (e.g.,
misrepresenting the cost involved in renting one’s house by not discussing maintenance charges or
not disclosing the fact that the house is a disputed property)
 distorting or misrepresenting information about the opposite party among peers to gain unfair
advantage (e.g., spreading false information about credit worthiness of a potential buyer to reduce
their alternatives)
 inappropriate information gathering through unfair means (e.g., bribing an employee of the
counterparty to gather information)
 bluffing or making threats or promises that are insincere (e.g., threatening to sue the counterparty
just to put them under pressure)

Unethical practices are generally used to gain an upper hand in negotiations or to “seal the deal.” Even if
they help in achieving the desired outcome, they may lead to negative consequences such as guilt, loss of
reputation, and souring of relationships. Even if one is following ethical practices, the other parties in the
negotiation may not be as scrupulous. One should understand ethical issues in negotiation, and fend off any
unethical tactics from other negotiators.

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3. PREPARE FOR SINGLE-ISSUE NEGOTIATION

This chapter discusses the concepts involved in preparing for single-issue negotiation. An understanding of
single-issue negotiation will help in your ability to handle more complex negotiations in future chapters. Most
negotiations are multi-issue negotiations where several issues are negotiated simultaneously. Despite the
increased complexity, the same underlying theories discussed in this chapter apply to multi-issue
negotiation. This chapter outlines the concepts needed to effectively negotiate over one issue and provides
a firm foundation to address multi-issue negotiations in future chapters. Figure 3-1 provides an overview of
the processes associated with this chapter. They are as follows: 3

3.1 Understand your Negotiation Situation—In this process you assess your situation for the upcoming
negotiation.

3.2 Understand Negotiation Situation of the Other Party—In this process you assess the other party’s
situation for the upcoming negotiation.

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3.1 Understand Your Negotiation 3.2 Understand Negotiation Situation

Situation of the Other Party

INPUTS INPUTS
1. Issue for Negotiation* 1. Issue for Negotiation*
2. Your Negotiation Capabilities 2. Your Negotiation Capabilities
3. Past Negotiation Results 3. Past Negotiation Results
TOOLS 4. Other Party Negotiation Capabilities
1. Aspects of Negotiation* 5. Your Resource Availability for Negotiation
2. Analysis of Alternatives* 6. Your Walk Away Point*
3. Primary Research 7. Your Alternatives*
4. Secondary Research 8. Your BATNA*
5. Meetings and Discussions 9. Your Negotiation Reference Frame
6. Framing 10. Your Negotiation Aspects
7. Assessing Constraints 11. Your Outcome Preferences
8. Understanding your Negotiation Leverage TOOLS
9. Risk Assessment 1. Aspects of Negotiation*
OUTPUTS 2. Analysis of Alternatives of the Other Party*
1. Your Resource Availability for Negotiation* 3. Primary Research
2. Your Alternatives* 4. Secondary Research
3. Your BATNA* 5. Meetings and Discussions
4. Your Walk-Away Point* 6. Assessing Constraints of the Other Party
5. Your Negotiation Reference Frame 7. Understanding Negotiation Leverage of the
6. Your Negotiation Aspects Other Party
7. Your Outcome Preferences 8. Risk Assessment of the Other Party
OUTPUTS
1. Expected Other Party Resource Availability
2. Expected Other Party Alternatives*
3. Expected Other Party BATNA*
4. Expected Other Party Walk Away Point*
5. Expected ZOPA*
6. Expected Other Party Negotiation Reference
Frame
7. Expected Other Party Negotiation Aspects
8. Expected Other Party Outcome Preferences

Figure 3-1: Prepare for Single Issue Negotiation—Inputs, Tools, and Outputs

Note: An asterisk (*) denotes a highly recommended input, tool, or output for the corresponding process.

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3.1 Understand Your Negotiation Situation

This process deals with understanding the negotiation situation at hand. As a negotiator, you need to have a
very good understanding of the issue and your own negotiation capabilities, as well as knowledge of past
negotiation results, prior to assessing the current situation. This process will identify the justification for
negotiation, type of negotiation, human resource issues, and probable alternatives. A comprehensive
understanding of the situation is the first step to prepare for negotiations. Figure 3-2 shows the inputs, tools,
and outputs of the Understand Your Negotiation Situation process.
3

1. Issue for Negotiation* 1. Aspects of Negotiation* 1. Your Resource Availability for

2. Your Negotiation Capabilities 2. Analyses of Alternatives* Negotiation*
3. Past Negotiation Results 3. Primary Research 2. Your Alternatives*
4. Secondary Research 3. Your BATNA*
5. Meetings and Discussions 4. Your Walk-Away Point*
6. Framing 5. Your Negotiation Reference
7. Assessing Constraints Frame
8. Understanding your Negotiation 6. Your Negotiation Aspects
Leverage 7. Your Outcome Preferences
9. Risk Assessment
10.

Figure 3-2: Understand Your Negotiation Situation—Inputs, Tools, and Outputs

Note: An asterisk (*) denotes a highly recommended input, tool, or output for the corresponding process.

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3.1.1 Inputs

3.1.1.1 Issue for Negotiation*

An issue forms the basis of the overall negotiation process, and is the reason for the negotiation. It is the
main area that the negotiation is intended to resolve. If the issue to be negotiated is not well-defined, you
should spend time and understand the situation – to clearly define what issue needs to be negotiated.
Determining the negotiability of the issue and understanding the relevancy of the expected outcome are
some of the important factors that need to be finalized before commencing a systematic negotiation. You
must analyze the issue to determine if it is negotiable and, if necessary, seek expert advice from others.

Nature of the Issue

Issues can be broadly divided into two types:

 Strategic or operational
 Personal or business

Strategic or operational—From a business perspective, an issue can be either strategic or operational. A

strategic issue is an issue that holds strategic importance for the organization and has direct impact on the
organization’s Corporate Strategy. Senior management extensively assists in negotiations that have
strategic significance. If the issue holds strategic importance, it is highly recommended to bring in seasoned
negotiators who can extract the best possible deal from each negotiation.

Examples of Negotiations for Strategic Issues:

 Negotiations regarding entering a new line of business

 Negotiations involved in the acquisition of a competitor
 Legal disputes to protect important patents or other intellectual property
 At a strategic planning meeting, several senior members determine the best approach with regards
to the firm’s product lines. The product line’s revenues are declining and the team must decide
whether to inject new life into the line by investing in additional product development or begin the
process of discontinuing the product. Several key stakeholders with conflicting goals are attending
the strategic planning session and must be prepared to negotiate for their desired outcome.

Operational issues are raised during a course of action or in the middle of a business process. For example,
in manufacturing industries, companies may negotiate with a string of suppliers or vendors for a decrease in
cost of procurement. Operational issues can have strategic importance depending upon the industry and
customer preferences. Establishing a manufacturing facility in a new location, for example, requires
negotiation involving operational issues; however relocating the manufacturing functions of the business
may be a strategic initiative that significantly impacts the Corporate Strategy of the business. Often the

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operational issues are negotiated by mid- to senior-level management. While negotiating operational issues,
functioning within allocated budgets and meeting deadlines are the two factors that are primarily addressed
by the negotiators. Seasoned negotiators are not necessarily required to lead a negotiation on behalf of a
company if the issue is perceived to be operational.

Examples of Negotiations for Operational Issues:

 Request for funding with management for a new project

 Project timeline negotiations with a manager or client 3
 Additional resources needed such as technology and equipment to cope with increased
workloads
 Defining roles and responsibilities in a new partnership agreement
 Negotiating a loan rate and repayment term on a loan
 Contractual obligations (e.g., deliverables, authority levels, budgets)
 Resolving a disagreement in the direction or concept of a project or product
 An engineer seeking a partner in order to capture a large contract will need to negotiate the
division of labor for the contract. The issue of revenue may be as simple as a 50/50 split, but
the agreement on responsibility will ultimately have more bearing on the value of the contract
for each side. As more work is accepted by either side, the expected hourly wage for the
contract decreases.
 A buyer for a garden center entered into negotiations for hand-crafted pottery from a local
potter. The potter was eager to have his products displayed in the garden center and so
undervalued the price-per-unit of the goods. The distributor realized that the low per-unit price
would ultimately be unsustainable for the potter. To ensure that his supplier would not struggle
financially attempting to fulfill the current and future orders, the buyer offered a higher price-
per-unit, even though this offer meant a lower profit margin for the garden center. The primary
issue for the distributor was the sustainability of supply.

Personal or Business—Personal issues are specific to the individual, and the best person to negotiate
these is the individual impacted by the outcome of negotiation. Personal issues are mostly negotiated by two
parties, and human relations factors such as perception, communication, body language, gestures, etc. play
a large role in the success of the negotiation. Some personal issues may require third parties to facilitate the
negotiation e.g. negotiating a divorce settlement may require lawyers.

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Examples of Negotiations for Personal Issues:

 Negotiating an annual percentage rate for a personal loan with a bank

 Negotiating a salary increase
 Negotiating a rental price for personal property
 Negotiating acceptable television time with a 10-year-old
 After getting into a car accident, a claimant will have to negotiate the current market value of their
car with their insurance company. The issue being negotiated is the replacement value of the
vehicle.

Business issues are generally negotiated with two or more parties on behalf of a company, often led by
senior management, seasoned negotiators, or both. Business issues are negotiated to arrive at a mutual
point of agreement where each party gains some form of benefit for the business they represent. Negotiation
style and approach play an important role in resolving business issues by paving the way for short- or long-
term relationships with other parties.

Examples of Negotiations for Personal or Business Issues:

 Negotiating a contract with an external consultant or contractor on behalf of your company

 Negotiating with multiple vendors to find an appropriate price and terms for procuring raw materials
required for a manufacturing company

3.1.1.2 Your Negotiation Capabilities

Negotiation capabilities develop over time. As the theoretical concepts for effective negotiation are
understood and mastered, you gain knowledge, expertise, and understanding of your group or organization,
all of which will help in current negotiations. Negotiation capabilities include availability of resources, an
established structure or process for negotiation, and a company’s approach to negotiation.

Availability of Resources

Availability of resources such as human resources, financial resources, and time, can enhance negotiation
capabilities.

 Human Resources—Skilled negotiators are needed to arrive at a solution that will not only help in
winning the negotiation, but also in building long-term relationships that will contribute to the growth
of the business. However, building relationships depends on an organization’s desire to collaborate
with an external party, which is subject to the type of businesses in which each party is operating

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and the benefits they would gain through their collaboration. Having trained and seasoned human
resources professionals will improve negotiating capabilities.

 Financial Resources—Financial stability nurtures the negotiation capabilities of an organization,

and effective negotiation usually helps a company perform better financially. Development of
various assets used in negotiation is an ongoing process that requires financial support.

 Time—Negotiation is a time-consuming process. Availability of time can prove to be an advantage

during the negotiation process, as you will have sufficient time to prepare and participate in the 3
negotiation. Also, if the other party is time constrained, they may make compromises. Expert
negotiators usually have a better idea about when to begin a negotiation, how to schedule
meetings, and how to set time limits for the negotiation.

Established Structure and Process for Negotiation

As you gain expertise in negotiation, you can establish standard templates for negotiation that can be used
by your group or organization. These can include structures and processes that can be used in different
negotiation scenarios. These templates will provide insights for the negotiation process and assist in
executing negotiations in a more precise, structured, and effective manner.

Company’s Approach to Negotiation

Risk averse—Because of the uncertainty of an outcome, any issue that is negotiated has associated risks.
Depending on the risk, organizations can decide how to proceed. For example, for some negotiations,
groups may prefer security over uncertainty. If there are two options, they may prefer the one that has less
risk associated with it.

Risk taking—Several companies are aggressive and are known to be risk takers during negotiation. They
go outside of their comfort zone and make challenging decisions in negotiation. However, the company
should be aware that this approach to risk may increase tensions with the other party and potentially lead to
failed negotiations.

Risk neutral—Some companies are not influenced by the degree of uncertainty that comes with a
negotiated agreement. Organizations that are risk neutral are more concerned about their investment in a
negotiated agreement than they are about the risks.

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Examples of Negotiation Capabilities within a Company:

 Use of a standardized contract to bid on a real estate purchase

 Use of a Request for Proposal (RFP) template previously used with clients to bid on a project
 Proposal of a new product or service to an existing customer such as upgraded software, office
equipment, and telecommunications systems
 A buyer for an organization can draw from past experiences to prepare for and execute successful
negotiations. Examples include purchasers of ad space, purchasers of printing services, and
purchasers of raw materials.

3.1.1.3 Past Negotiation Results

An understanding of past negotiation results is very useful when preparing for a future negotiation,
particularly when the current negotiation is similar to a previous negotiation scenario. The knowledge gained
from past negotiations can provide you with the following advantages:

 quicker preparation
 more streamlined identification and analysis of alternatives
 greater understanding of the other party
 readily available assets such as negotiation templates, relevant reports, etc.
 experience to draw upon in steering the negotiation to your advantage

There is always something that can be learned from each negotiation scenario. Learning can help to
improve the negotiation process including the gathering of information, HR skills, analyzing alternatives, etc.
Inputs can be obtained from the people involved in previous negotiations or from the documents maintained
by the organization.

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Examples of Past Negotiation Results:

 When a contract is lost due to failed negotiations, a post mortem can provide the team with insights
on how to best approach future situations. Key insights gained about the target market can be
applied to win future contracts with similar clients.
 The partners in a small graphic design firm have negotiated a number of contracts. The scope of
work is generally well defined, so the primary issue is the rate for services. In the early days, they
would start the negotiations with a quote that they believed was competitive, often lower than their
competitors’ prices, to help win the contract. Over time, they recognized that the quotes for their 3
company’s services were rarely contested. The firm realized that price was not the primary issue for
the other party; the buyers were more concerned with the quality of work. The graphic design firm
now starts the negotiations with the maximum price they think will be accepted. If the buyer balks,
there is still room to negotiate downward, but this method ensures they are not leaving “money on
the table.”

3.1.2 Tools

3.1.2.1 Aspects of Negotiation*

The Aspects of Negotiation discussed in the previous chapter are applicable to all negotiations. Assessing
an upcoming negotiation on the basis of the Aspects helps better prepare for the negotiation. For a
comprehensive understanding of the negotiation situation, you should not only look at the different
alternatives or parties involved in the negotiation, but also assess the negotiation relative to all of the
Aspects (described in greater detail in Chapter 2). These are as follows:

1. Justification for Negotiation

2. Distributive vs. Integrative Negotiation
3. Customization
4. Non-linear Process with Uncertain Outcomes
5. Human Relations Issues in Negotiation
6. Organization for Negotiation
7. Ethics in Negotiation

Justification for Negotiation

It is important to clearly understand the reason for negotiation. Two primary reasons for negotiating are as
follows:

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 To arrive at a deal or a mutually understood outcome, when there is an interdependence of

goals—In this scenario, both parties have goals that cannot be achieved on their own. If this is the
primary reason for the negotiation, the level of interdependence among the parties must be
considered. If the interdependency for you is higher than that of the other party, you will have to
make more compromises to reach your goals. If the level of interdependence is equal, the
negotiation will be more complex and challenging and the tactics and strategy will change as well as
the range of possible outcomes.
 To resolve a conflict when there is disagreement or opposition in ideas and interests—In this
scenario, you should understand the level of conflict that has to be resolved—interpersonal,
intrapersonal, intragroup, or intergroup conflict. Even here, parties negotiate because they stand to
lose or gain value depending on the outcome. As a negotiator, you should be prepared for the
challenges you may face in such negotiations, such as emotionally-charged situations, inflexibility
between negotiators, time limitations, etc.

Every negotiation has some expected returns and costs. This Aspect allows you to assess the expected
outcomes or the benefits that are expected from a successful negotiation. A negotiation should only be
entered into if the expected returns outweigh the expected costs. It is generally easier to compare the
benefits and costs if they are financial in nature (e.g., price) than if they are non-financial (e.g. improved
relationship).

Examples of Justification for Negotiation:

 The decision to negotiate on the price of furnace cleaning with a door-to-door salesperson would not
require much investigation, as there is an immediate financial gain for a short-term negotiation.
Whereas, the decision to re-negotiate a salary with an employer will require more forethought. If the
difference of the perceived value of the employee between the two parties is too great, entering into
the negotiations can have a negative impact on the relationship.
 A university student may wish to appeal his mark on a term paper. The student may believe that he
deserves an A and not a B, but this may be a purely subjective conclusion. If the student
investigates and discovers that As are rarely given by that particular professor, he may decide to
accept the grade and not spend time negotiating.

Distributive vs. Integrative Negotiation

You should anticipate the type of negotiation you are about to enter. If the involved parties don’t share an
existing relationship and are not likely to collaborate in the near future, the negotiation is distributive. In this
situation, the approach would be to gain as much value for the company as possible, even at the other
party’s expense. Generally, only one issue such as price will be discussed. While you should attempt to
gather as much information about the other party as possible, your primary objective is to maximize returns.
When the focus is on building a relationship and arriving at solutions beneficial to both parties (creating
value), and then claiming value, the negotiation is integrative. Generally, multiple issues are discussed, but a
single-issue negotiation can also be integrative in nature. In this case, the approach would be to understand

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the interests of the other party and to find out how value can be created for both parties through the
negotiation. You should be prepared to collaborate and create different alternatives, keeping in mind both
parties’ interests. So, the negotiation approach will change depending on the type of negotiation.

Example of Distributive vs. Integrative Negotiation:

 When purchasing a costly piece of equipment, the buyer may have the option of also purchasing an
extended warranty from the re-seller, which provides care and service beyond that of the
manufacturer. The buyer may negotiate the price of this warranty. The outcome of this negotiation
will impact the future relationship between the buyer and the re-seller and so extends beyond a
3
purely distributive negotiation.

Customization
The negotiation process can range from two-party, single-issue negotiation to multi-party, multiple-issue
negotiation. The strategy for a two-party negotiation will be different from the strategy for a multi-party
negotiation. If there are multiple parties involved, an organization will be looking for coalition partners who
will provide more leverage and resources to the cause. You may try to approach the other party even before
the negotiation begins. Sometimes you will have to look beyond your natural allies to find partners who will
help you on a particular issue. You should be prepared to preserve or break a coalition. You may also look
for neutral parties to moderate the negotiation and set the agenda for meetings. In a two-party negotiation,
you have to deal with one counter party, so you can focus on that party exclusively. You have to gather and
analyze information about that one party only. There is generally a natural order in a two-party situation, but
sometimes an arbitrator may be used in these cases as well.

If a multi-phase negotiation is expected, you should be patient and not expect immediate outcomes.
Sometimes an issue is settled in phases and you may have to oversee its implementation before the
negotiation can move forward.

Often, these details are clarified beforehand, so you will know what kind of negotiation you are entering and
if you can determine your course of action. But sometimes these particulars may change during the
negotiation process. For example, while trying to buy a property, the buyer may need to negotiate a loan
from a bank if enough funds are not available before a deal is reached. You should anticipate such
scenarios and have a plan in place.

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Example of Customization:

 A framing contractor is negotiating the price for a number of new houses. The contractor does not
have prior experience in residential framing and anticipates the developer will seek a lower bid than
they would receive from a more reputable company. The contractor might negotiate the contract for
one house in the development first, with the option to re-negotiate the cost on the remaining
houses in the development after successful completion of the first contract.

Non-linear Process with Uncertain Outcomes

Negotiation is generally a complex process that follows a non-linear path. Even if you are attempting a
simple negotiation, you should be prepared for various eventualities. The negotiation process may not move
forward as planned, and you may have to deal with different negotiators, constraints, and time frames as the
process progresses. Additional alternatives may be discovered while negotiating, and you should think of
possible strategies that can be implemented if such events take place. For example, when negotiating to sell
a property, some new buyers may join the negotiation process later.

You should also identify any risks that can affect the negotiation process. The probability of each risk’s
occurrence and its possible impact should be assessed. Priority of these risks should be based on both the
expected probability of occurrence and possible impact. A suitable action plan should be in place for high-
priority risks.

Human Relations Issues

Understanding the negotiation styles, biases, and personal preferences of negotiators is important for any
negotiation. Since negotiation is interpersonal in nature, these preferences and biases can affect the
outcome of the process and a negotiator should be prepared to tackle them. For example, if a company is
negotiating over the lease price for an office, the business may want to set a cap on the price they are willing
to pay so that they do not over commit.

As discussed in the previous chapter, individuals often have strong dispositions towards particular styles, but
an expert negotiator can change his or her negotiation style depending on the situation. According to G.
Richard Shell, the negotiation can be assessed for each scenario on the basis of two factors9:

 Perceived conflict over stakes—Perceived conflict will be high if both parties have similar goals
and interests, and they want to achieve the same outcome through negotiation. For example, in the
case of acquisitions, both parties will want better prices. The acquired company’s shareholders will
want more money, while the shareholders of the acquiring company will want to pay less.
Therefore, the perceived conflict will be high.

9 Shell, G. R. (2006). Bargaining for Advantage, Second edition. Penguin Books.

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 Perceived importance of future relationship—The perceived importance of the future

relationship will be high if both parties seek cooperation in the future. For example, in a marriage,
the perceived importance of future relationship is high.

Figure 3-3, shows the four scenarios in the situational matrix that takes into account high and low perceived
conflict over stakes and high and low perceived importance of future relationships.

Figure 3-3: The Situational Matrix

Different styles will be suitable for different situations. Before entering into the negotiation, you should decide
which negotiation style is suitable for each negotiation scenario based on the context of the negotiation,
constraints, interests, personal preferences, etc.

Situations in which both perceived conflict and importance of the future relationship are high result in a
balanced concern situation and the negotiators will have to balance both. For example, if a company wants
to pay less for an acquisition, but the future relationship is also at stake, they cannot leave the other party
disgruntled. A collaborative style is suitable for this situation, and the negotiators should seek creative
solutions for balancing both interests and relationships.

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Examples of Situational Matrix – Balanced Concerns:

 Business partnership
 Joint venture
 Merger
 Performance feedback (manager-employee)
 Customer complaint resolution
 A customer believes he received poor dinner service and complains to the manager. He negotiates
a free meal. While the manager may not necessarily agree with his evaluation, she knows the
customer is in a position of power; she does not want to deal with negative reviews; and she’d like
to see the customer return to the restaurant. Therefore, the manager agrees to a compromise,
removing the drinks and desserts from the bill and providing a complimentary appetizer on the
customer’s next visit.

In a relationship situation, perceived conflict is low, but the perceived importance of a future relationship is
high. For example, a negotiation between married couples will generally fall into this category.
Accommodation works best in situations where the emphasis is on the relationship.

Examples of Situational Matrix – Relationships:

 Marriage
 Friendships
 Work team
 Jim and Mary are on the same marketing team. They disagree on the marketing message for a new
campaign. Jim sees Mary’s message as too edgy for their target market and worries they may risk
losing customers. Mary is assertive in her arguments for her campaign approach and Jim sees
some merit in her rationale. Jim knows he needs to continue to have a harmonious working
relationship with Mary, so he takes a compromising approach, and agrees to implement Mary’s
campaign idea with some adjustments to specific terms and phrases, in order to address his
concerns with the tone of the campaign.

A low-perceived importance of a future relationship combined with a high-perceived conflict will result in a
transaction situation. In a transaction situation, a group wants to gain the best value, even at the expense of
the relationship (e.g., a price negotiation between a foreign tourist and a souvenir vendor). In such cases,
competitive style is more appropriate as both parties focus more on interests rather than the relationship.

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Examples of Situational Matrix – Transactions:

 Divorce
 House sale
 Market transaction
 The Smiths want to buy a house that has been on the market for over two months. The house is
priced outside their budget, but they are hoping that their low offer will stand. They decide to make
an offer that is well below the asking price and their agent is aggressive in the negotiations, citing
the fact that the house has not sold in over two months. Given that there is no expectation of a long- 3
term relationship with the seller, the Smiths hold their ground, eventually obtaining the house at well
below the asking price.

In tacit coordination, both the perceived conflict and perceived importance of the future relationship is low.
Avoiding is the best strategy in this situation. For example, it is better to avoid a negotiation over seats in a
short-duration flight.

Examples of Situational Matrix – Tacit Coordination:

 Street intersection (four-way stop)

 Airplane seating

It should be noted that other styles can also be used in each of these situations, depending on a number
factors, such as the style of the other negotiating party; various constraints, including time and other
resources; and personal preference. For example, a compromising style can be used if there is no other
alternative, if there are time constrains, or if other negotiation styles are not effective.

Organization for Negotiation

You need to decide if you will be negotiating directly or using an agent to negotiate on your behalf. If an
agent is negotiating, you should consider if there is going to be any conflict of interest or information
asymmetry with the agent. You may also have to negotiate as a part of a team, or assemble a team to
negotiate. In both cases, you must consider the relationships within the team, the size of the team, cultural
intelligence, language skills, technical skills, and any special skills of the members.

Example of Organization for Negotiation:

 An IT firm might have a standard procedure for dealing with client requests. The initial details can be
handled by the technical team, but the final negotiations will be lead by a senior VP with the
authority to sign off on price.

You should also consider the authority of the person negotiating on your behalf. You can place limits on their
authority in terms of acceptable outcomes. In this case, you and your negotiator should be prepared to deal

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with the counter party if the issues that occur are beyond the negotiator’s authority level. The next level of
authority should also be decided before negotiating begins.

Ethics in Negotiation

Ethics form an integral part of all negotiations. It is better to have rules in place to deal with any ethical
dilemmas that may arise during the negotiation process. If you are part of an organization, you should be
aware of the organization’s code of conduct. Sometimes an action can be deemed ethical according to an
organization’s code of conduct, but violates your personal code of conduct. An action plan should be ready
in case such situations arise. For example, the duties can be passed to another negotiator, or you may
follow your own code of conduct. Also, even if a company has an ethical approach to negotiation, you must
be prepared to fend off unethical approaches from the opposing party. For example, if the other party
attempts to avoid a particular question, you can try to gather more information from other sources, since the
counter party may be hiding important information.

Example of Ethics in Negotiation:

 A realtor may falsely claim that he or she has received a higher offer from another interested buyer.
This would be a violation of the National Association of Realtors’ Code of Ethics

3.1.2.2 Analyses of Alternatives*

After defining and analyzing the issue to be negotiated and the objectives or goals to be achieved, it is
important to assess your alternatives. These alternatives can be used if the negotiation fails or if the
outcomes of the negotiated agreement do not meet expectations.

These alternatives may fulfill the objectives or goals that have been established for the upcoming
negotiation. It is important to analyze these alternatives to determine if they can help in achieving the stated
goals, and to what extent. Knowing these alternatives not only helps in determining whether to begin,
continue, or close a negotiation, but also enables you to identify the best path to achieve the stated goals or
needs.

Example of Alternatives in Negotiation:

 When negotiating with a builder to buy a condominium in a highly desirable neighborhood, the
negotiating power of the purchaser is higher if he or she has assessed the alternatives to the
location that is being considered. Among the alternatives for the buyer are purchasing a different
condominium in the same neighborhood, purchasing a condominium with similar amenities in
another location, or leasing a condominium in the same neighborhood. The more alternatives that
the buyer can identify, the more negotiating power he or she has in the negotiation process.

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3.1.2.3 Primary Research

Primary research is conducted to gather new data for a specific purpose. Primary research needs to be
conducted among the various stakeholders within an organization or group. It can be used to gain insight
into current problems, to establish and evaluate alternatives, to assess the costs involved, to establish
pricing, and to understand stakeholder preferences. Data pertaining to your own position and interests is
collected to more fully understand an issue and to determine the underlying justification, or reasons, for the
negotiation. In a single-issue negotiation, parties generally have strong opinions about the issue. Primary
research helps understand the reasons behind these opinions. 3
Primary research can be conducted qualitatively or quantitatively10.

Qualitative Techniques

Qualitative techniques are used to collect subjective insights into the behavior, motivations, and attitudes of
the selected individuals. Qualitative techniques include the following:

1. In-depth Interviews—These interviews are normally open-ended, one-on-one interactions, usually

conducted by telephone or face-to-face. They are designed to collect individualistic behavior dynamics.
Although these interviews are flexible, the questions are structured around the issue.

In-depth interviews are not suitable for all types of problems; they are typically suited for the following
scenarios:
 when there is a deeper need to understand individualistic behavior
 when the issue involves sharing personal or confidential information, or discussing
embarrassing topics
 when the issue involves interviewing professionals or experts (as it is often more convenient
and feasible to interact with them using a one-to-one format)

2. Focus Group Discussions—Focus groups help researchers gather qualitative data from five-to-ten
stakeholders. By conducting a small meeting in the presence of a moderator, instead of collecting
responses to specific questions, focus groups aim to create a forum for informal discussion about the
specific issue and the factors underlying the issue. The main objective of the focus group is to acquire
insights into stakeholder preferences and the reasons for such preferences. The informal and relaxed
atmosphere often enables the surfacing of unexpected insights about the issue.

Quantitative Techniques

Quantitative techniques are used to obtain measureable insights into the behavior, motivations, and attitudes
of a selected group of individuals. Quantitative techniques can be used to elicit both subjective and objective
responses from the respondents. Surveys are the most effective quantitative technique that can be used to

10 SMstudy® Guide, Book 2—Marketing Research (2016). VMEdu, Inc.

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gather data. A questionnaire can be used for this purpose. A questionnaire is a data-collection tool that
consists of a structured set of questions designed to obtain specific information from respondents.

A survey using a questionnaire is a quick and efficient way of collecting information from a large set of
individuals. Additional details about quantitative techniques and questionnaire design are described in
Appendix A.1.

There are several advantages to using a questionnaire, including the following:

 Questionnaires provide an economical and expedited way to collect data from a large audience.
 The results of a well-designed questionnaire can be easily quantified to draw actionable inferences.
 Results can be established as baseline information that can be used for comparative and decision
making purposes.

Example of Primary Research:

 A new restaurant owner employs a researcher to determine customer food preferences and dining
frequencies at competing restaurants in the immediate area. This information can be used in
negotiations with various partners and investors.

3.1.2.4 Secondary Research

Secondary research involves the collection and analysis of existing research or reports. Secondary research
often provides background information on an issue and the underlying reasons for positions taken and
interests espoused by the group or organization. Secondary research provides a historical context on the
issue and helps to better understand the reasons for any previous positions taken. Secondary research can
also be conducted to examine information on previous negotiations on the same issue and to understand the
tactics followed and outcomes achieved in such negotiations. Secondary research can also reveal
information about a group, in terms of how it was formed, its initial objectives, and its evolution over time.
Such data can provide background information and context that can be used to validate primary research as
well as to effectively achieve objectives in the current negotiation.

Secondary research can also provide information about the present environment and therefore assist in
evaluating the best alternatives with respect to the current scenario. For example, a company that is
preparing for a merger or acquisition needs to understand the current macroeconomic situation and the
overall forecast for its industry. Evaluation, using data sourced from secondary research, is essential before
any negotiation.

Secondary research is especially useful in situations where it is too expensive or time-consuming to conduct
primary research. Secondary data collection generally takes less time than primary data collection. There
could be many sources for secondary research, so it is necessary to limit data collection only to valid and

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reliable sources. In addition, once data is collected, the quality of the data must be evaluated by examining
its accuracy and relevance with respect to the current issue.

Some of the important sources for secondary data include the following:

 Internal Reports—Different functions or departments within an organization have valuable sources

of past data. These data or reports are generally stored in the Management Information System
(MIS). Included in this data is information about the organization’s prior experiences, the individuals
involved, and the outcomes of past negotiations.
3
 Annual Reports—Much information is readily available within an organization’s annual report.
These reports provide internal or external secondary data and can be used as a starting point.
Annual reports may also contain financial records, functional activities, cost information, and major
achievements.

 Commercial Sources—Commercial sources are valuable, but usually involve a subscription or

membership for someone to access the information. There are many commercial sources for
external secondary data covering a wide range of fields and industries. Commercial sources are
generally thorough and accurate.

 General Media— General media such as the Internet, online databases, journals, broadcasts, and
print media are major sources of external secondary data. The Internet may prove to be the easiest
and the quickest source of secondary data. A negotiator can access a variety of websites, journals,
and online versions of traditional print media to obtain required data. Archives of newspapers can
be accessed online, making them useful resources for the researcher. Online databases are
valuable sources of information because they usually contain the most up-to-date data, provide fast
search capabilities, and are low-cost and convenient.

Examples for Secondary Research:

 Using the Internet, a restaurant manager researches customer blogs to identify ways to better meet
the needs of customers. The manager is planning a meeting in which she’ll negotiate with the owner
of the restaurant for changes in the restaurant’s services, menu items, and hours of service.
 An employee secures an industry salary survey report before his performance review with his
manager so that he can negotiate for a salary adjustment that would bring his salary in line with
others in his profession.
 Before a property acquisition, a land developer will conduct secondary research to determine the
valuation of the property by examining the history of recent sales in the same market. As well,
specific inquiries will be made with the city council to determine whether there are any limitations on
construction, including zoning and bylaw details, which may limit building size and land use options.
All of these factors will impact the projected profit that can be gained from the land development and
will thus factor into any negotiations with the seller

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3.1.2.5 Meetings and Discussions

Meetings and discussions are held with various stakeholders to discuss important factors in the negotiation,
such as the issue, constraints, costs, alternatives, and preferable outcomes. They also help in deciding the
walk-away point and BATNA. Meetings and discussions with stakeholders help identify the Aspects of
Negotiation that are to be understood and how to apply them to the negotiation strategy. Meetings and
discussions are also held between the organization and any agents hired to represent the group in
negotiation. It is important to convey the group’s preferences regarding the issue as well as the expected
outcomes from the negotiation among all stakeholders and agents. Overall, meetings and discussions help a
group in arriving at a consensus on how to move forward with the negotiation.

Examples of Meetings and Discussions:

 A meeting to discuss a primary research design proposal to management or a client, including

quantitative and qualitative methodologies.

3.1.2.6 Framing

A reference frame provides a perspective for the other party to view the issue from. By presenting the issue
using a good reference frame you will be able to convince the other party about the justification for an offer
that you make. Similar to an anchor, frames can also decide how the negotiation goes forward. It orients the
other party and makes them view the issue from the desired perspective. Empirical evidence suggests that
the way in which the issue and the alternatives are framed strongly influences a party’s willingness to reach
an agreement. While framing, it is important to understand what kind of a reference frame can influence the
other party. By creating a reference frame for an issue you influence the way in which the other party
perceives the issue. Effective framing uses the existing notions of how people generally tend to behave
under various conditions. Thus by framing an issue in a particular manner, you can indirectly influence the
way in which the other party responds during the negotiation. In most cases, it is preferable to create a
positive frame or a frame that offers a gain instead of a loss. However based on the issue, you may also
need to present a negative perspective. This can generally work in cases where the risk is high and the
other party prefers avoiding risks since the cost of failure is high.

The way in which a negotiation issue is framed can influence the way in which the other party perceives risk.
Considering that people usually tend be risk averse, framing an issue in a way that shows a potential risk
can influence the other party. In such cases the other party tends to take the option that avoids the risk. You
need to consider if there is a potential risk for the other party that you can highlight in your reference frame.
On the other hand, there may be cases where you need to highlight the positive aspects of the issue such
that the other party does not focus more on the potential risk.

People generally tend to make perceptional errors and cognitive errors while understanding and interpreting
an issue. While negotiating, this means that the other party may already have a certain set frame that will be
biased against you. In such a situation you not only need to have a clear reference frame but also need to

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be able to articulate it clearly to the other party. By framing an issue, you should be able to overcome any
biases that the other party may hold. An effective frame is one where you are able to convince the other
party about your point of view and can overcome their biases.

3.1.2.7 Assessing Constraints

Anything that can set you back or impair your ability to negotiate can be considered a constraint to
negotiation. Before negotiating with the other party, you need to assess and address your constraints so that 3
you are not weakened or hindered by them. The two main types of constraints that you may be faced with
are resource constraints and psychological constraints.

Resource Constraints

Resource constraints refer to constraints that arise out of a lack of time, people, or financial resources.
These constraints can hamper your preparation or participation in the negotiation process. As described in
section 3.1.1.2, availability of time can be an advantage during preparation as well as during the negotiation
process. It is important to be aware of any time constraints that you foresee at an early stage so that you can
schedule and plan for the negotiation process accordingly. In some cases, time constraints are the result of
an urgency caused by an internal or external situation that mandates you to negotiate and obtain an
outcome quickly. In other scenarios, a lack of proper planning or an oversight can result in resource
constraints. In the first case, where you need to reach an outcome quickly, your time constraints can be
exploited by the other party to gain an advantage in the negotiation. Hence, you need to plan accordingly,
consider the lack of time, and ensure that your time constraints are not disclosed to the other party. It is also
important to be aware that deadlines can be negotiable. There may also be cases where you can cite a time
constraint and compel the other party to enter into an agreement quickly, or you may wish to negotiate a
longer timeframe to adequately prepare. Time constraints need to be understood and used based on the
perspective of the issue. With proper planning and management, resource constraints should not impact the
overall success of the negotiation.

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Examples of Resource Constraints:

 A new client can either be very restrictive or very generous with time when speaking with a
salesperson or consultant about a product. It is therefore wise for a salesperson or consultant to
have two negotiation strategies when planning to meet with a client for the first time. If time is
limited, one strategy might focus on discussing just one feature of a product that can solve a specific
client problem at a specific price. If time is not as limited, more features can be discussed with more
time to negotiate different product features and pricing options. An effective sales professional is
able to pivot from a short to a long negotiation as needed, or from a long to a shorter negotiation
strategy if the client has unscheduled interruptions during the meeting. Alternatively, a follow-up
meeting can be scheduled to allow more time for the sales negotiation.
 Unplanned weather constraints represent external factors that can dramatically impact a
construction project. If adverse weather, such as rain or snow, occurs, a re-negotiation of timelines
to complete the project, while minimizing delays and additional costs, may be required.

Psychological Constraints
It is important to set aside emotions such as fear or anger toward the other party before entering into a
negotiation. You need to ensure that whenever you enter into a negotiation, the other party is considered
neither an adversary nor a friend. You need to be able to separate the people from the issues and consider
the other negotiator as simply someone who is trying to achieve preferable outcomes for the other party.
Emotions can stand in the way of you achieving your preferable outcome.

One of the most common constraints faced during negotiation is fear. In fact, a common fear is the fear to
negotiate, due to either a lack of confidence or anxieties regarding losing the negotiation. If you are
unprepared for a negotiation or unaware of alternatives or a walk-away point, you tend to enter it with the
fear of losing or damaging the relationship with the other party. Fear can also be caused if the other party is
perceived as a powerful entity with greater authority in the negotiation process. You need to understand that
being powerful does not guarantee a successful negotiation outcome. In a negotiation, power lies in having
leverage and being well prepared for the negotiation. The keys to avoiding fear regarding any negotiation
are being prepared, having explored other alternatives, and having a well-set BATNA and walk-away point.

Example of Psychological Constraints:

 Negotiating a starting salary with a new employer can be intimidating. Asking for a salary that is too
high may disqualify a job candidate from a job. Fear of not getting a job may lead to asking for a
salary that is too low. However, salary alone is only one component for a job candidate to plan for in
negotiating compensation with an employer. There are also non-salary related components that
may further expand options when negotiating a starting salary. These options might include job title,
additional vacation days, and future promotional opportunities. The better prepared a job applicant
is to have these discussions, the more likely both the employer and job candidate will find mutually
satisfactory terms and reach an agreement.

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3.1.2.8 Understanding your Negotiation Leverage

Negotiation leverage can be used to gain an advantage or increase the chances of achieving the preferred
outcomes. Leverage can be used to convince or persuade the other party to attend to your interests, relax
from their initial positions, and possibly lower their walk-away point. Conversely, leverage provides the
advantage of setting a higher walk-away point and offers better alternatives. Leverage is also often
synonymously termed power. When a party has power it can seek better alternatives or a deal that satisfies
all preferred outcomes. Negotiation leverage is derived from three sources—information, resources, and
authority. 3
Leverage from Information

Information can be used to support your position or interests. This information may be already accessible or
it may be data that needs to be gathered and organized. Information can be used as a tool to counter the
other party’s position or interests, arguments, and negotiation tactics. Facts and data are often presented to
persuade the other party to view the issue from a certain point of view, to win arguments, and ultimately to
achieve preferred outcomes. An effective form of leverage from information is the use of a credible expert
with relevant knowledge and experience, since an expert’s arguments are given greater importance and
validity than a non-expert’s arguments.

Example of Leverage from Information:

 When searching for an apartment to rent, most renters will notice that most advertised units are
offered with an established amount of rent expected to be paid. However, if a perfect rental unit is
slightly over budget, a renter can try to negotiate a lower price before signing the lease. Negotiation
leverage can be increased by knowing how long the apartment has been on the market and what
similar apartments are renting for in the neighborhood. If a renter can also provide the landlord with
evidence of a good credit history and references, the renter will also increase his or her chances of
negotiating a better rate.

Leverage from Resources

The ownership and control of resources is a source of leverage used to gain advantage in negotiations.
Resources are seen as a source of leverage if they are considered to be valuable by the other parties in the
negotiation. In order to achieve leverage from resources, one party must have control over something the
other party believes is scarce or difficult to obtain. In negotiations where there exists leverage of resources, it
is vital to know how important the resource is for the other party and how difficult it will be for them to obtain
it. Resources that commonly offer leverage include money, human talent, time, technology, critical services,
raw materials, and others.

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Examples of Leverage from Resources:

 Union-Management negotiations frequently involve negotiations over resources. Management may

want to make changes to staffing such as hiring more part-time non-union employees or staff
layoffs. These changes to human resources are typically driven by the need to increase profitability.
In the worst-case scenario, management may lockout union employees until new staffing
agreements can be reached. Management has leverage over salaries and can force the union to
open negotiations for a new union contract. The union, in turn, can leverage its own resources by
withholding effort and staffing through work slowdowns and rotating strikes to protect union jobs and
hourly wages. Because both unions and management have leverage over resources, it is not
uncommon to appoint an independent third party or mediator to help the two parties reach an
agreement in labour negotiations.
 Time is a valuable resource that can be leveraged during negotiations with parties who have little
time and urgent needs. A first time home buyer is typically not under any time pressure to purchase
and can wait for the right house and the right deal, while a seller who is under pressure to sell
quickly may be willing to drop his price. The purchaser with an abundance of time can use this to his
advantage in the negotiation.

Leverage from Authority

Leverage from authority is based on an individual’s position within a group or organization. This leverage
comes from the power to order, or even command, others at lower levels of authority. Leverage of authority
allows one to exert control, requiring others to follow. Leverage from a position can be a universal benefit for
negotiating. The holder of such a position has access to and control of information and resources, which add
to the strength of their leverage. Even if one does not have a high position or high level of authority, a given
position may entail control of resources or access to information that can be used as leverage.

Examples of Leverage from Authority:

 An executive assistant who controls the appointment schedule of a president essentially controls
access to the most important decision maker of an organization, and thus can use this power to
negotiate with internal suppliers such as technical support to ensure that his or her requests are
given the highest priority.
 A parent has legitimate power in a negotiation with a teenager requesting a late curfew.

3.1.2.9 Risk Assessment

Risks are uncertain events or outcomes that can affect your objectives. Risks that are likely to have a
positive impact are referred to as opportunities, whereas risks that could have a negative effect are referred
to as threats. Negotiation is unpredictable in nature because such events can alter the course of negotiation

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and its outcome. It is essential for you to assess these risks and determine your course of action. You
should identify and evaluate risks using the following factors:

 the probability of each risk’s occurrence

 the possible impact of such an occurrence

Risks with a high probability of occurrence and anticipated impact should be addressed before those with a
lower risk factor. This is also applicable to risks that can occur after the negotiation is completed. For
example, if you are negotiating for raw materials solely on the basis of price you should consider the risk of
receiving low quality raw materials. Once a risk is identified, it is important to understand the risk with regard 3
to the probable causes and the potential responses.

Your response should be based on the following:

 Your ability to take risks—Your ability to take risks depends on your resources, including human
resources, financial resources, and time. You may decide upon a response to a risk but, if you don’t
have the required resources, it will not be a suitable response for you. For example, a raw materials
supplier comes to know that a potential buyer is in the process of securing a contract from the
government, which could lead to a contract of higher volume and value for the supplier. If the
supplier doesn’t have the resources to increase their capacity, then negotiating for a bigger contract
is not a suitable response for them. If their assessment of resources shows that they can scale up in
phases, then they can negotiate a phased contract wherein they will increase their supplies over
time. Another response could be to take over another business to increase their capacity. A
thorough analysis will provide other suitable responses.
 Your willingness to take risks—The second factor that can affect your response is your willingness
to take risks. Even if you have the ability to take risks, you may not want to take risks. Willingness to
take risks depends on past experiences, personality or organizational traits, current situation, etc. In
the previous example, if there is uncertainty about scaling up your capacity, then you may not want
to negotiate for a bigger contract. This will be the case if you are risk averse. If you are more
inclined to take risks, you will go ahead with the phased contract despite the uncertainty.

A thorough risk assessment is necessary for a comprehensive understanding of your negotiation situation.
You need to identify and evaluate risks and prepare a plan of action on the basis of your ability and
willingness to take a risk. Without risk assessment you will not be prepared and may end up making hasty
decisions, which can be detrimental to your objectives. This is true for both opportunities and threats. For
example, in the previous case, if the supplier is not aware of the buyer’s contract with the government, the
supplier will not be ready with a plan of action. Even if the buyer brings up this issue during negotiation, the
supplier will not be properly prepared and may miss a valuable opportunity.

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3.1.3 Outputs

3.1.3.1 Your Resource Availability for Negotiation

As described in section 2.1, Justification for Negotiation, it is important to ensure that the overall cost of
negotiation does not exceed the benefits. Your cost is accrued primarily from utilization of time, money, and
effort required for the key resources. Therefore, before entering into the negotiation process, it is important
to identify the resources that will be used. The funds required for the negotiation process must be allocated,
and the time that will be spent throughout the negotiation process needs to be estimated. These steps
should be completed before considering the other Aspects as well as the BATNA and walk-away point. Also
the individuals who will be involved in the negotiation will need to be determined, and the individual who will
lead the negotiation needs to be established. The individual designated to lead the negotiator can be any
member from the group, or an external agent, who acts as an intermediary on the group’s behalf.

3.1.3.2 Your Alternatives*

The list of alternatives for the current agreement or deal that is being negotiated includes the options that the
negotiator has identified as possible approaches to reaching the objectives of the negotiation, in the event
that the negotiation fails or the outcomes of the negotiated agreement do not meet expectations. Refer to
section 3.1.2.2 for further details regarding the analyses of alternatives.

Examples of Your Alternatives:

 A company is entering into negotiations to outsource their customer service department to another
firm. The company could consider retaining its existing department and cutting costs internally,
developing a web-based customer service application, and keeping the status quo as their
alternatives to negotiating.
 When preparing to negotiate the rental price for a condo, the owner identifies selling the property
outright or hiring a real estate management firm as their potential alternatives to negotiating an
agreement with a renter.
 An individual is negotiating the sale of a used car that has some major mechanical issues. The
owner’s alternatives to negotiating might be keeping the car and repairing it or donating the car to
charity.

3.1.3.3 Your BATNA*

Your BATNA is the next best alternative if the negotiation does not go through. Your BATNA is selected from
the alternatives that have been identified.

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The term BATNA was coined by Roger Fisher and William Ury in 198111. BATNA stands for Best Alternative
to a Negotiated Agreement.

The BATNA is the result of the analyses of the alternatives. Without knowing the BATNA, you can never
determine whether to accept an offer or to walk away from the negotiating table. To identify the BATNA from
among the alternatives that have been identified or calculated, an estimate of the value of each alternative in
terms of how each achieves the stated objectives must be completed.

When calculating the BATNA, it is important to consider both quantitative and qualitative factors. A BATNA is
not fixed; it can change over a period of time due to a change in circumstances of the involved parties. As a 3
result, calculating a BATNA is not a simple process, but a BATNA can be enhanced by evaluating and
increasing alternatives. For example, when negotiating the price of a house an individual intends to
purchase, the individual should calculate their BATNA, not only taking into consideration the price, but also
other factors, such as the size of the house, its proximity to the individual’s place of work, the neighborhood,
etc. when determining an acceptable price. If the individual invests more time in research or hires
professional help to find a better house at a better price, there is always a chance that he or she may
improve or enhance the BATNA.

It should be noted that a BATNA is the realistic or most plausible option that you have if the current
negotiation fails. It is not something that you think you can do or something that is fair, such as if the seller
negotiates a sale of a perishable product that costs $100, $100 is not the BATNA. The BATNA will be the
next best option.

Process for Determining BATNA

There are three steps in the process of determining a BATNA. They are as follows:

 Situation analysis—The first step in determining the BATNA is to define and analyze the issue that
will be negotiated. This step leads to an analysis of the current situation. To analyze the situation
appropriately, both the quantitative and qualitative factors associated with the issue should be
considered.
 Generating alternatives—The next step is to identify or calculate the available alternatives. There
are numerous ways in which this can be done, and some of the common tools or techniques used
for this purpose include brainstorming, nominal groups, and in-house surveys.
 Analyzing alternatives and arriving at a BATNA—The last step is to identify or calculate the BATNA.
You should determine the criteria on which they will assess the alternatives and assign them
values. Next, the alternatives are evaluated using the criteria established. Then, you can discard or
improve alternatives and select the BATNA.

11Fisher, R. and Ury, W. (1981). Getting to yes: Negotiating agreement without giving in. New York: Penguin
Books

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Examples of BATNA:

 If an individual is negotiating the sale of a used car the BATNA for that car may be to donate it to a
charity as the individual will be entitled to a tax receipt for the donation.
 A company interested in outsourcing its customer service department reviews its alternatives and
decides that retaining its existing department and cutting costs internally, while not as potentially
cost effective as outsourcing, is its best alternative to a negotiated agreement.

3.1.3.4 Your Walk-Away Point*

A walk-away point is the point at which the BATNA becomes preferable to the agreement being negotiated,
or the point at which a negotiator is prepared to walk away from the negotiating table. For example, a
buyer’s walk-away point will be the highest price they are willing to pay for the item. Beyond this price point,
they are willing to walk away from the deal.

Examples of Walk-away Point:

 If the BATNA for the sale of a used car is to donate it to a charity for a tax receipt of $400, the
seller’s walk-away price might be $350.
 In negotiations for the rental price of a condo, the renter will determine the total monthly cost of the
condo, including mortgage payments, utilities, and condo fees. After adding a minimum acceptable
profit margin, the renter can determine the walk-away price.
 The BATNA may be determined as a percentage higher than the break-even value. If a product
costs $200 dollars to make, the walk-away price on the sale may be 15% profit, or $230.

3.1.3.5 Your Negotiation Reference Frame

At the end of this process, a frame of reference for the negotiation process will be identified. The frame of
reference needs to be convincing to the other party, allowing them to see the point of view that has been put
forward. It is the frame or perspective from which you will want the other party to perceive or interpret the
situation. The other party’s responses and tactics during the negotiation process are influenced by the frame
of reference. It is therefore important to identify a realistic frame of reference that is based on alternatives
and the Aspects of Negotiation, since this can improve the chances of achieving favorable outcomes from
the negotiation.

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Example of Your Negotiation Reference Frame:

 A company seeking the service of a customer service outsourcing company should communicate
their long-term growth strategy to the outsourcing company. By framing the negotiation as a long-
term partnership they demonstrate the future potential revenue for the outsourcing agency and
focus on the need for a financially viable agreement.

3
3.1.3.6 Your Negotiation Aspects

At the end of this process, the various Aspects of the upcoming negotiation should be clear with regards to
the justification and approach. The type of negotiation will be understood as well as the suitable negotiation
style. The individual selected to complete the negotiation and the parameters of authority the individual will
have will be determined. It is important to have these details established before gathering information about
the other party. As well, these Aspects may change when information is received from or about the other
party.

3.1.3.7 Your Outcome Preferences

After assessing your negotiation situation and options, a preferred negotiation outcome preference should
be determined and calibrated. On one end will be the group’s walk-away point, beyond which the deal is not
negotiable. On the other end will be the benefits that will ensue if the negotiation succeeds. Based on past
negotiation experience and this particular situation, it is advised that you determine what would constitute a
successful negotiation. For example, plan three scenarios for each negotiation—Unsatisfactory Outcome,
Neutral Outcome, Satisfactory Outcome. At the end of each negotiation, determine if the negotiation
received the desired outcome. Outcomes can be defined in terms of price, relationship, interests, legality,
commitment, etc.

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Example of Your Outcome Preferences:

 A company entering into negotiations with a customer service outsourcing agency reviews their
alternatives, BATNA, and walk-away price and determines the following potential outcomes:
o Unsatisfactory Outcome—The outsourcing agency is unwilling to enter into an agreement
for less than $12,000 per month.
o Neutral Outcome—The agency will accept between $10,000 and $12,000, and agrees that
the rate per customer service call will decrease if volumes increase to a defined level. At
this level, the outsourcing cost for customer service will be slightly less than the current
cost, with the potential of future savings.
o Satisfactory Outcome—The agency will accept a monthly agreement of less than $10,000
dollars and agree to decrease fixed costs per call should the volume increase.
The company has decided it will frame the agreement to seek the satisfactory outcome, but would
be willing to accept a neutral outcome.

Exercises for Understand Your Negotiation Situation:

 Role play—You are a homeowner negotiating a budget with a contractor to complete a renovation
project. You have a budget of $50,000 but the contractor’s first quotation is $85,000. Determine the
alternatives, BATNA, and walk-away point for this negotiation.
 Role play—You are selling a used car. You advertise the car online and receive several enquiries
but no offers. You are hoping to sell the car for $12,000, but you are willing to take $10,000.
Determine your alternatives, BATNA, and walk-away point.

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3.2 Understand Negotiation Situation of the Other Party

After assessing your negotiation situation, you should assess the negotiation situation of the other party.
Understanding the situation from the other party’s perspective will help to better negotiate and achieve
improved results. Some information about the other party will not be available and the other party may not
want their information revealed. The concepts in this process will help to uncover some information, but you
will gain clarity as you go through the negotiation process and begin negotiating with the other party. Always
actively listen to the other party, as this will help to further assess the negotiation situation and improve the
potential for a successful outcome. Figure 3-4 shows the inputs, tools, and outputs of the Understand 3
Negotiation Situation of the Other Party process.

1. Issue for Negotiation* 1. Aspects of Negotiation* 1. Expected Other Party Resource

2. Your Negotiation Capabilities 2. Analysis of Alternatives of the Availability
3. Past Negotiation Results Other Party* 2. Expected Other Party
4. Other Party Negotiation 3. Primary Research Alternatives*
Capabilities 4. Secondary Research 3. Expected Other Party BATNA*
5. Your Resource Availability for 5. Meetings and Discussions 4. Expected Other Party Walk-Away
Negotiation 6. Assessing Constraints of the Point*
6. Your Walk-Away Point* Other Party 5. Expected ZOPA*
7. Your Alternatives* 7. Understanding Negotiation 6. Expected Other Party Negotiation
8. Your BATNA* Leverage of the Other Party Reference Frame
9. Your Negotiation Reference 8. Risk Assessment of the Other 7. Expected Other Party Negotiation
Frame Party Aspects
10. Your Negotiation Aspects 8. Expected Other Party Outcome
11. Your Outcome Preferences Preferences

Figure 3-4: Understand Negotiation Situation of the Other Party—Inputs, Tools, and Outputs

Note: An asterisk (*) denotes a highly recommended input, tool, or output for the corresponding process.

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3.2.1 Inputs

3.2.1.1 Issue for Negotiation*

An issue forms the basis of the overall negotiation process. It is the main area that the negotiation is
intended to resolve. For further details, see section 3.1.1.1.

3.2.1.2 Your Negotiation Capabilities

Negotiation capabilities include availability of resources, an established structure or process for negotiation,
and a company’s approach to negotiation. For further details, see section 3.1.1.2.

3.2.1.3 Past Negotiation Results

Past negotiation results can provide significant insights and offer an advantage for the negotiating team,
particularly when the current negotiation is similar to a previous negotiation scenario. For further details, see
section 3.1.1.3.

3.2.1.4 Other Party Negotiation Capabilities

Any existing information about the negotiation capabilities of the other party will be useful in understanding
their situation. Information about the other party’s resource availability, existing negotiation templates or risk
tolerance will also help in formulating strategies and tactics for the coming negotiation. External sources,
previous negotiations with the other party, and industry reports are examples of possible sources for this
information.

3.2.1.5 Your Resource Availability for Negotiation

Your resource availability for negotiation is an output of process 3.1. Among the resources available for
negotiation are the funds required for the negotiation process and the time that will be spent throughout the
negotiation process. For further details, see section 3.1.3.1.

3.2.1.6 Your Walk-Away Point*

A walk-away point is the point at which the BATNA becomes preferable to the agreement being negotiated,
or the point at which a negotiator is prepared to walk away from the negotiating table. For further details, see
section 3.1.3.4. Having determined your walk-away point will enable you to set your lowest possible
parameter when analyzing the zone of potential agreement (as discussed in section 3.2.3.5).

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3.2.1.7 Your Alternatives*

The list of alternatives for the current agreement or deal that is being negotiated is an output of process 3.1,
Understand Your Negotiation Situation. The alternatives include the options that the negotiator has identified
as possible approaches to reaching the objectives of the negotiation, in the event that the negotiation fails or
the outcomes of the negotiated agreement do not meet expectations. For further details, see section 3.1.3.2.

3.2.1.8 Your BATNA* 3

Also an output of process 3.1, Understand Your Negotiation Situation, your BATNA is the next best
alternative if the negotiation does not go through. Your BATNA is selected from the alternatives that have
been identified. For further details, see section 3.1.3.3.

3.2.1.9 Your Negotiation Reference Frame

Your negotiation reference frame is the frame or perspective from which you will want the other party to
perceive or interpret the situation. For further details, see section 3.1.3.5.

3.2.1.10 Your Negotiation Aspects

An output of process 3.1, the Negotiation Aspects include the justification and approach of the negotiation,
the type of negotiation, the anticipated negotiation style, and details regarding the lead negotiator. For
further details, see section 3.1.3.6.

3.2.1.11 Your Outcome Preferences

The preferred outcome preferences are an output of process 3.1. These are determined after assessing the
possible outcomes of the negotiation from the walk away point to the successful negotiation and determining
the outcome preferences based on knowledge of past similar negotiations. For further details, see section
3.1.3.7.

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3.2.2 Tools

3.2.2.1 Aspects of Negotiation*

After understanding your negotiation, the next step is to gather information about the other party. You will not
have access to all of the information about the opposing party, but the more information collected, the better
you can negotiate. Information can be gathered through past experiences, external sources, and via
communication with the other party. You should assess the upcoming negotiation on the basis of Aspects
discussed in the previous chapter and from the other party’s point of view. As the negotiation process starts
more clarity on these Aspects will be gained.

Justification for Negotiation

You should attempt to find out why the other party is negotiating. Though the major issue may be apparent
before the beginning of the process, thinking about the negotiation from the other party’s point of view will
inform you about other issues that may arise. The other party’s level of interdependence should also be
assessed. Their reliance on the success of negotiation will be a key indicator of their approach to
negotiation. Also, consider their preferable outcomes and alternatives, which will be discussed in detail in the
next tool. Their expected benefits and costs will further help in understanding their position and interests.

Distributive vs. Integrative Negotiation

Consider the other party’s approach towards the upcoming negotiation, which can be determined on the
basis of their previous negotiations, the issue at hand, the importance of the issue, and their need for a
future relationship with you. Alter or adapt strategies depending on whether they will be approaching
negotiation as a distributive or integrative negotiation. For example, solutions involving credit terms and
duration of agreement may not be found if the other party is just focused on getting the maximum price
possible.

Customization

Customization recognizes that every negotiation process is not the same. Negotiations can range from
single-issue, single-phase, two-party negotiation to multi-issue, multi-phase, multi-party negotiation. The
negotiation strategy will be adapted for different negotiations. For many negotiation processes the issue,
parties, and phases are outlined in the beginning. In this case, both parties will have similar expectations.
But many times, these are not clarified beforehand or changes take place during the negotiation process.
Taking into account the other party’s point of view will inform you about their expectations, which will help
formulate the action plan. For example, if other issues are expected to arise during the negotiation process,
you can examine their own stance regarding the issue before the negotiation begins. Similarly, if the other
party prefers a phased negotiation, you should be prepared for this, even if it has not been clarified
beforehand.

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Non-linear Process with Uncertain Outcomes

You should determine what the other party considers risks and their contingency plans for these risks.
Negotiation is an unpredictable process and both parties should be ready for possibilities such as
replacement of negotiators, change in relationship, and new alternatives. From past experiences with the
party and information about their previous negotiations, it is possible to gauge the other party’s potential
action plan for these risks. This will help to better strategize. For example, review the other party’s potential
actions if a litigation case goes against them. Are they likely to withdraw from the negotiation process
completely or suspend it for the time being? If they win, they will have more funds. Are they likely to increase
the scale of further negotiations? These possibilities and their impact for the other party can be determined,
3
and a corresponding course of action can then be formulated.

Human Relations Issues in Negotiation

You should try to find out personal preferences, biases, and the preferred negotiation style of the counter-
party negotiators. Prior knowledge may give you an edge during the negotiation, as it will allow you to
change your own approach accordingly. For example, if you learn that the counter party’s negotiator prefers
a competitive negotiation style, you can change your own style for this particular situation. You can also
determine the negotiation style that the other party may use based on the situational matrix discussed in the
previous process. The situational matrix, which is described in in section 3.1.2.1, shows four general
scenarios, taking into account perceived conflict over stakes and perceived importance of future
relationships. Depending on the assessment of the perceived importance of the future relationship for the
other party and the perceived conflict over stakes, the negotiation style of the other party can be deduced,
as some styles are more suited for certain scenarios. Keep in mind that these are conjectures and may
prove to be incorrect, but it is still valuable to make logical assumptions while formulating your strategies.

Organization for Negotiation

Investigate who will be negotiating for the other negotiating party. Your approach may change if the other
party hires someone else to negotiate. In this case, hiring an agent to negotiate on your behalf can be
considered. Similarly, if the negotiation is to be conducted by teams, the opportunity to change the
composition of the team on the basis of the counter party’s team structure should be considered.

Determine the authority of their negotiators. Ideally, negotiators on both sides should have similar levels of
authority. You should still be prepared for a situation where this is not the case. For example, if it becomes
clear that the person you will be negotiating with has less authority than you, the following can be done:

 Decide to use this as an opportunity to get more information about the other party, which may not
be revealed by a senior person from the other party.
 Tactfully suggest that you will bring a senior member or manager, with more formal authority, and
the opposing party should do the same.
 Decide to negotiate. If the negotiation moves forward, other issues may arise. Promises made by
the negotiator of the other party may not materialize, or the negotiation may take much longer than
anticipated. You should be prepared to act if such issues arise. For example, the decision to stop
the negotiation and seek access to people with the appropriate authority can be made.

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It is possible to encounter a negotiator who has more authority. In this case, you should decide if they want
to go ahead with the negotiation or seek someone else with higher authority.

Ethics in Negotiation

Research whether the other party has an ethical approach to negotiation, based on their reputation and past
experiences. Unethical practices should not be adopted even if the other party is using them. If the other
party is inclined to use marginally ethical tactics such as hiding information, gathering information via unfair
means, bluffing, etc., you can plan a course of action. For example, you can plan in advance the criteria that
will lead to a decision to withdraw from the process, such as if the other party begins making threats.

3.2.2.2 Analyses of Alternatives of Other Party*

After the capabilities, priorities, goals, and power of negotiation are understood, the next step is to
understand the situation from the other party’s perspective. Learn what the other party wants from the deal
as well as why they want it. Information should be gathered on the other party before negotiation begins and
updated during the negotiation process. The following information can be gathered:

 goals, capabilities, and needs of the other party

 the risk appetite of the other party
 other past and current deals negotiated by the other party
 the strategy, tactics, and negotiation style of the other party
 the importance of the current deal for the other party

Alternatives for the other party are deals or agreements that the other party can negotiate instead of the
current negotiation or if the current negotiation fails. These alternatives may fulfill the objectives or goals that
the other party wants to achieve through the current negotiation.

Next, determine or estimate the alternatives of the other party. Some of the ways in which the required
information can be gathered to determine the alternatives for the other party are as follows:

 Industry publications—Depending on the profile of the other party and the type of negotiation,
information can be gathered on their risk appetite, business and negotiation history, etc. from
industry publications (e.g. journals, magazines, newspapers).
 Public reports—Collect information on the financial stability, reputation or brand value, business
interests, etc. of the other party through public reports (e.g., financial statements, stock reports,
company biographies, records of judicial judgments).
 Third-party contacts—Another valuable source of information are parties who have done or are
doing business with the other party. Speak with them and elicit information on the other party’s
negotiation style, tactics, and strategies.
 During the negotiation process—Gather information on the other party’s interests, objectives, and
priorities during the process of negotiation by observing and deciphering the information they share.

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Understanding the situation from the other party’s perspective will enable the group to calculate or estimate
their alternatives, BATNA, and walk-away point as well as determine their Zone of Possible Agreement
(ZOPA), which includes all of the possible agreements that will be acceptable to you and the other party.
Once the walk-away point is calculated and the other party’s walk-away point is clear, you can easily
determine the zone of possible agreement.

3.2.2.3 Primary Research

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As discussed in section 3.1.2.3, primary research is conducted to gather new data or data that is not already
available through secondary research. It is generally difficult to obtain information regarding the other party
with respect to their BATNA and walk-away point. However, primary research with the right candidates or
agencies can help you in gaining information that can prove beneficial for the negotiation. Primary research
can be conducted with individuals in the group as well as individuals or parties outside the group who may
have been part of negotiations with the other party in the past or with external agents who have knowledge
about the issue. When conducting primary research with any external agent, you need to ensure that the
agent has no obligation with the other party and that an association with them is not legally restricted.
Primary research can be either qualitative or quantitative in nature.

Qualitative Techniques

Qualitative techniques include the following:

1. In-depth Interviews—Interviews can be conducted with internal stakeholders as well as external agents
who may have information regarding the other party. Interviews help in gaining insights in the form of
qualitative data regarding the other party’s preferred styles of negotiation as well as other terms of
business. They can also provide insights that can help in evaluating the other party’s BATNA and their
walk-away point.

2. Focus Group Discussions—Focus group discussions can be conducted when you are looking to
gather insights simultaneously from a group of five-to-six individuals. They provide a forum for informal
discussion about the other party, including their styles and preferences. The informal and relaxed
atmosphere often helps uncover unexpected insights about the other party.

Quantitative Techniques

Surveys using questionnaires can be conducted among individuals or groups associated with the other party
to gain insights. For example, before a merger or acquisition, companies generally try to understand the
targeted company’s brand loyalty or brand awareness among its customers. This can be conducted on a
large scale through surveys using questionnaires.

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3.2.2.4 Secondary Research

Secondary research involves gathering and analyzing data from already existing research and reports.
Secondary research can help in gathering important information and gaining a greater understanding of the
situation from the other party’s perspective. Secondary research can be conducted to collect background
information or information related to the other party’s historical background, recent negotiations and deals,
financial information, or any information that is relevant and can be used for gaining an advantage during
negotiation.

Secondary research on the other party’s past negotiations can help in discovering any trends or patterns
with respect to deals. Such trends can help determine how important the upcoming negotiation is and what
the other party plans to achieve by entering into a deal. If you are aware that the other places a high degree
of importance on the deal, you can enter into the negotiation with a stronger initial offering.

In negotiations with parties from other nationalities, it is very important to have gathered information about
their common negotiation style as well as their cultural norms. Be aware of any cognitive biases or
perceptional distortions that they may have. This can help in offsetting any unexpected negotiation tactics or
behavior from the other party and will help in overcoming any difficulty that may arise out of such behavior.

Secondary research can be conducted using the following sources:

 Annual Reports—Annual reports, if available, can provide information about the other party’s
financial records, functional activities, changes in management, and any major achievements for
that period. Annual reports can serve as a good starting point for information about the other party.

 Commercial Sources—Commercial sources of information include reports or research data about

the other party. Many times, commercial sources require a subscription or membership to be
accessed.

 Government Publications—In relevant cases, government publications can be used to validate or

authenticate the claims of the other party. For example, a construction company, looking to source
building materials such as steel, may use government publications to research government-
authorized vendors. Such publications are especially useful in countries where the economy and
business activities are strictly regulated by the government.

 General Media—General media, such as the Internet, online databases, journals, broadcast and
print media, are major sources of secondary data about the other party. The Internet can be used to
search for different types of information regarding the other party. Information can also be sourced
from previously published print articles and journals.

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3.2.2.5 Meetings and Discussions

Meetings and discussions are held with other stakeholders within the group to analyze available information
and determine the other party’s possible BATNA and walk-away point. They also help to assess the overall
situation of the other party and predict the most likely approach they would take. Meetings and discussions
with other external agents may help better understand the other party’s usual negotiation style and the levels
of authority in its organizational structure. They help the group to be well prepared for the upcoming
negotiation and obtain internal commitment from other stakeholders in the group.
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3.2.2.6 Assessing Constraints of the Other Party

The other party will also have constraints—resource constraints and psychological constraints—that can
hinder their negotiation process. The different types of constraints are described in detail in section 3.1.2.7.
When the other party is faced with constraints you have the opportunity to use these constraints to your
advantage. Resource constraints of the other party can be understood based on the situation and the issue
under consideration. Constraints can be identified by being aware of the recent negotiations or events that
the other party has participated in as well as through primary and secondary research about the other party.
For example, consider an automotive component manufacturing company and its client, a manufacturer of
vehicles used for military purposes. The vehicle manufacturer has been recently awarded a government
contract to supply a quantity of vehicles, which was larger than its usual order. The vehicle manufacturer’s
supply partner for a particular component knows that the other party will be hard pressed for time and will
require a fast delivery of the components. The supplier can use this constraint to improve his or her terms for
business or negotiate an exclusivity agreement as the supplier of that particular component.

Psychological constraints are generally understood during the course of the negotiation as you get to know
more about the other party. However, you can also identify them by researching the background of the other
party and details of their recent negotiations. You may also gather information from agents or other groups
that have negotiated with the other party.

3.2.2.7 Understanding Negotiation Leverage of the Other Party

As described in section 3.1.2.8 negotiation leverage or power can be derived from three sources—
information, resources, or authority. It is possible to identify the negotiation leverage of the other party
through research. The type and amount of resources that the other party has can be understood prior to the
negotiation itself. This information can be obtained through research from available sources. The authority of
the other party in the negotiation can also be understood by knowing about the other party’s background and
the members in their group. While it may be difficult to know about the exact information that the other party
plans to use as leverage, you will be able to know the general nature of this information. For example, the
information may be in the form of a secret formula, or a proprietary technique, that the other party is in
possession of and is planning to use to gain leverage in the negotiation.

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3.2.2.8 Risk Assessment of the Other Party

Risk assessment for the other party is an essential component of understanding the other party’s negotiation
situation. You need to identify and evaluate risks from their perspective. You should try to gauge the other
party’s action plan for these eventualities. As discussed in the risk assessment tool in the previous process,
you should also try to assess the other party’s ability and willingness to take risks. It will be difficult to collect
this information about the other party, but you can draw inferences on the basis of your past experiences
with the other party, their past negotiations, third party sources, and current negotiation situation. For
example, an automobile components supplier should consider their customer’s action plan if the government
makes GPS mandatory for all vehicles. The supplier can identify a number of responses, including delaying
implementation or lobbying for a phased implementation, among others. They can try to determine the
expected response on the basis of their past experiences, information about their customers, information
about the industry, public opinion, etc.

3.2.3 Outputs

3.2.3.1 Expected Other Party Resource Availability

The resource availability of the other party for negotiation refers to the time, effort, and funds they are willing
to allocate for the negotiation. Although it may not be possible to gather exact information related to resource
availability, you can arrive at a fairly accurate estimate based on primary and secondary research. The
resource availability of the other party can indicate how important the issue is for them and can also
indirectly indicate the other alternatives available to the other party. For example, if the other party has
allocated a significant portion of their resources to the upcoming negotiation, this could signal that they have
not identified many alternatives.

3.2.3.2 Expected Other Party Alternatives*

Alternatives for the other party are those deals or agreements that the other party can negotiate instead of
the current negotiation or if the current negotiation fails. These alternatives may fulfill the objectives or goals
that the other party wants to achieve through the current negotiation. For further details, see section 3.2.2.2.

3.2.3.3 Expected Other Party BATNA*

The BATNA for the other party is the next best alternative that the other party has to the negotiated
agreement.

Once the alternatives for the other party are determined, you can proceed to estimate the BATNA of the
other party, or the next best alternative that the other party has for the negotiated agreement. To identify the

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other party’s BATNA from among the identified alternatives, estimate the value of each alternative in terms
of how they enable the other party to achieve their stated objectives. Also, remember that a BATNA is not
fixed; it can change over a period of time due to a change in circumstances of the parties involved. So, you
should continue to evaluate the other party’s BATNA until the negotiation is concluded.

By assessing the alternatives and the BATNA of the other party, you can adapt your strategy to improve
your BATNA by reducing the other party’s alternatives and weakening their BATNA through ethical and legal
means.

3
Example of Expected Other Party BATNA:

 Companies generally try to estimate the other party’s BATNA and also work towards reducing it.
This can be seen in the IT industry where companies such as Oracle that offer ERP solutions
acquire competition thereby reducing the BATNA of parties that are looking to purchase ERP
solutions. By reducing the other party’s options, their expected BATNA is inherently reduced.

3.2.3.4 Expected Other Party Walk-Away Point*

This is the point at which the BATNA for the other party becomes preferable to the agreement being
negotiated or the point at which the other party is prepared to walk away from the negotiating table.

Though it is difficult to accurately assess the other party’s walk-away point, it is possible to estimate it using
the information gathered about them. The estimate can improve during the negotiation process as more
information from the other party is collected.

3.2.3.5 Expected ZOPA*

ZOPA refers to the zone of possible agreement. It is the set of all possible agreements or deals that will be
acceptable for all parties involved in the negotiation. Once the walk-away point is calculated and the other
party’s walk-away point is clear, you can easily determine the zone of possible agreement.

Although the ZOPA gives a range of all possible agreements, it does not assure an agreement that is best
for you. Your goal is not just to come to an agreement, but also to secure the best agreement possible. Once
the range of possible agreements is understood, the negotiation can produce the best deal possible without
jeopardizing the negotiation.

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Example of ZOPA:

 A land owner is looking to sell a segment of her land to a developer. Based on her knowledge of the
market, she knows she can get $8 million for the piece and will not settle for less. However, she is
hoping to get more. A developer wants the piece of land for commercial development and given his
knowledge of lease rates that other retailers in the area are paying, he knows how much he can pay
for the property to develop it and turn a profit from the lease revenue. The most he can pay for the
land is $8.5 million, but he is hoping to pay around $7.5 million. The ZOPA for the land owner and
the developer is between $8 million and $8.5 million.

3.2.3.6 Expected Other Party Negotiation Reference Frame

The other party’s expected negotiation reference frame indicates their point of view, how they want to be
perceived, and how they interpret the issue. This is an anticipated reference frame and the exact frame that
they put forward will only be known and assessed during the negotiation process. The expected reference
frame may or may not match your reference frame. If it does not match, you must be prepared in your
negotiation tactics to guide the other party to view the issue from your frame or perspective.

3.2.3.7 Expected Other Party Negotiation Aspects

At the end of this process you should have an idea about the Aspects of Negotiation from the other party’s
point of view. Their justification, approach, and suitable style of negotiation will be clear as well as their
specific negotiators, their personal preferences and biases, and their authority level. Information regarding
all of these will not be complete before the start of negotiation, but any information gathered will help in
negotiation. Your approach to negotiation can be changed on the basis of this information.

3.2.3.8 Expected Other Party Outcome Preferences

After assessing the negotiation situation of the other party, their preferred outcomes can be determined and
calibrated. At one end of the possible outcomes will be the other party’s walk-away-point, beyond which they
will not negotiate. On the other end will be the benefits that they will realize in a successful negotiation.
Based on past negotiation experience and this particular situation, try to deduce the expected outcome
preferences of the other party. The outcome preferences can be defined in terms of price, relationship,
interests, legality, commitment, etc.

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Exercises for Understand Negotiation Situation of the Other Party:

 Role play—You are a homeowner negotiating a budget with a contractor to complete a renovation
project. You have a budget of $50,000 but the contractor’s first quotation is $85,000. Determine the
alternatives, BATNA, and walk-away point for the other party. What is the ZOPA of this negotiation?
Role play the negotiation, using various styles.
 Role play—You are selling a used car. You advertise the car online and receive several enquiries
but no offers. You are hoping to sell the car for $12,000, but you are willing to take $10,000. The
first offer is finally made — $8000.00. Determine the alternatives, BATNA, and walk-away point of 3
the other party. What is the ZOPA of this negotiation? Role play the negotiation using various styles.

 Role play—You work for a consulting firm and are planning to attend an upcoming trade show. You
are negotiating a deal with the event organizers for participation in the event, including reserving
physical booth space, buying ad space, and arranging for sponsorship opportunities. Your budget is
$35,000. Determine your alternatives, BATNA, and walk-away point. When the event organizers
inform you that your conference fees for the activities that you have planned will cost you $42,000,
you know you need to negotiate for a better price. What are the alternatives, BATNA, and walk-
away point of the other party? What is the ZOPA of this negotiation? Role play the negotiation using
various styles.

4. CONDUCT SINGLE-ISSUE NEGOTIATION

This chapter discusses the theoretical concepts of conducting a single-issue negotiation. The concepts that
apply to single-issue negotiations also provide a foundation for handling multi-issue negotiations in future
chapters. After a thorough understanding of the negotiation situation is established, the next step is
conducting the actual negotiation. Successful negotiation requires proper planning. Decisions will need to be
made regarding logistics, such as the meeting time and place, and the mode of the negotiation. Potential
roadblocks are identified, and an action plan is created to address these roadblocks. The need for external
expertise should be assessed. Careful negotiation planning will help immensely when the negotiation is
eventually conducted. During the negotiation, decisions regarding when and how to make an offer are made
4
as well as other suitable tactics for the situation. Figure 4-1 provides an overview of the processes
associated with this chapter. They are as follows:

4.1 Plan for Negotiation—This process involves creating a negotiation plan consisting of logistics, expected
negotiation paths, potential bottlenecks, calibration of outcomes, and negotiators.

4.2 Conduct the Negotiation—This process addresses various offers and tactics that should be employed
in the negotiation process.

4.1 Plan for Negotiation 4.2 Conduct the Negotiation

INPUTS INPUTS
1. Your Resource Availability for Negotiation 1. Logistics for Negotiation*
2. Your Alternatives* 2. Calibration of Outcomes
3. Your BATNA* 3. Expected Negotiation Paths
4. Your Walk-Away Point* 4. Your Negotiators*
5. Your Negotiation Reference Frame 5. Other Party Negotiators*
6. Your Negotiation Aspects 6. Potential Bottlenecks
7. Your Outcome Preferences 7. Your BATNA
8. Expected Other Party Resource Availability 8. Your Walk-Away Point
9. Expected Other Party Alternatives* 9. Expected Other Party BATNA
10. Expected Other Party BATNA* 10. Expected Other Party Walk-Away Point
11. Expected Other Party Walk-Away Point* 11. Your Negotiation Reference Frame
12. Expected Other Party Negotiation Reference 12. Expected Other Party Negotiation Reference
Frame Frame
13. Expected Other Party Negotiation Aspects TOOLS
14. Expected Other Party Outcome Preferences 1. Opening the Negotiation
TOOLS 2. First Offer*
1. External Expertise 3. Second Offer*
2. Negotiation Planning Session* 4. Subsequent Offers*
3. Negotiation Research 5. Tactics for Negotiation
OUTPUTS 6. Managing Agents
1. Logistics for Negotiation* OUTPUTS
2. Calibration of Outcomes 1. Negotiated Deal*
3. Expected Negotiation Paths 2. Negotiated Deal Terms and Conditions
4. Your Negotiators* 3. Satisfied Parties
5. Other Party Negotiators* 4. Potential for Future Deals
6. Potential Bottlenecks

Figure 4-1: Conduct Single Issue Negotiation—Inputs, Tools, and Outputs

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4.1 Plan for Negotiation

This process involves creating a plan for single-issue negotiation. Based on an assessment of the situation,
a negotiation plan is prepared, describing the logistics, expected negotiation paths, potential obstacles, and
a calibration of outcomes. As well, chosen negotiators and their level of authority are established. At the end
of this process, the negotiation preparation will be complete. Developing a comprehensive plan enables a
smooth and productive negotiation. Figure 4-2 shows the inputs, tools, and outputs of the Plan for
Negotiation process.

1. Your Resource Availability for 1. External Expertise 1. Logistics for Negotiation*

Negotiation 2. Negotiation Planning Session* 2. Calibration of Outcomes
2. Your Alternatives* 3. Negotiation Research 3. Expected Negotiation Paths
3. Your BATNA* 4. Your Negotiators*
4. Your Walk-Away Point* 5. Other Party Negotiators*
5. Your Negotiation Reference 6. Potential Bottlenecks
Frame
6. Your Negotiation Aspects
7. Your Outcome Preferences
8. Expected Other Party Resource
Availability
9. Expected Other Party
Alternatives*
10. Expected Other Party BATNA*
11. Expected Other Party Walk-Away
Point*
12. Expected Other Party Negotiation
Reference Frame
13. Expected Other Party Negotiation
Aspects
14. Expected Other Party Outcome
Preferences

Figure 4-2: Plan for Negotiation—Inputs, Tools, and Outputs

4.1.1 Inputs

4.1.1.1 Your Resource Availability for Negotiation

To plan for the negotiation, it is important to review the identified resources that will be used and the funding
and timing that have been allocated for these resources. For further details, see section 3.1.3.1

4.1.1.2 Your Alternatives*

These are the alternatives for the current agreement or deal that is being negotiated. For further details, see
section 3.1.2.2.

4.1.1.3 Your BATNA*

The best alternative to a negotiated agreement if the negotiation does not go through is the BATNA. It is
selected from the alternatives that have been identified. For further details, see section 3.1.3.3.

4.1.1.4 Your Walk-Away Point*

Your walk-away point is the point at which the BATNA becomes preferable to the agreement being
negotiated, or the point at which a negotiator is prepared to walk away from the negotiating table. For further
details, see section 3.1.3.4.

4.1.1.5 Your Negotiation Reference Frame

The frame or perspective from which the group will want the other party to perceive or interpret the situation
is the negotiation reference frame. For further details, see section 3.1.3.5.

4.1.1.6 Your Negotiation Aspects

These are various Aspects of the upcoming negotiation, including the justification and approach, the type of
negotiation, the suitable negotiation style, the individual selected to complete the negotiation, and the level
of authority of the negotiator. For further details, see section 3.1.3.6.

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4.1.1.7 Your Outcome Preferences

These are the preferred outcomes as determined in section 3.1.3.7. These may include a description of
unsatisfactory, neutral, and satisfactory outcomes. Outcomes can be defined in terms of price, relationship,
interests, legality, commitment, etc.

4.1.1.8 Expected Other Party Resource Availability

The resource availability of the other party for negotiation refers to the time, effort, and funds the other party
is willing to allocate for the negotiation. For further details, see section 3.2.3.1. 4

4.1.1.9 Expected Other Party Alternatives*

Alternatives for the other party are those deals or agreements that the other party can negotiate instead of
the current negotiation. These alternatives may fulfill the objectives or goals that the other party wants to
achieve through the current negotiation. For further details, see section 3.2.2.2.

4.1.1.10 Expected Other Party BATNA*

The BATNA for the other party is the next best alternative that they have to the negotiated agreement. For
further details, see section 3.2.3.3.

4.1.1.11 Expected Other Party Walk-Away Point*

4.1.1.12 Expected Other Party Negotiation Reference Frame

The other party’s expected negotiation reference frame indicates their point of view, how they want to be
perceived, and how they interpret the issue. For further details, see section 3.2.3.6.

4.1.1.13 Expected Other Party Negotiation Aspects

These are the various Aspects of the other party, including their justification and approach, the type of
negotiation, a probable negotiation style, their negotiators, and the level of authority of their negotiators.
Information regarding all of this will not be complete before the start of negotiation, but any information
gathered will help in planning for the negotiation. For further details, see section 3.2.3.7.

4.1.1.14 Expected Other Party Outcome Preferences

This is an assumption of the expected outcome preferences of the other party. This can be in terms of price,
relationship, interests, legality, commitment, etc. For further details, see section 3.2.3.8.

4.1.2 Tools
4.1.2.1 External Expertise

Negotiation is used in every aspect of life—personal as well as professional, and you may not have the
required expertise for all scenarios. For example, even if you are an expert negotiator, you may not have the
financial expertise to handle a merger and acquisition negotiation on your own. Similarly, a technology
expert may need an expert negotiator when initiating funding for their new startup. An external expert can be
hired based on the negotiation issue, the available resources, and/or the preferred outcome. Typically, the
external expert is referred to as an “agent,” and the negotiating party hiring or using the agent is referred to
as the “principal.”

Generally, external experts are hired for the following reasons:

 To act as an agent to negotiate on the principal’s behalf—Experts are generally better at negotiation
due to their experience and skills. When the negotiation party doesn’t have the expertise to
negotiate on its own, hiring an agent is necessary. Also, hiring an agent to negotiate creates
distance between the principal and the opposing party. There can be a level of conflict or animosity
as a result of conducting negotiations, and using an agent provides a buffer between the two
parties, which may be beneficial to their ongoing relationship.

Examples of Agents:

 A lawyer may negotiate on another’s behalf for situations such as divorce, or to settle inheritance
issues between family members.
 Merchant bankers or other experts may be hired to resolve conflicts between business owners
during the acquisition process.

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 To act as an advisor—An advisor doesn’t negotiate on the principal’s behalf, but rather is hired
because he or she is specialized in a particular field and is more knowledgeable regarding a
specific issue.

Examples of Advisors:

 Companies hire Human Resource (HR) consultants to find suitable employees. These HR
consultants may or may not negotiate with potential employees regarding salary and other terms of
employment.
 An accountant may be hired to discuss and negotiate taxation issues with the government, if there
are any clarifications required regarding annual tax filings. 4

 To moderate negotiations—At times, experts are hired to facilitate negotiations. In these cases,
agents are hired for their lack of bias toward the negotiation, as they are not aligned with a
particular side in the negotiation.

Examples of Moderating Negotiations:

 A judge and jury moderate the legal process of a trial and hear both parties before giving their
judgment.
 Experts may also be hired to act as arbitrators in a conflict. Such arbitrators assist both parties and
can also propose a solution.

External experts help overcome any weaknesses within a negotiating party or in the negotiation process and
are appointed on the basis of their expertise. For example, lawyers are hired to fight legal cases,
accountants help in conducting audits, and financial advisors provide investment advice. External experts
can suggest suitable negotiation tactics based on their experience from previous negotiations and expertise
on the issue. They can also help assess the negotiation situation.

There can be challenges associated with hiring an external agent. Some of these are as follows:

 Information asymmetry—Principals and agents may not be in possession of the same information.
Agents may acquire information due to their position within the negotiation and fail to convey it to
the principals. In other scenarios, principals may keep information from their agents, leaving agents
to negotiate with insufficient information. If both parties do not have the same information, their
approaches, decisions, and actions will differ. Adequate information dissemination will ensure that
both parties have the same level of understanding of the negotiations. Both principals and agents
should discuss the negotiation process in detail and provide each other with the required
information.

Example of Information Asymmetry:

 When a real estate broker is hired to sell a house, he or she is the agent and the owner is the
principal. Before the broker starts looking for prospective buyers, the homeowners should convey
their interests, constraints, outcome preferences, BATNA, walk-away point, etc. The broker should
be transparent about his or her capabilities and offer an honest assessment of the situation. This
may include informing the owner that the property may not receive the expected price or may not be
sold within the given time frame. As the broker begins speaking with potential buyers, he or she will
gather additional information and insights that should be conveyed to the owner. Additional
information may lead to a change in the owner’s expectations. On the other hand, if the information
is not relayed, the broker’s and owner’s assessments and expectations will be different.

 Conflict of interest—Though agents are supposed to act on behalf of principals, they may also have
personal motives that can lead to a conflict of interest. Such situations are generally resolved by
identifying and overcoming the conflict of interest by aligning interests of the principal and the agent.
In general, complete alignment of interests may be difficult.

Examples of Conflict of Interest Between Principal and Agent:

 A homeowner wants to sell his house as soon as possible, but the broker wants to wait for a better
deal because her brokerage fee is based on the selling price. This represents a conflict of interest.
In this situation, the homeowner can provide an incentive for selling the house in a month, thereby
aligning their interests.
 A company implementing an incentive program for its sales staff should attempt to ensure that the
incentive structure is properly aligned with the objectives of the company. For example, if the sales
staff is offered incentives solely for generated revenues, they may focus on reaching sales numbers
at the expense of acquiring new customers.

Sometimes, there are divided interests within the principal organization that further complicate the
negotiation process. One of the negotiator’s goals is to identify all such conflict of interest situations
and ensure that the parties’ overall objectives are met.

Example of Conflict of Interest within Principal Organization:

 In a negotiation for procuring automotive components, the finance department may want the least
costly components while the design department may want the best quality components, regardless
of cost. In this situation, senior management must balance or prioritize these conflicting interests,
since it is difficult to meet both expectations.

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 Miscommunication—Miscommunication among principals, agents, and the other party can lead to
misunderstandings. As the number of people involved in a negotiation increases so does the
potential for miscommunication. It also increases the potential for failure. It may be required to
speak directly with the other negotiating party in some circumstances in order to avoid the risk of
miscommunication.

Examples of Miscommunication:

 Miscommunication between a sports agent and a soccer club can result in a soccer player being
sold to another club.
 During divorce proceedings, a judge may recommend a couple attend marriage counseling or to talk 4
with each other personally without a lawyer present in order to resolve any miscommunication.

External expertise can be expensive and adds to the complexity of the negotiation. However, external
experts bring significant experience and knowledge to the negotiation situation. External experts may also
strengthen your position and increase the probability of a favorable outcome, but they do not guarantee a
successful negotiation. The costs and risks associated with hiring external experts should be analyzed.
Ideally, external expertise should be hired only if the benefit they can provide is greater than the cost they
represent.

At times, hiring external experts may be mandatory, due to legal requirements or organizational policies.

Examples of Mandatory External Expertise:

 In a legal proceeding for a criminal offence, it may be mandatory for both parties to hire lawyers,
and a judge will need to mediate the legal proceedings.
 For a company going through an initial public offering (IPO) for public listing of its equity, it may be
mandatory to hire merchant bankers.

4.1.2.2 Negotiation Planning Session*

Preparation lays the foundation for successful negotiation. Planning enables you to explore a wide range of
points of action, consider the arguments of the other party and arrive at a common ground of agreement,
ascertain short- and long-term implications of the outcomes of the negotiation, etc.

The negotiation planning session is the final meeting held with external agents, negotiators, and other group
members before the actual negotiation. During this session, several key decisions are made regarding the
negotiations, including the tactics to be employed during negotiation, the planned use of resources, the
approach of the negotiator, among others. On completion of the session, the following details should be
finalized:

 Logistics—These can include the following:

o Location—your preferred location or the other party’s preferred location, whether it be a
neutral location or at one of the party’s sites.
o Time-estimate—information on the duration of negotiation, how many phases of negotiation
may be required, convenient times for both parties to negotiate, etc.
o Preferred mode of negotiation—information on a variety of negotiation modes including
face-to-face, phone, video conference, e-mail, written, etc.
 Calibration of outcomes—This involves establishing the outcomes that will determine whether the
negotiation is a success or failure, the benefits of a successful negotiation, and the risks if the
negotiation fails.
 Establishment of a negotiation path—This is the path or the steps to be followed in the process
of negotiation and, if there are any obstructions, which alternative paths can be used to make a
negotiation successful.
 Negotiators—These are the selected negotiators, including their official status and authority for the
negotiation. Information on the other party’s negotiators and their level of authority might also be
discussed.

4.1.2.3 Negotiation Research

Negotiators often prepare for the negotiation process by focusing on their own aspects, tactics, alternatives,
logistics, and interests. However, this is only effective when there is also an understanding of the other party.
By focusing too much on your side of the negotiation, you will be underprepared and may not be able to
achieve your preferred outcomes.

Before conducting a negotiation, research must be conducted on the other party. This research is done to
gather additional information about the other party’s logistics including their preferred location, time,
duration, and mode of negotiation as well as their tactics during negotiation. An understanding of the other
party’s negotiation history, including logistics and trends, can be researched. The other party’s logistic
choices may be related to their negotiation tactics as well as their negotiation Aspects. The type of location
and the mode of negotiation compared with the Aspects of Negotiation from previous negotiations can help
prepare for the upcoming negotiation. For example, their mode of negotiation or type of location may be a
direct indication of the importance they assign to the issue. Negotiation research can also be done to
understand whether the other party’s negotiator is an internal group member or an external agent. If the
negotiator is an external agent, research can be done on the agent’s past negotiations, level of expertise,
and other associated Aspects. Researching the other party’s hired law firm and their negotiation tactics
before entering into a legal negotiation is an example of negotiation research.

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Example of Negotiation Research:

 A start-up company is meeting with a web developer to negotiate a contract for the web developer
to establish a digital presence for the company. If the location designated for the negotiation is the
start-up company’s offices with several senior staff members in attendance, the meeting will be
relatively formal. However, a meeting at a local restaurant with the company’s marketing manager is
likely to be more casual. The preparation is important in both cases, though the approach will be
altered to suit the location and the individuals participating in the negotiation.

4
4.1.3 Outputs

4.1.3.1 Logistics for Negotiation*

Logistics for negotiation include information on where the negotiation will be held, how the negotiation will be
conducted, how long the negotiation will run, how many phases of negotiation are required, etc. The details
of logistics include the following:

 Location—This identifies where the negotiation will take place. It can be your preferred location,
the other party’s preferred location, or a neutral location. Some factors to consider when choosing a
location for negotiation are as follows:
o What are the advantages/disadvantages of selecting a location of your choosing?
o What are the advantages/disadvantages of selecting a location of the other parties’
choosing?
o Are the negotiators of the other parties in agreement with the proposed location?
o Do the negotiators have access to all the amenities, such as computers, phones,
documents, etc., as well as access to all information required for negotiation?
o Should the environment for the negotiation be formal or informal?

 Time estimate—This includes information on the duration of negotiation, phases of negotiation,

and the best time to hold the negotiation. Apart from the broad timelines, discussions with the other
party can confirm when the negotiation will begin, when breaks are scheduled, when the negotiation
will conclude for the day, etc.

 Preferred mode of negotiation—This includes information on how the negotiation will be

conducted. For example, if the negotiation will be conducted face-to-face, via phone or video
conference, through the exchange of information via e-mails or written documents, etc.

Example of Logistics for Negotiation:

 The ability to compete in a global market has required companies to re-think how to best use
technology to negotiate with customers internationally. A supplier can negotiate product pricing,
delivery dates, shipping methodology, and order quantities using video conferencing to discuss
logistics with a customer, then summarize preliminary agreements using e-mail. The customer can
then either accept what has been proposed or enter into further negotiations with the supplier.

4.1.3.2 Calibration of Outcomes

Based on the negotiation situation and negotiation plan, outcomes should be calibrated in order to
understand what constitutes a good deal and what constitutes an acceptable one. Outcomes can be
categorized as satisfactory, unsatisfactory, or neutral, based on the benefits associated with each outcome.
Included in this calibration is an understanding of the risks associated with failure of the negotiation. For
example, when calibrating outcomes in a procurement negotiation, a satisfactory price for the equipment
should be considered as well as the risk of losing any dependent contracts if the procurement negotiation is
unsuccessful.

Examples of Calibration of Outcomes:

 At the Paris climate conference in December 2015, 195 countries adopted the first-ever universal,
legally binding global climate deal. The agreement sets out a global action plan to keep the increase
in global average temperature to well below 2°C above pre-industrial levels. The agreement is due
to take effect in 2020.
While this negotiated agreement represents a major success for the world as a whole,
environmentally conscious countries see this agreement as unsatisfactory because it is not
aggressive enough in terms of target temperatures or timing. Developing countries, on the other
hand, are less affected by the agreement, as they have not yet reached “peak emissions” in their
emerging economies. The impact of the climate agreement on these countries is therefore minimal
or neutral as it is recognised that it will take longer for these developing countries to meet emission
targets.
The negotiated agreement, while not ideal, is projected to have an overall benefit to alter
current trends in climate change overall

4.1.3.3 Expected Negotiation Paths

Understanding the negotiation paths enables you to understand the process and allows for the planning and
committing of adequate resources to carry out the negotiation. If there are any obstructions or changes

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during negotiation, alternative paths for a successful negotiation can be considered. For simple negotiations,
the negotiation path may be straightforward and fewer resources can be committed.

For example, the negotiation path to purchase a car is shown in Figure 4-3.

Background research for car

prices and features

Visiting dealership

Negotiating with Sales 4

Representative for first offer

Negotiating with Sales Manager

for final offer

Buying the car

Figure 4-3: Car Purchase Negotiation Path

In complex negotiations, there may be uncertainties and a greater number of resources may need to be
committed to complete the negotiation. For example, the negotiation path of a government contract award is
shown in Figure 4-4.

Call for Proposals

Proposal submission

Proposal discussions

Proposal Evaluation

Final Award

Figure 4-4: Government Contract Award Negotiation Path

4.1.3.4 Your Negotiators*

The selection of negotiators finalizes this process. Negotiators can be internal or a hired external agent. This
decision should be made on the basis of the negotiation situation and the availability of resources. When
using agents, checks and balances should be in place to tackle agency issues as detailed in section 4.1.2.1.
The level of authority a negotiator will have should be finalized at this point as well.

4.1.3.5 Other Party Negotiators*

Before conducting the negotiation, it’s important to know who will negotiate for the other party. Knowledge of
their preferred negotiation style, experience, and level of authority is valuable. For example, if the other party
hires an agent for negotiation, you may not have direct access to the other party.

4.1.3.6 Potential Bottlenecks

When planning the negotiation process, roadblocks may arise. It is important to identify and plan for such
potential obstacles. Some potential roadblocks are as follows:

 Lack of trust— This can be due to past experiences, unfamiliarity, or reputation of the other party.
To overcome this obstacle emphasis should be placed on truth and accuracy, the gathering of more

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information and proof, the discussion of noncompliance penalties, etc. In addition, a multi-phase
settlement requiring further negotiation can be implemented after concluded agreements are
honored and implemented. This gives both parties a chance to establish trust.

Example of Potential Bottleneck–Lack of Trust:

 When an architect is working with a client for the first time, the lack of an existing relationship and
trust will come into play. Before the client agrees to spend a large amount of money on a building
project, the architect and the client may agree on an architectural design in the first phase of the
project. In subsequent negotiations, they may then agree upon a price for the construction drawings
and for the completion date and price of the finished project. This multi-phased approach will 4
establish comfort and trust with the client.

 The Other Party is Not Interested in Negotiation—This can happen if the other party is happy
with the status quo or has better alternatives. Benefits of the expected deal and the problems with
the status quo can be discussed and offers of external support or incentives to negotiate can be
provided.

Example of Potential Bottleneck–Other Party is Not Interested in Negotiation:

 A customer who cannot decide whether to choose between economy and safety when buying a new
car might hesitate to make a buying decision. A salesperson will attempt to overcome the
customer’s fear of making a poor buying decision by indicating that customers with similar concerns
typically choose a specific model of car to strike a balance between economy and safety. This
approach reduces the negative emotions the customer may be experiencing and provides an
incentive to start negotiations with the salesperson.

 Sharing of information—When one party shares more information than the other, they may put
themselves in a weaker position. On the other hand, not sharing enough information may lead to a
sub-optimal solution. This can be an obstacle for the negotiation if either party is reluctant to share
information. This can be overcome through the incremental sharing of information, which allows for
understanding of other party’s intent and also builds trust.

Example of Potential Bottleneck–Sharing of Information:

 A company has established a budget of $40,000 to get their website developed. They ask the
developer for a quote to develop the website without divulging their budget for the
project. Realistically, the developer requires additional information to give an accurate quote. She
therefore asks the other party about their needs and expectations to complete the project. This
helps to establish trust and rapport for the upcoming price negotiations. This sharing of information
also provides the developer with insight into the scope of the project and provides the information
needed to follow up with a less costly quote to the customer if there is an objection to the cost of the
first estimate.

 Internal or external opposition—Opposition to negotiation or to probable agreements within one’s

own organization or the counterparty organization can be a potential roadblock. Identifying those in
support and those in opposition to the negotiation, and the reasons for their position, is necessary to
win over or neutralize any opposition.

Example of Potential Bottleneck–Internal or External Opposition:

 The National Coalition Against Domestic Violence in the United States has published a handbook to
break down opposition by influential government officials who oppose new legislation and additional
funding for the prevention of domestic violence. The handbook contains information to explain why
there is a need for changes to current legislation, and the cost to society if new programs are not
funded. The handbook also contains sample scripts for writing letters to legislators in opposition to
new legislation and funding. This has led to a greater willingness of those in opposition to negotiate
with the National Coalition.

 Gender and cultural barriers—People of different cultures or gender may have a different style or
approach to negotiation. Misunderstandings based on cultural or gender differences should be
avoided. Information can be gathered about the other party, in particular their culture, that will allow
for better planning. Careful attention should be paid to ensure negotiation issues are not masked as
cultural or gender issues.

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Example of Potential Bottleneck–Gender and Cultural Barriers:

 In American culture, referring to someone by his or her first name is an act of friendship. In
Japanese culture, the use of the first name at a first meeting is an act of disrespect. As a general
rule, it is always safer to adopt a formal posture and move to an informal stance, if the situation
warrants it, than to assume an informal style too quickly.
 When Enron was a pipeline company, it lost a major contract in India because local authorities felt
that it was pushing negotiations too fast. In fact, the loss of the contract underlines the important
role that cultural differences play in international negotiations. For one country’s negotiators, time is
money; for another’s, the slower the negotiations, the better and more trust in the other side.
4

Every negotiation situation is unique and will have its own set of potential bottlenecks. In most cases,
communication can help to overcome these bottlenecks. At the end of this process the principal should have
an action plan for each of the identified roadblocks.

Exercises for Planning for Negotiation:

 Role play—You are a training consultant and you are preparing for the first meeting with a potential
client. You know the client is looking to provide sales training for the entire sales team. You’ve
already had a brief discussion with the Director of Sales. She has a budget of 20,000.00 for the
training and a sales force of fifteen staff. What details will you need to establish before you enter the
negotiations? Consider the alternatives, BATNA, and outcome preferences for you and the client.
What are the potential bottlenecks and how might you deal with them?

 Role play—You are planning to rent office space and have identified a location in a part of the city
that is ideal for your business. You know that the rent is going to be high and definitely outside your
budget, but you are willing to commit to a long-term contract, and you know that the space has been
available for some time, so you may be able to get a good deal. What details will you need to
establish before you enter the negotiations? Consider the alternatives, BATNA, and outcome
preferences for you and the client. What types of leverage can you use to obtain the space at a
more affordable rate?

4.2 Conduct the Negotiation

This process deals with offers and tactics that should be used in the negotiation process. It specifies what
kind of offer is suitable for a particular situation. It describes when to make a first offer and the conditions
that are favorable for making it. Similarly, it explains when and under what conditions a second offer and
subsequent offers (if required) need to be made. It also draws awareness to the tactics that help in
negotiations and when such tactics are being used by the other party. As well, the factors involved in
managing agents if they are conducting the negotiation on your behalf, are discussed. Figure 4-5 shows the
inputs, tools, and outputs of the Conduct the Negotiation process.

1. Logistics for Negotiation* 1. Opening the Negotiation 1. Negotiated Deal*

2. Calibration of Outcomes 2. First Offer* 2. Negotiated Deal Terms and
3. Expected Negotiation Paths 3. Second Offer* Conditions
4. Your Negotiators* 4. Subsequent Offers* 3. Satisfied Parties
5. Other Party Negotiators* 5. Tactics for Negotiation 4. Potential for Future Deals
6. Potential Bottlenecks 6. Managing Agents
7. Your BATNA
8. Your Walk-Away Point
9. Expected Other Party BATNA
10. Expected Other Party Walk-Away
Point
11. Your Negotiation Reference
Frame
12. Expected Other Party Negotiation
Reference Frame

Figure 4-5: Conduct the Negotiation—Inputs, Tools, and Outputs

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4.2.1 Inputs

4.2.1.1 Logistics for Negotiation*

Logistics for negotiation includes information on where the negotiation will be held, how the negotiation will
be conducted, how long the negotiation will run, how many phases of negotiation are required, etc. For
further details, see section 4.1.3.1.

4.2.1.2 Calibration of Outcomes

4
Outcomes should be calibrated in order to understand what constitutes a good deal and what constitutes an
acceptable one. Outcomes can be categorized as satisfactory, unsatisfactory, or neutral based on the
benefits associated with each. For further details, see section 4.1.3.2.

4.2.1.3 Expected Negotiation Paths

Understanding the negotiation paths enables you to understand the process and allows for the planning and
committing of adequate resources to carry out the negotiation. For further details, see section 4.1.3.3.

4.2.1.4 Your Negotiators*

Negotiators can be internal resources or a hired external agent. The decision on who will best represent your
side in a negotiation should be made on the basis of the situation and the availability of resources. For
further details, see section 4.1.3.4.

4.2.1.5 Other Party Negotiators*

It is important to know who will negotiate for the other party. Knowledge of their preferred negotiation style,
experience, and level of authority should also be considered. For further details, see section 4.1.3.5.

4.2.1.6 Potential Bottlenecks

Potential bottlenecks or roadblocks may include a lack of trust, the other side not willing to negotiate, lack of
information, internal or external opposition, or cultural or gender barriers. An action plan for each of the
identified roadblocks should be defined. For further details, see section 4.1.3.6.

4.2.1.7 Your BATNA

This is the best alternative to a negotiated agreement if the negotiation does not go through. The BATNA is
selected from the alternatives that have been identified. For further details, see section 3.1.3.3.

4.2.1.8 Your Walk-Away Point

Before conducting a negotiation, you must have clearly documented the point at which the BATNA becomes
preferable to the agreement being negotiated, or the point at which a negotiator is prepared to walk away
from the negotiating table. This is described in section 3.1.3.4.

4.2.1.9 Expected Other Party BATNA

The BATNA for the other party is the next best alternative that they have to the negotiated agreement. For
further details, see section 3.2.3.3.

4.2.1.10 Expected Other Party Walk-Away Point

4.2.1.11 Your Negotiation Reference Frame

This is the frame or perspective from which you would want the other party to perceive or interpret the
situation. For further details, see section 3.1.3.5.

4.2.1.12 Expected Other Party Negotiation Reference Frame

The other party’s expected negotiation reference frame indicates their point of view, how they want to be
perceived and how they interpret the issue. For further details, see section 3.2.3.6.

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4.2.2 Tools

4.2.2.1 Opening the Negotiation

Opening the negotiation on the right note is necessary for a successful negotiation. It is useful to “break the
ice” and get to know the other party and the other party’s negotiators. A good opening also gives you an
opportunity to understand the other party’s intent and build trust. In some circumstances you may want to
start negotiating without the usual “small talk” but, unless you know the other party well and have negotiated
with them in the past, it is better not to jump into the negotiation immediately. Introduction and discussion on
4
ground rules for negotiation should precede the actual negotiation. This will set the tone for the rest of the
negotiation process. You should discuss and finalize the following to ensure that there are no hassles,
misunderstandings, or complications regarding the process later on12:

 Meetings—The duration, frequency, and location of meetings should be decided. The structure of
meetings can affect the negotiation process, especially for formal negotiations. For example,
deciding to meet every day until an agreement is reached will likely help in ensuring a steady
progression of the negotiation. You should also try to fix a timeline within which you expect the
negotiation to conclude.
 Authority Levels—You should discuss if negotiators on both sides have the same authority level
and the limits to their authority. You need to find out if the other negotiator has the authority to
make the final deal.
 Agreements—You should finalize the type of agreement acceptable to both parties. In some
informal settings a verbal agreement can suffice while, for others, a written agreement may be
required.

While discussing the issues mentioned above, you should actively listen to what the other party is saying.
Information exchange in the opening session will inform you about the other party’s interests, objectives, and
approach to negotiation. You should refrain from sharing too much information or asking too many questions
in the beginning. Ideally, both parties will set the pace for information exchange. It’s best to start with
incremental information exchange and let the other party reciprocate. Your assessment of the negotiation
situation, discussed in the previous chapter, should be adjusted as necessary on the basis of the information
exchange in the opening stage of the negotiation. You should also be prepared to modify your strategy, if
required. Any initial proposals that you prepared before starting the negotiation should also be modified if
necessary.

The opening session of the negotiation allows you to build rapport with the other party and the other party’s
negotiators. As you acknowledge their objectives and concerns and share your own, you build trust which

12Carrell, Michael R. & Christina Heavrin (2008) Negotiating Essentials: Theory, Skills, and Practices. Pearson
Education. 6th Edition

helps in negotiating further. You can also share your expectations for the process, outcomes, and the
relationship.

4.2.2.2 First Offer*

The first offer is extremely important in every negotiation. As the name suggests, it is the first proposal on
the table. Making the first offer provides a significant psychological advantage as it establishes the initial
expectation. It is particularly advantageous to make the first offer if there is a lack of clarity on the value or
exact point of the deal, such as when setting the price point of a custom service or product. The first offer
becomes the anchor around which the negotiation is conducted. Many single-issue deals are finalized close
to the first offer point.

Justification for the offer is an important part of making the first offer. Justification helps explain to the other
party why an offer is fair. For example, a homeowner can justify asking $ 1,000,000 for his house by saying
that it is in an excellent neighborhood, that it has been recently remodeled, and that the asking price is
appropriate for the area. Giving proposals without justification makes your offer look weak or unfair, which
gives the other party an opportunity to justify their offer and make their offer the anchor point. The framing
and justification of an offer will also affect the ensuing negotiation and can put the other party in a defensive
or an offensive mode. Acceptance or rejection of a proposal depends on how it is presented. Framing is
discussed in detail within the Tactics for Negotiation tool, which is described in section 4.2.2.4.

The first offer should be made when the walk-away point of the other party is known. This allows you to
make an offer that is close to the walk-away point of the other party, but within their ZOPA. This is
appropriate when the sole aim is to arrive at the best deal possible. However, this will not work if there is no
justification or leverage to support the offer or if the relationship or reputation is at stake. For example, a
football player has a low walk-away point because of his current salary, but an exceptional season has
suddenly increased his value. If the club owner offers something close to his walk-away point, he will not
take the offer seriously. The offer depends on the negotiation situation and the assessment of the other
party’s walk-away point. When the walk-away point is unknown, refrain from making the first offer as this
may result in either of the following:

 You may quote a value that is beyond the walk-away point of the other party, which may cause the
deal to fail.
 You may make an offer that is within the ZOPA of the other party but that represents a result that,
among the range of outcomes, favors the other party. The other party may happily agree with this
offer, or even counter with a lower offer. The anchor point for the negotiation may have been higher
had you waited for the other party to make the first offer.

Making an offer beyond the other party’s walk-away point may occur when the walk-away point of the other
party is entirely unknown or when an assessment of the walk-away point is incorrect. In either case, the
following situations are possible:

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 The other party may not want to go ahead with the deal or negotiation.
 The offer may even be considered offensive by the other party, since they may deem it to be a very
unfair proposal. For example, if a tourist negotiating for a souvenir offers way below the expected
sale price, the vendor may be offended by the offer.
 You may give the other party the impression of naïveté or a lack of background work for the
negotiation if the first offer is not realistic. It may also affect the negotiation process in the future.
 If the other party really wants the deal, they may continue the negotiation, but quote a different price
in their second and subsequent offers.

Making a first offer is dependent on the assessment of the other party’s negotiation situation. If there is
uncertainty about making the first offer, it is better to further discuss the context of the deal and frame the 4
situation to your advantage. Actively listening to what the other party has to say will provide a better
understanding of their interests, concerns, ZOPA, etc.

Examples of First Offer:

 A homeowner lists his house for $750,000.00. Knowing that this is a reasonable price, but wanting
to get a relatively good deal, a purchaser makes the first offer at $735,000.00.
 A woman lists her five-year-old road racing bike on a buy and sell website. Five years earlier, she
paid $1500.00 for it. Rather than listing a price, she indicates in the ad that she’ll take the best offer.
She’s hoping for $500.00 because, while it’s five years old, it’s in good shape. The first offer comes
in at $700.00. This is well within her ZOPA and she immediately takes the offer.

4.2.2.3 Second Offer*

The second offer is the counter offer made by either party. If the first offer is made by the other party, the
second offer can be made close to the expected walk-away point of the other party or additional discussion
can be initiated about the deal. During the discussion, an assessment of the importance of the deal for the
other party can be made and this may assist in achieving a better outcome from the negotiation.

If the first offer is made by the other party, there are three possibilities and suggested courses of action that
can be pursued. They are as follows:

Possibility 1—The other party’s first offer is beyond your walk-away point.

 Preferably, there can be a discussion of the issues with the other parties and an attempt can be
made to understand their concerns. After some discussion, a second offer that is believed to be a
good deal for one side can be made, and then they can try to convince the other party that it is a
good deal for them as well.

 Data or information that can be used to counter the first offer of the other party should be presented.

Examples of Second Offer when First Offer is beyond your Walk-Away Point:

 In a real estate deal, one party (lessee) offers to pay $20 per square foot, but the other party
(lessor) quoted newspaper articles and real estate magazines showing that the average property in
the same location is valued at $40 per square foot.
 A manufacturer quoted a supplier a price of $2,000 for a specific item. To validate a higher counter
offer the supplier discussed the manufacturing process and raw material and labor costs,
suggesting that the $2,000 price was unrealistic.

Possibility 2—The other party’s first offer is within your party’s ZOPA, but it is close to your walk-
away point and appears to be an unfavorable deal.

 In this scenario, further discussion of the issue and an attempt to make the other party understand
the frame of reference in addition to other assessments can make the other party more amenable to
the deal and they may provide a better offer.

 Make the other party provide another offer, by saying, for example, “I don’t feel that offer is good
enough. Can you make another offer, something I can consider?” If the other party provides another
offer, you are in a stronger position to continue the negotiation.

 Try to determine the other party’s walk-away point. Does the other party have a lot of flexibility or is
his walk-away point very close to yours? If the ZOPA is too small, it may be necessary to settle for a
deal that is only marginally better than not having a deal at all.

Example of Second Offer when first Offer is Close to Walk-Away Point:

 A consultant typically offers his services at between $120 and $150 per hour. In the first negotiation
with a new client, he is offered $110. This is essentially his walk-away point but the client is high
profile and he is hoping to strike a deal. He goes back to the client requesting they consider meeting
him in the middle. He agrees to a rate that is marginally below his regular rate in order to reach a
deal. He knows, long term, this is a good outcome.

Possibility 3: The other party’s first offer provides a really great outcome

 Although the offer is good, resisting the impulse to close the deal may lead to an even better deal.
Further discussion of the issue and an attempt to make the other party understand your frame of
reference in addition to other assessments can make the other party more amenable to the deal,
and they may provide a better offer.

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 Try to find the other party’s walk-away point and assess how much more they can offer before
closing the deal.

Example of Second Offer when First Offer has a Great Outcome:

 A basketball player has had a stellar college season. He is beginning to field offers from several
professional clubs. His agent sets up a meeting with one of the suitor clubs. They make him an offer
that is well beyond his expectations. Although he is thrilled, his agent manages to negotiate for an
additional two years in his contract by providing the club with additional details of the player’s stats
in his final year at college and a list of other clubs interested in signing a deal with the player.
4

4.2.2.4 Subsequent Offers*

After the first and second offer, there may be subsequent offers from both parties before a deal is finalized.
At this stage, more will be known about the other party’s interests and they will know more about yours.
More information may be exchanged based on the nature of the issue and the urgency to finalize a deal. It is
important to note during this stage that if the other party offers too many concessions too quickly, this is an
indication that they have a great amount of flexibility on their side. In this situation, you can push further for a
better deal. However, if the other party is not offering concessions or is negotiating very close to their earlier
offer, the current offer might be very close to their walk-away point.

Similarly, do not give concessions easily. From your point of view, it is not recommended to offer too many
concessions because this encourages the other party to believe that they can push further. Before thinking
of making a concession, consider the BATNA. If the BATNA is strong, a concession is not needed. However,
if the BATNA is weak, you may need to make concessions. Offer concessions in a phased manner, consider
the BATNA, and evaluate further alternatives. While offering a concession, always be patient and justify the
reason for offering it. Concessions should be made only on the basis of a benefit that can be obtained and
not on the basis of personal relationships.

Any additional information about the other party helps with the negotiation process. In integrative
negotiations, active listening may help to discern the other party’s concerns and opportunities to create win-
win outcomes for both parties. Active listening is described in detail in section 4.2.2.4.

Example of Win-Win Outcomes through Active Listening:

 A travel agent may provide additional discounts if a tourist books their travel in advance because it
reduces uncertainty for the travel agent and helps them negotiate better rates with hotels and
airlines. At the same time, for a tourist who has planned his travel way in advance, there is an
opportunity to get additional discounts for their travel. So, it is a win-win outcome for both the travel
agent and the tourist.

It is important to look beyond positions and identify complementary interests with the other party. By
exploring complementary interests, it may be possible to convince the other party to settle for a deal that
may even be below their walk-away point. Such interests are perceived as an additional benefit beyond what
was initially offered by the deal and the other party may be willing to extend concessions that were not
previously offered. In some cases, it is also possible to exploit differences to receive a better deal. By
working on differences and satisfying interests of both the parties, it is possible to create value that would
not have been possible before.

Example of Win-Win Outcomes through Satisfying Interests of Both Parties:

 When a buyer is not able to purchase a product because of the price is beyond what he or she can
afford, a seller may want to work with the buyer to break down the price. The buyer may agree on a
slightly higher total price, paid in installments over a certain period of time. This way the seller gets a
higher price and the buyer does not have to go beyond their budget with the initial purchase.

Continual evaluation is an important tactic that helps to understand the other party’s subsequent offers as
well as come up with subsequent offers that suit your needs. Do not stick to pre-negotiation assumptions,
but rather try to get more information over the course of negotiation; additional information can pertain to the
other party, their negotiation situation, or their BATNA, walk-away point, interests, or potential alternatives.
Continual evaluation is described in detail in section 4.2.2.4.

4.2.2.5 Tactics for Negotiation

Although a party may be well prepared before the negotiation and be aware of both parties’ alternatives,
walk-away points, reference frames, Aspects of Negotiation, and resource availability, certain negotiation
techniques may be required to reach a preferred outcome. Knowing how to use these techniques to utilize
the available information advantageously and to attain preferred outcomes is recommended. The techniques
discussed in this section include the following13:

 Establishing Credibility
 Active Listening
 Continual Evaluation

Establishing Credibility

During negotiation, the information exchanged plays an important role in first formulating and then altering
the BATNA, walk-away point, and preferred outcomes. The source of the information plays a key role in

13 Harvard Business Essentials: Negotiation (2003). Harvard Business Review Press

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influencing the other party during a negotiation. In some cases, when information is provided, the other party
may not initially accept its validity. This can delay the negotiation process, since the other party may take
time to validate the information provided. Information from a credible source will reduce the time taken for
negotiation as well as increase the chances of success. Therefore, it is important to establish credibility in
the initial phase. Information validity can be established by having the requisite proof for the information on
hand, or by using an external expert who can validate the information or negotiate on your behalf.
Information validation can also be based on the associations an organization maintains and engages with as
well as their previous deals. The use of introductions from reputed sources and endorsements are other
ways to establish credibility for business negotiations.

Example of Establishing Credibility: 4

 To establish credibility when negotiating a price, a computer hardware company needed to present
a believable business case to show why its prices were competitive and reasonable, compared to
other suppliers. At the same time, the company needed to demonstrate why paying that price would
benefit its customers, based on their knowledge of their customers’ specific individual and business
needs.

Active Listening

For any negotiation, a signal to the other party or negotiator that you are concerned about their interests is
needed as well. Active listening is not merely hearing the other party, but actively showing and signaling to
the other party a keenness to understand their interests. Expressions of empathy with the other party help
create the feeling that the other party’s needs and interests are understood. Some of the techniques for
active listening include the following:

 asking open-ended questions to gauge the other party’s needs and interests
 listening to the other party completely before responding
 being conscious of body language, being attentive to the other party’s body language, and
maintaining good eye contact
 after listening to the other party, paraphrasing or summarizing what they shared before providing
your response

While being an active listener increases acceptance by the other party, the need to be assertive while
expressing your needs and interests is also required. Therefore, it is important to strike a balance between
being assertive and being empathetic.

Continual Evaluation

As described in section 2.4, negotiation is a non-linear process that may not follow a predictable path.
During the course of negotiation there can be new alternatives or opportunities that arise as well as new
information that can be gained regarding the other party. During a negotiation there is a need for continual

evaluation. Be aware of new alternatives, information, or any changes that can alter the preferred outcomes,
BATNA, or walk-away point. Access to new information can cause an issue to be viewed differently, even
during single-issue negotiations. The other party may also offer concessions or heighten demands during
the negotiation, so it is important to continually evaluate as well as readjust the initially set inputs moving
forward.

Example of Continual Evaluation:

 Your career-minded spouse is against giving up a $60,000 salary to relocate to another city for you
to accept a new position. Your new position would pay $100,000 or $40,000 more than your current
salary. Your spouse’s initial BATNA is not to move, keep her job, and have you reject the job offer at
the new location. You therefore propose to your spouse that with a lower cost of living in the new
location, you will be able to afford a larger home on your salary alone. Your spouse will not have to
work if she chooses not to and she can pursue other personal interests at the new location. You
also explain that there is a high chance your spouse will be able to find a similar job to her current
one for a salary that is similar to that which she is currently making. By exploring alternatives, you
are therefore able to alter your spouse’s BATNA and reduce resistance to your accepting the new
position.

Dealing with Hardball Tactics

“Hardball tactics,” which are often used in negotiation, are designed to pressure the other party to settle at
an outcome, which they would not have agreed to under normal circumstances. While it is not advisable to
use hardball tactics, you need to know how to handle situations when hardball tactics are being used against
you. Some common hardball tactics are described below:

 Lowballing or highballing—The other party is said to be lowballing when he or she starts with an
unreasonably low offer. Highballing on the contrary refers to a scenario where the other party’s
initial demand is unreasonably high.

 Nibble—This is a scenario where the other party makes small demands when the negotiation is
nearing its agreement. After spending a considerable time negotiating and discussing, people
generally tend to concede to small demands from the other party toward the end of the process.

 Chicken—In this tactic, the other party uses a bluff that carries a threatened action with the intent of
forcing you to accept their demands.

 Intimidation—This involves the use of an emotional ploy to force you into conceding to the other
party’s demands. Anger is a commonly used intimidation tactic that is used to create fear or to
indicate some urgency—real or fabricated—in the situation.

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 Snow job—This refers to the use of providing excessive information or communicating in an

incomprehensible technical language with the intent of overwhelming or distracting you.

As a negotiator, it is important that you quickly realize and respond to negate the hardball tactic being used
against you. A hardball tactic is effective only when you are unaware that the other party is using it. Hence
an understanding of various hardball tactics and the ability to realize when they are being used is the best
defense against such tactics. The better you are prepared for the negotiation the lesser a hardball tactic will
be effective against you. A general tactic that can be used against all hardball tactics is to show indifference
to the tactic and move forward. For example, when the other party makes a very low or high initial offer
(lowballing or highballing), it’s effective to simply ignore the offer and not feel rushed into making an
immediate counter offer.
4
Another method to counter hardball tactics is to discuss the tactic with the other party. You can convey to the
other party that you are aware of hardball tactics and that you prefer having a mutually fruitful discussion.
For example, when you feel that the other party is using intimidation tactics, you can indicate your
displeasure towards this tactic and propose to continue the negotiation in a more polite manner.

4.2.2.6 Managing Agents

The issues that can arise from using agents are described in detail in section 4.1.2.1. Agency issues include
information asymmetry, conflict of interest, and miscommunication. During negotiation, agency issues should
be minimized. While dealing with agents it is important to ensure that all vital information needed for
negotiation is communicated to them. As mentioned in section 4.1.2.4, information is a source of leverage
and it is imperative for an agent to possess all the key information required to achieve the desired outcomes.

While using agents, ensure that a level of authority is established for the group if it hasn’t already been set.
A level of authority ensures that the agent communicates with the relevant authority for making decisions
and gathering information during negotiation. Clarity regarding what information can be disclosed to the
other party, what alternatives can be disclosed, and the tactics that need to be used is vital. An agent may
be an expert at using various tactics but, without providing the necessary information, they may not be able
to employ the tactics effectively. Conversely, the agent may not disclose information that can affect the
ability to make proper decisions as well as arrive at final outcomes. Clear and regular communication with an
agent is therefore essential for the negotiation process.

Issues regarding conflict of interest can exist with an agent if they are not fully aligned with a party’s
interests. The agent may even have an interest in the opposing party achieving their outcomes. In such
cases, it is important that you identify the situation early and find a suitable alternative. In addition, an
agent’s reputation and track record with regards to past negotiations needs to be assessed before being
appointed.

In most cases, the main reason for appointing an agent is the expertise that he or she brings to a negotiation
process in terms of knowledge and tactics. You need to ensure that this knowledge is utilized well and
tactics are optimally used to achieve the preferred outcomes.

4.2.3 Outputs

4.2.3.1 Negotiated Deal*

The negotiated deal is the final outcome that is arrived at after a successful negotiation. It brings a
settlement to the issue at hand. In the case of a failed negotiation, there is no deal. The negotiated deal
typically tends to fall in between the ZOPA of the negotiating parties. According to the calibration of
outcomes, as described in section 4.1.3.2, an assessment of the current deal can be made, and the deal can
be determined to be satisfactory, unsatisfactory, or neutral.

A negotiation may result in a contract, such as a procurement contract for purchasing materials from another
company.

4.2.3.2 Negotiated Deal Terms and Conditions

Along with the negotiated deal, terms and conditions for the deal are also discussed and finalized. These
may contain details about the deal including terms for compliance, penalties for non-compliance, timelines,
and expected service. All parties are expected to follow the set terms and conditions to ensure that the
negotiated deal is not breached.

Example of Negotiated Deal Terms and Conditions:

 A football player negotiates his first professional contract. He receives a signing bonus along with a
five-year contract for which penalties apply should he break the contract before its term. The club
reserves the right to sever the contract should the player behave in a way that puts the club at risk.
The player knows that he must abide by the terms and conditions of his contract in order to maintain
his position on the team.

4.2.3.3 Satisfied Parties

A negotiated deal generally leads to satisfied parties, since the deal fulfilled the objectives of all parties. If all
parties are not satisfied, it may not be a successful negotiation for all parties. Generally, even if a deal is
favorable to one party, the other party also gains something because they agreed to the deal. Therefore,
even if satisfaction levels vary, a negotiated deal results in satisfied parties.

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4.2.3.4 Potential for Future Deals

A successful negotiation offers the potential for future deals due to the rapport built during the current deal.
As is evident from the processes discussed earlier, negotiation depends on the relationships between the
parties. Good relationships provide opportunities for other deals in future. Successful negotiation also
provides opportunities to form coalitions and partnerships in the future.

Example of Potential for Future Deals:

 An advertising deal with a particular brand may pave the way for deals with other brands belonging
to the same company.
4
 An automobile company and its suppliers in a particular area may form a coalition to lobby for tax
subsidies.

Exercises for Conducting the Negotiation:

 Role play—As a training consultant, you have prepared for your first meeting with a potential client.
You know the client is looking to provide sales training for the entire sales team. You’ve already had
a brief discussion with the Director of Sales. She has a budget of 20,000.00 for the training and a
sales force of 15 staff. In your planning, you consider the alternatives, BATNA, and outcome
preferences for you and the client. Begin the negotiation. Who will make the first offer? What tactics
can be used to reach a deal?

 Role play—You are planning to rent office space and have identified a location in a part of the city
that is ideal for your business. You know that the rent is going to be high and definitely outside your
budget, but you are willing to commit to a long-term contract, and you know that the space has been
available for some time so you may be able to get a good deal. Now that you have planned your
negotiation strategy, considering the alternatives, BATNA, and outcome preferences, begin your
negotiation. Who will make the first offer? What negotiation tactics can be used to get the best deal
in this scenario?

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5. PREPARE FOR MULTI-ISSUE NEGOTIATION

This chapter discusses the concepts involved in preparing for a multi-issue negotiation. The two processes
in this chapter focus on understanding your own negotiation situation as well as the negotiation situation of
the other party. Most negotiations are multi-issue negotiations where several issues are negotiated. In such
scenarios, it is important to understand and clearly define the issues prior to negotiation. Also, you will need
to analyze the importance placed on each issue by the other party. Figure 5-1 provides an overview of the
processes associated with this chapter. They are as follows:

5.1 Understand your Negotiation Situation—In this process you assess your situation for the upcoming
negotiation.

5.2 Understand Negotiation Situation of the Other Party—In this process you assess the other party’s 5
situation for the upcoming negotiation.

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5.1 Understand Your Negotiation 5.2 Understand Negotiation Situation

Situation of the Other Party

INPUTS INPUTS
1. Existing Understanding of Issues* 1. Your Issues for Negotiation*
2. Your Negotiation Capabilities 2. Your Negotiation Capabilities
3. Past Negotiation Process 3. Past Negotiation Results
4. Past Negotiation Results 4. Defined Negotiation Process
TOOLS 5. Other Party Negotiation Capabilities
1. Issues Analysis* 6. Your Resource Availability for Negotiation
2. Aspects of Negotiation* 7. Your Alternatives*
3. Analysis of Alternatives* 8. Your BATNA(s)*
4. Primary Research 9. Your Walk-Away Point(s)*
5. Secondary Research 10. Your Negotiation Reference Frame(s)
6. Meetings and Discussions 11. Your Negotiation Aspects
7. Assessing Constraints 12. Your Outcome Preferences
8. Understanding your Negotiation Leverage TOOLS
9. Risk Assessment 1. Analysis of Issues of the Other Party
OUTPUTS 2. Aspects of Negotiation*
1. Your Issues for Negotiation* 3. Analysis of Alternatives of the Other Party*
2. Defined Negotiation Process* 4. Primary Research
3. Your Negotiation Timeline 5. Secondary Research
4. Your Resource Availability for Negotiation* 6. Meetings and Discussions
5. Your Alternatives* 7. Assessing Constraints of the Other Party
6. Your BATNA(s)* 8. Understanding Negotiation Leverage of the
7. Your Walk-Away Point(s)* Other Party
8. Your Negotiation Reference Frame(s) 9. Risk Assessment of the Other Party
9. Your Negotiation Aspects OUTPUTS
10. Your Outcome Preferences 1. Expected Other Party Issues*
2. Expected Other Party Resource Availability
3. Expected Other Party Negotiation Process*
4. Expected Other Party Negotiation Timeline
5. Expected Other Party Alternatives*
6. Expected Other Party BATNA(s)*
7. Expected Other Party Walk-Away Point(s)*
8. Expected Other Party Negotiation Reference
Frame(s)
9. Expected Other Party Negotiation Aspects
10. Expected Other Party Outcome Preferences

Figure 5-1: Prepare for Multi-Issue Negotiation—Inputs, Tools, and Outputs

Note: An asterisk (*) denotes a highly recommended input, tool, or output for the corresponding process.

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5.1 Understand your Negotiation Situation

This process addresses understanding your current negotiation situation. You will need to have a thorough
understanding of the issues involved and your negotiation capabilities, as well as knowledge of past
negotiation results prior to assessing your negotiation situation. In this process, you identify the justification
for negotiation, the type of negotiation, HR issues related to the negotiation, and probable alternatives. In
contrast to single-issue negotiation, multi-issue negotiations require the use of an additional tool—Issues
Analysis—for a comprehensive understanding of the negotiation situation. Figure 5-2 shows the inputs,
tools, and outputs of the Understand your Negotiation Situation process.

1. Existing Understanding of Issues* 1. Issues Analysis* 1. Your Issues for Negotiation*

2. Your Negotiation Capabilities 2. Aspects of Negotiation* 2. Defined Negotiation Process*
3. Past Negotiation Process 3. Analysis of Alternatives* 3. Your Negotiation Timeline
4. Past Negotiation Results 4. Primary Research 4. Your Resource Availability for
5. Secondary Research Negotiation*
6. Meetings and Discussions 5. Your Alternatives*
7. Assessing Constraints 6. Your BATNA(s)*
8. Understanding Your Negotiation 7. Your Walk-Away Point(s)*
Leverage 8. Your Negotiation Reference
9. Risk Assessment Frame(s)*
9. Your Negotiation Aspects
10. Your Outcome Preferences

Figure 5-2: Understand Your Negotiation Situation—Inputs, Tools, and Outputs

Note: An asterisk (*) denotes a highly recommended input, tool, or output for the corresponding process.

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5.1.1 Inputs

5.1.1.1 Existing Understanding of Issues*

In a multi-issue negotiation there are numerous issues that are presented for negotiation. Your existing
understanding of issues depends on your experience in having participated in similar negotiations and your
expertise on the issues under consideration. For example, a business negotiation between a buyer and
seller can involve a number of issues, such as pricing, terms of business, legal issues, non-compete
clauses, and territorial rights, among others. Your existing understanding may cover a few or most of the
issues based on your experience. If you are new to such a negotiation you may not be aware of issues such
as territorial rights or the exclusivity already granted to other parties. Your understanding of issues needs to
be expanded prior to every negotiation because each negotiation can generate new issues and novel ways
of tackling them.

In addition to understanding the specific issues, there may be an established priority for tackling certain
issues or an understanding of those that are most critical to reaching an acceptable outcome. As well,
resolution on some issues may be useful as leverage in other areas of the negotiation. Identifying these
priorities and establishing the ranking and qualification of issues can serve as important inputs to the
analysis of the issues in a multi-issue negotiation. Issue Analysis is described in detail in section 5.1.2.1.

5.1.1.2 Your Negotiation Capabilities

Negotiation capabilities develop over time. As the theoretical concepts for effective negotiation are
understood and mastered, effective negotiators gain knowledge, expertise, and an understanding of their
organization, all of which help in current negotiations.

Negotiation capabilities include availability of resources, an established structure or process for negotiation,
and a company’s approach to negotiation. Availability of skilled human resources, time, and stable financial
resources enhance a party’s negotiation capabilities. Similarly, as expertise in multi-issue negotiation is
gained, you can establish standard templates that can be used for future negotiations. These may include
structures and processes that can be used in different negotiation scenarios. These templates will provide
insights for identifying and prioritizing different issues at hand, identifying issues for tradeoffs, defining
preferable outcomes on the basis of critical issues, and more. Negotiation capabilities are discussed in detail
in section 3.1.1.2.

5.1.1.3 Past Negotiation Process

Irrespective of the nature of the issues negotiated in the past, there are several insights about negotiation
that you, as a negotiator, gain from each negotiation in which you participate. In addition, you should have

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the ability to analyze actions at each stage of negotiation. The use of existing negotiation templates and the
degree to which such templates are applicable to the current negotiation are important considerations and
can significantly contribute to its success. Thus, it’s important to ensure that every negotiation is well
documented for future use. In multi-issue negotiation a structured framework must be prepared prior to the
negotiation, beginning with issues of relatively low importance to issues of greater importance from your
organization’s perspective.

5.1.1.4 Past Negotiation Results

An understanding of past negotiation results is very useful when preparing for a future negotiation,
particularly when that negotiation is similar to a previous negotiation scenario. The knowledge gained from
past negotiations can provide you with the following advantages: 5
 quicker preparation
 streamlined identification and analysis of issues and alternatives
 greater understanding of the other party
 readily available assets such as negotiation templates and relevant reports
 personal experience to draw upon in steering the negotiation to your advantage

You can hone in on previous multi-issue negotiations while preparing for the current multi-issue negotiation.
Past negotiation results will provide insights for identifying probable issues, prioritizing issues for discussion,
identifying alternatives for each issue, determining preferable outcomes for the negotiation, and more.
Understanding past negotiation results can also teach you how not to lose sight of the ultimate goal while
discussing individual issues.

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5.1.2 Tools

5.1.2.1 Issues Analysis*

Before negotiating with another party or other parties, you should have a clear understanding of the issues.
Unlike single-issue negotiation, centered around one specific issue, multi-issue negotiation has multiple
issues that need to be initially identified and then evaluated. A clear understanding of the issues helps in
prioritizing and categorizing issues, evaluating alternatives, and identifying preferred outcomes.

Before analyzing issues, you need to ensure that all the issues relevant to the negotiation have been
identified. While you may be aware of the most important and significant issues, even before this process, it
is necessary to identify all issues that are relevant to the upcoming negotiation. This not only helps in
achieving your preferred outcomes but also in evaluating alternatives and selecting the best alternative.
When multiple issues are involved, there is usually some interdependency between them. You need to know
which issues are interdependent and calibrate your preferred outcomes and alternatives accordingly. If you
are part of a coalition, you and your coalition partners will likely have common interests; however, you need
to identify if your coalition partners have differing interests with regards to any of the issues. Differences
need to be understood and consensus must be reached by the coalition before the negotiation begins.

Categorizing and prioritizing issues is an important activity before beginning the negotiation. By analyzing
and sorting issues into categories, you will be better prepared to enter negotiation. Categorization can be
based on any number of different criteria and should be centered around your needs and specific
requirements. For example, if you are entering into a business negotiation, your issues might be categorized
as commercial, legal, financial, and service-based. Issues may also be categorized as those you consider to
be critical and those you consider to be more flexible or non-critical. Categorization not only helps you
prepare for the negotiation and participate in an organized manner, but also enables you to more effectively
allocate time and resources based on the importance of each issue. Categorizing and prioritizing issues also
helps to determine the sequence in which the issues need to be addressed during negotiation. Finally,
categorizing can also provide a foundation on which to build proposals and shape the final deal.

When you are not aware of all the issues, you may not be able to identify alternatives for those unknown
issues. For example, in a negotiation for a commercial rental space, you need to ensure that you identify all
issues, even those that may not exist in your current location. When planning for offices in new geographies
there may be numerous new and unfamiliar issues. It is important to identify such issues before entering into
a negotiation. You may not have suitable alternatives if you do not identify all the relevant issues.

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Examples of Issues Analysis:

 A joint venture agreement between multiple parties may need to address the issues such as the
division of scope responsibility, authority levels during the venture, defining of shared expenses, and
the revenue sharing structure.
 In 2015 Iran and a coalition of nations lead by the United States negotiated the terms of an
agreement regarding the reduction in Iran’s nuclear capability in exchange for removal of sanctions
by the coalition against Iran. The issues outlined prior to and during the negotiation included the
arms embargo against Iran, economic sanctions, nuclear inspections, the development of advanced
centrifuges, and transparency from Iran regarding their past and future nuclear work.
 A contractor who employs a subcontractor is fully dependent upon the subcontractor to perform a
job. At the same time, the subcontractor depends upon the contractor for employment, income, and
5
future job referrals. This interdependency of goals leads to negotiated timelines, budgets, and
compensation that will meet the needs of both parties while at the same time achieving the common
objective of successful project completion for a third party.
 A customer may want a high quality product quickly at a low price. If a supplier takes a contract with
such a customer, it is possible that the supplier will not be able to meet all the expectations of the
customer. Instead of taking such a contract, the supplier needs to make the customer aware of
where expectations cannot be met. Timelines may need to be negotiated to deliver a high quality
product. Alternatively, if a product is needed quickly, the supplier may need to explore finding
another supplier who can do the work quickly, but at a greater cost. By identifying these issues
upfront, solutions to potential problems can be negotiated proactively.

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5.1.2.2 Aspects of Negotiation*

The upcoming negotiation should be analyzed on the basis of the seven Aspects of Negotiation discussed in
previous chapters. This analysis will provide a comprehensive understanding of your negotiation situation. In
a multi-issue negotiation some of the Aspects may vary for different issues. Therefore, the analysis should
be done for each issue.

Justification

It is necessary to understand the reason for negotiation. As discussed earlier, there can be two primary
reasons for negotiation:

 To arrive at a deal or a mutually understood outcome—In this case, you negotiate because there is
an interdependency of goals. You cannot achieve your goals without the other party. As the number
of issues increases so does the complexity of the deal. You must also consider the level of
interdependency among parties. If your interdependency is lower than that of the other party, the
number of compromises that you will need to make will likely be fewer. It is also important to note
that the level of interdependency can vary for different issues in a multi-issue negotiation. For
example, before negotiating a partnership with a brand that wants to expand to your territory, you
may realize that their level of interdependency is high for a distribution network but low for
marketing expertise.

 To resolve a conflict—In this case, you negotiate because there is disagreement or opposition of
ideas and interests. If this is the primary reason for negotiation, you should understand the level of
conflict that has to be resolved—intrapersonal, interpersonal, intragroup, or intergroup. As in the
previous case, the complexity of the negotiation increases with an increase in the number of issues.
Also, a negotiation process may require resolutions at different levels of conflict. For example, in the
case of conflict resolution between nations (intergroup conflict), the legislative bodies of both
nations also must approve or agree to the settlement (intragroup conflict). This may require a
secondary negotiation among the different political parties of a country.

In addition to looking at the primary reason for negotiation, you should also look at the expected returns and
costs. You will have different preferable outcomes for each issue in the coming negotiation. You should
negotiate only if the overall expected returns outweigh the expected costs.

Distributive vs. Integrative

Most multi-issue negotiations tend to be integrative in nature, where the focus is on arriving at solutions
beneficial to both parties by creating and then claiming value. Certain issues, like price, in an integrative
negotiation can be distributive in nature where the approach would be to gain as much value as possible,
even at the other party’s expense. You should assess each issue to find out which are likely to be
distributive in nature. This will depend on both parties’ approach to negotiation.

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Examples of Distributive vs. Integrative Negotiation:

 ABC Corp and XYZ Publishing have a mutually beneficial distribution arrangement whereby they
each produce their own titles and act as distributors for one another. Each year, they meet to
discuss new titles and establish terms for their contractual arrangements for the coming year. Given
their dependence on one another for future business success as well as their mutual need for
cooperative and harmonious relations, the negotiations are integrative in nature.
 When making a real estate purchase, the seller and buyer enter into price negotiations. The seller is
seeking to obtain the highest price for their property, while the purchaser wants to pay the lowest
possible price. This distributive approach allows both parties to arrive at a mutually acceptable price,
which is more or less than the original asking price. Other details between both parties must also be
negotiated. These may include issues such as the purchase effective date; the amount of the down
payment; which chattels, such as lighting and fixtures, to include when transferring ownership; and 5
legal fees. Some of these might be of greater importance to the buyer than the seller and vice-
versa. Using the integrative bargaining approach, both parties can determine each other’s priorities
and find solutions that produce the most gain for the other party without losing too much in return.

Customization

Just like single-issue negotiations, multi-issue negotiations can involve multiple parties and can be
conducted in multiple phases. Often, these details are clarified beforehand, so you will know what kind of
negotiation you are entering into and you can determine your course of action. However, sometimes these
particulars may change during the negotiation process. For example, a negotiation between two neighbors
over house modifications may become a multi-party negotiation if other neighbors join the negotiation. Your
strategy will depend on whether the negotiation scenario is a multi-party or a multi-phase negotiation.
Typically, coalitions are formed in a multi-party negotiation. Sometimes you may have different coalitions on
different issues, but it is difficult to both support and oppose the same party on different issues in the same
negotiation. In a multi-party scenario, a neutral party can set the agenda or decide on the priority of the
issues. You may also need neutral party intervention to conduct or settle a negotiation.

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Example of Customization:

 Negotiating resources frequently occurs across departments in organizations. Implementation of a

marketing strategy, for example, will require financial support and staffing from sales, marketing
research and branding and advertising. Human and financial resources are limited and need to be
negotiated between the different department heads of these areas. Furthermore, these negotiations
may need to occur in multiple phases as other project timelines and budgets become clearer or
change over time. It is not unusual during this time for different parties to form coalitions to exert
influence on different departments to support activities that they see as more important than other
projects. A senior manager, such as a CEO or president, may need to ultimately decide what
resources to assign to support the marketing strategy and other projects if agreement cannot be
reached during negotiations between the department heads.

Non-linear Process with Uncertain Outcomes

Not all negotiations follow a linear path. Though you should try to map out the path of a negotiation, you
should also be prepared for uncertainties. Factors such as new alternatives, changes in negotiators, and
changes in the nature of the relationship may alter the course of a negotiation. In a multi-issue negotiation,
latent issues may also crop up during the course of the negotiation. For example, while you are negotiating a
rental agreement on a vacant house, you may find during the course of that negotiation that immediate
availability of the house may be an issue. Other issues can come up in a single-issue negotiation, which
should then be conducted as a multi-issue negotiation. You should also prepare contingency plans for any
risks that can impact the negotiation process.

Example of Non-linear Process with Uncertain Outcomes:

 A buyer cannot forecast competing offers when purchasing a used vehicle. It is therefore in the
buyer’s interest to be prepared to sweeten an offer to the seller, especially if the buyer has reached
the maximum price of the offer to purchase the vehicle. This may include offering cash for the car,
taking immediate possession of the vehicle, or offering to buy the vehicle in its current condition
without a mechanical inspection. These alternatives can help the seller consider the buyer’s offer
other than making a decision on price alone.

Human Relations Issues in Negotiation

An important step in preparing for any negotiation is to understand the human relations Aspect of the
negotiation. Since negotiations are conducted by individuals, it is essential that you understand negotiator’s
preferred styles, existing perceptions and attitudes, and biases. Even if you are negotiating on your own, you

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should try to be aware if you are prone to any errors in perception or biases on the basis of your previous
negotiation experiences. It is better to have checks and balances in place for such errors.

Generally, people have a preferred style of negotiation based on such things as previous experiences,
personality, and culture, but experienced negotiators can alter their negotiation style. As discussed in
previous chapters, a negotiation style should be altered or adapted according to the negotiation situation. In
a multi-issue negotiation, there can be cases when you may have to use different negotiation styles for
different issues. For example, while a collaborative style may be suitable for a merger and acquisition
negotiation, you may use a competing style while negotiating the acquisition price.

Organization

As discussed in single-issue negotiation, you need to decide whether you will be negotiating directly with the
other party or asking an agent to work on your behalf. If an agent is negotiating for you, there can be issues
5
such as conflict of interest, information asymmetry, or miscommunication. In a multi-issue negotiation, you
can have different negotiators for different issues. For example, when negotiating for a role in an upcoming
movie, an actor can negotiate issues such as screen time, shades of character, and required preparation
and then let his agent discuss the financial issues.

Another important factor is the level of authority given to your negotiator. You can place limits on the
authority of your negotiator depending on the importance of issues. For example, a co-founder of a startup
company may have given complete authority to her HR manager on issues not related to the salary of
potential hires. So, while the HR manager can agree to flexible work hours or working from home while
negotiating with potential candidates, she will require senior management approval for salary negotiations. It
is also important to decide on the next level of authority before starting the negotiation. If the negotiator is
unable to approve salary details, it must be clear who has that authority and how their involvement will be
integrated into the negotiations.

Ethics

Ethics form an integral part of any type of negotiation. Organizations should have a code of conduct to
resolve ethical dilemmas that may crop up during a negotiation. You may also have your personal code of
conduct that can be used for personal negotiations. Some tactics may not be illegal but can be seen as
marginally ethical. It is better to stick to a code of conduct—organizational or personal—in this regard, rather
than the basic rule of law.

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Exercises for Aspects of Negotiation:

 Case study or role play: Group discussion or role play on how two parties can successfully negotiate
with different BATNAs, budgets, cost models, etc. Identify and discuss possible solutions to address
factors which can negatively impact negotiations as identified in the generic examples. Pre-identify
the conflict styles used in either the case study or role play and prepare for negotiations based on
these styles.
 Scenario: Beginning in 2010, and ongoing in 2016, the Greek government has been involved in
multiple rounds of negotiations with creditors and international banking coalitions, including the
European Commission, the International Monetary Fund and the European Central Bank regarding
bailout loans to avoid defaulting on national debt payments. These are complex, multi-issue, multi-
party negotiations, which require an in-depth consideration of all the Aspects of negotiation. Working
in groups, discuss and document some possible key points within each Aspect from the viewpoint of
the Greek government.
 Key issues to be considered are—Greece’s need for bailout funding to avoid defaulting on
international debt, Greece’s acceptance of austerity measures proposed (the sale of publicly owned
assets, spending reductions in areas such as pensions, and higher taxes), the willingness of the
Greek citizens to accept the terms of the agreement, and the timeframe for implementation of any
measures.
Potential Answers:
 Justification: Greece is in danger of defaulting on its national debt. Negotiating the terms of
repayment and the granting of emergency loans is a necessity to avoid the collapse of their
economy. There is an obvious and unavoidable conflict that needs to be resolved.
 Distributive vs. Integrative Negotiations: The financial stability of both the Greek economy and the
economies of the Eurozone will be impacted by the results of any negotiations. There is an inherent
need for an integrative solution for all parties involved in this type of intragroup conflict.
 Customization: The complexity of the negotiation, as well as the number of involved parties requires
a highly customized solution. These negotiations will most definitely be multi-party. The Greek
government will first have to gather information from their creditors about the terms of the
agreement, and then negotiate internally with any governmental unions and ultimately with the
population of their nation. The Greek government may propose phased rounds of negotiations to
deal with the multiplicity of issues. They may also seek a multi-phased approach to the
implementation of the terms of the negotiations.

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 Non-linear Process with Uncertain Outcomes: Due to the long time period of these negotiations, the
negotiating parties are expected to change. There may be new governments in power in Greece or
other Eurozone nations. Those negotiating on behalf of the EC, IMF and ECB may also change.
Affected parties, such as labor unions may also become involved through strikes or other forms of
protest. New opportunities or alternatives may also arise during the course of the negotiations.
Changes in economic trends may increase or decrease Greece’s position. Global influences such
as immigration and armed conflict in neighboring nations will also have an impact on options.
 Human Relations Issues in Negotiation: Greece will need to be aware of the styles of the key
negotiators as well as the political climates in the involved countries. The lead negotiator for the IMF
may have a collaborating style due to their experience and understanding of the interdependencies
involved. The negotiations may also be influenced by the competing style of Greece’s union
representatives, who may see any submission to international pressure as a distributive loss to their
position. 5

 Organization for Negotiation: The location and timing of the negotiations will play an important role.
As the negotiations involved parties from multiple countries, the physical location should be chosen
to be as neutral as possible. Cities like Geneva or Brussels have an infrastructure and history of
hosting these types of talks. The Greek government might want to time the negotiations to follow a
general election. This would increase the length of time they have to communicate the results of the
negotiations to their populous and minimize the pressure of public opinion on the process.
 Ethics in Negotiation: Greece will use their own constitution and legal precedents to frame any legal
and ethical issues. They might also make an ethical argument against any forms of austerity
measures that they consider a violation of their sovereignty.

5.1.2.3 Analysis of Alternatives*

Alternatives are other deals or agreements that you can negotiate instead of the current negotiation or if the
current negotiation fails. These alternatives may fulfill the objectives or goals you want to achieve through
the current negotiation.

Having a set of alternatives is one of the important sources of bargaining power. To have more power or
leverage over the other parties, it is imperative to assess your alternatives to the deal that you will negotiate.
Also, analysis of alternatives allows you to decide whether to begin, continue, or close a negotiation, and
also enables you to identify the best path to achieve your stated goals or needs.

Multi-issue negotiations can involve tradeoffs among multiple issues, so you should also consider
alternatives for the most important issues to enhance your leverage in negotiation. Multi-issue negotiations
may have multiple parties or stakeholders—each with his or her own agenda. So, a key aspect of multi-party
negotiation is assessing alternative ways to achieve the stated goals. You should analyze alternatives,
evaluate mutually exclusive paths for achieving those goals, and also evaluate the relative strengths and
weaknesses of different alternatives. This will enable you to identify or calculate your BATNA (Best

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Alternative to a Negotiated Agreement), your walk-away points (i.e., the points at which your BATNA
becomes preferable to the agreement being negotiated or the point beyond which you will be prepared to
walk away from the negotiation table). Also, note that you may have multiple BATNA depending on the
number of critical issues you are negotiating.

Examples of Analysis of Alternatives:

 A marketing department wants to launch a new product. It needs to collect data to identify the best
target audience for the product and the right product messaging. Of the two research needs, a
product messaging study is considered to be the most important. A marketing research company
quotes two studies to achieve these objectives. The marketing department head considers the two
proposed studies to be unaffordable. He consequently sets a maximum budget for the research
company to conduct the research. Alternatives to be considered include doing only the product
messaging study, using less expensive secondary research, or doing a scaled down version of both
studies with smaller sample sizes. After receiving proposals for all of these different scenarios, the
head of marketing decides to bring in senior managers to discuss the relative strengths and
weaknesses of the different alternatives. Based on their inputs, the marketing manager may be able
to negotiate additional funds to support the research and revise the BATNA for the cost of the
project. A final cost and study design can then be negotiated with the research company.
 Negotiations between a union and management frequently involve multiple issues such as
compensation, overtime, job security, and benefits. In these instances, it is not uncommon for one
bargaining party to offer one or two concessions in exchange for the other party doing the same. For
example, management may offer higher pay and benefits and ask the union to help offset these
additional costs by agreeing to work standard shifts with an established limit for working overtime
hours.

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5.1.2.4 Primary Research

Primary research is conducted to gather data for a specific purpose. The quantitative and qualitative
techniques used in primary research have been described in detail in section 3.1.2.3. Qualitative research is
used to collect subjective insights into the behavior, motivations, and attitudes of selected individuals,
whereas quantitative techniques are used to obtain measureable insights into the behavior, motivations, and
attitudes of a selected group of individuals.

In multi-issue negotiations, primary research may be conducted to gain insights related to the multiple issues
under consideration, to assess the preferences of stakeholders, to analyze costs and benefits, and to
evaluate alternatives. Unlike single-issue negotiation, in multi-issue negotiations you may need to prioritize
issues based on their relative importance. It may be more important to reach a favorable outcome on some
issues, while you may have to concede or compromise on other issues. Primary research through in-depth
interviews and focus group discussions conducted with stakeholders can help you realize the relative 5
importance of various issues. Primary research can help you identify the issues that your group or
organization has considered important in previous negotiations and the reasons for their importance.
Quantitative research can help you identify the relative importance of issues as well as the preference of
alternatives among people in your group or organization. Primary research can also be conducted with
independent agents who have been used in previous negotiations. This can help you understand the
significance of your Negotiation Aspects or the importance placed on various issues in past negotiations and
whether they helped you achieve your desired outcomes.

Examples of Primary Research:

 A builder proposes a new subdivision in a residential area. The builder encounters resistance from
nearby homeowners who are concerned about the impact this new development might have on
future traffic volumes. To address these concerns, the builder decides to conduct focus group
meetings with homeowners in an adjacent neighborhood where similar development has occurred in
the past. The builder can then perform a retrospective analysis of additional infrastructure needs
such as traffic calming initiatives and public transit and present the findings as part of the
negotiation strategy to receive approval for the new subdivision.
 A product manager, in preparation for an annual strategic planning retreat, arranges for a focus
group event in order to gather specific insights about his target customers. He knows that going into
the strategic sessions, he’ll be negotiating for additional resources including research and
development funding for any new products that he plans to spearhead in the coming months and
years. He’s hoping the focus group will provide him with some insights and data that will support his
effort to expand his budget and bring products to market that will meet customer needs and grow
revenue for his business unit.

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5.1.2.5 Secondary Research

Secondary research involves gathering data through collection and analysis of existing research or reports.
Secondary research for single-issue negotiation within the Understanding Your Negotiation Situation
process is described in section 3.1.2.4. In secondary research, you collect and analyze data that is already
available. Secondary research can help you gain a better understanding of the issues from a historical
perspective. Before entering into a negotiation, you need to collect information related to your issues in order
to be able to prioritize issues for the negotiation. The information gained from secondary research may be
related to the importance placed on the issues in past negotiations, the tactics adopted by previous
negotiators, the costs involved in conducting negotiations, the benefits gained from negotiating, the type of
alternatives considered in previous negotiations, and agents or agencies that have been able to help you
achieve desirable outcomes.

By considering reports that are based on macroeconomic analysis of an industry, you can also get an
understanding of how external factors may affect issues or alternatives. Such reports are especially
important if you are preparing for a business negotiation. Even in negotiations of a personal nature, an
understanding of the macroeconomic conditions can help you understand issues better and eventually
achieve preferable outcomes.

As described in section 3.1.2.4, secondary research is especially useful in situations where it is too
expensive or time-consuming to conduct primary research. Secondary data collection usually takes less time
to conduct than primary data collection. Because there can be many sources for secondary research, it is
necessary to limit data collection only to valid and reliable sources. It is also important to validate the quality
and accuracy of the collected data with respect to the current situation.

Examples of Secondary Research:

 Before a merger or acquisition, each party will gather information about the value of all businesses
and business lines impacted by the transaction. Much of this information is available in annual
reports.
 Commercial land purchase and development often involves several parties. Before a project is
initiated, the value and zoning of the property must be determined using land assessment reports,
title inquiries, and zoning inquiries with the city. The value that each party brings to the table must
be assessed through each company’s annual report as well as industry reports. All of this
information factors into the final contractual arrangement among the land development businesses
involved in the project.

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5.1.2.6 Meetings and Discussions

Meetings and discussions are held with various stakeholders to discuss important factors in the negotiation
such as the issues, constraints, costs, alternatives, and preferable outcomes. If your negotiation is a multi-
issue negotiation, a meeting can be a platform to discuss the relative importance of each issue and
determine the BATNA and walk-away point for each issue. While discussing the relative importance of
issues it is recommended that you list all the issues to be discussed and rank them according to their
importance. Possible settlements for each issue should also be discussed and preferable outcomes for the
overall negotiation should be determined.

5.1.2.7 Assessing Constraints

5
Assessing constraints is described in detail in section 3.1.2.7. Constraints are anything that can set you back
or impair your ability to negotiate. In multi-issue negotiation, assessing constraints and addressing them
effectively can significantly impact the success of the negotiation, as constraints can impede the process
and ultimately impact the outcomes for multiple issues in the negotiation. Constraints are classified as either
resource constraints or psychological constraints.

Resource constraints are those that arise out of a lack of time, people, or financial resources. Time
constraints are caused by a lack of proper planning and preparation or by an external or internal urgency
that can force you to negotiate and obtain an outcome quicker than desired. In multi-issue negotiations, time
constraints are often caused by the additional duration taken to prepare for all the issues prior to the
negotiation. When there are multiple issues to consider, you not only need to analyze each issue, but also
determine your alternatives, BATNA(s), and walk-away points for each issue. While preparing for the
negotiation, you need to make sure that you have correctly estimated the time required for preparation. A
miscalculation or oversight with regards to the time required for the negotiation can severely affect the
negotiation process, resulting in failure to achieve preferred outcomes. Time constraints can also be caused
due to external or internal urgencies. Such constraints may force you to reach an outcome earlier than
planned or offer concessions or tradeoffs that were not part of the initial plan. It is important to note that, as
discussed in section 3.1.2.7, deadlines for the negotiation process are often negotiable; it is advisable,
therefore, to try to extend the deadline for the negotiation rather than concede or rush to end the negotiation
hastily due to time constraints.

Constraints can also be caused due to a shortage of people required to prepare for the negotiation. In multi-
issue negotiation, all issues require proper preparation and, often, this is only possible if you have a
dedicated team that is assigned to the task. You may be able to prepare with a limited number of people if
you have ample time for preparation. Hence, if you have a time constraint and numerous issues to prepare
for, you will need to assemble a good-sized team for the negotiation.

Financial constraints can also hamper the negotiation process. A financial constraint can affect your
preparation, the logistics for the negotiation, and the quality of external agents that you employ. If you are

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faced with a financial constraint you need to ensure that you procure the adequate financial support required
or plan in such a way that the financial constraints do not negatively impact the negotiation process.

Psychological constraints are caused when emotions stand in the way of you achieving your preferred
outcomes. It is important to set aside emotions such as fear or anger toward the other party before entering
into a negotiation. Such emotions can hamper your rational thinking process and lead to undesired
outcomes. For more information on psychological constraints, refer to section 3.1.2.7.

5.1.2.8 Understanding your Negotiation Leverage

Negotiation leverage is anything that can be used to gain an advantage or increase the chances of achieving
your preferred outcomes. Leverage can be used to convince or persuade the other party to attend to your
interests, relax from their initial positions, and even change their walk-away point. Leverage provides you
with the ability to set a higher walk-away point and offers better alternatives. Leverage is often
synonymously referred to as power. Having leverage improves your alternatives, which, in turn, enables you
to negotiate more forcefully towards your preferred outcomes. There are three main sources of negotiation
leverage—information, resources, and authority.

Leverage from Information

Leverage from information is based on your access to information or ability to gather and organize data to
support your position or interests. Information can be used as a tool to counter the other party’s position or
interests, arguments, and negotiation tactics. Facts and data are presented to persuade and convince the
other party to view the issue from your point of view, to win arguments, and eventually to achieve your
preferred outcomes. Information presented by an expert is given the highest level of credibility and respect.
Experts’ arguments are often given more importance than a non-experts’, even if both arguments present
the same information.

Examples of Leverage from Information:

 During the sale of property, knowledge of multiple offers provides the seller with leverage in
negotiating the sale at the highest obtainable price. Conversely, for a buyer, knowledge that a
property has been listed for a lengthy period of time with no offers made provides the buyer with
leverage to make an offer at a low purchase price.
 A management consultant likely will not know a client’s budget when making a request for proposal
(RFP). This gives a client leverage to negotiate the cost of a proposal downward, even if the
consultant’s initial proposal is within the client’s budget. The client can also leverage competitors’
quotes that are known only to themselves to further negotiate a lower price on an RFP.

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Leverage from Resources

The ownership and control of resources is a source of leverage that is used to gain advantage in
negotiations. Resources are a source of leverage when they are highly valued by the other parties. In order
to achieve leverage from resources, you need to have control over something scarce or difficult for the other
party to obtain. You need to know how important the resource is for the other party and how difficult it will be
for them to obtain it. Resources that offer the controlling party leverage include money, human talent, time,
technology, critical services, and raw materials, among others.

Examples of Leverage from Resources:

 When negotiating professional sports contracts, agents obtain specific details about the needs of
various franchises. For example, the agent for a talented NHL goal tender will seek out franchises in
need of improved net minding when seeking a contract for his client. It is likely that the franchises 5
with the greatest need will make the best offer to secure the talent that the player offers.
 Information technology (IT) has finite resources in an organization to complete projects for internal
clients. If two or three departments would like IT support at the same time, IT has leverage in terms
of which projects to assign its fixed resources. Because of limited resources, IT can therefore
operate from a position of strength when negotiating project priorities and timelines.

Leverage from Authority

Leverage from authority stems from your position in the group or organization. Leverage from occupying a
legitimate position offers you the power to order or even command others at lower levels of authority. Your
leverage from a position can help you in negotiations for that group and for other negotiations as well. A
person in a position of authority can also gain access to, and control of, information and resources that can
add to the leverage. In some cases, even if you are not in a position of authority, your position may offer you
control of resources or access to information that can provide leverage.

Examples of Leverage from Authority:

 Senior management needs to ensure integration of the various elements of the corporate strategy,
such as the corporate human resources and marketing strategies. Management may use its
authority in this process to influence decisions at a business unit or regional level to ensure staffing,
training, and compensation strategies are in place to support key initiatives.
 When negotiating for resources—including human resources, funding, equipment, or facilities—
within an organization, managers may seek the assistance of senior staff to gain an advantage in
the negotiation process. Lobbying for support of key projects will require the manager to convince
senior management of the value of his or her initiatives so that senior management can use its
authority to provide the marketing manager with the necessary resources to effectively execute his
or her strategy.

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5.1.2.9 Risk Assessment

Risks, as discussed in section 3.1.2.9, are uncertain events or outcomes that can affect your objectives. The
unpredictable nature of a negotiation is primarily due to such events, which can alter the course of a
negotiation. Risks that are likely to have a positive impact on the negotiation process are referred to as
opportunities, whereas risks that can affect the negotiation in a negative manner are considered threats.
Whether positive or negative, all types of risks need to be identified and analyzed on the basis of two factors:

 the probability of each risk’s occurrence

 the possible impact of such an occurrence

You should follow standardized steps and ensure that all risks are identified, evaluated, and addressed with
an appropriate course of action. Risks with a high probability and anticipated impact should be addressed
before those with a relatively lower anticipated impact. Your course of action for each risk should be based
on the following:

 your ability to take risks

 your willingness to take risks

Risk assessment in a multi-issue negotiation is a more difficult and complicated undertaking than risk
assessment in a single-issue negotiation. Generally, the complexity of risks involved increases as the
number of issues increases. As well, when multiple issues are involved, there is some interdependency
between them. The risks associated with the issues are also interdependent. For example, a negotiation for
acquiring another company includes discussions on the financial health of the acquired company, the cost of
acquisition, the mode of acquisition, employee attrition, union agreements, etc. Most of these issues are
interdependent. Any problems with the acquired company’s financial well-being, such as fabricated data or
auditing malpractices, will affect many of the other issues. Hence, while assessing the risks, the
interdependency of issues must be considered. The risk of financial irregularities can impact other issues
such as employee attrition as employees of the acquired company may leave if they feel that their employer
is not honest. If the acquisition is successful, the buyer may have to reassure the employees of their
standard of ethics. As part of risk assessment, you will have to assess the impact of a particular risk on all
issues and determine a course of action to either mitigate the risk or in some cases leverage or take
advantage of the risk.

Your ability and willingness to take risks may differ from issue to issue. For example, an individual acting on
behalf of a large conglomerate may be able to take monetary risks but may not be able to risk brand
reputation. He or she may not want to enter a potentially lucrative partnership with a less reputable brand as
such a partnership may damage his own brand reputation by association. It’s important to note that your
willingness to take risks will also differ from issue to issue. For example, if a company has faced hassles due
to questionable financial practices of companies it has acquired in the past, the company is likely going to be
reluctant to take the same risks in future without a more comprehensive understanding of the risks
associated with such acquisitions.

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In a multi-issue negotiation, you will have to assess risks associated with each issue and their impact on the
overall negotiation. Your response for each risk may also be different as your ability and willingness will not
be the same for all issues. These factors make risk assessment more complex and more critical in a multi-
issue negotiation.

5.1.3 Outputs

5.1.3.1 Your Issues for Negotiation*

After conducting analysis and research you should have identified most, if not all, of the issues relevant to
the negotiation. You should categorize the issues based on suitable criteria and classify issues as either
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critical or non-critical. Critical issues are those that are essential to achieve your desired outcomes, whereas
non-critical issues are those that you are ready to be flexible on i.e. tradeoff or compromise if faced with
such a situation. Your understanding of issues is significantly enhanced after this process. Based on this
understanding, you can decide on alternatives for all issues and define your walk-away points as well.

Example of Issues for Negotiation:

 An employee offered an international position in another country has to consider and negotiate
multiple financial and non-financial elements before accepting a new position. To maintain or
improve upon his or her current standard of living, the candidate will need to negotiate
compensation and benefits in the local currency of the destination country. The cost of living,
including accommodation, food, and transportation costs, will also need to be factored into these
discussions. Additional issues for negotiation may include private schools for his children,
employment for his spouse, and airfare for return trips to the home country. Some issues may be
deemed by the international job candidate as critical with no room for negotiation, while others may
warrant some compromise.

5.1.3.2 Defined Negotiation Process*

You should define a tentative negotiation process on the basis of past experiences, the current negotiation
situation, an understanding of issues, and resource availability. Defining the negotiation process helps in
executing negotiations in a precise, structured, and convincing manner. Among the details of the defined
process are the time, effort, and money that you are ready to use for this negotiation. You should also
decide whether you will negotiate on your own or hire an agent for the negotiation. The negotiation process
defined at this stage is tentative and will undergo changes as you assess the negotiation situation of the
other party.

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Example of Defined Negotiation Process:

 A homeowner is negotiating a renovation project with a contractor. Having undergone a number of

previous renovations with this contractor, she knows what to expect. She maps out the anticipated
negotiation process, having both identified a number of issues on which to negotiate and rated her
priorities. Specifically, she has a ‘wish list’ that includes both ‘must haves’ and ‘nice-to-haves’ in this
renovation. She’s willing to make compromises on some of the items on her list in order to complete
the project within budget, and she’s aware that the first estimate that she receives will be outside
her allocated budget. However, she also knows that if she is willing to make some concessions on
timelines, her contractor is likely to reduce the price on some elements. She uses this information as
leverage in her negotiation, in order to gain most of the items on her wish list, at a reasonable price,
within a timeline that is less than ideal, but still manageable.

5.1.3.3 Your Negotiation Timeline

A negotiation timeline outlines the time available for each process in the negotiation. Negotiation is a cost-
incurring process. Inefficiencies and delays lead to increased overhead costs during the negotiation. Travel
costs, opportunity costs, and the compensation of the negotiators are included in the total cost of
negotiation. Considering these costs, it is highly recommended to adhere to the time limit dedicated to each
event. The bureaucracy involved in a negotiation can also delay the process for other parties. In multi-party
negotiations, smaller companies often complain of being a victim of the centralization and bureaucracy of
larger companies. While determining a timeline for a negotiation you must address the following points14:

 your own cost of negotiation

 the number of parties to be involved in negotiation
 prior scheduling
 setting up an additional time limit, post negotiation

As well, every negotiation must be supported with a reasonable budget. Failing to work within a stipulated
time frame makes the negotiation not only tiring and longer but also creates misunderstandings and
communication gaps among parties. This, in turn, makes the negotiation ineffective.

5.1.3.4 Your Resource Availability for Negotiation*

It is important to ensure that the overall benefits of a negotiation exceed the costs of the negotiation. A
negotiator’s cost is accrued primarily from utilization of time, money, and effort required for the key
resources. Therefore, before entering into the negotiation process, it is important to identify the resources

14 Simons, T & Tripp, Thomas.M. (1997). The Negotiation Checklist: How to Win the Battle Before it Begins

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that will be used. The funds required for the negotiation process must be allocated, and the time that will be
spent throughout the negotiation process needs to be estimated. These steps should be completed after
considering the other Aspects as well as the BATNA and walk-away point. Also, the individuals who will be
involved in the negotiation should be determined. The individual designated to lead the negotiation can be a
member from your organization or an external agent who acts as an intermediary on the group’s behalf.

5.1.3.5 Your Alternatives*

The list of alternatives for the current agreement or deal being negotiated includes the options that the
negotiator has identified as possible approaches to reaching the objectives of the negotiation, in the event
that the negotiation fails or the outcomes of the negotiated agreement do not meet expectations. It can also
be a list of alternatives for each critical issue or set of critical issues that you are negotiating. Refer to section 5
5.1.2.3 for additional details regarding the analysis of alternatives.

5.1.3.6 Your BATNA(s)*

Your BATNA is the next best alternative if the negotiation does not go through. Your BATNA is selected from
the alternatives that have been identified. You may also have BATNA for each of the critical issues or set of
critical issues you are negotiating. In this context, when you know that you are not reaching a favorable deal
on a critical issue, you may decide to take the BATNA selected for that issue instead and then take that
issue out of the current negotiation.

The BATNA for the overall deal or multiple BATNAs for the critical issues being negotiated are the result of
the analysis of the alternatives. Without knowing the BATNA, a negotiator can never determine whether to
accept an offer or to walk away from the negotiating table. To identify the BATNA from among the
alternatives that have been identified or calculated, an estimate of the value of each alternative in terms of
how each achieves the stated objectives must be completed.

It should be noted that the BATNA(s) is the realistic or most plausible option(s) you have for the current
overall deal or critical issues that are part of the deal. It is not simply something that you think you can do or
something that is fair. It requires careful consideration of all alternatives and a comprehensive
understanding of all issues.

5.1.3.7 Your Walk-Away Point(s)*

A walk-away point is the point at which the BATNA becomes preferable to the agreement being negotiated,
or the point at which a negotiator is prepared to walk away from the negotiating table. You may have multiple
points at which you might decide to walk away as you can have a walk-away point for each critical or deal-
breaker issue you are negotiating.

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5.1.3.8 Your Negotiation Reference Frame(s)

At the end of this process you should have identified a frame of reference that will be used for the
negotiation process. Your frame of reference influences the other party’s perception of your point of view. It
should be able to convince the other party to accept the point of view that you present. In a multi-issue
negotiation, you can have different reference frames for critical issues, especially when you are discussing
one issue at a time. It is important to identify a realistic frame of reference that is based on your alternatives
and Aspects and can improve your chances of achieving favorable outcomes from the negotiation.

5.1.3.9 Your Negotiation Aspects

At the end of this process you should be clear about your Negotiation Aspects. You should know your
justification for negotiation as well as your approach to negotiation. This will provide a comprehensive
understanding of your negotiation situation. Your assessment of the negotiation from the other party’s point
of view will also impact this output. Your understanding of the Aspects of Negotiation will help you in
formulating your negotiation strategy. In multi-issue negotiation, Aspects may vary from issue to issue.

5.1.3.10 Your Outcome Preferences

You should determine and calibrate your outcome preferences by the end of this process. In a multi-issue
negotiation, you should determine and calibrate your preferred outcomes for each issue. On one end will be
your walk-away point for a particular issue, beyond which you will no longer negotiate. On the other end will
be the benefits that you will achieve if the negotiation succeeds. You should also decide what constitutes a
successful negotiation for you. This will become more difficult as the number of issues increases. Many
times, the outcome of a negotiation is defined on the basis of critical issues only. The actual outcome of the
negotiation will be deemed a success or failure accordingly. Outcomes can be defined in terms such as
price, relationship, interests, legality, and commitment.

Example of Outcome Preferences:

 For the employee offered an international position in another country, the employee and his family
may decide that the most critical objective is to improve their standard of living. He and the
employer may agree upon various terms including salary and benefits, accommodation for himself
and his family, and acceptable educational arrangements for his children, all of which will contribute
to the family’s standard of living. Ultimately, he may consider the negotiation a success, even if
other criteria, such as employment for his spouse, for example, cannot be accommodated by the
employer. Identifying in advance the optimum and the acceptable outcome preferences will help the
employee negotiate an agreement that works for him, his family, and his new employer.

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5.2 Understand Negotiation Situation of the Other Party

After assessing your negotiation situation, you should assess the negotiation situation of the other party. It is
difficult to gather information about the other party as it is generally not in their best interests to make this
information readily available to you; however, any additional information that you gather will help you to
negotiate more effectively and achieve better results. In a multi-issue negotiation, you begin by analyzing the
issues for the other party. This lays the groundwork for other tools such as analysis of alternatives for the
other party and Aspects of Negotiation. You will gain some information about the other party before the
negotiation begins by using the concepts in this process; but you will get more clarity as you go through the
process and start negotiating with the other party. Always actively listen to the other party, as any additional
information that you gather will help you with the negotiation. Figure 5-3 shows the inputs, tools, and outputs
of the Understand Negotiation of the Other Party process. 5

1. Your Issues for Negotiation* 1. Analysis of Issues of the Other 1. Expected Other Party Issues*
2. Your Negotiation Capabilities Party* 2. Expected Other Party Resource
3. Past Negotiation Results 2. Aspects of Negotiation* Availability
4. Defined Negotiation Process 3. Analysis of Alternatives of the 3. Expected Other Party Negotiation
5. Other Party Negotiation Other Party* Process*
Capabilities 4. Primary Research 4. Expected Other Party Negotiation
6. Your Resource Availability for 5. Secondary Research Timeline
Negotiation 6. Meetings and Discussions 5. Expected Other Party
7. Your Alternatives* 7. Assessing Constraints of the Alternatives*
8. Your BATNA(s)* Other Party 6. Expected Other Party BATNA(s)*
9. Your Walk-Away Point(s)* 8. Understanding Negotiation 7. Expected Other Party Walk-Away
10. Your Negotiation Reference Leverage of the Other Party Point(s)*
Frame(s) 9. Risk Assessment of the Other 8. Expected Other Party Negotiation
11. Your Negotiation Aspects Party Reference Frame(s)
12. Your Outcome Preferences 9. Expected Other Party Negotiation
Aspects
10. Expected Other Party Outcome
Preferences

Figure 5-3: Understand Negotiation Situation of the Other Party—Inputs, Tools, and Outputs

Note: An asterisk (*) denotes a highly recommended input, tool, or output for the corresponding process.

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5.2.1 Inputs

5.2.1.1 Your Issues for Negotiation*

After understanding your negotiation situation, you will have identified most, if not all, of the issues relevant
to the negotiation. You will also classify issues as either critical or non-critical. These issues will act as an
essential input for understanding the negotiation situation of the other party. Refer to section 5.1.3.1 for
more details.

5.2.1.2 Your Negotiation Capabilities

5.2.1.3 Past Negotiation Results

5.2.1.4 Defined Negotiation Process

This is an output of the previous process. In preparation for negotiation, it is important to define a desired
negotiation process on the basis of past experiences, the current negotiation situation, an understanding of
issues, and resource availability. This negotiation process is tentative and will undergo changes as you
assess the negotiation situation of the other party. Refer to section 5.1.3.2 for more details.

5.2.1.5 Other Party Negotiation Capabilities

Any existing information about the negotiation capabilities of the other party will be useful in understanding
their situation. Information about the other party’s resource availability, existing negotiation templates, or risk
tolerance will also help in formulating strategies and tactics for the coming negotiation. External sources,
previous negotiations with the other party, and industry reports are examples of possible sources for this
information.

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5.2.1.6 Your Resource Availability for Negotiation

An output of the previous process, your resource availability for negotiation takes into account all of the
resources necessary to engage in the negotiation. Such resources include human resources, financial
resources, and time. Refer to section 5.1.3.4 for more details.

5.2.1.7 Your Alternatives*

An output of the previous process, this is a list of alternatives for the current agreement or deal that is being
negotiated. It includes the options that you identified as possible approaches to reaching the objectives of
the negotiation, in the event that the negotiation fails or if the outcomes of the negotiated agreement do not
meet expectations. The list of your alternatives will be useful in analyzing the alternatives for the other party.
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Refer to section 5.1.2.3 and section 5.1.3.5 for additional details.

5.2.1.8 Your BATNA(s)*

Your BATNA(s) is an output of the previous process. It is the next best alternative if the negotiation does not
go through. Your BATNA is selected from the alternatives that have been identified. It is described in detail
in section 5.1.2.3 and section 5.1.3.6.

5.2.1.9 Your Walk-Away Point(s)*

This is the point at which the BATNA becomes preferable to the agreement being negotiated, or the point at
which you are prepared to walk away from the negotiating table. It is an output of the previous process and
is described in section 5.1.2.3 and section 5.1.3.7.

5.2.1.10 Your Negotiation Reference Frame(s)

Your negotiation reference frame is an output of the previous process. It influences the other party’s
perception of your point of view. For further details, refer to section 5.1.3.8.

5.2.1.11 Your Negotiation Aspects

An output of the previous process, the Negotiation Aspects provide a comprehensive understanding of your
negotiation situation. An understanding of the Negotiation Aspects will influence your assessment of the

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negotiation situation of the other party and in turn will be affected by their negotiation situation. For more
details, refer to section 5.1.2.2 and section 5.1.3.9.

5.2.1.12 Your Outcome Preferences

This is an output of the previous process. In a multi-issue negotiation, you will have preferred outcomes for
each issue. Outcomes can be defined in terms of price, relationship, interests, legality, commitment, and so
on. Refer to section 5.1.3.10 for more details.

5.2.2 Tools

5.2.2.1 Analysis of Issues of the Other Party*

This tool is based on information gathered about the issues of the other party—specifically, the importance
placed on each by the other party and its relative importance based on your own issues. As with analysis of
your issues, it is necessary to first identify all the issues that are considered by the other party. It is important
to note that the other party may have identified issues that you may not have considered. If you are able to
identify all issues ahead of time, they become easier to tackle during negotiation. It also helps in
understanding the other party’s point of view if you already know about the issues that they have
communicated. If you are aware of all the issues, you will also be able to identify alternatives for those
issues and even use those issues to your advantage during negotiation. Identifying all the issues can also
help you determine, to a certain extent, the reference frame or frames that the other party may use.

In multi-issue negotiations, the other party may not place as much importance on certain issues as you do.
Prioritization of issues by the other party can be different from the order of priority you place on your own
issues. Other parties usually do not reveal information regarding their prioritization of issues, because you
can use this as leverage in achieving your preferred outcomes. As this information is not made readily
available, you need to use your primary and secondary research data to analyze and estimate the priorities
established for each of the other party’s issues. This can be very useful for you as you can use it to make a
better initial offering or gain a better deal on other issues. There may be certain interdependencies among
issues for the other party. These interdependencies may not be the same as those for your issues. It can be
beneficial to identify interdependencies among other party issues, so you can identify and evaluate
alternatives accordingly. A property deal that involves several buyers, for example, will likely involve some
interdependencies among the parties as well as with the seller that might be related to the timing of the deal,
the price offered, other pending deals, or any other variables. Knowing about such interdependencies in
advance can provide an advantage to the selling party.

Understanding other party issues also plays an important part in framing. Framing as a tool is discussed
later in section 6.1.2.5. The other party may have decided to consider certain issues or place importance on

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a certain set of issues for specific reasons. By understanding the issues that the other party finds important,
you can position your reference frame in such a manner that complements the other party’s reference frame.
In multi-issue negotiations, parties often have to trade or compromise on some issues. It always helps if you
know which issues they are ready to trade off, and compare them with your own issues. This analysis allows
you to enter a negotiation with suitable alternatives and give you confidence that you can attain your
preferred outcomes without having to make major compromises.

5.2.2.2 Aspects of Negotiation*

Assessing different Aspects of Negotiation from the other party’s perspective is the first step toward
understanding the negotiation situation of the other party. Any strategy made without considering the other
party’s perspective is unlikely to succeed. You have to examine the Aspects of Negotiation from the other 5
party’s point of view to gain a complete overview of the negotiation. At this stage you may only have partial
information, but it will help in formulating your negotiation strategy.

Justification for Negotiation

You need to understand the other party’s reason for negotiation. Apart from apparent issues that will be
known before the start of the negotiation, you should also try to discover if there are other hidden issues that
may crop up during the course of negotiation. You should also assess their expected outcomes. The
expected benefits and costs of the other party will enhance your understanding of their situation. In a multi-
issue negotiation, you should analyze their preferable outcomes for each issue. You can formulate your
offers and counter offers on this basis.

Distributive vs. Integrative Negotiation

It is important to anticipate the other party’s approach to the upcoming negotiation. Consideration should be
given to each issue in a multi-issue scenario as some issues can be approached as distributive, even if the
overall negotiation is integrative in nature. For example, before negotiating with a first-time supplier, you find
out that though they want to have long-term contracts with their customers, they are aggressive in terms of
price and credit terms. So these two issues should be approached differently as compared to other issues.

Customization

As previously mentioned, each negotiation is different. This difference can be due to the issues, the parties,
the alternatives, the negotiation phases, and more. Many of these particulars are clarified before the
negotiation, but they may change once the process starts. If these are not clarified, then thinking from the
other party’s perspective will inform you of their expectations from the negotiation process. You can
formulate your action plan accordingly. For example, if the other party is known for discussing and
concluding one issue before moving on to the next one, then you should also plan accordingly.

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Non-linear Process with Uncertain Outcomes

Assessing the expected risks and the other party’s action plan for dealing with them are essential for
understanding the other party’s negotiation situation. While you will not be able to deduce this information
completely, you should still try to find out what the other party considers risks and their contingency plan for
them. This information will help you prepare your plan for these uncertainties as well. For example, before
negotiating the purchase of a family business, a buyer may find out that the agreement can be scuttled by
the family patriarch. They will have their own plan for this scenario, but the buyer should also factor this into
his or her plan.

Human Relation Issues in Negotiation

Because negotiation is an interpersonal process, the people involved have substantial impact on the
process. After you understand your own preferred biases, existing perceptions, and potential weaknesses,
you should try to figure out the same for the other party negotiator. Any information that you gather about
their experience, biases, and potential weaknesses can be exploited during the negotiation process. You
can also try to deduce the negotiation style the other party may use for different issues on the basis of past
experience, third party sources, negotiation situation, and so on. This may be conjecture, but it can still be
useful in your negotiation plan.

Organization for Negotiation

You should try to find out who will negotiate for the other party. The other party may have different
negotiators for different issues. This means you will have to adapt your strategy according to the issues. For
example, you may bring in a financial expert while negotiating the price of a small restaurant chain, if the
other party brings a financial expert for the same issue. You should also find out the level of authority for the
other party. Ideally, both parties in the negotiation should have similar authority levels, but there will be times
when you will negotiate with someone with less or more authority than you. You should be prepared for such
situations. For example, if the other party negotiator has less experience than you, you may tactfully suggest
that you will bring your manager, who has more authority, and the other party should do the same. This
situation has been discussed in detail in Chapters 2 and 3.

Ethics in Negotiation

Information about the other party’s ethical or unethical approach to negotiation is very useful. This can often
be inferred from their reputation and past experiences. You can change your negotiation plan on the basis of
this information, but you should refrain from using unethical tactics even if you suspect the other party may
be using them.

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5.2.2.3 Analysis of Alternatives of the Other Party*

After assessing the issues and Negotiation Aspects from the other party’s perspectives, you now must
discover the alternatives that are available to the other party. Alternatives for the other party are deals or
agreements that the other party can negotiate instead of the current negotiation or deals that can be
negotiated if the current negotiation fails. These alternatives may fulfill the objectives or goals that the other
party wants to achieve through the current negotiation. To analyze the alternatives, it is important to learn
what the other party wants from the deal as well as why they want it. The following information can further
help in the analysis of alternatives and in understanding the other party’s negotiation situation:

 goals, capabilities, and needs of the other party

 risk appetite of the other party
 other past and current deals negotiated by the other party
 the strategy, tactics, and negotiation style of the other party
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 the importance of the current deal for the other party
 the importance of various issues for the other party

In a multi-issue scenario, you should consider alternatives that the other party has for the most important
issues. Next, determine or estimate the alternatives that the other party has for the overall deal and for the
critical issues that are part of the deal. Some of the ways in which the required information can be gathered
to determine the alternatives for the other party are as follows:

 Industry publications—Depending on the profile of the other party and the type of negotiation,
information can be gathered on their risk appetite, business and negotiation history, and more from
industry publications such as journals, magazines, and newspapers.
 Public reports—Collect information on the financial stability, reputation or brand value, and
business interests of the other party through public reports such as financial statements, stock
reports, company biographies, and records of judicial judgments.
 Third-party contacts—Other valuable sources of information include individuals and companies
who have done or are doing business with the other party. Speak with them and elicit information on
the other party’s negotiation styles, tactics, and strategies.
 During the negotiation process—Gather information on the other party’s interests, objectives, and
priorities during the process of negotiation by observing and deciphering the information they share.

Understanding the situation from the other party’s perspectives will enable you to calculate or estimate their
alternatives, BATNA for the overall deal, BATNA(s) for the critical issues, and walk-away points. This
information will also help you to determine the zone of possible agreement (ZOPA), which includes all the
possible agreements that will be acceptable to you and the other party. Once your walk-away points and the
other party’s walk-away points are clear, you can easily determine the zone of possible agreement.

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5.2.2.4 Primary Research

Primary research on the other party can yield information regarding their issues, alternatives, and Aspects of
Negotiation. The other party may have decided on a range of issues that they need to negotiate. They may
have categorized and prioritized the issues as well. Primary research can help you get information regarding
the relative importance that they have attributed to various issues. This information can be compared with
your own issues to evaluate whether you need to identify better alternatives or place more importance on
certain issues.

Primary research and findings regarding the other party’s tactics and style of negotiation can be used to
prepare for the upcoming negotiation. In multi-issue negotiation, the other party may approach different
issues using different negotiation styles. For example, while trying to figure out a possible solution to a
conflict over the timing of implementing terms of an agreement, the other party may be willing to collaborate.
While negotiating price, the other party may have a history of using the competing style. Primary research
can also help you find the preferred outcomes of the other party for each issue under consideration.

Primary research can be conducted with individuals in your group as well as individuals or parties outside
the group who may have been part of negotiations with the other party in the past or with external agents
who have knowledge about the issues under consideration. When conducting primary research with any
external agent, ensure that the agent has no obligations or commitments to the other party and that an
association with them is not legally restricted. As described in section 3.1.2.3, primary research can be either
qualitative or quantitative in nature. The quantitative and qualitative techniques used for primary research on
the other party are described in section 3.2.2.3.

5.2.2.5 Secondary Research

Secondary research involves gathering and analyzing information about the other party from already
available sources such as existing research and reports. Secondary research to gather information about the
other party is described in detail in section 3.2.2.4. Secondary research is especially useful in situations
where it is too expensive or time-consuming to conduct primary research. Secondary data collection
generally takes less time than primary data collection.

In multi-issue negotiation, secondary research can help you identify issues that have been generally
considered important by the other party. By analyzing reports and existing records about previous
negotiations in which the other party had participated, it is possible to gain an understanding of issues that
the other party has placed importance on and those issues that they have not considered significant.
Secondary research can also reveal information about the other party’s actual outcomes from recent and
past negotiations. This can give you an idea of outcomes that the other party might be looking to achieve in
upcoming negotiations.

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Secondary research can also be used to gather information about the other party’s Aspects of Negotiation,
their background, and historical data. More details about secondary research and the sources to collect data
are described in section 3.2.2.4.

5.2.2.6 Meetings and Discussions

Meetings and discussions are held with other stakeholders within the group and with external agents to
analyze available information and determine probable issues and the importance of issues for the other
party. Meetings and discussions provide a forum in which to discuss the other party’s BATNA(s) and walk-
away point(s). External agents bring an outsider’s perspective to these meetings—a perspective that can be
critical for understanding the other party’s negotiation situation. Meetings and discussions help you to be
well prepared for the upcoming negotiation and obtain internal commitment from other stakeholders in the 5
group.

5.2.2.7 Assessing Constraints of the Other Party

The other party is also likely to have some constraints and by knowing those constraints you tend to gain
some advantage during negotiation. However it is generally difficult to identify the other party’s constraints
before the negotiation. The different types of constraints are described in detail in section 3.1.2.7 and 5.1.2.7
Resource constraints of the other party can be understood based on the situation and the issues under
consideration. Such constraints can be identified by being aware of the recent negotiations or events that the
other party has participated in as well as through primary and secondary research about the other party.
Resource constraints such as financial and people constraints can be generally understood during the
preparation stage. Psychological constraints can be understood only during the negotiation. However, by
researching on the other party’s past negotiations you will get to know if they have psychological constraints
during negotiation.. It is important that you do not enter the negotiation with a perceptual bias about the other
party based on this knowledge. A perceptual bias prevents one from seeing all factors in the negotiation and
can cloud one’s judgment. For example, a homeowner might be emotionally attached to the home that he is
selling and thus is dealing with his own psychological constraint; however, knowing about the homeowner’s
attachment to his home should not impact the buyer in negotiating a good deal for the house, including an
appropriate purchase price, closing date, and other conditions of the sale. For more information about
assessing constraints of the other party, refer to section 3.2.2.6.

5.2.2.8 Understanding Negotiation Leverage of the Other Party

Negotiation leverage and its sources are described in detail in section 5.1.2.8. Negotiation leverage is
derived from three sources—information, resources, and authority. It is possible through research to identify
the sources of leverage of the other party, especially if the source of the leverage is the other party’s
resources or the negotiator’s authority. Data regarding the kind of resources owned or controlled by the

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other party is usually available from open sources such as the other party’s website or reports available in
the public domain. Similarly, you will also be aware of the authority of the other party before the negotiation.
The leverage from authority might be based on the position of the other party’s negotiator within their
organization. Leverage from authority can also be the result of the overall position of the other party in the
industry. For example, the other party’s negotiator may be the head of a trade or industry group of which you
are also a member. More information regarding negotiation leverage from the other party is provided in
section 3.2.2.7.

5.2.2.9 Risk Assessment of the Other Party

For a comprehensive understanding of the other party’s negotiation situation, you need to identify and
analyze risks from their perspective. You need to understand what the other party considers as risks and
anticipate their course of action for each risk. You should try to identify risks associated with each issue or
at least the critical issues. It is also helpful to try to assess the other party’s ability and willingness to take
risks. In a single-issue negotiation, only one issue is under consideration, so the other party’s ability and
willingness to take risks needs to be assessed for just one issue. However, in a multi-issue negotiation you
may have to consider the risks separately for each issue. As discussed in section 5.1.2.9, ability and
willingness to take risks may differ from issue to issue. It will be difficult to collect this information about the
other party but you can draw inferences on the basis of your past experiences with the other party, their past
negotiations, third party sources, and the current negotiation situation.

5.2.3 Outputs

5.2.3.1 Expected Other Party Issues*

After analysis and research, you are expected to have an understanding of the issues that are likely to be
raised by the other party and the issues that the other party considers important. Although an exhaustive
and complete understanding of the other party’s issues is difficult to achieve, the information available
should enable you to attain desirable outcomes for your critical issues. Knowing the other party’s issues
makes it easier to understand their reference frame, around which you can present a suitable counter
reference frame.

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Example of Expected Other Party Issues:

 When considering a three-year international assignment, a job candidate has to be realistic when
negotiating the employment terms of a contract. While some terms and conditions may be
negotiable (e.g., salary and benefits), it is unlikely that the host or parent company will be able to
guarantee a new position in a specific country at the end of the three-year term. Changing business
needs and the uncertainty of future job vacancies make this impossible for a company to negotiate,
other than perhaps developing a list of preferred destinations and positions at the end of the three-
year contract. An international job candidate will, therefore, need to accept an international
assignment with some degree of uncertainty.

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5.2.3.2 Expected Other Party Resource Availability

The resource availability of the other party refers to the time, effort, and funds the other party is willing to
allocate for the negotiation. Although it may not be possible to gather exact information related to resource
availability, you can arrive at a fairly accurate estimate based on primary and secondary research. The
resource availability of the other party can indicate how important the negotiation is for them and any areas
in which they have leverage.

5.2.3.3 Expected Other Party Negotiation Process*

After assessing the negotiation situation for the other party you should have a fair idea of their negotiation
process. Your analysis of their previous negotiations, the issues and alternatives for the current negotiation,
and their resource availability will help you determine the expected negotiation process for the other party.
This will also influence your own negotiation process, which should be updated.

Example of Expected Other Party Negotiation Process:

 When purchasing a new car, a customer can expect negotiating not only the price of the vehicle, but
also the options on the vehicle. The agreed upon purchase price may therefore include or exclude
items such as an extended warranty, heated or leather seats, and/or an automatic transmission at
no extra charge to the customer. While these options may not discount the final price of a vehicle, a
dealer may be more willing to absorb these costs instead of reducing the purchase price of the
vehicle itself. This may allow the dealer to maintain an acceptable profit margin without selling a
vehicle at a deeply discounted price or a loss. Anticipating this process will help the buyer negotiate
the more options at the best price.

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5.2.3.4 Expected Other Party Negotiation Timeline

The expected other party negotiation timeline provides an indication of the other party’s time allocation for
each process in the negotiation. These time allotments can be estimated on the basis of the expected cost
of negotiation for the other party, the number of parties involved in the negotiation, the expected schedule of
the negotiation, and the importance of the negotiation for the other party. You can use time as a leverage
point based on your assessment of the other party’s timeline.

5.2.3.5 Expected Other Party Alternatives*

Alternatives for the other parties are those overall deals or agreements along with the alternatives for the
critical issues that the other parties can negotiate instead of the current negotiation or if the current
negotiation fails. These alternatives may fulfill the objectives or goals that the other parties want to achieve
through the current negotiation. For additional details, see section 5.2.2.3.

Examples of Expected Other Party Alternatives:

 In a real estate market where demand is greater than supply, the seller has leverage. In this type of
market, a buyer needs to make an offer that stands out from competing bids. This might include
offering a greater down payment, a flexible possession date, or an unconditional offer to the seller.
These alternatives will likely appeal to a seller who has the luxury of considering multiple bids for the
same property.
 At month-end, it is likely that a car dealer is motivated to reduce inventory. You know the dealer is
likely motivated to sell a vehicle to you at a reduced price. At the same time, you recognize that the
dealer needs to make an acceptable profit when selling you a vehicle. In this case, you may be able
to negotiate not only on the price of the vehicle, but also additional options which may have less
impact on the dealer’s profit margin than reducing the purchase price of the vehicle alone. For
example, an extended warranty or upgraded leather upholstery at no additional charge, or a greater
trade-in value on your used vehicle, may be more acceptable to the dealer and allow you to
negotiate a better deal for both yourself and the dealer.


5.2.3.6 Expected Other Party BATNA(s)*

The BATNA for the other party is the next best alternative that the other party has to the negotiated
agreement. This can also include the BATNA for each critical issue or set of critical issues that are being
negotiated as part of the overall agreement.

Once the alternatives for the other party have been determined, you can proceed to estimate their BATNA,
or the next best alternative that the other party has for the negotiated agreement. To identify the other
party’s BATNAs from among the identified alternatives, estimate the value of each alternative in terms of

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how they enable the other party to achieve their stated objectives. Also, remember that BATNA is not fixed;
it can change over a period of time due to a change in circumstances of the party involved. So, you should
continually evaluate the other party’s BATNAs until the negotiation is concluded.

By assessing the alternatives and the BATNAs of the other party, you can adapt your strategy to improve
your BATNA by reducing the other party’s alternatives and weakening their BATNAs through ethical and
legal means.

5.2.3.7 Expected Other Party Walk-Away Point(s)*

The walk-away point is the point at which the BATNA for the other party becomes preferable to the
agreement being negotiated or the point at which the other party is prepared to walk away from the
negotiating table. You can also list the other party’s walk-away points for each critical issue or set of critical 5
issues that are being negotiated as part of the deal.

Though it is difficult to accurately assess the other party’s walk-away points, it is possible to estimate those
points using the information gathered about them. This estimate can be improved throughout the negotiation
process as more information from the other party is collected.

5.2.3.8 Expected Other Party Negotiation Reference Frame(s)

The expected negotiation reference frame for the other party is an indication of the other party’s point of
view; it provides a sense of how they want to be perceived and how they interpret the issue. It must be noted
that this is an anticipated reference frame and the exact frame that the other party puts forward can only be
known and assessed during the negotiation process. In a multi-issue negotiation, the other party can have
different reference frames for different issues, especially when one issue is addressed at a time.

5.2.3.9 Expected Other Party Negotiation Aspects

At the end of this process you should have a better understanding of the Negotiation Aspects of the other
party. The Aspects include their justification and approach to negotiation. You will also have some
information about the other party’s negotiators, their personal preferences and biases, and their authority
level. This information may not be concrete, but it will provide valuable insights for the coming negotiation.

5.2.3.10 Expected Other Party Outcome Preferences

After assessing the other party’s negotiation situation, you should have a fair idea about their outcome
preferences. In a multi-issue negotiation, you should try to determine and calibrate the outcome preferences
of the other party for each issue. One end will be the other party’s walk-away point for each issue, beyond
which they will not negotiate. On the other end, will be the benefits that they will gain if the negotiation

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succeeds. This assessment and calibration can be done on the basis of past negotiation experience and this
particular situation. Outcome preferences can be in terms of price, relationship, interests, legality,
commitment, and so on.

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6. CONDUCT MULTI-ISSUE NEGOTIATION

The previous chapter dealt with understanding the negotiation situation for you and for the other party. The
next step is to conduct multi-issue negotiation. This chapter discusses the concepts involved in conducting
successful multi-issue negotiation. The first process describes tools for planning for negotiation. You need to
finalize the logistics—time, place, and mode of the negotiation. You will have to analyze and classify all the
potential issues that can crop up in the negotiation. You will also have to assess if you need external
expertise and in what capacity. Proper planning will help in conducting the negotiation. The next process
looks at various tools for conducting the negotiation such as offers, tradeoffs, opening the negotiation,
formulating policies, terms and conditions, third party interventions, managing agents, etc. These tools help
in all stages of the negotiation process—from opening to settlement. Figure 6-1 provides an overview of the
processes associated with this chapter. These are as follows:

6.1 Plan for Negotiation—In this process you will create a negotiation plan consisting of logistics, expected
negotiation paths, potential bottlenecks, categorized issues, and negotiators.
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6.2 Conduct the Negotiation—This process deals with offers, tradeoffs, third party interventions and other
tactics that should be used in a multi-issue negotiation process.

6.1 Plan for Negotiation 6.2 Conduct the Negotiation

Figure 6-1: Conduct Multi-Issue Negotiation—Inputs, Tools, and Outputs

Note: An asterisk (*) denotes a highly recommended input, tool, or output for the corresponding process.

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6.1 Plan for Negotiation

This section describes the process of creating a plan for a multi-issue negotiation. This process involves
understanding the logistics for negotiation and helps in preparing for the upcoming negotiation process. After
this process you will know the tactics that will be used, the reference frame that you will adopt, and any
insights that can be gained on the other party’s preferences for the negotiation. In this process hiring
external agents is also considered, and you will develop an understanding of the functions performed by
agents. You also determine expected negotiation paths and calibrate your preferred outcomes at the end of
this process. Figure 6-2 provides the inputs, tools, and outputs of the Plan for Negotiation process.

1. Your Issues for Negotiation* 1. External Expertise 1. Logistics for Negotiation*

2. Your Resource Availability for 2. Issues Matrix* 2. Calibration of Outcomes
Negotiation* 3. Negotiation Planning Session* 3. Expected Negotiation Paths
3. Your Alternatives* 4. Negotiation Research 4. Your Negotiators*
4. Your BATNA(s)* 5. Framing 5. Other Party Negotiators*
5. Your Walk-Away Point(s)* 6. Potential Bottlenecks
6. Your Negotiation Aspects 7. Your Negotiation Reference
7. Your Outcome Preferences Frame(s)
8. Expected Other Party Issues for
Negotiation*
9. Expected Other Party Resource
Availability
10. Expected Other Party
Alternatives*
11. Expected Other Party BATNA(s)*
12. Expected Other Party Walk-Away
Point(s)*
13. Expected Other Party Negotiation
Reference Frame(s)
14. Expected Other Party Negotiation
Aspects
15. Expected Other Party Outcome
Preferences

Figure 6-2: Plan for Negotiation—Inputs, Tools, and Outputs

Note: An asterisk (*) denotes a highly recommended input, tool, or output for the corresponding process.

6.1.1 Inputs

6.1.1.1 Your Issues for Negotiation*

An output of the Understand Your Negotiation Situation process, described in section 5.1, your issues for
negotiation are all of the issues that you want to resolve or discuss in the negotiation. These issues typically
are categorized as critical or non-critical. Critical issues are those that are essential to achieve your desired
outcomes, while non-critical issues are those that you are willing to tradeoff or compromise if faced with a
situation where flexibility is required. Refer to section 5.1.2.1 and 5.1.3.1 for more details.

Examples of Issues for Negotiation:

 An engineer seeking to partner with another firm to capture a large contract will need to negotiate
several issues such as the division of labor and the division of revenue. However, several other
issues will factor into the negotiation, including roles and responsibilities, additional partnerships,
approvals, etc.
 Software Suppliers Inc. wants to hire a contract field force to sell one of its products. Numerous
issues have been identified by the supplier for negotiation. These include compensation, customer
call frequency, target customers, training, and how to measure the performance of the contract field
force. During negotiations, management of the contract sales force identifies specific challenges
confronting its field force in some territories. Some sales territories are considered too
geographically dispersed to maintain the daily sales call average set by the supplier. The contractor
therefore discusses alternatives with Software Suppliers Inc. and negotiates lower sales call targets
for territories in rural areas. This allows more time for sales representatives to travel from one
appointment to another. The supplier is open to this arrangement, having not previously considered
how geography and limited resources might affect sales performance.

6.1.1.2 Your Resource Availability for Negotiation*

Your resource availability for Negotiation is an output of the Understand your Negotiation Situation for Multi-
Issue Negotiation process. It is important to identify the required resources and available resources before
you start the negotiation. Refer to section 5.1.3.4 for more details.

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6.1.1.3 Your Alternatives*

An output of the Understand Your Negotiation Situation process, described in section 5.1, this is a list of
alternatives for the current agreement. These are the options available to you in case the negotiation fails or
if the outcomes of the negotiated agreement do not meet expectations.

6.1.1.4 Your BATNA(s)*

Your BATNA is the next best alternative if the negotiation does not go through. Your BATNA is selected from
the alternatives that have been identified. Knowing your BATNA(s) for critical issue(s) is important so that
you do not end up taking a deal that is less desirable than the next best alternative. Your BATNA is not
simply something that you think you can do or something that is fair. It requires careful consideration of all
alternatives and a comprehensive understanding of all issues. See section 5.1.3.6 for further details.

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6.1.1.5 Your Walk-Away Point(s)*

A walk-away point is the point at which the BATNA becomes preferable to the agreement being negotiated,
or the point at which a negotiator is prepared to walk away from the negotiating table. In a multi-issue
negotiation, you can have more than one walk-away point. Refer to section 5.1.2.3 and 5.1.3.7 for more
details.

Example of Your Walk-Away Point:

 Excavators Inc. buys old buildings, refurbishes them, and divides them into smaller units for new
and growing businesses. The person who manages negotiations with sellers must assess each
building carefully, in terms of fair market value and the cost to finance, refurbish, and convert each
property. He then calculates the most that the company can afford to pay for each property, taking
into account the available budget, time requirements, and staffing levels needed to close each sale
and convert each property. He then makes an initial offer below that amount. While he is prepared
to re-negotiate or go up in price, he will never exceed his original calculation to refurbish each
property. This represents his walk-away point.

6.1.1.6 Your Negotiation Aspects

Understanding your negotiation situation is critical for achieving your objectives in negotiation. Having a
clear idea about the Negotiation Aspects will help you understand your negotiation situation and formulate
your negotiation strategy. For additional details, see section 5.1.2.2 and 5.1.3.9.

6.1.1.7 Your Outcome Preferences

Your outcome preferences are an output of the Understand your Negotiation Situation process, described in
section 5.1. After assessing your negotiation situation, you will identify your preferred outcomes. These will
become your objectives for a successful negotiation. Refer to section 5.1.3.10 for additional details.

Example of Your Outcome Preferences:

 A local government has a reputation for wasting money and other resources. It has also come under
scrutiny from environmental groups for not taking more of a leadership role in using recycled paper
products. Re-Use Inc. is aware of the government’s reputation and decides to highlight its
environmentally friendly product line when bidding on a government contract. Its first proposal is
rejected as being too costly. Re-Use Inc. would like to establish a long-term relationship with the
government as a preferred supplier. It therefore is prepared to negotiate a discounted price for its
paper products with an eye towards achieving high volume sales in the future at an acceptable profit
level.

6.1.1.8 Expected Other Party Issues for Negotiation*

These are the issues that are likely to be raised by the other party and the issues that they consider
important. You need to include all potential issues in your negotiation plan so that you are prepared when
you finally start the negotiation. For additional details, refer to section 5.2.2.1 and 5.2.3.1.

Example of Expected Other Party Issues for Negotiation:

 A sales representative needs to anticipate customer objections, based on the customer’s reactions
to previous sales presentations. Cautious customers who hesitate making buying decisions will
need more information on how a product will benefit them. This will help to reassure them that they
are making a good buying decision. Allowing more time for customers to ask questions during the
sales presentation will also allow the sales representative to identify specific information customers
may need before making a buying decision. Anticipating other objections such as price or cost
objections may also be required to prepare for successful negotiations.

6.1.1.9 Expected Other Party Resource Availability

The resource availability of the other party for negotiation refers to the time, effort, and funds that you
anticipate they are willing to allocate for the negotiation. This information is an important input for your
negotiation planning as it provides insights about the importance of the upcoming negotiation from the
perspective of the other party.

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6.1.1.10 Expected Other Party Alternatives*

These are the alternatives the other party has to the current negotiation. You need to consider these
alternatives when you are planning for negotiation especially while creating initial offers. Refer to 5.2.2.3 and
5.2.3.5 for more details.

6.1.1.11 Expected Other Party BATNA(s)*

The BATNA for the other party is the next best alternative that the other party has to the negotiated
agreement. You should use the BATNA(s) of the other party for your negotiation planning. It is important to
note that there can be more than one BATNA in a multi-issue negotiation. For additional details on the
expected BATNA of the other party, refer to section 5.2.3.6.

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6.1.1.12 Expected Other Party Walk-Away Point(s)*

The walk-away point is the point at which the BATNA for the other party becomes preferable to the
agreement being negotiated or the point at which the other party is prepared to walk away from the
negotiating table. It is a critical input and should be adjusted as you gather more information about the other
party during the negotiation.

6.1.1.13 Expected Other Party Negotiation Reference Frame(s)

The expected other party negotiation reference frame is an output of the Understand the Negotiation
Situation for the Other Party process. This is an anticipated reference frame based on an understanding of
the other party. For details on the other party’s negotiation reference frame, see section 5.2.3.8.

6.1.1.14 Expected Other Party Negotiation Aspects

The expected other party negotiation aspects is an output of the Understand the Negotiation Situation of the
Other Party process. The Negotiation Aspects of the other party can include the other party’s justification for
negotiation, their approach, human relations issues, among others. This information may not be concrete,
but it can provide valuable insights for the coming negotiation. For details on the other party’s Negotiation
Aspects, see section 5.2.3.9 or refer to chapter 2, Aspects of Negotiation for a comprehensive description.

Example of Expected Other Party Negotiation Aspects:

 An accident victim’s lawyer can predict fair compensation owed to his client, based on similar legal
cases. Depending on the severity of the accident, compensation claims may be made for physical
and mental pain, medical costs, lost income, and damage to the victim’s quality of life. The
defendant’s lawyer will go through the same process to predict reasonable compensation, if any, for
each of the anticipated claims made by the victim’s lawyer. Through this process, both lawyers can
predict and negotiate a fair settlement without having to go to court.

6.1.1.15 Expected Other Party Outcome Preferences

An output of the Understand Negotiation Situation of the Other Party process, described in section 5.2, the
expected other party outcome preferences are the preferred outcomes that you anticipate the other party will
have identified. The assessment of the preferred outcomes is conducted on the basis of past negotiation
experience and the current negotiation situation. Expected other party outcome preferences provides
valuable insights about the other party’s objectives for negotiation. Refer to section 5.2.3.10 for more details.

Example of Expected Other Party Outcome Preferences:

 Stampings International is a tool and die maker that makes tools used in manufacturing processes.
The company knows from working with clients in the past what is most important to each customer.
For some, short delivery times are more important to make urgent repairs to manufacturing
equipment. In these cases, Stampings International can negotiate full price for its parts in exchange
for short delivery times. For customers who are more interested in price, the tool and die company is
prepared to negotiate discounts for bulk orders in exchange for three to four week delivery times.

6.1.2 Tools

6.1.2.1 External Expertise

In a multi-issue negotiation there are several issues that are discussed for negotiation. Your existing
understanding of issues depends on your experience in similar negotiations and your expertise on the issue
under consideration. Multi-issue negotiation is inherently more complex than single-issue negotiation. The
nature of the issues and factors associated with the issue, including social, economic, political or legal
factors, make the negotiation challenging and complicated. Moreover, in multi-party negotiation arriving at a
solution becomes even more difficult due to the potential for a clash of views and varied agendas of the

180 © 2016 VMEdu® Inc. A Guide to the Negotiation Body of Knowledge (NBOKTM Guide)
6 – CONDUCT MULTI-ISSUE NEGOTIATION

parties involved. Experts can be hired to overcome these difficulties. They can be used for the following
purposes:

 as negotiators
 as advisors
 as third-party intermediaries

Experts as Negotiators

Multi-issue negotiation requires negotiators who are skilled and experienced. It is highly recommended that
you use an experienced negotiator to represent yourself in multi-issue negotiation. Skilled negotiators help in
arriving at a solution that will not only help in winning the negotiation, but also in building long-term
relationships that will contribute to the growth of the business. Having trained and seasoned negotiators will
improve your negotiating capabilities. Professional negotiators understand the psychological and perceptual
turbulence the other parties go through when a particular issue is not resolved in a manner that is
acceptable to them. An experienced negotiator will be able to use this understanding to frame and present
solutions in a way in which the other party is most likely to accept. 6

Experts as Advisors

Organizations can hire experts as advisors. Advisors provide information that can be used by their clients to
solve problems. There are three basic types of advisors. These are as follows:

Advisor as Director—The negotiator takes total control of the negotiation. He directs the
negotiation and takes actions toward a successful negotiation.

Advisor as Servant—The negotiator only follows the demands of the client and strives to achieve
them.

Advisor as Partner—The advisor and the negotiator collaborate to manage the issues and solve
the problem.

Experts as Third-Party Intermediaries15

There is more potential for conflict in a multi-issue negotiation than there is in a single-issue negotiation due
to the involvement of several issues, clash of opinions, and varied agendas. Third party assistance can be
used to deal with conflicts. Third party entities do not necessarily play a large role in each issue but they play
a key role in extending communication, limiting the number of issues, reducing stress, and facilitating
constructive discussion. Negotiation involving complicated issues often leads to anxiety, anger, and
frustration among participants. In these instances, third party intervention is the most effective way to reduce
the tension and bring the negotiation back on track. The negotiators themselves may opt for third party

15 Lewicki, Roy J., David M. Saunders, Bruce Barry, and Minton J.W. (2003) Negotiation. McGraw-Hill/Irwin

intervention or it can be imposed from the outside, by law or regulation. Third party interventions can be of
the following types:

 Mediation
 Arbitration
 Process Consultation

Mediation—Mediation is a form of “assisted negotiation”—an extension and elaboration of the

negotiation process where the parties themselves develop and endorse an agreement. Though
mediators have no formal authority over the result of the negotiation, they bring difference to the process
by meeting the parties individually, understanding the points of conflict and points of interest of the
parties, identifying the potential compromising positions, and encouraging parties to arrive at a solution
that is beneficial to all. The ideal situation for mediation is when both parties are open to receive help, as
mediation requires cooperation from both the parties. Formal mediation is based on established and
accepted rules and procedures. Mediation is considered an effective tool when resolving international
disputes in particular.

The mediator must be approved by all parties involved and must be neutral. A mediator should possess
the following characteristics:

 prior experience in settling negotiation

 an unbiased perspective
 a thorough understanding of the business and point of dispute
 an understanding of the different phases of negotiation
 good listening skills
 a problem solving attitude

The process of mediation comprises five phases. These are as follows:

1. Convening the Mediation—This is the first stage of mediation and the most important phase.
In this phase all information about the issue is gathered.

2. Beginning Session—In this session the mediator gets to know about the desired resolution of
the issues for all the parties involved.

3. Communication—In this stage the parties communicate with each other and the mediator also
takes part in the discussion. Parties discuss solutions to the issues and try to resolve any
conflict by communicating their concerns.

4. The Negotiation—In this stage parties negotiate with each other and work towards solutions
that are beneficial for everyone. The mediator serves as a catalyst in this phase.

5. Closure—This is the final stage of the mediation process where the parties arrive at an
agreement suitable for everyone with the assistance of the mediator.

182 © 2016 VMEdu® Inc. A Guide to the Negotiation Body of Knowledge (NBOKTM Guide)
6 – CONDUCT MULTI-ISSUE NEGOTIATION

Examples of Mediation:

 Families often opt for a mediator to assist in various family matters, such as decision-making with
regards to caring for aging parents. Mediators can provide guidance particularly on the specific
topics that need to be agreed upon and the details that must be considered when making significant
decisions that are emotionally charged and which impact all members of the extended family.
 Dividing property is a source of conflict in many divorces. Trying to decide who gets what causes
headaches and arguments, causing difficulty when discussing important issues. While a judge can
divide up the marital assets, turning to a mediator to help resolve disputes over property or child
care can help each party determine their rights according to law. While it is unlikely that the parties
will see eye-to-eye on every issue, mediation can help both parties reach agreements. Mediation
therefore can give each spouse a greater feeling of control over the outcome of their case compared
to litigation.

6
Arbitration—Arbitration is a common method to resolve a dispute. In cases where a deadlock or a
timing deadline has been reached, the parties involved seek intervention from a neutral third party. This
can be as per an existing agreement or an ad-hoc decision taken by the parties. The third party listens
to both parties and decides on the solution. Arbitration is commonly used in resolving disputes among
businesses and disputes between labor unions and management. It is also common at an international
level when disputes rise between countries over commercial affairs or other issues based on their
respective national interests. The decisions arrived at after arbitration may either be voluntary or binding
depending on the nature of the agreement between the parties and the statutory laws in place.

Table 6-1 lists the primary differences between Arbitration and Mediation.

Type

Arbitration Mediation

Criteria

Cost More Less

Time Longer Comparatively Less

Relationship Don’t collaborate with parties After settling dispute mediators stay
with Parties after settling dispute in touch with both parties

Modus
Restricted to instructions Flexible
Operandi

Table 6-1: Comparison of Arbitration and Mediation

Examples of Arbitration:

 When collective bargaining between administration and the union for a public school board breaks
down and the two parties are in a deadlock, an arbitrator is brought in to resolve the dispute, reach
an agreement, and prevent or end an existing strike.
 Workers at a department store feel that they should receive benefits in addition to a salary. Rather
than risking a strike, the union contacts store management to appoint an impartial adjudicator to
settle the dispute through binding arbitration. An arbitrator subsequently decides that employees
working more than thirty hours a week should be entitled to receive health care benefits. Since the
ruling is binding, management must comply with the decision and pay for benefits for those
employees who qualify.

Process Consultation—Process consultants employ a variety of tactics to resolve a dispute. They

begin by interviewing the parties separately. Through these interviews, they understand the issue,
position, points of view etc., of each side. The interview also helps process consultants in understanding
how each party views the others and their relationship history. Gathering this information enables the
process consultant to establish a series of framing or clarifying statements and points of confrontation or
disagreement that can be discussed and eventually resolved. This is followed by a meeting between the

process consultants and the parties in disagreement. The schedule, attendees, meeting agenda, and
other items are planned ahead of time. In the meeting, the process consultant acts as a referee to both
parties, and is or her primary job is to keep the parties on track so that the ongoing conflict does not
intensify. Through confrontation and exposing differences, the process consultant leads the parties to
resolve the differences and come up with mutually beneficial solutions.

A process consultant must have the following characteristics:

 Should be an expert
 Knowledge about conflict management
 Should be unbiased and completely neutral
 Should be authoritative

Process consultation is highly effective in resolving marriage and family disputes. It is a method that
helps in establishing long-standing relationships among parties. In business, process consultation is
used to address group conflict and team building.
6

Example of Process Consultation:

 A call center is having difficulties meeting call volumes and is seeing an increase in call drops. The
team lead has made several attempts to address the shortfalls using various efforts, including both
reprimanding some staff for lack of productivity and rewarding others for strong performance. The
call center team is insistent that the issues stem from short staffing and inadequate training on the
CRM system. The manager uses inquisitorial intervention to determine the root causes and
implements staffing changes as well as new training protocol to bring about positive change in the
department.

6.1.2.2 Issues Matrix*

In the previous chapter, issues were first analyzed from your perspective and then from the other party’s
perspective. The next step is to assess and classify issues for both parties together. You should plan your
strategy for these issues accordingly.

The first level of classification should be based on whether both parties have similar or different interests in
an issue. In a multi-issue negotiation, you may not have to compete on all issues. There can be issues
where both your interests and the other party’s interests are similar. For example, a supplier wants to deliver
inventory in three weeks and the customer also wants some time so that the currently available goods are
sold off; both parties have similar interests on the issue of delivery time. Similarly, if an employee wants a
transfer to another city and the business has an opening in that location, the parties do not have to negotiate
on the issue of location. Classifying such issues will save both time and effort. It can also have a positive

effect on your relationship. Sometimes parties negotiate hard and end up with sub-optimal solutions when
they fail to realize that they have similar interests on some issues.

The next level of classification should only be done for issues where both parties have different interests. It
is based on the importance of issues for both parties. After this classification you will find the following:

 Issues that are critical to only one of the parties—In such cases, the other party can
compromise on these issues. For example, if working on Saturday is critical for a company but not
for a potential employee the potential employee can compromise on this issue. These are issues on
which you can be flexible and compromise. The extent of compromise will depend on the
importance of issues. Sometimes you can easily compromise while at other times you will negotiate
to a great extent. For example, a potential employee will easily compromise on working on
Saturdays but will negotiate more when asked to work from home on Sundays. You will not walk
away from the negotiation solely on the basis of these issues but the level of compromise will
depend on how important these issues are for you. You should not let the other party know whether
issues are or are not critical to you. This information can be used as leverage in negotiation.
 Issues that are critical for both parties—Both parties will compete on such issues. Either party
can walk away from the negotiation solely on the basis of these issues. This can lead to distributive
negotiation. For example, salary of employee, price of goods etc.
 Issues that are not critical to either party—Both parties can avoid such issues or collaborate. For
example, politicians contesting elections avoid mentioning issues from each other’s personal lives.

Table 6-2: Issues Matrix

Once you have assessed and categorized all the issues from both parties’ perspectives, you can develop
your strategy for negotiation. You will decide your tradeoffs and deal breakers. You may not prepare offers
and justification for each issue but you should consider each of them while preparing your proposal. You
can also decide your range of concession or compromise for different issues.

6.1.2.3 Negotiation Planning Session*

The negotiation planning session is the final planning session that you hold with your external agent (if
appointed), negotiators, or other group members before the actual negotiation. Planning and preparation
before the actual negotiation lays the foundations for successful negotiation. This is an opportunity to set the
tone and direction for the negotiation. As part of your preparation for negotiation, you should gather
information about issues to be negotiated, the priority of issues from your and the other party’s perspectives,
your and the other party’s negotiation styles, and outcomes that will help serve your mutual interests. During
the negotiation planning session, you should assess the information gathered and make decisions on the
following points:

 tactics and negotiation style that you intend to use during negotiation
 how you will use your resources to achieve your goals and objectives
 tactics and negotiation styles that may be employed by the other party
 key goals that the other party wants to achieve through this negotiation
 resources that may be available to the other party to achieve their objectives 6
 logistics such as location, time estimate, preferred mode of negotiation, etc.
 calibration of outcomes
 establishment of a negotiation path
 your negotiators, their official status, and their authority for the negotiation
 the other party’s negotiators and their level of authority for the negotiation

Establishing these factors in the planning session will enable you to obtain a clear picture of the other party,
as well as their goals and motivations in relation to your own. This planning will also help you in
sequencing/scheduling the negotiation. You can discuss non critical issue first to understand more about the
other party, establish trust, establish leverage, and increase commitment. For example, if you have already
discussed and agreed upon various issues, the chances of failure over a single issue will be less than if you
start the negotiation with a critical issue.

6.1.2.4 Negotiation Research

Negotiation research helps in obtaining more information and insights regarding the other party’s logistics,
including their preferred location, time, duration, mode of negotiation, and tactics for negotiation. Negotiation
research for a single-issue negotiation is described in detail in section 4.1.2.3. While research conducted as
part of primary and secondary research pertains more to the issues and Aspects of Negotiation related to
you and the other party, the research done here relates more to the operational aspects of the upcoming
negotiation. The research is focused on determining the best way to conduct the negotiation, including the
scheduling, the location, and the mode of negotiation among others. Information can be sought directly from
individuals who have been part of previous negotiations or agents who are aware of the preferred
negotiation logistics of the other party. Information can also be obtained from existing literature and reports.
Industry norms, cultural differences, and other commonly followed negotiation etiquette may also need to be

understood before deciding on the negotiation logistics. This is especially important when planning for
negotiations where the government is involved or negotiations involving different parties from different
nationalities. Negotiation research thus helps you make sure that you have created the best possible
conditions to achieve your desired outcomes from the upcoming negotiation.

Negotiation research can also be conducted to help in learning more about the other party’s negotiators. You
can research whether they are using an internal or external agent. If the negotiator is an external agency
then you can research about the agency’s past negotiations, level of expertise, and other aspects. If third
party intermediaries are being used for mediation, arbitration, or any form of dispute resolution, you can
conduct research on the previous negotiations of the third party to understand their preferred negotiation
logistics.

6.1.2.5 Framing

A reference frame provides a perspective for the other party to view the issue. By presenting the issues
using a good reference frame you will be able to convince the other party about the justification for an offer
that you make. The reasons and importance of framing are presented in detail in section 3.1.2.6. In multi-
issue negotiation, each issue needs to be presented using convincing and acceptable reference frames.
Framing should be done carefully in multi-issue negotiation, as you need to be aware of all issues in the
negotiation as well as the dependencies between or among issues. Each issue, along with its dependency
with other issues, needs to be fully understood before framing it. Your chances of achieving preferable
outcomes may be weakened if the other party finds any single issue presented in an unacceptable manner.

When framing multiple issues, you may adopt a central theme or structure for all of the issues. You can also
use multiple frames or themes to consider the issues overall. A central structure for issues considers the use
of a uniform reference frame across issues. Issues can be grouped and framed as environmental, people-
centric, economic, relationship-focused, and others. A central reference frame provides uniformity and
consistency in the way in which you approach the negotiation. You may alternatively look at each issue from
a different point of view. For example, you may view and frame some issues using an environmental
reference frame and other issues using a people-centric frame.

As described in single-issue negotiation, an effective frame is one where you are able to convince the other
party about your point of view and overcome their biases. This holds true for multi-issue negotiation as well,
where framing holds more importance due to the difference in the nature of issues as well as the
dependencies among and between issues.

6.1.3 Outputs

6.1.3.1 Logistics for Negotiation*

Logistics for negotiation encompasses agreement of all parties involved regarding when, where, and how
negotiation will be conducted and who will be involved in the negotiation. This is especially important in the
case of multi-party, multi-issue negotiation as it can be very tricky or difficult to get all the parties to the table
at a time and place that is preferable to everyone and discuss the issues that everyone is prepared to
discuss. Some parties may want to discuss issue A first, while others may want to first negotiate issue B. It is
vital to gain agreement from all parties on which issues will be discussed in what order, when, where and by
whom.

Logistics for negotiation will include information on location, time estimate, preferred mode of negotiation,
etc. For further details, refer to section 4.1.3.1.
6

6.1.3.2 Calibration of Outcomes

This refers to the calibration of outcomes into satisfactory, unsatisfactory, or neutral, based on the current
negotiation context and the negotiation plan. This calibration is done to understand which deals are good
(i.e., which deals constitute a success), which deals are acceptable, when a good deal is not possible, and
which deals are not acceptable. The calibration of outcomes is more complex in a multi-issue negotiation
with various definitions of success, acceptability, and unacceptability, since calibration of outcomes in a
multi-issue negotiation would factor in the importance of certain issues over others. If, for example, the
issues of greatest priority are negotiated successfully, albeit with some concessions on the less important
issues, the negotiation would likely be deemed successful overall.

6.1.3.3 Expected Negotiation Paths

For a simple negotiation, the negotiation path might be straightforward and not require the development of
any alternative paths. However, in the context of a complex multi-party, multi-issue negotiation, negotiators
may have to explore numerous negotiation paths to deal with different scenarios that may arise while
seeking a favorable deal. For further details, refer to section 4.1.3.3.

6.1.3.4 Your Negotiators*

This is a list of all the negotiators who will be negotiating on your behalf. In a complex negotiation, you might
decide to use different negotiators to negotiate different aspects of the deal with different parties or in
different phases of negotiation. Negotiators can be internal or hired external agents. This decision should be

made on the basis of the negotiation situation and the availability of resources. For further details, refer to
section 4.1.3.4.

6.1.3.5 Other Party Negotiators*

This is a list of negotiators of the other party. It can include information on the authority of the negotiators,
their negotiating style, experience, etc. For further details, refer to section 4.1.3.5.

6.1.3.6 Potential Bottlenecks

While planning for negotiation, you will come across potential bottlenecks, which can hamper the negotiation
process. You should identify these roadblocks and prepare an action plan for each of them. Some
bottlenecks, discussed in Chapter 4, common for both single-issue and multi-issue negotiations are as
follows:

 lack of trust
 lack of interest in negotiation
 sharing of information
 internal or external opposition
 gender and cultural barriers

In the case of multi-issue negotiations, you can encounter other roadblocks such as not recognizing or
discussing important issue(s), which can derail the entire negotiation. This is especially true for conflict
resolution negotiations between different countries. Communication can help in overcoming such roadblocks
in multi-issue negotiations.

6.1.3.7 Your Negotiation Reference Frame(s)

At the end of this process you would have identified a frame of reference that will be used for the negotiation
process. In multi-issue negotiation, your negotiation reference frame is formulated after analysis of issues
and framing, whereas in single-issue negotiation, only framing is required to formulate your negotiation
reference frame as there is only one issue to be considered for negotiation. Your frame of reference
influences the other party’s perception of your point of view. It should be able to convince the other party to
accept the point of view that you present. In a multi-issue negotiation, you can have different reference
frames for critical issues, especially when you are discussing one issue at a time. Your reference frame for
negotiation is formulated for all the issues under consideration. As explained in section 6.1.2.5, framing is
done to ensure that the other party can be convinced about your point of view and their biases can be
overcome. Your negotiation reference frame may be based on a central theme that governs all the issues or
it may have different frames of reference for different issues. It is important to identify a realistic frame of

reference that is based on your alternatives and Aspects and can improve your chances of achieving
favorable outcomes from the negotiation.

6.2 Conduct the Negotiation

This process deals with identifying and creating offers, tradeoffs, and tactics that you will eventually use in
the negotiation. Offers in multi-issue negotiation are more complex than in single-issue negotiation, as the
offers are typically composed of several offers for numerous issues. Offers also require a detailed
understanding of any RFXs (i.e., requests for proposals, bids, information, or quotation), since fulfilling such
requests with an offer will require meeting the specific needs set out in the request. This process also deals
with understanding how to break an impasse that may develop during the course of a negotiation. During
negotiation, you also need to make sure that your agents are well managed and their capabilities are well
utilized.

Figure 6-3 shows the inputs, tools, and outputs of the Conduct the Negotiation process.

1. Logistics for Negotiation* 1. Opening the Negotiation 1. Negotiated Deal*

2. Calibration of Outcomes 2. Offers* 2. Negotiated Deal Terms and
3. Expected Negotiation Paths 3. Tradeoffs* Conditions
4. Your Negotiators* 4. Formulating Policies, Terms, and 3. Satisfied Parties
5. Other Party Negotiators* Conditions 4. Potential for Future Deals
6. Potential Bottlenecks 5. Tactics for Negotiation 5. Lessons Learned from the
7. Your BATNA(s) 6. Breaking a Deadlock Negotiation
8. Your Walk-Away Point(s) 7. Managing Agents
9. Expected BATNA(s) of Other
Party
10. Expected Other Party Walk-Away
Point(s)
11. Your Negotiation Reference
Frame(s)
12. Expected Other Party Negotiation
Reference Frame(s)

Figure 6-3: Conduct the Negotiation—Inputs, Tools, and Outputs

Note: An asterisk (*) denotes a highly recommended input, tool, or output for the corresponding process.

6.2.1 Inputs

6.2.1.1 Logistics for Negotiation*

Logistics for negotiation is an output of the previous process. It includes information on location, time
estimate, preferred mode of negotiation etc. Refer to section 6.1.3.1 for further details.

6.2.1.2 Calibration of Outcomes

An output of the Plan for Negotiation process, this refers to the calibration of outcomes into satisfactory,
unsatisfactory or neutral, based on the current negotiation context and the negotiation plan. Refer to section
6.1.3.2 for further details.
6

6.2.1.3 Expected Negotiation Paths

Expected negotiation paths, an output of the previous process, enables negotiators to understand the
process and allows for the planning and committing of adequate resources to carry out the negotiation. It is
an important input for conducting the negotiation as it provides insights about the probable paths for the
negotiation process.

6.2.1.4 Your Negotiators*

This is a list of negotiators who will be negotiating on your behalf. You decide whether you want an internal
or external agent during the planning for negotiation process. You can also decide to do the negotiating
yourself, instead of hiring an agent. For additional details, refer to sections 4.1.3.4 and 6.1.3.4.

6.2.1.5 Other Party Negotiators*

This is a list of negotiators for the other party. It includes information on the authority level of the negotiators,
their negotiating style, experience, etc. For additional details, refer to section 4.1.3.5 and 6.1.3.5.

6.2.1.6 Potential Bottlenecks

These are the roadblocks that can hamper your negotiation. To be prepared, you identify and prepare an
action plan for each bottleneck. For additional details, see section 6.1.3.6. For a compressive description of
potential bottlenecks, see section 4.1.3.6.

6.2.1.7 Your BATNA(s)

This is an output of Understand your Negotiation Situation for Multi-issue Negotiation process. Your BATNA
is the next best alternative if the negotiation does not go through. Your BATNA is selected from the various
alternatives that have been identified. For further details, see section 5.1.3.6.

6.2.1.8 Your Walk-Away Point(s)

A walk-away point is the point at which the BATNA becomes preferable to the agreement being negotiated,
or the point at which a negotiator is prepared to walk away from the negotiating table. In a multi-issue
negotiation you can have more than one walk-away point. Refer to section 5.1.2.3 and 5.1.3.5 for more
details.

6.2.1.9 Expected Other Party BATNA(s)

The BATNA for the other party is the next best alternative that the other parties have to the negotiated
agreement. There can be more than one BATNA in a multi-issue negotiation. For additional details, refer to
section 5.2.3.7.

6.2.1.10 Expected Other Party Walk-Away Point(s)

6.2.1.11 Your Negotiation Reference Frame(s)

Your negotiation reference frame is an output of process 6.1, Plan the Negotiation. Your negotiation
reference frame is an important input for this process as it supports the offers and tradeoffs that you make,
and the tactics that you choose to employ.

6.2.1.12 Expected Other Party Negotiation Reference Frame(s)

The other party’s expected negotiation reference frame indicates their point of view, how they want to be
perceived, and how they interpret the issue. It must be noted that this is an anticipated reference frame, and
the exact frame that the other party puts forward can only be known and assessed during the negotiation
process. For further details, see section 5.2.3.8.

6.2.2 Tools

6.2.2.1 Opening the Negotiation

Opening the negotiation for a multi-issue negotiation is as important as, if not more important than, opening
the negotiation in a single-issue negotiation. An effective opening provides you with an opportunity to
understand the other party and the other party’s negotiators. Opening the negotiation on the right note helps 6
you establish rapport and trust. It also establishes ground rules for negotiation. In a multi-issue negotiation
you should discuss and finalize the following before starting the actual negotiation:

 Meetings—The duration, frequency, and location of meetings should be decided.

 Authority Levels—You should discuss whether negotiators on both sides have the same authority
level and the limits to their authority.
 Issues—Both parties should inform each other about the issues they expect to discuss. This will
provide a framework for discussion and ensure that no new issues are added during the course of
negotiation unless both parties agree.
 Agreements—You should finalize the type of agreement acceptable to both parties.

Your assessment of the other party should be adjusted on the basis of this information exchange. For
example, you may realize during the initial information exchange that early delivery is a critical issue for the
other party. You will modify your strategy and initial proposals on this basis. You should also ensure that you
do not share too much information or ask too many questions in the beginning. Both parties should set the
pace of information exchange together. For example, instead of telling the other party about all your issues
and concerns at once, both parties should discuss their issues one by one. As the information is shared by
both parties, the relationship is developed and trust is established. A one way flow of information is likely to
create information imbalance and misunderstandings.

Opening the negotiation is an important tool for a successful negotiation. Effectively “breaking the ice” in the
beginning will help you later in the negotiation process and in any future negotiations.

6.2.2.2 Offers*

In multi-issue negotiation, it is more difficult to establish and put forth offers. Multiple issues are involved,
and offers are usually dependent on the sequence in which issues are addressed as well as the
interdependency among issues. When issues are addressed in sequence it is easier for the parties involved
to make offers and counter offers, reach a settlement on that issue, and then proceed to the next issue. The
order in which issues are addressed is usually commonly referred to as the agenda. When issues are
addressed sequentially, you need to mutually decide the order in which issues are to be considered. While
you may want issues to be addressed in a certain sequence during negotiation, the other party may prefer a
different ordering of issues during the negotiation. The preferred ordering is decided during the issues
analysis phase, which is described in detail in section 5.1.2.1. The order in which issues are addressed is
based on the prioritization and categorization of issues as decided by the parties. For example, in business
negotiations, the first phase of negotiation is usually regarding the product or service features or
specifications. If the parties are satisfied during this phase, they may then proceed to discuss financial and
legal issues. An advantage of sequential negotiation is that the parties are in a position to settle the high
priority issues first and then proceed to other issues, thereby making sure that they do not take up much
time negotiating issues that are not important if the negotiation ceases unexpectedly. However, sequential
negotiation generally takes up more time as issues are negotiated one by one.

A common approach in business is to bundle the issues together and negotiate several issues
simultaneously. This approach allows the parties to use tradeoffs more efficiently during negotiation.
However, when issues are negotiated simultaneously, your offers and counter offers are made based on
your prioritization of issues as well as an assumed understanding of the importance given to issues by the
other party. In business, companies may issue a Request for Proposals (RFPs), a Request for Quotation
(RFQs) or a Request for Information (RFIs). RFX is the common acronym used to capture all three—RFPs,
RFQs and RFIs.

 RFPs—These are issued by companies that are interested in soliciting proposals from other
companies or agencies in order to procure a product or a service. It informs the other party
regarding what the buyer is looking for in terms of the product or service.
 RFQs—These are similar to RFPs but in this case the buyer is looking only for a price quotation.
These are also referred to as requests for bids.
 RFIs—These are issued before an RFQ or RFP to gather key information from potential suppliers. It
helps in filtering suppliers from a broader list and ensures that interested suppliers have initiated the
process of preparing the proposal. RFIs can also be issued by potential suppliers to seek more
information regarding your specifications listed in the RFP.

RFXs contain information regarding what you need and what you expect from the other party. They are a
form of first offer where you are stating your demands to a broad base of parties. RFXs give the other party
an idea of which issues you consider as high priority and what your walk-away points are with respect to the
issues.

Proposals are issued either as a response to an RFP or as a response based on your understanding of the
other party’s requirements. Proposals in business can also be issued without an initial RFP. In these cases,
parties meet and start the negotiation, and then they negotiate on issues or requirements. If you are looking
to supply or sell to the other party then you will try to understand the other party’s requirements. This is then
followed by you issuing a proposal to the other party. Proposals, when issued after a first round of
negotiation or as a response to an RFP, describe what you are willing to offer to the other party. It generally
contains information regarding financial issues, service terms, legal conditions, and exclusivity terms among
others.

The offer that you state in your proposal may or may not be accepted by the other party. You may face
objections or rejections, and you should be prepared to negotiate provided the other party is willing. It is
therefore important that you make your offer in the proposal judiciously. While it is always preferable to make
a high initial offer, it should not be so high that the other party rejects it outright. First offers, second offers,
and subsequent offers for single-issue negotiation are described in detail in chapter 4, Conduct Single-Issue
Negotiation. You may need to further negotiate and make tradeoffs or concessions if there are objections
with an offer. This should be done very carefully as you should not appear to be making tradeoffs or 6
concessions too easily. You should have a clear and definite justification for the offers stated for all issues in
your proposal.

Proposals can be viewed as a form of a packaging of issues. All issues are simultaneously addressed and
the negotiation process can move faster. A proposal informs the other party of all the issues and the offers
that you can make. It also ensures that parties can recognize and make tradeoffs or concessions easier than
when negotiating issues sequentially. Since proposals usually comprise your first offer to the other party, you
need to ensure that you package offers on issues carefully to ensure that the other party remains interested.
Some businesses use a technique whereby multiple proposals are created enabling the other party to
choose which one suits their requirements more appropriately. Two such techniques are Multiple Equivalent
Simultaneous Offers (MESOs) and Economic Matrix.

 Multiple Equivalent Simultaneous Offers (MESOs)—MESOs provide a flexible technique to

compare issues so that the best options can be identified. The MESO technique involves three
steps:

1. Identify issues, prioritize them, and determine weights for each issue based on priority.
2. Identify the possible outcomes for each of the identified issues. The outcomes need to be
ranked, with one outcome being ranked the highest with 100 points and the other outcomes
having relative points based on the highest valued outcome.
3. Create three approximately equal offers by multiplying the weights and the points and
generating the total value of the offer.

MESOs are a technique that shows flexibility on your part and increases your chances of success.
MESOs result in offering the other party choices, thus increasing the chance of achieving a deal. A
disadvantage however, is that the other party may become more demanding and pick various

options that suit them from the three proposals. It is also difficult at times to evaluate the offers and
fix points to options, particularly when you are dealing with highly complex issues.

Example of MESO:

 An employer presents a candidate with three compensation offers from which to choose: 100K
salary, plus a 5 percent commission on all sales, plus two weeks’ vacation; $120K salary, no bonus
plan, plus two weeks’ vacation; or 100K salary and four weeks’ vacation. Presenting three offers
from which to choose lets the candidate know that the company is flexible and willing to work
around the candidate’s specific needs.

 Economic Matrix—An economic matrix is similar to MESO, but instead of subjective points, it
attributes monetary value for each option of an issue. This is possible only where issues can be
evaluated based on an economic or monetary value. This technique allows the parties to negotiate
only for a fixed amount of resources. By offering a proposal in the form of an economic matrix you
present the other party with a matrix of options to choose from, stating the exact monetary value
that can be achieved from each offer.

Example of Economic Matrix:

 A renovator provides a potential client with a quote that outlines several phases of renovation. Each
phase is priced differently with substantial savings attached to larger commitments on the part of the
client. The client can choose to renovate in 1, 2, 3, or 4 phases. If the client commits to one long
renovation, she saves a significant amount on the total cost of the renovation, but must make a
greater commitment to the project and does not have any flexibility to change contractors if issues
arise on the project. The four-phased approach, offers her the most flexibility, as she is not
committing to the entire project with one contract; however, the total cost of the renovation is
significantly higher as each phase is priced as a separate project.

6.2.2.3 Tradeoffs*

Tradeoffs are an essential part of any multi-issue negotiation. Tradeoffs are concessions made on certain
issues to achieve your overall objective for the negotiation. As discussed in the previous process, you should
conduct a thorough analysis of issues, considering the issues from both parties’ perspectives before you
start negotiating. This will help you categorize issues. There will be issues on which both parties have similar
interests. You do not need to negotiate on these issues as you can achieve your intended outcome without
negotiating. For example, while discussing a family vacation, you will not discuss the timing of the vacation if
all members want to go during the summer season. You will be negotiating on other issues on which you
have different interests, such as location or duration. Amongst these other issues, there will be some issues
that are not critical to you or not as important for you as they are for the other party. You can compromise on
these issues to gain leverage on other issues that are critical for you. You can be flexible about the outcome

of these issues depending on their importance. For example, a buyer may compromise on price to achieve
the objective of receiving supply on short notice. Similarly, a seller can compromise on price in the current
deal if this will lead to a better relationship and more deals in the future.

After you have identified the issues on which you can be flexible, you should think of a range for concession.
You will need to think of the starting value that you will present to the other party and the minimum value that
you can accept. The range of flexibility depends on the importance of the issue and your negotiation
situation. You will make fewer or no compromises on critical issues and more compromises on issues that
are less important to you. You may make compromises on important issues if the relationship is important to
you or if your interdependence on the other party is high. For example, while negotiating with a potential
employer you can ask for $X as salary with a work-from-home option. You will make small concessions on
your salary but can let go of the work-from-home option or accept limits to this option if it is less important to
you than salary. If you see tremendous future growth with this employer you may make more compromises,
even on salary. It is important to note that a multi-issue negotiation is not just a tradeoff of issues i.e. one
party making all the compromises on certain issues and the other party conceding on other issues. While
this may be true in some cases, both parties will often make compromises on the same issues. For example, 6
your potential employer will also make compromises on salary and the work-from-home option. The
compromise will depend on how important the issues are and on the negotiation situation of both parties.

As the negotiation proceeds you will learn more about the issues from the other party’s perspective. You can
provide the other party with different package offers to find out the relative importance of issues. You may
have to adjust your assessment of the other party’s issues as the negotiation progresses. You will similarly
adjust your strategy for tradeoffs. For example, if you find out post sales service is more important to the
other party than credit terms, you can modify your strategy towards achieving better credit terms.
Sometimes, it is better to link issues so that when you concede on one issue, the other party knows that you
are expecting concessions on the other issues. Using the previous example, you can clearly state that your
maintenance department will send service personnel within two days instead of four days but you will expect
payment from them within fifteen days instead of thirty days.

It is essential that you do not let the other party perceive your concessions as something unimportant to you.
You must demonstrate that the issue was important to you even if that is not the case. If the other party
perceives that the compromise was trivial, you will lose your leverage. You should not concede easily on any
issue. You always state the value of your position and make concessions in a way that the other party knows
that you are sacrificing something important. In the previous case if you concede on post sales service, you
can emphasize the fact that you are deviating from the standard four-day service that is offered to your other
clients. Making this clear will help establish the importance of your concession.

6.2.2.4 Formulating Policies, Terms, and Conditions

Policies, terms, and conditions provide the working framework for the deal agreed upon between the parties.
These terms and conditions are usually non-negotiable. However, if they are not properly drafted, there may
be uncertainty and liability. Precisely written terms and conditions are important to ensure that there is no
ambiguity, semantic or otherwise, in what has been agreed upon between the parties.

There is a basic difference between negotiating issues and agreeing on governing policies and terms &
conditions. You might negotiate a great deal but, if the appropriate terms and conditions, which bring the
deal into fruition, are not added into the contract or agreement, then you may not be able to achieve all the
objectives that you set out to achieve with this deal. The policies, terms, and conditions may be legal,
environmental, company-based or industry-based policies. These ensure that what has been discussed and
agreed upon during the negotiations is legally signed off. If there are disagreements regarding the deal in the
future, the parties will be held accountable on the basis of what is written in the agreement rather than what
the intentions were.

Terms and conditions can be a powerful source of leverage in your business relationship with the other
party. You can include provisions for termination of the deal with mutual consent or if certain expectations
are not met. This will safeguard your interests in cases where events do not turn out as you had expected.
Your leverage is directly proportional to the power or right you have to terminate the deal. In addition to the
termination clause, there are other clauses that should be considered when formulating policies, terms, and
conditions—namely managing changes, issues, risks, infringements, penalties, warranties, confidentiality,
data, etc. The success of a negotiation not only depends on your perception of how well your objectives
have been achieved, but also on the leverage that you have established through terms and conditions,
which ensure that you achieve the stated goals and objectives.

6.2.2.5 Tactics for Negotiation

The tactics for negotiation described for single-issue negotiation—namely, establishing credibility, active
listening, and continual evaluation—are also applicable for multi-issue negotiation. These techniques are
explained in detail in section 4.2.2.4.

In multi-issue negotiations, it is important to create an environment where free flow of information is

established. This does not mean revealing all key information, but rather making sure that your and the other
party’s interests are shared during negotiation. It is highly beneficial to understand the real needs and
objectives of the other party. During negotiation, you need to understand the other party’s priorities so that
you can issue offers that suit the other party’s needs. In order to accomplish this, it is important to establish
an environment where information can be exchanged freely. The best way to achieve this is by establishing
your credibility at an early stage of the negotiation. In multi-issue negotiation, you may need to discuss
numerous options and alternatives to reach a final deal, and information exchange is crucial for this to occur.

In multi-issue negotiation, parties should seek to establish a strong relationship. It is preferable to employ a
collaborative style, which seeks to reach a solution after considering the interests and objectives of all the
parties. You need to emphasize the commonalities and try to minimize differences while seeking to achieve
a mutually beneficial outcome. Multi-issue negotiations provide an opportunity to invent creative solutions
that can help in increasing the total value offered from the negotiation. The fact that there are multiple issues
makes it possible for you and the other parties to evaluate the issues and discover options that may not
have been available or considered prior to negotiation.

6.2.2.6 Breaking a Deadlock

Negotiations are complicated and can involve stress and anxiety, which can lead to frustration and anger.
Negotiations over critical issues often reach a deadlock or impasse leaving the parties stranded without
resolution. In these situations, third party intervention is required to resolve the impasse. Third parties deploy
dispute resolving techniques like aiding in controlling the number of issues, persuading parties to stick to
previously agreed upon issues, enhancing communication, coordination, reduction of stress etc. However, 6
third party intervention should be avoided as long as parties are able to resolve deadlocks in a negotiation
within a reasonable time, budget, and use of resources. If this cannot be achieved, the negotiators may
decide upon deploying a third party intervention themselves, or intervention can be imposed from outside by
law, custom, or regulation.

An impasse in negotiation can occur as a result of the following:

 Problems in Communication

People participating in a negotiation must have good communication skills. The negotiator must
choose his words carefully and structure his or her points logically. Using appropriate terminology to
express thoughts is a key factor to an effective negotiation. Lack of clarity in speech and haphazard
use of words can affect the communication process, which can make your position appear vague
and weak.

In addition to direct, verbal communication, nonverbal aspects such as body language, eye contact,
gestures etc. play an important role in negotiation. Certain gestures must be avoided, especially if
your counterparts are from different nationalities, as some gestures may be considered offensive.
For example, in certain parts of the Middle East, showing a thumbs-up gesture is considered highly
offensive.

In addition to ensuring effective communication skills throughout the negotiation, several key
logistical components must be communicated to the counterparts, in a systematic and effective
manner. These include the agenda, procedures, venue, and other particulars.

Without proper communication prior to and throughout the negotiation process, there is significant
potential for misunderstandings and eventually a deadlock.

 Disinterest Among Parties

Prior to entering into a negotiation, you should know how important the negotiation is for the other
party. If the issues are of less importance for the other parties, they may not have much interest in
the negotiation regardless of how important the negotiation is for you. If previous negotiations with
the other parties have been unsuccessful, there is a chance that the other parties will not have
sufficient interest and enthusiasm for a new negotiation. If the participants in a negotiation are
professional rivals, then parties who have little to gain from the negotiation may show disinterest
and may not constructively participate in the process.

 Focus on Positions

Negotiation is always a two-way process. Negotiating parties must understand the concern of the
other parties and steer the process in a way that everyone walks away with some benefits. Arguing
and fighting for your own cause and position, without an open mind and a willingness to see things
from other parties’ perspectives can lead to an impasse.

 Inability to factor in the other party’s interests

Negotiation style and approach has a larger role to play in a successful negotiation than any other
factor. Market leaders, or a stronger party in a negotiation may negotiate aggressively and dominate
over smaller companies. The lack of an empathetic approach to negotiation by strong parties can
create misunderstandings and possibly result in deadlock. This approach may also violate a code of
ethics and set an unhealthy standard and image of the company within its industry.

 Excessive emotional attachment

Issues in business must be handled in a professional way. If parties become emotionally attached
to an issue, they may strive for a specific solution that might be perceived as one-dimensional by
the other parties. When this happens, and the other parties oppose, the negotiation can hit a
roadblock.

Who should intervene?

Typically, third party intervention is recommended only if the negotiation hits a deadlock. External
intervention should be otherwise avoided. Any intervening party must be unbiased and have no involvement
with the outcome of the negotiation. The third party should possess good people skills and sound knowledge
of the business and industry, in order to enable them to conduct the negotiation effectively.

Negotiation comprising complicated issues can lead to anxiety, anger, and frustration among participants. In
these cases, third party intervention is the most effective way to reduce the tension and put the negotiation
back on track. The negotiators themselves may opt for third party intervention or intervention can be
imposed by law or regulation.

Third party interventions can be of the following types:

 Mediation
 Arbitration
 Counselors or Process consultants or facilitators

Mediation—Mediation is a form of “assisted negotiation”—an extension and elaboration of the negotiation

process where the parties themselves develop and endorse an agreement. Though mediators have no
formal authority over the result of the negotiation, they bring difference to the process by meeting the parties
individually, understanding the point of conflict and point of interest of the parties, identifying the potential
compromising position, and encouraging parties to arrive at a solution that is beneficial to all. For more
information, refer to section 6.1.2.1.

Arbitration—Arbitration is a common method to resolve a dispute. In cases where a deadlock, or timing

deadline has been reached, the parties involved can seek intervention from a neutral third party. The third
party listens to both negotiating parties and decides on the solution. Arbitration is commonly used in
resolving disputes among businesses and in disputes between labor unions and management. For more
information, refer to section 6.1.2.1. 6

Process Consultation—Process consultants employ a variety of tactics to resolve a dispute. They begin by
interviewing the parties separately. Through these interviews, they understand the issue, position, points of
view etc., of each side. The interview also helps process consultants in understanding how each party views
the others and their relationship history. Gathering this information enables the process consultant to
establish a series of framing or clarifying statements and points of confrontation or disagreement that can be
resolved. This is followed by a meeting between the process consultants and the parties in disagreement.
The schedule, attendees, meeting agenda, and other items are planned ahead of time. In the meeting, the
process consultant acts as a referee to both parties, and is or her primary job is to keep the parties on track
so that the ongoing conflict does not intensify. Through confrontation and exposing differences, the process
consultant leads the parties to resolve the differences and come up with mutually beneficial solutions. For
more information, refer to Section: 6.1.2.1

6.2.2.7 Managing Agents

Agents are frequently used in multi-issue negotiations and should be managed to ensure that they perform
well to achieve your desired outcomes. Agents are usually experts in negotiation tactics and may also have
familiarity on certain issues associated with the negotiation. Managing agents for single-issue negotiation is
described in detail in section 4.2.2.5. Agency issues such as information asymmetry, conflict of interest, and
miscommunication are relevant for multi-issue negotiations as well and need to be sorted out with care.
When negotiating for multiple issues, these agency issues can complicate managing agents. You need to
ensure that the information exchange is smooth and occurs regularly, that authority is established, and that
communication is clear and concise.

The agents’ expertise needs to be utilized not only for tactics but also for evaluating ways to increase the
overall value that can be created from the negotiation. Agents, given their previous experience with multi-

issues negotiations, will be able to offer creative solutions that you or the other party may not be able to
achieve independently. They will be able to incorporate options that may not have been available to you
previously. In addition, they can help you in evaluating the economic value of options and bundling or
packaging options in to a coherent proposal. Agents can also help you understand the future potential of
deals and help you evaluate offers made by the other party.

6.2.3 Outputs

6.2.3.1 Negotiated Deal*

The negotiated deal is the final outcome that is arrived at after a successful negotiation. It brings a
settlement to the issues under consideration. A negotiation may result in a contract, such as a procurement
contract for purchasing materials from another company. It may also be in the form of a settled conflict. In a
multi-issue negotiation, parties generally tend to make tradeoffs or concessions on issues and therefore the
final negotiated deal will be one that is accepted by all parties. The fact that there are multiple issues at hand
offers the possibility of tradeoffs and concessions which may lead to increasing the overall value offered
from a negotiation.

6.2.3.2 Negotiated Deal Terms and Conditions

Terms and conditions provide the framework for the deal agreed upon between you and the other party.
They are agreed upon by all the parties who have a stake in the negotiated deal. They are based on legal,
environmental, company or industry policies, terms, and conditions. The terms and conditions ensure that
what has been discussed and agreed upon during the negotiations is legally signed off. They can include
numerous clauses that enable you and the other party to manage changes, issues, risks, infringements,
penalties, warranties, confidentiality, data, etc. when the deal is enforced.

6.2.3.3 Satisfied Parties

A negotiated deal should lead to satisfied parties, since the deal has fulfilled the objectives of all parties
involved. In a multi-issue negotiation, where parties attach different priorities to issues, it may not be
possible for all parties to be satisfied on all issues under consideration. However, the intent of multi-issue
negotiation is for all parties to be generally satisfied after a negotiation. Since parties have the option of
offering concessions or tradeoffs on some issues, the final deal will always be of some value for all the
parties that negotiated.

6.2.3.4 Potential for Future Deals

A successful negotiation offers the potential for future deals due to the rapport built during the current deal.
In multi-issue negotiation, building a relationship with the other party is more important than it is in single-
issue negotiation, since the deal usually tends to be for a longer period and the parties involved will be
interacting more frequently. As is evident from the processes previously discussed, negotiation depends on
the relationships between the parties. Good relationships provide opportunities for other deals in future.
Successful negotiation also provides opportunities to form coalitions and partnerships in the future.

6.2.3.5 Lessons Learned from the Negotiation

A multi-issue negotiation offers learning opportunities for all parties involved in the negotiation. By
participating in the negotiation, the parties learn not only about the issues under consideration but also about
the negotiation process, managing agents, negotiating tactics, and formulating offers, among other things. 6
After the negotiation process, your negotiation capabilities will also improve, and you will be in a better
position to participate in future negotiations.

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APPENDIX A.1: MARKETING RESEARCH TECHNIQUES

A.1.1 Qualitative Techniques*

Qualitative techniques are also sometimes referred to as the “soft side” of marketing research. A variety of
factors related to the research problem cannot be studied through quantitative research and require an
understanding of softer aspects such as thoughts, feelings, emotions, behaviors, and so on. Many
researchers practice a pluralistic approach, which involves combining qualitative and quantitative research
techniques, thus taking advantage of the benefits of both types. Among the various qualitative techniques
used by researchers are in-depth interviews, projective techniques, and focus group discussions.

1. In-depth Interviews—These interviews are normally open-ended, one-on-one interactions conducted

either telephonically or face-to-face, and designed to collect individualistic behavior dynamics. Although
these interviews are unstructured, the questions and probing are structured around the research
problem.

The researcher should be able to gather the data, analyze it, and write a report at the end of the
interview. In-depth interviews are not suitable for all types of research problems; they are typically suited
for the following research scenarios:

 when there is a deeper need to understand individualistic behavior

 when the research involves sharing personal or confidential information or discussing embarrassing
topics
 when the research involves interviewing professionals or experts (as it is often more convenient and
feasible to interact with them in a one-to-one manner)

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Example of In-depth Interviews:

 A consumer packaged goods company wants to understand more about the purchase behavior of its
target consumers. The company conducts in-depth interviews with a sample of fifty people. The
following questions are asked:

o How do people become aware of their need for the product?

o How do consumers find the product?
o How do consumers make their final selection?
o How do consumers order, purchase, and pay for the product?
o What happens after they buy the product?
o How is the product used and prepared?
o What are consumers really using the product for?
o What do consumers need help with when using the product?
o How do consumers get help?
o Do customers review the products? How? What do they say? Where do they say it?
o How is the product refunded or replaced?
o What happens after consumers finish using the product?

2. Projective Techniques—The projective technique is a questioning technique used to obtain indirect

responses underlying motivations, beliefs, attitudes, or feelings regarding issues of concern. The main
objective of the projective technique is to discover and interpret consumers’ perceptions of a product or
service that they might not express directly.

There are different types of projective techniques:

 Association—Subjects are provided with a hint or stimulus and asked to respond with the first thing
that comes to mind. Word association is a common example of the association technique.

 Completion—Subjects are provided with an incomplete stimulus situation and asked to complete it
in any way they wish with the constraint that the completions meet certain standards of rationality or
form. For example, a story completion may require a chronologic order.

 Construction—Respondents are required to go beyond simple association and to consrtuct or

create a more elaborate product, which is usually a complete art form, such as a story, description,
dialogue, or picture. In a construction technique, the initial structure provided to the respondents is
less than is the case with a completion technique. For example, the researcher might ask
respondents to create a collage of what they feel when they experience a product, service, or
concept under study.

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 Choice or Ordering Techniques—Choice or ordering techniques require the respondent to select

from a set of alternative arrangements that fit some specific criteria, such as relevance,
attractiveness or meaningfulness (e.g., a picture arrangement test).

 Expressive—In expressive techniques, respondents are given a visual or verbal situation and
asked to relate the attitudes and feelings of other individuals to the situation (e.g., a role play).

The projective technique has some limitations. Using this approach can be time-consuming and expensive.
It requires a smaller sample size, has a high non-responsive rate, and can be misinterpreted. Interpretation
of the data collected from a study that uses the projective technique can also be time-consuming and
complex.

Example of Projective Techniques

 A deodorant brand plans to determine its brand image, which can be associated with the perceptions
of the consumer. Brand image is the total brand personality perceived by the customer. Using the
construction projective technique, the brand asked respondents to create a collage of what they feel
when they experience the deodorant under study. Based on feedback, the brand was able to
characterize its image as a young, successful man who is handsome, pleasant, and enjoys the
outdoors.

.
3. Focus Group Discussions—A focus group is used to collect qualitative data from five to ten
respondents by conducting a small meeting in the presence of a moderator. Instead of collecting
responses to specific questions, this meeting aims to create a forum for informal discussion about
specific products or certain topics. The main objective of the focus group is to acquire insights into
customer preferences and behavior. The informal and relaxed atmosphere often helps uncover
unexpected insights about the product. Focus groups are usually conducted for exploratory research
where there is a need to understand a complete picture of market dynamics.

Focus group participants are carefully selected on the basis of common traits such as similar buying
behaviors, demographics, and socio-economic factors. Homogeneity among the participants prevents
conflicts on issues that are not relevant to the discussion. One of the key criteria for selection can also
be familiarity of the participants with the products or topics being discussed. For example, the
participants of a focus group formed to evaluate the use of a new mobile application for smartphones
should have adequate experience in using smartphones. Focus group size is usually kept small enough
for the participants to have enough time to share their opinions and yet large enough to gather diverse
views about the topic. Having too small of a group can limit the information that can be gathered, and
too large of a group can result in a lack of opportunity for all participants to share their insights.
Questions or topics for the focus group need to be developed based on the marketing research problem
and objectives. When based on the research problem and objectives, the role of each focus group will
also be clearly defined. The type of questions used to initiate discussion should be open-ended. For
example, questions such as “What do you like about the product?” and “What would your suggestions

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for this service be?’’ would be appropriate for a focus group discussion. Questions that invite a “yes-or-
no” response are generally not used in focus groups.

The moderator of a focus group plays a vital role in initiating and leading the discussion. The moderator
should have characteristics similar to the participants and should have experience in handling groups.
She will guide the discussion through the topics and ensure that the discussion aligns with the
objectives. Even experienced moderators can sometimes find it difficult to manage participants who
have a dominating personality and tend to disrupt the discussion. A skilled moderator will be flexible
enough to alter the flow of discussion amid such disruptions. During lengthy discussions, the moderator
should ensure that adequate arrangements are made to provide participants with a comfortable
environment to relax and provide insights to discussion topics.

In most focus groups, audio and video of the discussions are recorded for analysis and reporting
purposes.16 Notes and comments can be gathered by the moderator, which will help in creating the
summary of the discussion. The report of the focus group discussion should be descriptive in nature.
Instead of just summarizing the data, reporting should also provide a detailed interpretation of the data.

16 Naresh.K.Malhotra, David.K.Birks, Marketing Research – An Applied Approach (2006).

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Examples of Focus Group Discussions:

 Focus group research is used extensively by pharmaceutical companies to test concepts related to
new drugs and marketing of over-the-counter (OTC) and prescription products. Using focus group
discussion, pharmaceutical companies explore consumers' and physicians' opinions about various
marketing mix elements such as product concepts and packaging, advertising, and promotional
ideas. Focus group research will help the pharmaceutical company gain physicians’ insights on
various important matters and opinions, such as the types of users that will find a drug most
appropriate, how important the drug is perceived to be in the treatment of patients, and when and
how the physicians will prescribe the drug to patients. Focus group discussions will also help to
gather input from physicians and end-users on the preferred positioning for the product or service.
Focus groups can help in identifying the information needed to target customers for the new product.
If advertising and merchandising materials have already been created, a focus group will provide
information if the target customers (physician and/or retail consumer in this case) relate well to the
advertising or merchandising materials aimed at them. Because many of drugs are not supported by
mass media advertising, focus group discussions will also enable the company to gather useful
information about packaging, which is helpful especially with OTC drugs. Focus groups also help
pharmaceutical companies understand the opinions of physicians and end users regarding the
service they expect to receive from the company thereby helping the company in creating customer
service and loyalty programs.
 A dental clinic conducted a focus group discussion to improve the process for patients arriving at the
out-patient office. The focus group was composed of patients who had experienced the clinic’s
facilities, and the collated feedback was provided to the clinic management. Based on the
recommendations of the focus group, the waiting area layout was improved and clear, easy-to-follow
instructions were provided to first-time patients to avoid any inconveniences. A second focus group
was conducted a few months later to evaluate the success of the implemented changes.

A.1.2 Quantitative Techniques*

Quantitative data collection techniques depend heavily on the sampling methodology and the data collection
instrument used. These techniques are concerned with testing hypotheses derived from theory or estimating
the size of a phenomenon of interest.

One research or data collection instrument used in these techniques is the questionnaire, which is a set of
pre-determined questions that can elicit both subjective and objective responses. There are a number of
factors to consider in designing a questionnaire, including the characteristics that will be measured in the
questionnaire, the scale on which the characteristics will be rated, the types of questions to ask, and the set
of responses that will elicit meaningful data.

Designing an appropriate questionnaire that will elicit high-quality, analyzable data requires careful
consideration of all of these factors. One of the first steps in designing a questionnaire is to determine the

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characteristic that needs to be measured and then determining an appropriate scale for rating the
characteristic.

Measurement is the act of assessing the level of presence of certain characteristics in the variable under
consideration. The characteristics measured are attributes or qualities of the variable. Characteristics that a
researcher might measure include certain demographic characteristics, consumer perception of quality or
user friendliness, or the reasons for a decrease in sales. Each characteristic is measured using a scale that
will enable respondents to rate the attribute of the variable. For example, a restaurant may ask patrons to
rate their dining experience (the attribute measured) on a scale of poor, fair, good, or excellent.

Types of Scales

Scales can be classified into “Categorical” and “Metric” scales.

 Categorical Scales measure variables with a few distinct levels of measurement for values. For
example the taste of a newly launched beverage can be measured as sweet, bitter, or bland. Two
types of categorical scales are Nominal and Ordinal scales.

 Metric Scales measure variables using numbers on a continuous scale. Rating a new book on a
scale of 1 to 10 is an example of a metric scale. Two types of metric scales are Interval and Ratio
scales.

The level of measurement or type of scale chosen is a critical concept to consider in the design of a
questionnaire for two reasons. First, the chosen scale will determine the amount of information to be derived
from the scale. The amount of information derived is lowest when the nominal scale is used and highest
when the ratio scale is used. Second, the chosen scale also determines the statistical analysis possible for a
particular scale. Figure 3-4 shows the types of scales available to researchers.

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Types of Scales

Categorical Metric

Nominal Ordinal Interval Ratio

Amount of information and possible statistical analysis increases

Figure A.1-0-1: Types of Scales
Figure 3-4: Types of Scales

1. Nominal Scale—A nominal scale is used for labeling variables. It is the simplest form of scale and
can only be used to carry out the simplest of operations, such as categorizing variables into
subsets. Consider the following example of customer preferences of 1,000 respondents from
California who were asked to choose between two brands of soft drinks.

Brand A Brand B Total

Teenagers 400 200 600

Adults 200 200 400

Total 600 400 1,000

In this example, the respondents have been grouped into two categories: those who prefer brand A
and those who prefer brand B. The respondents are further grouped based on their ages to identify
the preferences of adults and teenagers for the two brands. The two subsets are mutually exclusive
and exhaustive. The nominal scale in this case can be effectively used to understand the customer
preferences of the respondents in two different age brackets for the two brands. However, this scale
cannot be used to do advanced analysis of the responses, such as an analysis to understand how
strongly the members of the two groups liked the two brands.

2. Ordinal Scale—An ordinal scale is used for ranking the test units or their responses to the variable
under consideration. It is used for ordering only and not for comparing. For the example previously
mentioned, consider four instead of two brands of soft drinks. Suppose the respondents are asked
to rate each brand as one of the following: “extremely bad,” “bad,” “neutral,” “good,” or “extremely

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good.” The response of each respondent for all four brands will indicate his or her level of
preference.

Brand Response of a respondent

A Good

B Bad

C Extremely Good

D Extremely Bad

The ordinal scale has been used in this example to compare the four brands of soft drinks by
ranking them based on the preferences of the respondents. This scale has limitations, as it cannot
be used to determine the distance between the values of customer preference for different brands.
So, it is not possible to find out how preferable brand C is when compared to brand A.

3. Interval Scale—An interval scale not only contains the characteristics of both the nominal and
ordinal scale but also can be used to determine the distance between the items. The degree of
difference can be expressed using this scale, but not the ratio. Temperature scales and dates are
examples of interval scales.

For the previous response, it can be inferred that the customer prefers brand C the most and brand
D the least. Also, the difference between the preference for brand C and brand A can be assumed
equal to the difference between the preference for brand B and brand D. Such a scale is called
“assumed interval” as the difference between the different descriptors is assumed constant.

4. Ratio Scale—Unlike other scales, this scale deals with quantifiable data, and therefore has the
concept of absolute zero. Not only does it contain the capabilities of the nominal, ordinal, and
interval scales, but it also has the power of comparing the results using ratios. Actual
measurements such as speed of a vehicle, age of a consumer, and number of children are all
examples of ratio scales. Irrespective of the unit used to measure a particular quantity on a ratio
scale, the ratio is always constant. For example, a vehicle traveling at 80 miles/hour is twice as fast
as another vehicle traveling at 40 miles/hour. Even if the speed is converted to kilometers, the ratio
remains constant.

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Questionnaires

A questionnaire is a data collection tool that consists of a set of questions designed to obtain specific
information from respondents. Correctly designing the questionnaire is a critical task because a properly
designed questionnaire will enable the researcher to collect information that provides a decisive outcome.
Questionnaires can be used to test hypotheses, gauge audience preferences, understand market demand
for current product concepts, and decide on potential product features that may be attractive to the
audience. There are a number of advantages to using a questionnaire, including the following:

 Questionnaires provide an economical and fast way of collecting data from a large audience.
 The results of a well-designed questionnaire can be easily quantified to draw actionable inferences.
 Results can be used to baseline information on various elements that can be compared over time.
 Questionnaires can be used to prove/dispel an existing hypothesis and/or create a new hypothesis.

Even though questionnaires present a quick and economical method of data collection, they are restricted in
usage and have the following disadvantages:

 Questionnaires are insufficient when understanding complex issues that require in-depth research
(e.g., reasons for a change in consumer perception).
 There is always a risk of interviewees not being truthful in their responses, especially for questions
that are of a personal nature or ones that may be deemed embarrassing (e.g., income, how often a
person goes to the restroom, etc.).
 Interviewees can misunderstand an open-ended question that is not clearly presented and this may
skew the results.
 Questionnaires run the risk of being influenced by the bias of either the person framing the
questions or of the person asking them.

Some of the disadvantages of a questionnaire are due to the fact that the questionnaires are open to bias
introduced by the interviewer or interviewee. Some of these errors can be removed or reduced by designing
the questionnaire effectively.

When designing a questionnaire, several steps are involved including identifying the objectives and
hypotheses, framing the questions, selecting question formats and scales, and determining the sequence of
questions.

1. Identify objectives and hypotheses—The key to designing the right questionnaire is to have
clarity about the objectives of the survey. The target audience is identified before deciding the
objectives of the questionnaire. Typically, there are two main objectives when using questionnaires
to collect data:

 to obtain relevant and accurate information from the target segment

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 to test a current hypothesis or form a new hypothesis for developing a product/service

2. Frame questions—The most critical aspect of designing a questionnaire is to ensure that the
questions are appropriately framed. For a question to be deemed appropriate for the questionnaire,
it needs to fulfill the following criteria:

 The question must be easy to understand and must not be easily misinterpreted by the
respondent.
 The answer to each question in the questionnaire should add some value to the overall survey.

3. Decide on question formats—Once the type of information to collect and the objectives of the
research have been identified, questions that will extract relevant responses from the target
segment should be crafted. Questions are typically of two types:

 Closed-ended questions: In such questions, the respondent must choose from among the
response options provided for each question.
Example: What is your favorite season?
a) Summer b) Autumn c) Spring d) Winter
 Open-ended questions: These questions do not place restrictions on the answers respondents
can provide. Thus, open-ended questions provide more varied responses than closed-ended
ones. However, the information obtained from such questions takes greater time to analyze.
Example: What is the most thrilling activity you have done in your life?

In addition to crafting appropriate questions, a scale for the responses should be chosen that elicits
the type of information desired by the researcher and provides valuable data.

4. Sequence the questions—Some general rules for sequencing questions include the following:
 Start with a few generic questions and then move to ones asking for specific information.
 Order questions logically from one step to another.
 Avoid including personal and sensitive questions that would be difficult for the respondent to
answer.

A few question formats should be avoided when creating a questionnaire. These include the following:
 Leading questions that are inclined to encourage the respondents to select a particular option
 Ambiguous questions that may be open to interpretation or that can be misunderstood by the
respondents
 Sensitive questions that respondents may be reluctant to answer truthfully
 Double-negative questions that may be open to misinterpretation by the respondents

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Example of Questionnaires:

A leading consumer electronics and home appliances company, XYZ, is conducting a survey to
understand consumer buying behavior. The following are some of the questions included in its survey. In
practice, when researchers design questionnaires, they try to balance the number of questions
(information sought) with time taken to complete the survey. Also, depending on the quality of the
information being sought, they can construct different types of questions.

Instructions: Please read each question below. Check the box next to the response that best matches
your answer. Whenever a question says, “Please check all that apply,” please check each answer that
applies to you. Your responses are completely anonymous.

1. Have you purchased a new washing machine, refrigerator, air conditioner, TV, or any other consumer
electronics or home appliances within the last year?

 Yes
 No  If No, please skip to Question 17.

2. What did you purchase? If you have purchased more than one of the products/appliances listed
below during the last year, check the one that you purchased most recently.

a. Washing Machine b. Refrigerator c. Air Conditioner d. TV

e. Washer Dryer f. Vacuum Cleaner g. Water Purifier h. Other appliances:

_______________

Please answer the following questions for this particular appliance.

3. Why did you purchase this new appliance? Please check only one.

 Old one broke

 Moved into new house
 Remodeled
 Needed bigger/better model
 Didn’t own one
 Other: ____________________

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4. Which company’s appliance(s) did you purchase? Is it

 Brand 1
 Brand 2
 Brand 3
 Brand 4
 Brand XYZ
 Brand 6
 Brand 7
 Brand 8
 Brand 9
 Brand 10
 Other : ___________________________________

5. What sources did you use to help decide which make and model to buy? Please check all that apply.

 Friends/word of mouth
 In-store materials (brochures, etc.)
 Salesperson
 Consumer reports/reviews
 Technical reviews
 Information from Internet
 Reputation of brand/manufacturer
 Other sources: _____________________________________________________________

6. Are you happy with your purchase?

 Yes
 No  If No, Why? _________________________________________________________

7. What was important to you when deciding on the make and model? Below is a list of factors that
might have influenced your decision to buy the particular model you chose. Please rate the
importance of each factor by circling a number from 1 to 4, where 1 is extremely important and 4 is
not important at all.

Extremely Important Important Less Important Not Important At All

Price 1 2 3 4

Brand 1 2 3 4

Color 1 2 3 4

Size 1 2 3 4

Premium features 1 2 3 4

Warranty 1 2 3 4

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8. Did a salesperson explain the long-term costs of owning an appliance due to its energy use?

 Yes
 No
 Not applicable

9. Did you buy an energy-efficient model?

 Yes
 No
 Not applicable

10. How did you know whether or not you were buying an energy efficient model?

 Don’t know
 Energy Guide label
 Consumer reports
 Sales person recommendation
 Other: ___________________________________

11. Where did you purchase the appliance?

 Locally-owned business
 Company dealer
 Company showroom
 Big-box retailer
 Online purchase
 Other: ______________________________________

12. Did you receive a Rebate/Discount on the purchase of this appliance?

 Yes
 No

If YES:

13. Was the rebate important in your decision to buy this particular make and model?

□ Yes □ No

14. What was the amount of the rebate? If you don’t remember, please make your best guess. $.
________

15. Did you purchase the appliance in EMI?

 Yes
 No

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16. Are you satisfied with the after sales service provided by the company?

 Yes
 No
 The product is performing satisfactorily and no after sales service has been required.

17. If you were to choose a gift from the following what would you choose? (check three)

 Cell phone (Brand: __________________________ )

 TV (Brand: __________________________)
 Refrigerator (Brand: __________________________)
 Washing machine (Brand: __________________________)
 Stereo system (Brand: __________________________)
 Air conditioner (Brand: __________________________)
 Vacuum cleaner (Brand: __________________________)
 Water purifier (Brand: __________________________)
 Washer (Brand: __________________________)
 Dryer (Brand: __________________________)

18. In your opinion, which is the most effective mode of advertising?

a) TV b) National newspaper c) Billboard d) Magazine e) Banners and posters f) Promotional

campaigns

19. In your house, who makes the majority of household decisions?

________________________________________

20. How will you rate the following companies on a scale of 1 to 7 according to their visibility (frequency
of advertisement seen on TV, newspaper, billboards, etc.)?

(7 means very frequently seen and 1 means rarely or never seen)

Brand 1 1 2 3 4 5 6 7

Brand 2 1 2 3 4 5 6 7

Brand 3 1 2 3 4 5 6 7

Brand 4 1 2 3 4 5 6 7

Brand XYZ 1 2 3 4 5 6 7

Brand 6 1 2 3 4 5 6 7

Brand 7 1 2 3 4 5 6 7

Please answer the following questions about yourself. Your answers to these questions, as well
as to all the other questions on this survey, are completely anonymous.

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21. What is your age?

 Under 25
 25–29
 30–39
 40–49
 50–59
 60+

22. Gender? a) Male b) Female

23. What is your occupation?

 Student
 Job/Salaried/Service
 Self employed
 Other: ________________________________

24. What is your annual household income (in USD)?

 Below $40,000
 $40,000–$60,000
 $60,000–$100,000
 $100,000–$200,000
 More than $200,000

25. What is your marital status?

 Single/Widowed/Divorced
 Married

26. Where do you live: ____________________________

27. What is the highest education level you have attained?

 Completed High School

 Completed College
 Completed Graduate School
 PhD/Doctorate

If you have any comments, please write them below.

________________________________________________________________________________________________
Types of Quantitative Techniques

Quantitative techniques are the methods used to collect data from a larger target audience using a
structured set of questions. The type of quantitative research depends on which medium can be used to
reach the respondents in an optimum manner. The factors that need to be considered are the time and cost

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of the medium used and whether the medium obtains quality data without creating bias. The following types
of quantitative techniques are available for data collection:

 Paper and Pencil Interview (PAPI)— The Paper and Pencil Interview (PAPI) is a quantitative
technique that involves a direct interview of each respondent using a paper-based questionnaire. The
use of PAPI has reduced greatly since the introduction of computers. However, it can still be convenient
for non-complex questionnaires administered to small sets of people. For example, door-to-door
researchers may carry copies with them, or copies may be given out to attendees at a conference or
trade show.

 Computer–assisted Personal Interview (CAPI)—The Computer-assisted Personal Interview (CAPI) is

a quantitative technique in which respondents provide their answers on a computer in the presence of
an interviewer. It is considered a personal interviewing technique because the interviewer accompanies
the respondent during the process. CAPI has several advantages over other forms of quantitative
techniques when the sample size is large. However, this method has its own limitations as it attracts
only computer-savvy respondents. This technique is mostly used when a stimulus has to be shown to
the respondents and the questions are based on their understanding of the stimulus. It is often more
convenient to show the stimulus on a computer screen.

 Computer-assisted Telephonic Interview (CATI)—The Computer-assisted Telephonic Interview

(CATI) is a quantitative technique that uses computer software and a telephone system to conduct the
questionnaire and record the responses. The computerized questionnaire is administered by the
interviewer to the respondents over the phone. The interviewer records the responses directly into the
software. This technique enables data analysis without the need for transferring responses to the
computer and makes it possible for researchers to generate interim reports.

 Computer-assisted Web Interview (CAWI)—The Computer-assisted Web Interview (CAWI) is one of

the most commonly used quantitative techniques in recent times. The questionnaires are created in
software specifically built for web interviews. This interface allows for the insertion of audio-video and
links to different web pages. The program changes the flow of questions depending on the respondent’s
answers and the available information about the respondent. It is more economical than other
quantitative techniques because it does not require the interviewer to be present during the interview.

 Central Location Test (CLT)—The Central Location Test (CLT) is a quantitative technique in which
face-to-face interviews are conducted at a centralized location such as a room or booth in a shopping
mall. It is considered an effective method for testing concepts, products, packaging, and advertising
effectiveness, as well as conducting sensory research. The interviewers are well trained to ensure
effective data collection.

APPENDIX B. AUTHORS AND REVIEWERS OF THE NBOKTM

GUIDE

This appendix lists the names of those individuals who contributed to the development and production of the
NBOKTM Guide.

NGstudyTM is grateful to all these individuals for their continuous support and acknowledges their
contributions towards the development of the NBOKTM Guide.

B.1 Lead Author

Tridibesh Satpathy

B.2 Co-authors and Subject Matter Experts

John Adetunji

Peter Baverso

Vince Belanger

Evelyn Brooks

Alexis Carnegie-Dunham

Charles Chase-Davis

Porfirio Chen Chang

Linda Clevenger

Spring Eselgroth

Jack Ferguson

Estela Flood

Trent Fogg

Gonzalo Gallegos

James Gibson

Tug Gokaydin

Christopher Graham

Alison Holder

Kevin Jackson

K. Pallavi Jha

John Kamp

Ruth Kim

Charles Lobosco

Alex McDuffie

Margaret Meloni

Prince Mensah

Dorothy Murray

Gourab Nanda

Jose Nunez

Diego Ochoa

Buddy Peacock

Jim Pruitt

Charles Quansah

Arun Rahim

Deepak Ramaswamy

Frank Reveles

Mauricio Rodriguez

Shawna Sheldon

Jayadeep Subhasis

Jamey Stephens

Sandra Strech

Te Wu

REFERENCES

Thomas, K.W. (1992). Conflict and negotiation processes in organizations. In Dunnette, M.D. & Hough, L.M.
(Eds.) Handbook of industrial and organizational psychology, Vol. 3 (2nd ed.). pp. 651-717. Paulo Alto, CA:
Consulting Psychologists Press.

Warren Weaver and Claude Elwood Shannon (1963). The Mathematical Theory of Communication. Univ. of
Illinois Press

A Guide to the Scrum Body of Knowledge (SBOKTM Guide) (2015). VMEdu, Inc.

Bureau of Arms Control. (1994, Oct 1). Agreed Framework Between the United States of America and the
Democratic People's Republic of Korea. Retrieved from http://2001-
2009.state.gov/t/ac/rls/or/2004/31009.htm

Singh, B.D. (2012). Negotiating and Counselling: Text and Cases. Excel Books

Hitt, W.D. (1990). Ethics and leadership: Putting theory into practice. Columbus: Battelle Press.

Shell, G. R. (2006). Bargaining for Advantage, Second edition. Penguin Books.

SMstudy® Guide, Book 2—Marketing Research (2016). VMEdu, Inc.

Fisher, R. and Ury, W. (1981). Getting to yes: Negotiating agreement without giving in. New York: Penguin
Books

Carrell, Michael R. & Christina Heavrin (2008) Negotiating Essentials: Theory, Skills, and Practices.
Pearson Education. 6th Edition

Harvard Business Essentials: Negotiation (2003). Harvard Business Review Press

Simons, T & Tripp, Thomas.M. (1997). The Negotiation Checklist: How to Win the Battle Before it Begins

Lewicki, Roy J., David M. Saunders, Bruce Barry, and Minton J.W. (2003) Negotiation. McGraw-Hill/Irwin

Naresh.K.Malhotra, David.K.Birks, Marketing Research – An Applied Approach (2006).

GLOSSARY

Accommodating Negotiation Style

In this negotiation style, the negotiators believe in the long-term value of negotiation and would prefer to
solve the other party’s problems. Accommodators place greater emphasis on preserving personal
relationships than winning the negotiation.

Active Listening

Active listening is a negotiation tactic which involves trying to completely understand what the other party is
saying. Active listening is not merely hearing the other party, but actively showing and signaling to the other
party a keenness to understand their concerns and interests.

Agents

Agents are external individuals or organizations hired to act on behalf of another individual or organization.

Alternatives

Alternatives are possible approaches to reaching the objectives of the negotiation, in the event that the
negotiation fails or the outcomes of the negotiated agreement do not meet the expectations.

Arbitration

Arbitration is a common method to resolve a dispute. In cases where a deadlock or a timing deadline has
been reached, the parties involved seek intervention from a neutral third party. The decisions arrived at after
arbitration may either be voluntary or binding depending on the nature of the agreement between the parties
and the statutory laws in place.

Aspects of Negotiation

The Aspects of Negotiation are facets that help you understand negotiation in principle. They are the
fundamental features that must be understood in order to relate and compare the different forms of
negotiation. The Aspects of Negotiation are the foundation of the associated processes and can be applied
to any type of negotiation.

Association Techniques

In this type of projective technique, subjects are provided with a hint or stimulus and asked to respond with
the first thing that comes to mind. Word association is a common example of the association technique.

Avoiding Negotiation Style

In this negotiation style, the negotiators intrinsically do not like to negotiate and would prefer to avoid
negotiation altogether unless it is absolutely necessary. Such negotiators prefer to explore areas where
there is potential for the negotiating parties to be in agreement, but they typically avoid the points on which
the two negotiation parities might differ, preferring to avoid confrontation.

Balanced-concern Situation

Situations in which both perceived conflict and importance of the future relationship are high result in a
balanced-concern situation and the negotiators will have to balance both.

BATNA(Best Alternative to A negotiated Agreement)

BATNA is the next best option that a negotiating party has if the current negotiation fails. You should not
accept any deal that makes you worse off than your BATNA/

Categorical Scales

Categorical Scales measure variables with a few distinct levels of measurement for values. For example the
taste of a newly launched beverage can be measured as sweet, bitter, or bland.

Central Location Test (CLT)

The Central Location Test (CLT) is a quantitative technique in which face-to-face interviews are conducted
at a centralized location such as a room or booth in a shopping mall. It is considered an effective method for
testing concepts, products, packaging, and advertising effectiveness, as well as conducting sensory
research.

Chicken

In this tactic, the other party uses a bluff that carries a threatened action with the intent of forcing you to
accept their demands.

Choice or Ordering Techniques

Choice or ordering techniques require the respondent to select from a set of alternative arrangements that fit
some specific criteria, such as relevance, attractiveness or meaningfulness (e.g., a picture arrangement
test).

Cognition

Cognition refers to the way a person processes information received.

Cognitive Biases

Errors made in information processing are called cognitive biases and can impede one’s negotiation
outcomes.

Collaborating Negotiation Style

In this negotiation style, the negotiators enjoy the negotiation process, particularly when the scenario
involves solving complex problems. They enjoy discovering innovative alternatives to solve negotiation
challenges.

Competing Negotiation Style

In this negotiation style, the negotiators enjoy the negotiation process, and thrive in scenarios where they
can compete and win a good deal.

Completion Techniques

This is a type of projective technique where subjects are provided with an incomplete stimulus situation and
asked to complete it in any way they wish with the constraint that the completions meet certain standards of
rationality or form. For example, a story completion may require a chronologic order.

Compromising Negotiation Style

In this negotiation style, the negotiators prefer to close a deal quickly and may compromise quickly in order
to provide a solution that they believe to be fair and equal for all parties.

Computer-assisted Personal Interview (CAPI)

The Computer-assisted Personal Interview (CAPI) is a quantitative technique in which respondents provide
their answers on a computer in the presence of an interviewer. It is considered a personal interviewing
technique because the interviewer accompanies the respondent during the process.

Computer-assisted Telephonic Interview (CATI)

The Computer-assisted Telephonic Interview (CATI) is a quantitative technique that uses computer software
and a telephone system to conduct the questionnaire and record the responses. The computerized
questionnaire is administered by the interviewer to the respondents over the phone. The interviewer records
the responses directly into the software.

Computer-assisted Web Interview (CAWI)

The Computer-assisted Web Interview (CAWI) is one of the most commonly used quantitative techniques in
recent times. The questionnaires are created in software specifically built for web interviews. This interface
allows for the insertion of audio-video and links to different web pages. The program changes the flow of
questions depending on the respondent’s answers and the available information about the respondent.

Conflict

Conflict of Interest

Though agents are supposed to act on behalf of principals, they may also have personal motives that can
lead to a conflict of interest.

Constraints

Construction Techniques

In this type of projective technique, respondents are required to go beyond simple association and to
construct or create a more elaborate product, which is usually a complete art form, such as a story,
description, dialogue, or picture. In a construction technique, the initial structure provided to the respondents
is less than is the case with a completion technique. For example, the researcher might ask respondents to
create a collage of what they feel when they experience a product, service, or concept under study.

Continual Evaluation

Continual evaluation is a negotiation tactic wherein any information related to negotiation such as
alternatives, other party negotiators, resources, constraints etc. is continuously assessed.

Cost-Benefit Analysis (CBA)

This is a simple but effective tool which can help you decide whether negotiation is required or not. In order
to conduct a CBA you need to be able to monetize both the costs associated with negotiation and the
benefits that can accrue as a result of it. Negotiation is feasible if monetary benefits exceed the cost of
conducting it.

Deadlock

Deadlock is an impasse which leaves all the parties stranded without any resolution. It can occur due to
problems in communication, disinterest among parties, focus on positions, inability to factor in the other
party's interests, and excessive emotional attachment.

Distributive (Win-Lose) Negotiation

Distributive, or win-lose negotiation, is a strategy directed toward the distribution of a fixed resource between
two or more parties. Also known as positional or hard-bargaining negotiation, this type of negotiation often
results in a win-lose scenario. In this type of negotiation, a gain for one party is a loss for the other. It is
primarily used when only one issue (for example, price) is discussed.

Economic Matrix

An economic matrix is similar to MESO, but instead of subjective points, it attributes monetary value for each
option of an issue. This is possible only where issues can be evaluated based on an economic or monetary
value. This technique allows the parties to negotiate only for a fixed amount of resources.

End-result Ethics Framework

According to this framework the, the rightness of an action is determined by the consequences. A person
following this framework believes that the end justifies the means. So, as long as the individual achieves his
or her goal, any action taken toward reaching that goal is ethical.

Ethics

Expressive Techniques

In expressive techniques, respondents are given a visual or verbal situation and asked to relate the attitudes
and feelings of other individuals to the situation (e.g., a role play). This is a type of projective technique.

First Offer

First offer is the first proposal on the table.

Focus Group

These are groups recruited to discuss the current research problem. They can provide insightful information
and possible suggestions to support the research process. Focus groups help researchers gather qualitative
data from five-to-ten stakeholders. The main objective of the focus group is to acquire insights into
stakeholder preferences and the reasons for such preferences.

Framing

Framing is the process of creating a reference frame or a perspective for a particular issue. Effective framing
uses the existing notions of how people generally tend to behave under various conditions. By framing an
issue in a particular manner, you can indirectly influence the way in which the other party responds during
the negotiation.

Groupthink

Groupthink is a phenomenon that occurs when a group of people desires to get along well with each other
and all members conform to the group norms. At times, this may lead to irrational decision-making.

Halo Effect

This occurs when a person generalizes and associates a number of attributes with another person based on
the knowledge of one trait of that person. If the trait is perceived as positive (e.g., the individual is considered
congenial) then the person is judged in a positive way, regardless of other behaviors.

Hardball Tactics

Hardball tactics, which are often used in negotiation, are designed to pressure the other party to settle at an
outcome, which they would not have agreed to under normal circumstances.

Highballing

Highballing refers to a scenario where the other party’s initial demand is unreasonably high.

In-depth Interviews

These interviews are normally open-ended, one-on-one interactions, usually conducted by telephone or
face-to-face. They are designed to collect individualistic behavior dynamics. Although these interviews are
flexible, the questions are structured around the issue.

Information asymmetry

Information asymmetry occurs when one party has more information than others.

Information Availability Bias

Sometimes people have a favored way of representing information or tend to accept information that is
represented in a particular format. This is referred to as information availability bias. Information availability
bias can make a party take less notice or even ignore other available information or information that is not
clearly put forth.

Integrative (Win-Win) Negotiation

Intergroup Conflict

This refers to conflicts between groups or teams that can be due to situations such as the presence of
interpersonal conflicts, clash of objectives or ideas, and poor dissemination of information leading to lack of
trust or faith. Examples of intergroup conflict include conflicts between unions and management, or between
nations.

Internal Rate of Return (IRR)

Internal Rate of Return (IRR) is a discount rate on an investment in which the present value of cash inflows
is made equal to the present value of cash outflows for assessing a deal’s rate of return. When comparing
deals, one with a higher IRR is typically better.

Interpersonal Conflict

This refers to conflicts between negotiating individuals due to misunderstandings, lack of coordination,
inaccurate perceptions, pre-conceived notions, or biases.

Interval Scale

An interval scale not only contains the characteristics of both the nominal and ordinal scale but also can be
used to determine the distance between the items. The degree of difference can be expressed using this
scale, but not the ratio.

Intimidation

This involves the use of an emotional ploy to force you into conceding to the other party’s demands. Anger is
a commonly used intimidation tactic that is used to create fear or to indicate some urgency—real or
fabricated—in the situation.

Intragroup Conflict

These types of conflicts occur at a group or team level where there is lack of coordination, lack of
information exchange, or too many interpersonal conflicts among members of the group or team. Conflicts
that occur among members of a family, class, union, project team, or committee are examples of intragroup
conflict.

Intrapersonal Conflict

This refers to the conflict that occurs within an individual due to a clash of his or her ideas, thoughts,
assumptions, beliefs, emotions, or values. One’s inability to express emotions such as anger or admiration
due to the fear of repercussions from how other parties will perceive the expression is an example of
intrapersonal conflict.

Irrational escalation of commitment

This happens when a person commits to a course of action, even if it constitutes irrational behavior.

Justification

Justification provides the primary reasons for negotiation, answering the questions “Why should one
negotiate?” and “What value is gained by negotiating, rather than taking the offer made by the other party?”
Assessing the justification for negotiation enables the involved organizations to determine whether it is viable
or desirable to negotiate. The primary reasons to proceed with negotiation are as follows:

• to arrive at a deal or a mutually understood outcome

• to resolve a conflict

Logistics for Negotiation

Lowballing

The other party is said to be lowballing when he or she starts with an unreasonably low offer.

Mediation

Mediation is a form of “assisted negotiation”—an extension and elaboration of the negotiation process where
the parties themselves develop and endorse an agreement. Though mediators have no formal authority over
the result of the negotiation, they bring difference to the process by meeting the parties individually,
understanding the points of conflict and points of interest of the parties, identifying the potential
compromising positions, and encouraging parties to arrive at a solution that is beneficial to all.

Metric Scales

Metric Scales measure variables using numbers on a continuous scale. Rating a new book on a scale of 1 to
10 is an example of a metric scale. Two types of metric scales are Interval and Ratio scales. Two types of
categorical scales are Nominal and Ordinal scales.

Multi-issue Negotiation

Multi-issue negotiations are negotiations which involve several issues.

Multi-party negotiation

Multi-phase negotiation

Multiple Equivalent Simultaneous Offers (MESOs)

MESOs provide a flexible technique to compare issues so that the best options can be identified. The MESO
technique involves three steps:

1. Identify issues, prioritize them, and determine weights for each issue based on priority.

2. Identify the possible outcomes for each of the identified issues. The outcomes need to be ranked,
with one outcome being ranked the highest with 100 points and the other outcomes having relative
points based on the highest valued outcome.

3. Create three approximately equal offers by multiplying the weights and the points and generating
the total value of the offer.

MESOs result in offering the other party choices, thus increasing the chance of achieving a deal.

Natural Coalition

Members of natural coalitions have the same viewpoint on multiple issues. It is very difficult to break a
natural coalition. For example, a coalition of USAID and NGOs working for development in Africa is a natural
coalition.

NBOK™ Guide

A guide to the Negotiation Body of Knowledge (NBOK™ Guide) delivers guidelines for conducting
successful negotiations. It provides a comprehensive framework that includes aspects and processes for
preparing and conducting negotiations.

Negotiated Deal

The negotiated deal is the final outcome that is arrived at after a successful negotiation. It brings a
settlement to the issue at hand.

Negotiated Deal Terms and Conditions

Negotiation

According to the NBOK™ Guide, negotiation is the process of discussion between two or more individuals or
groups, where one individual or group seeks to gain something from the other individual or groups, and vice
versa. Negotiation is a common skill used by individuals, businesses, and governments all the time as they
communicate with others—and it is a skill that can be improved over time.

Negotiation Capabilities

Negotiation capabilities include availability of resources, an established structure or process for negotiation,
and a company’s approach to negotiation. Negotiation capabilities develop over time.

Negotiation Leverage

Negotiation Processes

Negotiation processes describe the specific activities and flow of a typical negotiation.

Negotiation style

Negotiation Timeline

A negotiation timeline outlines the time available for each process in the negotiation.

Net Present Value (NPV)

NPV is a method used to determine the current net value of a future financial benefit, given an assumed
inflation or interest rate. In other words, NPV is the total expected income or revenue from a deal, minus the
total expected cost of the deal, taking into account the time-value of money.

Nibble

This is a scenario where the other party makes small demands when the negotiation is nearing its
agreement. After spending a considerable time negotiating and discussing, people generally tend to
concede to small demands from the other party toward the end of the process.

Nominal Scales

A nominal scale is used for labeling variables. It is the simplest form of scale and can only be used to carry
out the simplest of operations, such as categorizing variables into subsets.

Operational Issues

Operational issues are raised during a course of action or in the middle of a business process. Often the
operational issues are negotiated by mid- to senior-level management.

Ordinal Scale

An ordinal scale is used for ranking the test units or their responses to the variable under consideration. It is
used for ordering only and not for comparing.

Overconfidence

Overconfidence is the tendency to believe that one’s own opinions and beliefs are more accurate than those
of others. This can lead to rejecting other opinions as well as going ahead with an incorrect belief for
negotiation.

Over-valuation

Over-valuation is the tendency to value one's own products or services higher than they actually are and
inflate their price.

Paper and Pencil Interview (PAPI)

The Paper and Pencil Interview (PAPI) is a quantitative technique that involves a direct interview of each
respondent using a paper-based questionnaire.

Perception

Perception is the process of assigning meaning to the messages received by the listener. In negotiation, it is
largely related to how one party interprets the other party’s messages and behavior in the given
environment.

Personalistic Ethics Framework

According to this framework the, rightness of an action is based on one’s conscience. People who believe in
personalistic ethics will not do anything that is unethical according to their own moral standards.

Primary Research

Primary research is conducted to gather new data for a specific purpose.

Principal

An organization or individual hiring or using an agent is referred to as the principal.

Process Consultation

Process consultation is a type of third part intervention in which the objective is to keep the parties on track
so that the ongoing conflict does not intensify. Through confrontation and exposing differences, process
consultants lead the parties to resolve the differences and come up with mutually beneficial solutions.

Projection

This occurs when a person projects his or her own characteristics or state of mind on the other party.
Projection often occurs as a result of an individual’s need to protect his or her own self-concept.

Projective Technique

The projective technique is a questioning technique used to obtain indirect responses underlying
motivations, beliefs, attitudes, or feelings regarding issues of concern. The main objective of the projective
technique is to discover and interpret consumers’ perceptions of a product or service that they might not
express directly.

Psychological Constraints

Qualitative Techniques

Qualitative techniques are used to collect subjective insights into the behavior, motivations, and attitudes of
the selected individuals.

Quantitative techniques

Quantitative techniques are used to obtain measureable insights into the behavior, motivations, and attitudes
of a selected group of individuals.

Questionnaire

A questionnaire is a data-collection tool that consists of a structured set of questions designed to obtain
specific information from respondents.

Ratio Scale

This scale deals with quantifiable data, and therefore has the concept of absolute zero. Not only does it
contain the capabilities of the nominal, ordinal, and interval scales, but it also has the power of comparing
the results using ratios.

Reference Frame

Relationship Situation

In a relationship situation, perceived conflict is low, but the perceived importance of a future relationship is
high.

Request for Information (RFIs)

RFIs are issued before an RFQ or RFP to gather key information from potential suppliers. It helps in filtering
suppliers from a broader list and ensures that interested suppliers have initiated the process of preparing the
proposal. RFIs can also be issued by potential suppliers to seek more information regarding your
specifications listed in the RFP.

Request for Proposals (RFPs)

RFPs are issued by companies that are interested in soliciting proposals from other companies or agencies
in order to procure a product or a service.

Request for Quotation (RFQs)

RFQs are similar to RFPs but in this case the buyer is looking only for a price quotation. These are also
referred to as requests for bids.

Resource Constraints

Resource constraints refer to constraints that arise out of a lack of time, people, or financial resources.
These constraints can hamper your preparation or participation in the negotiation process.

Return on Investment (ROI)

ROI assesses the expected net income to be gained. It is calculated by deducting the expected costs or
investment from the expected revenue and then dividing this (net profit) by the expected costs in order to
obtain a return rate.

ROI = (Revenue – Cost) / Cost

RFX

RFX is the common acronym used to capture all three—Request for Proposals (RFPs), Request for
Quotation (RFQs) and Request for Information (RFIs). RFXs contain information regarding what you need
and what you expect from the other party.

Risks

Uncertain events or sets of events that can affect the objectives of a negotiation process are called risks.
Risks may contribute to the success or failure of a negotiation. Risks that are likely to have a positive impact
on the negotiation process are referred to as opportunities, whereas risks that can affect the negotiation in a
negative manner are considered threats.

Rule Ethics Framework

According to this framework the, the rightness of an action is determined by rules. A person who believes in
rule ethics will make decisions on the basis of rules such as laws, the company code of conduct, and
association bylaws.

Second Offer

Second offer is the counter offer made by either party.

Secondary Research

Selective Perception

Selective perception occurs when a person filters and selects only those facts or pieces of information that
easily integrate with or support a particular belief. This tends to further exacerbate the effect caused by
stereotyping or the halo effect, since the person not only forms a quick judgment about the other party, but
also filters out any events or evidence that suggests otherwise.

Self-serving Bias

Persons with self-serving bias attribute success to their own skills while failure is considered to be caused by
external factors. When considering the other party’s behavior this effect is reversed; the internal or personal
qualities of the opposing side are considered the primary cause of success or failure and external factors are
discounted.

Single-issue Coalition

Members of a single-issue coalition reach an agreement over one issue while holding dissimilar viewpoints
about other issues. It is easier to break a single-issue coalition compared to a natural coalition. For example,
a temporary coalition of normally hostile nations while voting on a particular issue in the UN is a single-issue
coalition.

Single-issue Negotiation

Single-issue negotiations deal with only one issue. Although most negotiations are multi-issue negotiations,
where several issues are negotiated at the same time, understanding the theoretical concepts related to
single-issue negotiation provides a firm foundation for understanding multi-issue negotiations in future
chapters.

Snow Job

This refers to the use of providing excessive information or communicating in an incomprehensible technical
language with the intent of overwhelming or distracting you.

Social Contract Ethics Framework

According to this framework the, the rightness of an action is determined by customs and social norms.
Those who believe in social contract ethics will make decisions on the basis of norms prevalent in their
society.

Stereotyping

This occurs when a person assigns attributes to another person based on his or her association to a
particular socio-cultural or demographic group. This may be due to a general non-factual belief that
attributes specific qualities to a group, or due to a personal experience that led to a generalization when
considering that particular group.

Strategic Issues

A strategic issue is an issue that holds strategic importance for the organization and has direct impact on the
organization’s Corporate Strategy. Senior management extensively assists in negotiations that have
strategic significance.

Subsequent Offers

Any offers made after the first and second offers are called subsequent offers.

Surveys

Surveys are one of the most effective quantitative techniques for gathering data. Surveys are usually
conducted within a target group of people who can provide quality information relevant to the research
problem.

Tacit coordination Situation

In tacit coordination, both the perceived conflict and perceived importance of the future relationship is low.

Tactics

A tactic is a technique employed in the negotiation process that allows you to you utilize available
information to your advantage and helps you achieve your desired outcomes.

Tradeoffs

Tradeoffs are concessions made on certain issues to achieve your overall objective for the negotiation.

Transaction Situation

A low-perceived importance of a future relationship combined with a high-perceived conflict will result in a
transaction situation.

Value

Walk-away Point

Winner’s curse

Often in a negotiation when one reaches a deal quickly, he or she subsequently feels let down or dejected
on reaching the deal easily. This tendency to feel let down with a completed deal is referred to as the
winner’s curse.

ZOPA (Zone of Possible Agreement)

ZOPA is the range in which the agreement is possible without causing loss to any of the parties in the
negotiation. It is the “bargaining range” within which an agreement can be reached.

INDEX
Categorical Scales, 212
A Central Location Test (CLT), 222
Certifications, 8
Accommodating, 3, 12, 44 Change in Nature of Relationship, 41
Active Listening, 128, 129 Change in Negotiation Process, 41
Advisors, 109, 181 Change in Negotiator, 41
Agency Issues, 131, 203 Channels, 13, 52
Agreements, 123, 195 Chaotic Process, 39
Alternatives, 4, 94, 98, 107, 147, 161, 165, 170, 177 Chicken, 130
Analyses of Alternatives, 74 Claiming Value, 11, 33
Analyses of Alternatives of Other Party, 94 Closed-ended questions, 216
Analysis of Alternatives, 147 Coalition, 38, 39, 40, 69, 140
Analysis of Alternatives of the Other Party, 165 Natural Coalition, 39
Analysis of Issues of the Other Party, 162 Single-Issue Coalition, 39
Annual Reports, 77, 96 Cognition, 12, 13, 48, 50
Arbitration, 182, 183, 184, 203 Collaborating, 4, 12, 44, 46
Aspects of Negotiation, 1, 7, 9, 10, 23, 67, 78, 86, 92, Commercial Sources, 77, 96
100, 112, 128, 142, 158, 159, 163, 166, 167, 179, 187 Communication in Negotiation, 13, 52
Customization, 11, 37 Competing, 4, 12, 44, 46
Distributive vs. Integrative, 11, 32 Compromising, 4, 12, 44, 47
Ethics, 14, 56 Computer–assisted Personal Interview (CAPI), 222
Human relations Issues, 12, 43 Computer-assisted Telephonic Interview (CATI), 222
Justification, 10, 24 Computer-assisted Web Interview (CAWI), 222
Non-linear Process with Uncertain Outcomes, 11, 40, Conduct the Negotiation, 18, 21, 120, 192
41 Conduct the Negotiation (Multi-Issue), 173, 192
Organization for Negotiation, 13, 54 Inputs, 193
Assertiveness, 3 Outputs, 204
Assessing Constraints, 79, 151 Tools, 195
Assessing Constraints of the Other Party, 97, 167 Conduct the Negotiation (Single-Issue), 103, 120
Associate Level Certifications, 7, 8 Inputs, 121
Authority, 54, 153, 195 Outputs, 132
Authority Level, 13, 54, 55, 74, 100, 123, 171, 193, 195 Tools, 123
Availability of Resources, 64 Conflict, 2, 10, 26, 27, 44
Avoiding, 3, 12, 44, 45, 73 Conflict of Interest, 13, 73, 110, 131, 145, 203
Continual Evaluation, 128, 129
B Cooperativeness, 3
Cost-Benefit Analysis, 28
BATNA, 4, 78, 80, 84, 85, 86, 90, 91, 95, 97, 98, 99, 106, Creating Value, 11, 33
107, 122, 127, 128, 130, 147, 151, 157, 161, 165, Customization, 11, 23, 37, 67, 69, 92, 143, 163
167, 170, 171, 177, 179, 194
BATNA(s), 161, 177
Benefits of Negotiation, 27
D
Breaking a Deadlock, 201 Deadlock, 183, 201, 202, 203
Decoding, 13, 52
C Defined Negotiation Process, 155, 160
Disinterest Among Parties, 202
Calibration of Outcomes, 112, 114, 121, 189, 193

Distributive, 3, 11, 23, 32, 33, 35, 36, 67, 68, 92, 142, Framing, 78, 124, 162, 188
163, 186
G
E
Gender and cultural barriers, 118
Economic Matrix, 198 General Media, 77, 96
Encoding, 13, 52 Government Publications, 96
End-result ethics, 56 Groupthink, 39
Establishing Credibility, 128
Establishment of a negotiation path, 112 H
Ethics, 14, 23, 56, 67, 74, 94, 145, 164, 225
Excessive emotional attachment, 202 Halo effect, 12, 48
Existing Understanding of Issues, 138 Hardball tactics, 130
Expected Negotiation Paths, 114, 121, 189, 193 Highballing, 130, 131
Expected Other Party Alternatives, 98, 107, 170, 179 Human Relations Aspects, 70
Expected Other Party BATNA, 98, 107, 122 Human Relations Issues, 12, 23, 67, 93,144
Expected Other Party BATNA(s), 170 Human Relations Issues in Negotiation, 12, 67, 93, 144
Expected Other Party BATNA(s), 179 Human Resources, 64
Expected Other Party BATNA(s), 194 Hypothesis, 215, 216
Expected Other Party Issues, 168
Expected Other Party Issues for Negotiation, 178 I
Expected Other Party Negotiation Aspects, 100, 108,
171, 179 Impasse, 192, 201, 202
Expected Other Party Negotiation Process, 169 In-depth Interviews, 75, 95, 207
Expected Other Party Negotiation Reference Frame, Industry Publications, 94, 165
100, 107, 122 Information Asymmetry, 13, 50, 54, 73, 109, 131, 145,
Expected Other Party Negotiation Reference Frame(s), 203
171, 179, 195 Information availability bias, 13, 50, 51
Expected Other Party Negotiation Timeline, 170 Information Exchange, 36
Expected Other Party Outcome Preferences, 100, 108, Integrative, 3, 11, 23, 32, 33, 34, 35, 36, 67, 68, 92, 142,
171, 180 163
Expected Other Party Resource Availability, 98, 107, Intergroup Conflict, 27
169, 178 Internal or external opposition, 118
Expected Other Party Walk-Away Point, 99, 107, 122 Internal Rate of Return, 28, 30
Expected Other Party Walk-Away Point(s), 171, 179, 194 Internal Rate of Return (IRR), 30
Expected ZOPA, 99 Internal Reports, 77
External Expertise, 108, 111,180 Interpersonal Conflict, 27
Interval Scale, 214
F Intimidation, 130
Intragroup Conflict, 27
Feedback, 13, 52 Intrapersonal Conflict, 27
Financial Benefits, 28 Irrational escalation of commitment, 13, 50
Financial Resources, 65 Issue for Negotiation, 62, 90
First Offer, 124 Issue Matrix, 185, 186
Focus Group, 75, 207, 209, 210 Issues, 35, 36, 43, 62, 131, 137, 140, 164, 186, 188, 195,
Focus Group Discussions, 75, 95, 209 202
Focus on Positions, 202 Issues Analysis, 140
Formulating Policies, Terms, and Conditions, 200

J Negotiation Aspects, 10, 91, 149, 158, 161, 165, 171,

177, 179
Justification, 10, 23, 24, 67, 84, 92, 124, 142, 163 Negotiation Leverage, 81, 152, 167
Negotiation Planning Session, 111, 187
L Negotiation Research, 112, 187
Negotiation Styles, 3, 12, 44
Lack of trust, 116 Accommodating, 3, 44
Lessons Learned from the Negotiation, 205 Avoiding, 3, 45
Leverage from Authority, 82 Collaborating, 4, 46
Leverage from Information, 81, 152 Competing, 4, 46
Leverage from Resources, 81, 153 Compromising, 4, 47
Location, 112, 113, 222 Negotiators, 3, 9, 11, 12, 13, 14, 18, 21, 25, 34, 41, 43,
Logistics, 18, 21, 27, 103, 105, 112, 113, 121, 151, 173, 44, 45, 46, 47, 48, 53, 54, 57, 62, 63, 64, 65, 68, 70,
175, 187, 188, 189, 193 71, 93, 100, 103, 105, 108, 111, 112, 113, 114, 116,
Logistics for Negotiation, 113, 121, 189, 193 123, 138, 144, 145, 150, 156, 160, 164, 171, 173,
Lowballing, 130 181, 187, 188, 189, 190, 193, 195, 201, 202
Negotiators, 12, 41, 48, 54, 112, 116, 121, 181, 189
M Net Present Value (NPV), 28, 29
New alternatives, 11, 41
Managing Agents, 131, 203 Nibble, 130
Marketing Research, 210, 225 Noise, 13, 52
Meanings, 13, 52 Nominal Scale, 213
Mediation, 182, 184, 203 Non-financial benefits, 30
Meetings, 78, 97, 123, 151, 167, 195 Non-linear Process with Uncertain Outcomes, 11, 23, 40,
Meetings and Discussions, 78, 97, 151, 167 41, 67, 70, 93, 144, 164
MESOs. See Multiple Equivalent Simultaneous Offers
Message, 13, 52 O
Metric Scales, 212
miscommunication, 13, 111, 131, 145, 203 Offers, 21, 192, 196, 197
Miscommunication, 111 Open-ended questions, 216
Multi-issue negotiation, 8, 19, 21, 59, 135, 138, 139, 140, Opening the Negotiation, 123, 195
142, 144, 145, 151, 154, 155, 158, 159, 162, 163, Ordinal Scale, 213
166, 168, 171, 173, 175, 177, 179, 180, 181, 185, Organization, 13, 23, 24, 54, 67, 73, 93, 145, 164
188, 189, 190, 192, 194, 195, 196, 198, 199, 200, Organization for Negotiation, 13, 54, 67, 73, 93, 164
201, 204, 205 Other Party Negotiation Capabilities, 90, 160
Multi-party, 2, 38, 39, 40, 69, 92, 143, 147, 156, 180, 189 Other Party Negotiators, 116, 121, 190, 193
Multi-phase, 37, 40, 69, 92, 117, 143 Overconfidence, 13, 50, 51
Multiple Equivalent Simultaneous Offers, 197 Overvaluation, 13

N P
Nature of the Issue, 62 Paper and Pencil Interview (PAPI), 222
Personal or Business, 63 Past Negotiation Process, 138
Strategic or personal, 62 Past Negotiation Results, 66, 90, 139, 160
NBOK™ Guide, 1, 2, 6, 7, 9, 11, 15 Perception, 12, 48
Negotiated Deal, 132, 204 Personalistic ethics, 56
Negotiated Deal Terms and Conditions, 132, 204 Plan for Negotiation, 18, 21, 105, 175, 193
Plan for Negotiation (Multi-Issue), 173, 175

Inputs, 176 RFPs, 196

Outputs, 189 RFQs, 196
Tools, 180 RFX, 196
Plan for Negotiation (Single-Issue), 103, 105 Risk Assessment, 82, 154
Inputs, 106 Risk Assessment of the Other Party, 98, 168
Outputs, 113 Risk averse, 65
Tools, 108 Risk neutral, 65
Potential Bottlenecks, 116, 121, 190, 194 Risk taking, 65
Potential for Future Deals, 133, 205 Risks, 12, 41, 82, 83, 154
Preferred mode of negotiation, 112, 113 Rule ethics, 56
Primary Research, 75, 95, 149, 166
Problems in Communication, 201 S
Process Consultation, 182, 184, 203
Process for Determining BATNA, 85 Satisfied Parties, 132, 204
Processes, 9, 15 Scales, 212, 213
Professional Level Certifications, 7 Second Offer, 125
Projection, 12, 49 Secondary Research, 76, 96, 150, 166, 167
Projective Techniques, 208 Selective Perception, 12
Association, 208 Self-serving bias, 13, 50, 51
Choice or Ordering Technique, 209 Sender, 13, 52
Construction, 208 Sharing of information, 117
Expressive, 209 Single-issue negotiation, 8, 16, 18, 59, 68, 69, 75, 103,
Completion, 208 105, 137, 140, 144, 145, 149, 150, 154, 168, 180,
Proposals, 196, 197 181, 187, 188, 190, 192, 195, 197, 200, 203, 205
Psychological Constraints, 79, 80, 97, 151, 152, 167 SMBOK® Guide, 223
Public reports, 94, 165 Snow job, 131
Social contract ethics, 56
Q Stereotyping, 12, 48
Subsequent Offers, 127
Qualitative Research, 95
Qualitative Techniques, 75, 207 T
Quantitative Research, 95
Quantitative Techniques, 75, 211, 221 Tacit coordination, 73
Questionnaires, 76, 215 Tactics for Negotiation, 124, 128, 200
Templates, 65, 66, 90, 138, 139, 160
R Terms and conditions, 200, 204
Third party intervention, 181, 201, 202
Ratio Scale, 214 Third-party contacts, 94, 165
Receiver, 13, 52, 53 Third-Party Intermediaries, 181
Receptor, 13, 52 Time, 65, 79, 112, 151, 184
Reference frame, 78, 91, 100, 106, 107, 122, 161, 162, Time estimate, 113
163, 168, 171, 175, 179, 188, 190, 194, 195 Tradeoffs, 198
Relationship, 3, 11, 24, 28, 30, 32, 33, 35, 36, 44, 68, 71, Transaction situation, 72
72, 73, 80, 87, 92, 93, 100, 107, 108, 124, 144, 158, Transmitter, 13, 52
162, 172, 184, 186, 188, 195, 199, 200, 201, 203, 205 Types of Negotiation, 3
Resource constraints, 79, 97, 151
Return on Investment, 28, 29
RFIs, 196

U VMEdu®, 2

Understand Negotiation Situation of the Other Party, 159, W

180
Understand Negotiation Situation of the Other Party Walk-away point, 4
(Multi-Issue), 135, 159 Walk-Away Point*, 4, 90, 106, 107
Inputs, 160 Win-lose. See Distributive
Outputs, 168 Winner’s curse, 13, 50
Tools, 162 Win-win. See Integrative
Understand Negotiation Situation of the Other Party
(Single-Issue), 59, 89 Y
Inputs, 90
Outputs, 98 Your Alternatives, 84, 91, 106, 157
Tools, 92 Your BATNA, 84, 91, 106, 122, 157, 161, 177, 194
Understand your Negotiation Situation, 137, 176, 178, Your BATNA(s), 157, 194
194 Your Issues for Negotiation, 155, 160, 176
Understand Your Negotiation Situation, 61, 91, 176, 177 Your Negotiation Aspects, 87, 106, 158, 161
Understand your Negotiation Situation (Multi-Issue), 135, Your Negotiation Capabilities, 64, 90, 138, 160
137 Your Negotiation Reference Frame, 86, 91, 106, 122
Inputs, 138 Your Negotiation Reference Frame(s), 158, 161, 190,
Outputs, 155 194
Tools, 140 Your Negotiation Timeline, 156
Understand Your Negotiation Situation (Single-Issue), Your Negotiators, 116, 121, 189, 193
59, 61 Your Outcome Preferences, 87, 91, 107, 158, 162, 178
Inputs, 62 Your Resource Availability for Negotiation, 84, 90, 106,
Outputs, 84 156, 161, 176
Tools, 67 Your Walk-Away Point, 86, 90, 106, 122
Understanding Negotiation Leverage of the Other Party, Your Walk-Away Point(s), 157, 161, 177, 194
97, 167
Understanding your Negotiation Leverage, 81, 152 Z
Unethical, 14, 57, 94
ZOPA, 5, 95, 99, 124, 125, 126, 132, 165
V
Value, 11, 24, 33, 35, 36

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