NEGOTIATION

What is a Negotiation?

A process whereby two parties, with differing views initially,

attempt to reach an agreement on a common objective by
the selective use of different methods of persuasion.
People are not born good negotiators…

…these skills can be developed!!

Good negotiation skills can mean the difference between success & failure!
• Negotiation occurs in business, non-profit organizations,
government branches, legal proceedings, among nations
and in personal situations such as marriage, divorce,
parenting, and everyday life.

• Professional negotiators are often specialized, such as

business negotiators, political negotiator, peace
negotiators, hostage negotiators, or may work under
other titles, such as diplomats, legislators or brokers
Positions are what is said up front, often very
decisively! Interests, on the other hand, are
what lie behind these positions

Positions Interests
(1) Things you say you want (1) Underlying motivations

(2) Demands (2) Needs and concerns

(3) Things you say you will, or (3) Fears and aspirations
won’t, do
Be Prepared
In Case of Purchasing
❑ Understanding your needs & requirements
❑ Knowing the supply market conditions
❑ Knowing your purchasing strategy
❑ Knowing your desired supplier relationship
❑ Being aware of prices & costs
❑ Understanding the supplier company
❑ Understanding the people involved
❑ Assessing the balance of power
❑ Carrying out a SWOT analysis
Reviewing the supplier’s capabilities and strategy

❑ Technical capabilities
❑ Financial situation
❑ Market-related capacities
❑ Management capabilities
❑ Management culture
❑ Industrial relations
❑ The supplier’s main competitive
advantage (cost, leadership, differentiation, reliability…)
-how suppliers see your company as a potential client

The Supplier Perception Model

 Successful Negotiators:
Spend more time planning & preparing
Consider many options & possible outcomes
Focus more on areas of common ground
Distinguish facts from assumptions
Set clear objectives
Use open-ended questions
Listen & observe well
Use more long-term comments
Deal well with pressure
 Successful negotiators (cont’d):
Focus on developing trust
Seek more information
Share knowledge easily
Test understanding, summarise & clarify
Keep the discussion focused

Good negotiators also learn

from their mistakes They don’t:
Give many reasons to explain a position
Get defensive or attack
Use “irritators”
Make immediate counter proposals
What to do?
What to do?...
❑ Avoid falling into the trap of “stereotypes”
❑ Acknowledge different perceptions
❑ Don’t judge
❑ Speak clearly & slowly and check understanding
❑ Be careful with expressions, signs & gestures
❑ Observe & learn
 Understanding the people involved

It is people who make the deals, not organisations...

WARM
TOUGH
LOGICAL
CREATIVE
DEAL MAKER
A person who is friendly, and easily
relates to other people - WARM
An adversarial negotiator who may be hard on the
problem and on the people involved -TOUGH

A person who resorts to rational

arguments, facts and figures - LOGICAL
A person who is inventive and imaginative,
who looks at the total picture but leaves to
others- CREATIVE
A person who enjoys the bargaining
involved in a negotiation, and looks for
quick solutions – DEAL MAKER
The Balance of Power
❑ Market power
❑ Relative value power
❑ Financial power
Organisational power ❑ Reputation power
❑ Time power
❑ Reward power
❑ The power of choice
Personal
power
Some common mistakes regarding balance of power….

❑ Under-estimating your own power

❑ Over-estimating your own power

❑ Assuming that the other party knows (or doesn’t

know) your weaknesses, problems, deadlines…

❑ Assuming that the other party is automatically in

a stronger position
SWOT Analysis
Developing the negotiation strategy

Your own negotiation The positions and possible

objectives and targets interests of the other side
Your
negotiation
strategy

The relative strengths and

weaknesses of both the sides
ITC
Your negotiation strategy is about HOW
to best achieve your objectives & targets
 Determining the negotiable zone
Comparing targets: e.g. Unit Price

Tk 10 million Tk 15 million
Buyer

Negotiable
Zone
Seller
Tk 11 million Tk 17 million

ITC M7:U3:3.4-1
Targets should be:
▪ Relevant
▪ Ambitious but achievable
Best target
▪ Specific
▪ Measurable Worst acceptable
▪ Impartial target

▪ Compatible
What is BATNA and WATNA here?
BATNA is an acronym that stands for Best
Alternative To a Negotiated Agreement. It is
defined as the most advantageous alternative
that a negotiating party can take.

WATNA??
The zone of possible agreement (ZOPA)

• The zone of possible agreement (ZOPA) or bargaining range is

considered an area where two or more negotiating parties may find
common ground.

• It is this area where parties will often compromise and strike a deal.

• In order for negotiating parties to find a settlement or reach an

agreement, they must work towards a common goal and seek an
area that incorporates at least some of each party's ideas.

• It is the range between each parties Reservation Values and is the

overlap area that each party is willing to pay in a negotiation
Persuasion techniques:

• Emotion
• Logic
• Bargaining
• Compromise
• Threat
Emotion: Making the other party understand
your feelings on an issue

• Emotion can counter logic

• Emotion can be used to increase the value of
something
• Exaggerated emotion can have the opposite
effect!
Logic: Using a rational argument based on facts
& figures

• Try to keep the argument simple

Bargaining: The trading of variables: if…
then...

• Try to give away things that are less valuable

to you than what you get in return
Compromise: Agreeing to meet somewhere
in between

• 50/50 is not the only compromise

• Compromise tends to favour the one who

takes the most extreme position
Threats:

Suggesting the consequences of not complying with your

demands

• Use “if”
• Use indirect rather than direct threats
• Threaten only at business level
• Be prepared to vary persuasion techniques
• Remember that persuasion is not an
objective in itself!
• Remain creative & flexible
Conduct Strategy of negotiation

▪ Opening stage
▪ Testing stage
▪ Proposal stage
▪ Bargaining stage
▪ Agreement stage
The opening stage
 The testing stage
❑ Check your assumptions & their perceptions
❑ Get missing information
❑ Explore topics of common ground
❑ Explore their underlying needs & interests
❑ Ask “what”, “why”, and “how” questions
❑ Clarify perceptions
❑ Listen attentively
❑ Show concern for their needs & interests
❑ Don’t make any firm proposals yet!
 The proposal stage
❑ Try to get them to propose first
❑ Use hypothetical questions: “what if…”
❑ Don’t jump to conclusions
❑ Listen actively & clarify
❑ Summarise often
❑ Link variables & build on ideas
❑ Take notes
❑ Recess if needed
❑ Don’t reject a proposal instantly
❑ Don’t immediately make a counter-proposal
❑ Don’t use irritating phrases
ITC M7:U4:4.1-5
 The bargaining stage

❑ Try to attach conditions to concessions

❑ Give away variables which are worth more to them than to you
❑ Link variables
❑ Make numerous small concessions rather than a major one
❑ Don’t get caught by new issues
❑ Don’t make unplanned concessions
❑ Don’t lose sight of your objectives!!
The
agreement
stage
The art of asking questions

❑ Open questions
❑ Closed questions
❑ Probing questions
❑ Multiple questions
❑ Leading questions
❑ Reflective questions
❑ Hypothetical questions
The art of Active Listening

❑ Stop talking
❑ Concentrate on what they are saying
❑ Don’t interrupt or answer back
❑ Try to understand their underlying concern
❑ Don’t jump to conclusions

ITC M7:U4:4.2-3
Body language
What we say
How we say it
How we appear
Interpreting body language

Doubt Defensive
Hand over mouth
Arms crossed
Stroking beard or chin Palms hidden
Scratching head
Leaning away
Pen in mouth
Confidence Willingness
Hands behind head Leaning forward
Relaxed look Open palms, arms uncrossed
Hands joined by fingertips (to Nodding gestures
form a triangle) Increased eye contact
Interpreting body language
Nervousness
Swallowing frequently
Clearing throat
Fidgeting and perspiring Boredom
Not looking the other person in Stifled yawns
the eyes (except in cultures where
this is a sign of respect) Heavy eyes

Eye contact decreases

Leans back, moves away
Interpreting body language

Frustration
Clenching & unclenching of fists
Touching desk, table, chair, documents...
Tight mouth
Deception
Evasive eye contact
Body turned away
Changes in voice pitch and speed
Increase in body shifts
Negotiating with people from other countries:

❑ Generalising cultural patterns can be dangerous!

❑ Don’t expect a certain behaviour (you may be mistaken!)

❑ The same behaviour may mean different things in different

cultures

Your interpretation of people’s behaviour is automatic,

instantaneous and subconscious, so be careful !
Using foreign languages

❑ Speak slowly, clearly, pause & repeat

❑ Summarise & check understanding
❑ Use visuals, diagrams, samples…
❑ Don’t assume that they are fluent in your language
❑ Ask for/ encourage clarification
❑ Check key vocabulary in advance
❑ Translate key documents
Using interpreters
❑Words can be translated but cultural patterns can’t…

❑Opportunities for misunderstandings multiply so prepare well

❑Get an interpreter who has participated in similar negotiations

before

❑If possible, choose your own interpreter

❑Go over issues & terminology with the interpreter in advance

Negotiating by telephone
❑Make a note of the key issues to be discussed in advance
❑Have a pen & paper ready (and use it)
❑Make sure the person at the other end is free to discuss
❑Be aware of any time differences
❑Speak slowly & clearly
❑Don’t interrupt
❑Suggest an agenda for the discussion & follow it
❑Summarise at the end
❑Keep a written record
❑Follow up in writing (if appropriate)
Negotiation tactics

❑The building block technique ❑ Pause the negotiation

❑Silence ❑ Third party influence
❑Repeat, repeat... ❑Re-escalation of demand
❑Recess ❑“One more thing”
❑Divide & rule ❑Deadlines
❑Empathy ❑Slicing
Your negotiation team

Who should be there?

Decide on roles:
Team leader
Specialised support
Summariser
Observer
 NEGOTIATION SKILL SETS

▪ Hard work and due diligence ▪ Alertness & mindfulness

▪ Planning and analytical ability ▪ Keen Observation skills
▪ Interpersonal & social skills ▪ Tactfulness
▪ Listening skills ▪ Convincing and
▪ Confidence manipulation ability
▪ Attitude ▪ Anticipation ability
▪ Assertiveness ▪ Asking Ability
▪ Problem solving skill
Reviewing your negotiation

❑ Were your objectives achieved? (why/why not?)

❑ Discuss the outcome with your supervisor, colleagues and

team-members...

❑ Identify “lessons learnt”

❑ Think of what went wrong … as what went particularly well

❑ Make notes and keep them for the next time

 … The single and most dangerous
word to be spoken in business is NO.
The second most dangerous word is YES.
It is possible to avoid saying either….
THANK YOU