Negotiation :Concept The word "negotiation" originated from the Latin expression,

"negotiatus", which means "to carry on business".

The process of conferring to arrive at an agreement between

different parties, each with their own interests and preferences. parties with different preferences.

A give-and-take decision-making process involving interdependent

It is a process by which the involved parties or group resolve

matters of dispute by holding discussions and coming to an agreement which can be mutually agreed by them . some product.

It also refers to coming to closing a business deal or bargaining on

Examples Everything is negotiated.

Family and personal Where should we go for dinner? Can I borrow the car? Academic research Fund my project. Publish my paper. Business ventures I want a raise. Invest in my company. Pay me a license fee or Ill sue you.3

Negotiation : Concept Negotiation is the process of two or more parties working together to arrive at a mutually acceptable resolution of one or more issues relating to the commercial transaction, a contract or a deal . According to J.L. Graham Negotiation is a face to face decision-making process between parties concerning an specific issues.

In the words of Walton

& McKenzie Negotiation is the deliberate interaction of two or more social units in an attempt to reach a jointly acceptable position on some conflicting issues. Steven Cohen defines the negotiation as a give and take bargaining process that when conducted well, leaves all the parties feeling good about the result and committed to achieving it.

Features of Negotiation: There must be minimum of two parties present. Both the parties have predetermined goals. Some of the predetermined goals are not shared by both the participants/parties. There is a expectation of an outcome. Both the parties believe in the outcome of the negotiation may be satisfactory. The parties understand the purpose of negotiation.

Both the parties are willing to modify their positions. Successful negotiation involves the management of tangibles (e.g. the price or the terms of agreement) and the resolution of intangibles (e.g. psychological motivation in terms of need to win , beat the other party, avoid losing to other party.)

Assumptions in negotiation: Negotiation is a process of give and take. It has no space for coercion and threat . It is based on free will of the parties. In negotiation proposals and counter proposals should be reasonable. In negotiation, parties having belief that other individual /group can be persuaded. Hierarchically equal status of the parties during negotiation. There is a desire for fairness in the process of negotiation. Beneficial for resolving differences.

Why do we NEGOTIATE ? To reach an agreement To beat the opposition To compromise To settle an argument To make a point .i.e. benefit

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Basic Elements of Successful Negotiation:

Positive Attitude Knowledge of the Negotiation process An understanding of people A grasp of your subject Creativity: settle on a solution before you negotiate Communication skills

NEED AND IMPORTANCE OF NEGOTIATION DYNAMIC NATURE OF BUSINESS: The dynamic ,changing nature of the business means people must negotiate and renegotiate their existence throughout the duration of their career. The advent of decentralised business structure and absence of hierarchical decisionmaking provide opportunities for managers. People must continuously create possibilities and integrate their interest with others. INTERDEPENDANCE : The increasing interdependence of people within the organization, both laterally and hierarchically , implies that people need to know how to integrate their interests and work together across business units and functional areas.

Competition: Business is increasingly competitive. The

company must be expert in competitive environment. Managers must recognise the competition between companies and some cases between the units within a company . Understanding how to navigate this competitive environment . Information Age: The information age provides opportunities and challenges for the manager negotiators. Globalization : Managers need to develop negotiation skills that can be employed with peoples of different nationalities , backgrounds and styles of communication.

PRAM MODEL(WIN-WIN MODEL): Ross and Long(1988) have developed the PRAM Model to put win-win approach into practice. The model guides the negotiators through the four steps: Planning the Agreement Building Relationship Reaching Agreement Maintaining RelationshipPlanning : It Requires that party to conflict , set its own goals, anticipate the goals of others, and determine the areas of probable agreement. Relationship : Developing a win-win relationship requires that negotiators plan activities that allow positive personal relationship and mutual trusts.

Agreement: Forming win-win agreement requires that each party should confirm that other partys goals, verify areas of agreement, its purpose and consider positive solutions to reconcile areas of disagreement. Maintenance : Finally win-win maintenance entails providing meaningful feedback based on performance keeping in touch and reaffirming trust between parties.PLANS P WinWin RELATIONSHIP R

MAINTENANCE M

A AGREEMENT

DISTRIBUTIVE BARGAINING: The distributive bargaining (Distributive Negotiation) is one in which each of the parties tries to grab maximum benefits and impose maximum losses to the other. This is come to be known as win-lose situation. It is also known as Zero Sum which means that one partys gain counter balances the other partys loss. Such a negotiation is based on contentious and outcome is unstable. Stephen Covey says In leadership style win-lose is the authoritarian approach. Win-lose people are to use position power, credential possessions or personality to their way.

The win-lose people have usual characteristics: I want it all Ultimatum/use threats Time wrap Rigidity Fundamental Strategies of Distributive Bargaining: The prime objective of the distributive bargaining is to maximize the value of the current deal. The distributive bargaining contains strategies: To push for a settlement close to the resistance point through making extreme offers and small concessions.

To convince the other party to change its resistance by influencing the partys beliefs about the value of the deal i.e. overpriced. If a negative settlement range exists, to convince the other party to reduce its own resistance point i.e. persuade through accepting a lower benefit so that other party decide he has to pay more than he wanted to. To convince the other party that this settlement is the best that is possible i.e. the best possible deal.

TACTICS OF DISTRIBUTIVE BARGAINING: Within the fundamental strategies of distributive bargaining there are four important tactical tasks concerned with targets , resistance points, and cost of terminating negotiations for a negotiator in a distributive bargaining situation to consider: Assess the other partys target, resistance point and cost of terminating negotiation Manage the other partys impression of the negotiators target, resistance and cost of terminating negotiation Modify the other partys perception of his or her own target, resistance and cost of terminating negotiation Manipulate the actual costs of delaying or terminating negotiation.

Assess the other partys target, resistance point and cost of terminating negotiation : Indirect Assessment: Indirect assessment means determining what information an individual likely used to set target and resistance points and how he or she interpreted this information. For example, in lobour negotiation, management may infer whether or not a union is willing to strike by how hard the union bargains or by the size of its strike fund . The union decides whether or not the company can afford a strike based on the size of inventories, market conditions for the companys product. An automobile buyer might view the number of cars in the inventory on the dealers lot, refer to newspaper articles about automobiles sales, read about a particular cars popularity in consumer buying guides. A variety of information sources can be used to access the other partys resistance point. One can make observations, consult readily available documents and publications, and speak to knowledgeable expert. Direct Assessment : Direct assessment indicates that the a party revealing the information believes that the proposed agreement is within the settlement range and that other party will accept the offered information as true rather than see it as a bargaining ploy. An industrial salesmen may

tell the purchaser about the product quality and service, alternative customers who wants to buy the product , and the time required to manufacture special orders. Most of the time , however, the other party is not so forthcoming and the methods of getting the direct information are more complex. For example, In lobour negotiations, companies have been known to recruit informers and unions have had their members collect papers from executives waste baskets. Additional approaches includes provoking the other party into an angry outburst or putting other party under pressure designed to cause him or her to make a slip and reveal valuable information.

Manage the other partys impression of the negotiators target, resistance and cost of terminating negotiation: Screening Activities : The simplest way to screen a position is to say and do as little as possible . Silence is golden when answering questions; words should be invested in asking the other negotiators questions instead. Reticent reduces the likelihood of making verbal slips or presenting any clues that the other party could use to draw conclusions. A look of disappointment or boredom, fidgeting and restlessness, or probing with interest all can give clues about the importance of the points under discussion. Concealment is the most general screening activity.

Direct Action to Alter Impression: Negotiator can take many actions to present facts that will directly enhance their position or make it appear stronger to the other party. One of the most obvious method is sellective presentation, in which negotiator reveal only the facts necessary to support their case or position. Another approach is to explain or interpret known facts to present a logical argument that shows the costs or risks to oneself if the other partys proposals are implemented. Negotiators should justify their positions and desired outcomes in order to influence the other partys impressions. Negotiators can use industry standards, benchmarks, appeals to fairness, and arguments for the good of the company to draw a compelling picture for the other party to agree to what they want. Modify the other partys perception of his or her own target, resistance and cost of terminating negotiation: A negotiator can alter the other partys impressions of his or her own objectives by making outcomes appear less attractive or by making the cost of obtaining them appear higher. The negotiator may also try to make demands and positions appear more attractive or less unattractive to the other party . There are several approaches

to modifying the other partys perceptions. The common approach is to interpret for the other party what the outcomes of his or her proposal will really be. A negotiator can explain logically how an undesirable outcome would result if the other really did get what he or she requested. This may mean highlighting something that has been overlooked. Manipulate the actual costs of delaying or terminating negotiation: There are three ways to manipulate the costs of delay in negotiation: Plan Disruptive Action: One way to encourage settlement is to increase the costs of not reaching a negotiated agreement. For instance, people dissatisfied with automobiles they purchase from a certain dealer had their cars painted with large, bright yellow lemons and signs bearing the dealers name , then drove them around town in an effort to embarrass the dealer in to making a settlement . Public picketing of a business, boycotting a product or company, and locking negotiators in a room until they reach an agreement. Alliance with Outsiders: Another way to increase the costs of delay or terminating negotiations is to involve other parties in the process who can somehow influence the outcome. These parties may include business or

government agencies, political action groups and protest organizations to bring greater collective pressure on the target party. Scheduling Manipulation: The negotiation scheduling process can often put one party at a considerable disadvantage . Business people going overseas to negotiate with customers or suppliers often find that negotiations are scheduled to begin immediately after their arrival, when they still suffering from fatigue of travel and jet lag. Alternatively , a host party can use delay tactics to squeeze negotiation into he last remaining minutes of a session in order to extract concessions from the visiting party(Cohen, 1980)

INTEGRATIVE NEGOTIATION: The integrative negotiation is one in whichparties on the both sides feel that they are gaining what they are expected . They are happily, reconciled, empathetic, open, receptive and satisfied. Such a situation widely come to be known as Win-Win Situation. Stephen Covey says Win-Win negotiation is based on the paradigm that there is plenty for everybody, that one persons success is not achieved at the expense or exclusion of the success of others. This is also called Principled Negotiation or Negotiation on the merits. The main principles of integrative negotiation are: Separate the people from the problem i.e. It should be issue or problem based not the people based.

Focus of interests not the position of the people. Invent option for the mutual gain. Insist on using objective criteria. Characteristics of Integrative Negotiation: The integrative negotiation contains the following characteristics: Joint problem solving Mutual problem identification Working out solutions Mutually acceptable solutions Mutual collaboration Integrative Negotiation Process: There are four major steps in the integrative negotiation process s follow: Identification and definition of problem : Define the problem in a way that is mutually acceptable to both sides. Understanding the problem: State the problem with an eye towards practicality and comprehensiveness State the problem as a goal and identify the obstacles to attaining the goal De-personalize the problem Bring interests and needs to the surface separate the problem definition and from the search for solutions

Generate the alternatives solutions to the problem: The search for alternatives is the creative phase of integrative negotiation. Once the parties have agreed o the a common definition of the problem and understood each others interests ,they need to generate a variety of alternative solutions. It contains: Inventing options: Generating alternatives solutions by redefining the problem set: Expand the pie Logroll Use non-specific compensation Cut the costs for compliance Find a bridge solution Brainstorming Evaluating and selecting the alternatives: Evaluate solutions on the basis of quality, standards, and acceptability. Be willing to personal preferences. Be alert to the influence of intangibles in selecting options. Use sub-groups to evaluate complex options.

STRATEGIES OF INTEGRATIVE NEGOTIATION: Building trust and share information: Negotiation who build a trusting relationship and share information greatly increase the probability that a win-win outcome will be reached(Bazerman & Neale). It is important to realize that the information that negotiators need to share is not information about their BATNA, but rather, information about their preferences and priorities across the negotiation. Ask diagnostic questions: A negotiator could ask the other party in a negotiation any number of questions. Provide information: It is a fallacy to believe that negotiators should never provide information to their opponent. Negotiation would not go anywhere if negotiators did not communicate their interests to the other party. The important question , is what information to reveal. Unbundle the issue: One reason why negotiations fails is because negotiators haggle over a single issue, such as price. Skilled negotiators are adept at expanding the set of negotiable issues. Adding issues, unbundling issues , and creating new issues can transform single-issue, fixed pie negotiation into an integrative, multi-issue negotiation with-win potential. Make package deals, not single issue offer: Single issue offers lure negotiators into compromise agreements. Negotiator should offer a bundle of benefits to the both parties.

Make multiple offers simultaneously: The strategy of multiple simultaneous offer can be effective even with the most uncooperative parties. Make the offers all at the same time: It means that the negotiators should open and discuss issue at one time . It issue should not be discussed in to the pieces or parts. Bridging: It refers to inventing new, mutually acceptable solutions by integrating individually held proposal. An example, husband and wife both getting one week holiday from their jobs where the husband is interested in spending his holidays in the mountain dose to nature, while wife is interested in the active social life, parties and beach to swim and relax. One alternative could be to spend half the week in one location and half week in the another location, it is just a compromise. Bridging would suggest to find a location (perhaps a resort) that has an element of both preferences. Expanding the pie: This refers to increasing resources because limited resources can and often affect result in a conflict situation. Example, enlarging the amount of financial assistance or duration of license. TACTICS OF INTEGRATIVE NEGOTIATION: Self Assessment: Goals BATNA Level of confidence

Assessment of the other Party Goals BATNA Reservation point Assessment of Situation Short-term/ Long-term/repetitive negotiation Negotiation as necessity/opportunity Negotiation an exchange/ dispute situation Related costs involved Place of negotiation Negotiation involve one or more offers Possibility of third party interaction/ involvement Go to the table loaded with information Do not complain and do not explain Avoid admissions and confessions Never attack the stronger party Never be dishonest and do not surrender Be strongly sincere Monitor the other partys behaviour Keep calm and balanced

Do not haggle over many small issues Use toll of argument

STRATEGTY AND PLANNING FOR NEGOTIATION:The dominant force in negotiation is in the planning that take place prior to the dialogue . Effective planning requires hard work on the following points: Defining the issues Assembling issues and defining the bargaining mix Defining interest Defining limits and alternatives Defining ones own objectives(targets) and opening bids(where to start) Analyzing the other party i.e. resources, interests , needs , resistance point and alternatives, reputation and negotiation style . Planning the issue presentation and defense Defining protocol i.e. where and when the negotiation will occur, who will be there , what the agenda will be.

Negotiation Strategies: Competitive : One party wants the entire cake Price to be paid for goods Win at any cost Characteristics: Making very high demand Making few concession (something which you allow) A reluctance to give any concession Giving little information Giving misleading information Demanding information Taking control from the start

Collaborative Strategy: Parties constructively explore their difference and search for solutions Holding on to a fixed idea of what you want and arguing for it, regardless of any underlying interest

Characteristics: Attempt to gain trust by giving information A willingness to give concession Avoidance of conflict Perception of self as honest and ethical

AVOIDING: To avoid any real progress Those involve will not really engage in negotiation It means postponing the negotiation Advantages: Can put the other side under pressure Forces the other side to take initiative Disadvantages: It is unethical Can give control to other side

Accommodating: Agreement to the other sides proposal to an extreme useless as a strategy in negotiation. Used by inexperienced negotiator following their own personality style

NEGOTIATION SUB PROCESS: PERCEPTION, COGNITION AND EMOTION Perception is the process by which individuals connect to their environment. The process of ascribing meaning to massages and events is strongly influenced by the perceivers current state of mind, role, and comprehension of earlier communications. Other parties perception about the another party and environment. It is the sense making process so that people interpret their environment to respond appropriately. Framing: A key issue in perception and negotiation is framing . Frame is the subjective mechanism through which people evaluate and make sense out of situations, leading them to