Negotiation Skills.mms Ppt

Selling and Negotiation Skills

Syllabus

• Types of Negotiation• Negotiation Strategies• Selling Skills – Selling to Customers• Selling to Superiors• Selling to peer groups , team mates &

subordinates• Conceptual Selling, Strategic selling• Selling Skills – Body Language

Reference Text

• Negotiations & Selling - by Sameer A. Kulkarni• Getting to Yes - by Roger Fisher & William Ury• Negotiations and Selling - by R.K.Srivastava• Negotiation - Harvard Business Essentials• Winning Negotiations - Harvard Business

School Press

Negotiations – What about it?

In business you don’t get the success you deserve …….You get the success you negotiate for.

What is Negotiation?

• Negotiation is the means by which people deal with their differences.

• It is often planned and a purposeful activity to arrive at an agreement.

• The Latin word Negotiatus – Meaning “To carry on Business”

• Negocios in Spanish means “Business”• Negotiari in Roman also means to “To carry on

Business” It is an important step in the Sales Process Negotiation (Harvard Business Essentials)•

Negotiation - Some Definitions

• “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 . It also refers to coming to closing a business deal or bargaining on some product.”

Negotiations & Selling by Sameer A.Kulkarni


• Negotiation is the process where interested parties resolve disputes , agree upon courses of action , bargain for individual or collective advantage, and /or attempt to craft outcomes which serve their mutual interests. Negotiation is usually regarded as a form of alternative dispute resolution.



• The trading of concessions , including price reductions between supplier and customer , in an attempt to shape a supply contract (sale in other words)so that it is acceptable to both supplier and customer.


Features of Negotiation

• At least two parties are involved• The parties agree that there is a conflict of

interest• The focus is on arriving at a mutual win-win

agreement –Negotiation is a conflict –solving process

• Negotiators must have the behavioral and analytical skills to succeed


When to Negotiate ?

• When two or more parties are doing business and would like to arrive at a solution with respect to price , service or quality

• When business risks involved cannot be accurately pre-determined

• When a long period of time is required to produce the items purchased

Marketing Management by Philip Kotler

Types of Negotiations

• Distributive Negotiation• Integrative Negotiation• Principled Negotiation

Negotiation & Selling by Sameer A.Kulkarni

Distributive Negotiation

• Known as competitive Negotiation• Win-Lose Negotiation• Zero-Sum Negotiation• Tug of war Negotiation

Features of Distributive Negotiation

• Chances are that the Negotiating parties are meeting for the first time

• The negotiation could be a one time activity – Purchase of a Car or house• Win at any cost – Mostly Price based- Win of

one party is reflected on the loss of the other party

• Long term relationship not a criteria

Success Principles in Distributive Negotiations

• Play your cards close to your chest – Share just enough and no more information

• Gather as much information from the opposite side as possible – information is power

• Express intent and not eagerness to purchase• Be realistic – don’t go over board on

negotiations and lose the deal Negotiation and Selling by R.K.Srivastava

Integrative Negotiation

• Known as collaborative negotiation• Important to understand each others

requirement• Co-operative approach to mutual problem

solving• Win-Win negotiation

Features of Integrative Negotiation

• Focus is on creating value and claiming it• Trade-offs are noticed to get what you value

most and let go less important factors• Negotiation extends much beyond price and

delivery date• Encourages long-term relationship• Results in increasing the pie and try and get a

good share of the pie

Success Principles in Integrative Negotiations

• Focus on getting something of value to you while letting go of something which has a lesser value

• Understand each others requirement and priority• The goal is not to hurt your counterpart but to

help them with little cost to your self and vice-versa

• Appreciate your counterpart’s problems and have a problem solving approach

• Try and build bridges rather than burning bridges Negotiation and Selling by R.K.Srivastava

Principled Negotiation

• Known as interest-based negotiation• More practical approach to negotiation• Based on a problem solving approach• Negotiation process focuses on fair needs and

not the desired wants

Negotiation & Selling by Sameer A.Kulkarni and Marketing Management by Philip Kotler

Features of Principled Negotiations

• Liberation of problem – Detach the people from the problem

• Objectivity – Focus on interest not on position• Determine alternate options – What if this does

not workout.• Objective evaluation criteria – Being well

informed will help . Collect as much information on the subject of negotiation to get the best deal. Negotiation & Selling by Sameer A.Kulkarni and Marketing Management by Philip Kotler

Concepts of Negotiation• Any successful negotiation must have a

fundamental framework based on knowing the following:

- The alternative to negotiation - The minimum threshold for a negotiated deal - How flexible a party is willing to be , and what

trade – offs it is willing to make - Value Creation through Trade Negotiation (Harvard Business Essentials)

4 Key Concepts of Negotiations

• BATNA (Best Alternative To a Negotiated Agreement)

• Reservation Price• ZOPA (Zone Of Possible Agreement)• Value Creation Through Trades

Know your BATNA

• The concept has been developed by Roger Fisher and William Ury

• It is one’s preferred course of action in the absence of a deal

• Knowing your BATNA means knowing what you will do if you fail to reach an agreement in the negotiation

• Know your BATNA before the Negotiation.

Know your BATNA

• If you don’t know your BATNA – you will not know if the deal makes sense or when to walk away from the negotiation table

• Not Knowing BATNA can result in opportunity loss- you may reject a good offer that is better than the alternatives you have

Improving your position in the negotiation table

• Improve your BATNA to improve your negotiating position

• Identify the other side’s BATNA• Weaken the other party’s BATNA

BATNA - Example

A consultant is negotiating with a potential client about a month –long assignment . It’s not clear what fee arrangement she’ll be able to negotiate , or even if she’ll reach an agreement, So before she meets with this potential client , she considers her best alternative to an acceptable agreement . In this case , the best alternative to a negotiated agreement - the consultant’s BATNA – is spending that month developing marketing studies for other clients – work that she calculates can be billed out at $15,000.

A King who knew his BATNA Long before the acronym BATNA was invented , savvy operators kept their best

alternatives in mind as they dealt with opponents . Consider France’s Louis XI ,one of the most crafty monarchs in fifteenth century Europe . When England’s Edward IV brought his army across the Channel to grab territory from his weaker rival , the French King decided to negotiate . Knowing that his BATNA was to fight a long and costly war , Louis calculated that it is was safer and cheaper to strike a deal with Edward . So he signed a peace treaty with the English in 1475,paying 50,000 crowns upfront and an annuity of 50,000 crowns for the rest of Edward’s life (which proved to be short).To seal the deal , Louis treated his royal counterpart and the English army to forty-eight hours of eating , drinking , and merry making .As an added token , he signed the Cardinal of Bourbon to be Edward’s “jolly companion” and to forgive his sins as he committed them.

As Edward and his army staggered back to their boats ending the Hundred Years War , Louis remarked:”I have chased the English out of France more easily than my father ever did ; he drove them out by force of arms while I have driven them out by force of meat pies and good wine.”Such is the power of negotiating when you know your BATNA.

Reservation Prices

• Also Known as the “walk away price”• Reservation price should be derived from your

BATNA• Don’t enter a negotiation without a clear

reservation price

Reservation Price - Example You are currently paying $20 per square foot for the

suburban office space . The location is satisfactory and you believe that the price is fair , but you wouldn’t mind paying more to be closer to your downtown customers . While preparing to negotiate with a commercial landlord for an office lease in a downtown highrise , you decided that you would not pay more than $30 per square foot . That’s your reservation price . If the landlord insists on more ,you can stay where you are at $20 per square foot(your BATNA).

At the end of a lengthy negotiation session , the landlord declares that he will not accept less than $35 per square foot – and he won’t budge . You graciously terminate the negotiation and walk away from the deal.

Zone of Possible Agreement (ZOPA)

• ZOPA is the area or range in which a deal that satisfies both parties can take place

• It is the set of agreement that potentially satisfy both parties

• Each Party’s reservation price determines one end of the ZOPA.

ZOPA - Example A buyer has set a reservation price of $2,75,000 for the purchase of

a commercial warehouse . “That’s as high as I’m willing to go,” she tells herself . Naturally , she would prefer paying less . Unknown to her , the seller has set a reservation price of $2,50,000.That is the least he’ll take for the property . The ZOPA, therefore , is the range between $2,50,000 and $2,75,000.The two parties might haggle a bit in reaching agreement , but an agreement in this range would satisfy each.

Buyer : What would you say to an offer of $2,55,000?I could agree to that.

Seller : Thanks , but I believe that the building is worth more and I can get more if I wait for a month.

Buyer : You may or you may not .I would be willing to pay $2,60,000 Seller : Pay $2,65,000 and it is yours Buyer : I agree to pay $2,65,000

Value Creation Through Trades

• The negotiating parties can improve their position by trading the values at their disposal – Getting what one wants in return for something it values much less

• Both parties often emerge as winners

Value Creation Through Trades- Examples

• For a supplier , an extended delivery period can be useful whilst the customer may need the delivery in a phased manner

• Warranty for the customer is valued very high whilst the supplier can it for a small incremental cost

• Work from home office two days each week can mean a lot to a working mother whilst it comes at no cost to the employer

Summing up Key Concepts• BATNA is the best alternative to a negotiated agreement . It is one’s

preferred option in the absence of a deal . Knowing your BATNA means knowing what to do if you fail to reach an agreement . Don’t enter a negotiation without knowing your BATNA.

• If your BATNA is weak , do what you can to improve it . A strong BATNA improves your negotiating position.

• Identify the other side’s BATNA . If it is strong , think of what you can do to weaken it.

• Reservation price is the price at which the rational negotiator will walk away . Don’t enter a negotiation without a clear reservation price.

• ZOPA is the zone of possible agreement . It is the area in which a deal will satisfy all parties . This area exists when the parties have different reservation prices . Home buyer willing to pay $2,75,000 and the seller is willing to part with the home at a minimum price of $2,50,000.

• Value Creation through trades is possible when a party has something he or she values less than does the other party and vice versa. By trading these values , the parties lose little but gain greatly.

Preparation for Negotiation

• Every important endeavor benefits from Preparation.

• People who know - what they want - what they are willing to settle for - what the other side is all about stand a better chance of negotiating a better

deal for themselves. Negotiation(Harvard Business Essentials)

Preparation for Negotiation

• What does preparation mean for the negotiator ?- Understanding one’s own position and interests

and also of the other party- The issues at stake and alternative solutions- Learning as much as possible about the concepts

such as BATNA , Reservation Price , ZOPA and Value creation through Trade

- Above all understanding the people with whom you will be dealing.

Preparation - Example• Laura , one of Phil’s best employees , requested a meeting to talk about

taking a six month leave of absence . She had expressed her interest in an extended leave several times in the past . Now she has made a formal request for a meeting . Phil agrees and they meet.

With all the things going on in the dept., Phil didn’t want to think about how his unit would get its work done without Laura . Hence , he didn’t think about her request .”May be she will change her mind or just forget about it” he thought . But she didn’t.

When they finally met Laura was completely prepared .She had considered the staffing issues and anticipated all the questions/concerns (including her substitute during team meetings)her boss would raise during the meeting and had her answers ready so that the work will not get affected during her absence.

Phil on the other hand was not prepared at all . He wanted to suggest an alternative but couldn’t think of one . Finally Laura got her leave sanctioned in her terms since she was prepared and Phil was not .Had Phil been prepared , he would have found out a common ground to manage his unit’s goal and Laura’s leave request.

9 Steps To

Preparation in Negotiation

Step1:Consider What a Good Outcome would Be for You and the other Side

Never enter into a negotiation without first asking yourself the following:

- What would be a good outcome for me ?- What are my needs ?- How do I prioritize them ?Then ask the same questions from the perspective of the other

side. In the example shared earlier – Phil should have thought about

his priorities as well as Laura’s priorities to reach a win-win situation.

Eg: Negotiate for a shorter leave Schedule the leave for the slow part of the year Ideally Phil should have put himself in Laura’s shoes(to

understand what are Laura’s needs and priorities and what should be a good outcome for Laura)to prepare for the negotiation

Step 2:Identify Potential value creation opportunities

• Once you understand what a good outcome is from your’s as well as from the otherside you can identify the following:

- Areas of common ground, - Compromise - Opportunities of favorable trade-offsEg. Understand that Laura’s key issue as one of balance between work and family life. Hence reduce Laura’s working hours Opportunity for tele-work from a home office

Step 3:Identify your BATNA and Reservation Price and Do the Same for the Other Side

• BATNA and Reservation Price are important elements of preparations

Eg. What is Phil’s BATNA ? We don’t have enough details about his BATNA . Perhaps he has not thought of his BATNA . This could result in Phil dealing with an unhappy employee or look for Laura’s replacement if she resigns incase Phil declines her leave.

Similarly Laura’s BATNA is also unknown and perhaps limited .She may do well to negotiate rather than push for her leave and undermine her position in the company .Her BATNA could be to look for another job during her six months leave if she takes the leave.

Step 4 : Shore Up your BATNA

• Any thing you do to improve your best alternative to a negotiated agreement will put you in a stronger position and speaks of being well prepared.

Eg. Phil could have improved his BATNA in the preparation stage if he had identified another employee to step into Laura’s shoes . Laura’s strong point of being indispensable would lose it’s power.

Step 5:Anticipate the Authority Issue

• Make sure you are negotiating with the MAN ie. the decision maker.

This will help you in the following manner:- All your reasoning is heard directly by the decision maker.- The benefits of good relationship built at the bargaining table

are likely to be reflected in the deal and its implementation- The chances of disputes/misunderstanding/

misrepresentation is minimized So , do whatever you can, to identify the real decision maker and

ensure that he is there during the negotiation.It is also important to know if the decision making is to be done

by an individual , a team or a committee . Understand the decision making process.

Step 5:Anticipate the Authority Issue (cont’d)

• What if you are not negotiating with the decision maker?- The discussions may lead to exchange of

information/interests that can help explore creative options.

- Take care to confirm the ground rule that we are not getting into any commitment.

- When negotiating prices keep some margin to reduce while discussing with the authority.

- However , if the prices are non-negotiable then convey the message that the prices or terms and conditions are final.

Finally it is always good to know the authority level of the person you are negotiating and know your authority level as well.

Step 6:Learn All You Can About the Other side’s People and Culture , Their Goals and How They’ve Framed the Issue

• Negotiation is an interpersonal activity.• Seasoned negotiators understand this and try to

learn as much as possible about the people they have to deal with.(about the people from various sources , their experience in negotiations, Aggressiveness , Conflict – avoiding or not, bureaucratic or entrepreneurial , have the authority or not and how important is this negotiation for their business).

Step 7:Prepare for Flexibility in the Process- Don’t Lock Yourself into a Rigid Sequence

• Negotiations don’t always follow a predictable, the path or sequence.

• Parties must be prepared to move forward without a clear road map.

• Parties must also exercise patienceHence,- Start with the assumption that the process will not unfold in a

predictable fashion- Be prepared for changes on both sides – new people and

unanticipated developments- Treat every change as an opportunity for learning- Flexibility is important. However, be flexible within the context of

your larger goal . Be focused on the business that has to be acquired and don’t let the delays and bumps in the road to make you lose sight of your goal.

Step 8:Gather External Standards and Criteria Relevant to Fairness

• Both the negotiating parties would like to believe that the deal reached is fair and reasonable.(neither party likes to believe that they have been forced to make a bad deal).

External or “Objective” criteria can be used to establish what is fair and reasonable.

Eg. I have spent some time researching the commission structures used by commercial real estate agencies in the metropolitan area . As you can see , for properties listed between $1 million and $3 million , the commission rates range between 3 to 5 percent , with an average of 4.4%.Thus we believe that our offer to pay you 4.5% commission is fair and reasonable.

It is important to identify the relevant criteria for fairness and reasonableness . If the other side is convinced then they will often be happy with the outcome of he negotiation.

Hence , it is good to be well informed about the standards in the market place for similar situations.

Step 9:Alter the Process in Your Favour

• It is always important to track the negotiation process from the beginning to the end so that:

You have a say in the agenda , the pre-negotiation ground work, the sequence , the participants, the location and even sometimes the shape of the negotiation table.

Besides , it is important to educate others in a negotiation where there a several participants.

Be prepared to learn as negotiation unfolds.

Preparation – Summing up• Know what a good outcome would be from your point of view and that of

the other side• Look for opportunities to create value in the deal• Know your BATNA and reservation price .Make an effort to estimate those

benchmarks for the other sides• If your BATNA isn’t strong ,find ways to improve it• Find out if the person or team you are dealing with has the authority to

make a deal • Know those with whom you are dealing . Learn as much as you can about

the people and the culture on the other side and how they have framed the issue

• If a future relationship with the other side matters , gather the external standards and criteria that will show your offer to be fair and reasonable

• Don’t expect things to follow a linear path to a conclusion . Be prepared for bumps in the road and periodic delays

• Alter the agenda and process moves in your favour

The Process of Negotiation

• Negotiation is a process and not an event• It is a multi-faceted business transaction

Negotiation & Selling by Sameer A Kulkarni

The Process of Negotiation

• The process consists of various activities under the following five broad stages:

- Pre- negotiation Stage- Conceptualization- Setting the norms- Discussion / Talks- Agreement

Pre-Negotiation Stage• This stage is also called Intelligence/ Information

gathering stage.• Planning is the main focus area at this stage . It is a

critical tool . It is expected to define the broad framework for carrying out the negotiation.

• Planning with the end in mind will help you make a comprehensive plan

• Most often a comprehensive plan will help you in effective problem solving and thereby achieve the desired objective .

• Good planning for negotiation can lead to better confidence in the negotiation table

Pre-Negotiation Stage

Five steps to help in planning for negotiation: - Prioritize and rank the goals - Look into the priorities of other party - Find out real motivation - Plan factual inquiries - Quantification of the objectives

Prioritize and rank the goals• Decide upon the goals for the negotiation session to make it

more result oriented• What interests are to be taken for the discussion . Eg .

Monetary , long term relationship.• These interests need to be understood by all team members.• Once the goals are identified , each party should priorities

them.• Thereafter the points can be discussed in that sequence or in

order of priority . The hard areas can be discussed first followed by the soft areas or vice - versa.

• It should be kept in mind that negotiation is a process and each party should focus on trading the less important items for secure the more important items.

Look into the priorities of other party

• It is always beneficial to know the priority of the other party.(values , needs , issues)

• Your strategy will depend on the priority of the other party

• You strength on the negotiation table will be enhanced

Find out real motivation

• It is important to tactfully find out the motivation/ position of the negotiating party before the negotiation process starts

• Every negotiator’s way to determine this may be different

Plan factual inquiries

• In any negotiation it is important to get important information at the pre-negotiation stage

• Good negotiators spend a lot of time in asking information seeking questions , staying curious and alert to uncover the other side’s views of the situation , facts , interests and priorities

• The above exercise needs to be conducted skillfully so that it does not look too obvious and ruin your chances to get important information

Quantification of the objectives

• All the objectives should be linked to a monetary perspective/quantified

• Linking the objectives to a monetary aspect or units is required to make it more understandable and enhance the possibility of getting good counter offers

• Quantification and principled reasoning facilitates the cordial tone of negotiation and helps in arriving at a fair solution

Conceptualization stage• After planning it is important to formulate the probable

foundation of the agreement• Points to be considered here are – competitive analysis and

legal aspects to facilitate basic amicable principles• Both parties broadly exchange information in a formal

manner with regard to views , aims , possible estimations , basic calculations . The size of the team , time,venue are also decided at this stage

• At this stage the negotiating parties may establish some measures of compatibility amicably

• A broad agenda is worked out at this stage Proper conceptualization results in systematic and effective bypass of “negotiation traps”

Setting the Norms

• The next stage is “ setting the Norms”- stage 3• Here both the parties should define the norms

based on monetary aspects.• Setting the norms in itself often becomes a

point of negotiation

Discussion/Talks• Negotiation is a process of dialogue• There should not be any change in the pre-decided

matters like team members , size of the team and the broad framework.

• It is advisable to have a patient approach , recognise the role of the other person

• The discussion should be carried out in a decent/dignified manner.

• It should be issue based with out hurting personal sentiments

• No personal defend / attack should be encouraged• Clubbing of issues should be avoided

Agreement

• This is a post negotiations step where the formal drafting of agreed terms and conditions are done

• This should be done as agreed in the conceptualization stage under the legal aspects

• This agreement will also include the guideline for resolution of any disputes arising in future

• Some negotiations end with the issuance of a purchase order . The purchase order must include all the monetary aspect as well as the timelines , non-per performance clause etc.

Tasks involved in the negotiation steps• Negotiation comprises of various tasks• Negotiation is a process of communication aimed at resolving

any sort of problem• The success of negotiation is based on the following

outcomes: - It should produce an agreement - It should be efficient (ensure desired outcome) - It should improve or at least not damage the relationship of the parties • It is recommended that one should enter any negotiation

with a co-operative approach rather than a competitive approach

• That there is no set standard process for being successful in negotiations

• There are only guidelines which can be followed

Guidelines that can be followed

• Selecting the team members - The size of the negotiation team needs to be

kept small to ensure it is more manageable, easy to communicate,and less costly

- The team should have a leader alongwith experts in the relevant areas(Technical, prices analysis).There could also be a lead negotiator

Identify the key objectives and issues of negotiation

• An issue can be any matter with a potential to create disagreement in the negotiation

• The disagreement may be due to different information sources used by the parties regarding functional areas such as Audit reports , technical analysis , MIS reports etc.

• While preparing for the objectives , one must ensure that there should be enough technical support in terms of facts and market knowledge for each objective followed during negotiation

• In competitive negotiation , the evaluation of the best price must be based upon various criteria and conditions , like level of production , demand expected etc.

• In non-competitive negotiation,the negotiated best value must adhere to the set government norms in all aspects.It should be in line with the government’s social targets ,because a negotiated deal cannot offer or transfer any right superceding the established law.

Identify the negotiators’ possible approach to the negotiation

• It is better to understand the rigid framework of the constraints . This provides the broad way for proceeding the negotiations.

Assessment of strengths and weaknesses

• Assessment of the strength and weakness of the other party will ultimately motivate to arrive at win-win conclusion.

• There are some resources which are common for all the involved parties to it , like :time available to negotiate , importance of the contract and risk involved in it.

Establishing the negotiation priorities and potential trade-offs or concessions

• Important points can be categorized into groups like,avoidable points(issues to avoid during negotiations) bargaining points (issues open to bargain),give points (issues open for concession)and must points (non-negotiable issues)

• Trade-offs in both cases of negotiations are helpful in competitive negotiation . The trade off position can be used for evaluating the final proposal offered. In case of non-competitive negotiation,this can be used for developing counter offers for establishing the tolerance limit for negotiations

• A reasonable trade-off is possible by answering the following questions:

- What is a reasonable and acceptable result on the basis of the shared information? - What is the reasonable and expected outcome on this issue? - What may be the least desirable result acceptable?

Determine an overall negotiation strategy

• The tactics and its sequences should be pre-decided.

• You may start from less important and move towards the most important issues of the discussion , or

• You may start from the most important and move towards the less important issues of the negotiation.

Following any of the above approach is called the building blocks approach.

Prepare a negotiation plan

• The detailed plan of negotiation should be discussed with all the team members so that the team is on the same wave length and they can contribute effectively.

• The plan will bring in clarity of the role expected out of every team member

• The team can even plan who steps in when during the negotiation process

Brief your management about the plan

• The briefing may be formally through a presentation or through informal discussion and inputs taken

• The strategy must be executed with prior approval of the management

Prepare a negotiation agenda

• A negotiation agenda should include: - Topics to be addressed alongwith the order

in which they will be discussed. - A general time schedule for negotiating each

of the point. - Locations of the negotiation schedule - Names and titles of the team members ,with

their cell numbers and e-mail ids

Points to be considered for effective negotiation • Assess the party with whom you are negotiating• Evaluate the situation and assess the possibility of the parties achieving their goals• Evaluate the relationship with the negotiating party . Look at past interactions/

negotiations • Look at tangible and intangible takeaways out of this negotiation• Consider what you definitely want and what you can trade off• Assess the best you can derive out of this negotiation• Assess what you definitely have to achieve out of this negotiation• Be prepared as to how you will handle the issues that will come up during the

negotiation• Prioritize issues• Be prepared with all the data/MIS reports and other important and relevant

information before start of the negotiation• Assess the negotiating party’s strength and weakness and approach to negotiation• Assess your strength and weakness and what will be your approach to negotiation• Prepare the agenda• Based on the above what should be my strategy• If the negotiation fails what is my alternative

Is Negotiation Necessary ?• The process of Negotiation can be a lengthy and cumbersome

process.• Hence, it is always a good idea to assess if it is required.• Assessment may help the parties save time and avoid

unnecessary compromise.• Negotiation request by a party which has no standing in the

matter can and should be avoided.• If no result is expected out of a negotiation , it is best avoided.

(Party having complete authority to take a decision).• If the other party has a good case , it is better to concede

rather than push for a negotiation. • When it is known that a negotiation will not help ,it is better

to go for third party intervention. • Hence , do not negotiate unless you have to or unless you can

obtain some direct or indirect advantage by doing so. Negotiation and Selling by R.K.Srivastava

Seven Pillars of Negotiations

• Relationship• Interests• BATNA• Creativity• Fairness• Commitment• Communication

Negotiation and Selling by R.K.Srivastava

Relationship• In most negotiations relationship is an integral

part.eg.Colleagues,clients,suppliers,purchases• Like in personal life , the same is the case in business – the

wisest approach is to treat each event as an ongoing building block of a long-term relationship.

• Business to Business relationship – results in improved business numbers , builds reputation of the company , increases possibility of repeat business and better price deals and delivery as per requirement . Leads to friendship and positive relationship.

• Sellers and Purchase relationship – Makes business easy to do since the seller is expected to be hard skinned and the purchaser is expected to be hard nosed . Good relationship makes things easy.

• Same goes for relationships with colleagues and family members.

Interests

• Take care to look after your interests and those of your counterpart.

• By demonstrating sensitivity to your counterpart you may be able to influence business decisions more easily and to your advantage.

• Your counterpart will appreciate you for being fair and understandable.

• This also helps in building good relationship within the organization and society.

BATNA

• BATNA is another successful tool in handling negotiation.

• It gives strength and options in the negotiation process.

• It is important to keep track of the dynamics of BATNA and continue to focus on your objectives based on your BATNA as well as that of your counterpart’s BATNA.

Creativity• A creative approach can always help both the

negotiating parties.• Asking specific and direct questions can help you to

learn about the interests and logic behind a certain position taken by the other party . This will help you to devise new and more beneficial proposals.

• Some possible questions are: - What makes you deal with our company? - Are there things I do not know about this that I need

to know? - What is it that you like or dislike about my proposal?

Fairness• Fairness is always a very effective strategy. Follow the

old saying “ Do unto others as you wish them to do to you”(Though there is no absolute universally accepted norm for fairness).

• What is important is that your counterpart needs to perceive fairness on your part.

• Fairness not perceived positively can jeopardize a negotiation and thereby the objective will not be achieved.

• Fairness if used effectively will have a positive impact to the party’s reputation.

Commitment• Commitment towards the sincerity of the process of

negotiation is very crucial.• Staying committed to the process of negotiation is a major

confidence building measure between the negotiating parties.• Do reality checks on the sincerity of the negotiators during

the process of negotiations.• Keep options to take care of failures in the commitment

process as follows: - Get prepared for the worst case scenario. - Build in penalty clause to safeguard your interest - Set monitoring groups with specific responsibility - Make provisions for an arbitrator in case of any disputs

Communication

• Communication facilitates exchange of information.

• It also brings transparency which builds trust.• Effective communication reduces the surprise

elements in negotiation and the agreement prepared post negotiation.

• Clear communication also sets clear expectations from either side.

Negotiation Strategies

Negotiation has been a subject of study for a decades in management studies.

While discussing Negotiation as a subject it is important to distinguish between negotiation protocol and negotiation strategy.

Negotiations and Selling by R.K.Srivastava

Negotiation Protocol

• It determines the flow of messages between the negotiating parties.

• It dictates who can say what , when and acts as a guideline which the negotiating parties must abide by.

• The protocol is necessarily public and open.


Negotiation Strategy• Negotiation Strategy on the other hand is the way the

negotiating party acts within those rules in an effort to get the best outcome of the negotiation.

• It deals with ‘when’ and ‘what’ to concede• When to hold firm• The strategy of the parties is always private /

confidential • Hence a negotiation strategy is a pre-determined

approach or plan of action to achieve a specific goal or objective and make an agreement or contract with another party.


Negotiation Strategies

• Strategy articulates the negotiators overall plan designed to achieve desired goals.

• Getting substantial gain out of the deal is a primary goal of the negotiating parties.

• There are three negotiation strategies suited for obtaining a beneficial position in a negotiation.


Three Negotiation Strategies

• Soft• Hard• Balanced negotiations

Soft Strategy

• This strategy is used when the relationship of the parties is friendly

• The emotional relationship dominates over the business relationship

• Concessions are made in this negotiation• Often there is clear communication of all aspects

of business(total transparency) • The focus is on arriving at an agreement• This strategy also helps build trust on each other

Hard Strategy• In this strategy , negotiation is conducted entirely based on

rules• There is no scope for emotions or relationship in the Hard

Strategy• All facts are exchanged in a clear manner• In this strategy the parties push for their points of view and

try to win• Trustworthiness is not a compelling element in this practice• Winning at any cost is the driving force in this strategy• Can lead to distrust at times (an acceptable norm in this

strategy)

Balanced Negotiation

• Also called collaborative negotiation• As discussed earlier being collaborative does

not mean weak or giving in• A collaborative approach often leads to the

best possible solution• Collaborative approach is a long term

relationship-oriented method• It is a balanced approach , unlike the first two

approaches(Soft and Hard)

Balanced Negotiation

• Information and other relevant details are shared under a situation of trust with an objective to arrive at a solution

• A significant amount of trust and maturity is expected to be demonstrated in this approach

Summary of the three Negotiation StrategiesCharacteristic Soft Strategy Hard Strategy Balanced Strategy

Participants Are Friends Are adversaries Are problem solvers

Goal Is agreement Is victory Is an amicable solution

Role of Concession Concessions are made Concessions are demanded Based on a problem solving mode

Focus Is on relationship Non-emotional Soft on relationship and hard on issues

Atmosphere Trust others Distrust others Objectivity is maintained

Flexibility Easy to change your position Disturb others position Interest is rigid , position is flexible

Tactics Make offers Make threats to walkout Explore Interests

Target Acceptable solution is detected Solution is enforced irrespective of

Multiple choices are generated with freedom to choose

Aim To have an agreement To find a solution Insist for an objective criteria

Result Yields pressure Applies pressure Yields on principle and not on pressure

Deciding a Suitable Strategy• Deciding on a strategy for negotiation is important.• It will guide the negotiator in developing a purposeful behavior.• Possible factors which influence the selection of a specific strategy :

Goals-The selection will be guided mainly by the objectives or goals expected to derive a consent upon in the negotiation process.There may be multiple goals.

Authorities -The selection of strategy largely depends on the levels of authority conferred to the representative participating in the interaction.

Personality Profile - The context of exhibited values in the previous negotiations should be given a prime focus for designing a suitable strategy .It is observed that most negotiators seek to maintain a coherent personality profile all the time.

Counterparts – It is clear that a strategy appropriate for one type of counterpart may be

inappropriate for another and experience of past interactions will have a say on the strategy.

Alternatives - Knowledge of “Best Alternative to a Negotiated Agreement” or BATNA may guide in selecting the negotiation strategy

The Negative Tactics

Negative tactics can be divided into three categories:

- Deception - Coercion - Prevention

Deception

• Negotiators do adopt deception as a tactic occasionally.

• This is done to deceive the other party , and influencing their decision to favour the deceiving party.(Make the other party believe in something which is not right)

• Deception is seen as a business trick . However, if the truth unfolds it may reduce one’s say in the negotiation table.

Coercion

• It is a method of getting people to do something by force

• Coercion happens at all levels in the hierarchy• Subordinates are normally subjected to this

situation• It is often seen as direction and not compulsion

and hence subordinates are left with little choice in the decision making/ negotiation process but to obey the Senior Manager

Prevention

• This is the third way a party can block the other party in some way.

• Prevention may occur when a person acts as a gateway to other people or information.

• This is normally done by refusing to fully and honestly answer the questions(information seeking questions).

Negotiation Styles

Negotiation styles vary with difference in social background , culture , nationality and type of business.

There are three styles which are as follows: - Belief Oriented - Professional Style - Non-Professional Style

Belief Oriented Style

• Belief is the basic essential element of this style.• It is strongly recommended that once the

understanding among the negotiating parties is reached , they realize that belief is established through a set of behavior and the resistance between the negotiating parties is diluted / minimized resulting in an amicable solution

• Belief can be acquired in a phased manner.• A belief-based style is perfectly suitable and can

be executed with soft and balanced strategy.

Professional Style

• Professional Style is followed specifically in the international bidding negotiations.

• It covers a large span of application areas like Mergers & Acquisition where the negotiations are carried through a principle negotiating agent.(not necessarily an individual , can be an organization as well).

• This style is suitable for negotiations in the areas of Industrial Relations , International Bidding , Political , Selling and Buying of firms.

Non-Professional Style• Negotiation can happen within non-professional

contexts.• These negotiations are carried out in an absolutely

non-skilled level.• These negotiations are such because they happen in an

unplanned manner where the outcome is not defined.• This style is suitable for negotiations of the following

nature;• Domestic : Discussions and arguments at home• Everyday : Everybody , everyday• Hierarchical : Parent-Child , Boss – subordinate etc.

Spectrum of Negotiation Styles• Consideration of Self – Own interest most important . Your victory most important

and not that of the other party.• Consideration of Others – Your values will enforce consideration for others , which

are often based on your beliefs about people . In this style there are chances of you over estimating the importance of others, thereby prioritizing their well over your own.

- Excessive consideration for others leads in offering concessions where you secure the loser’s position.

- Over doing this(giving away too much) may even result in you losing important elements of the relationship.

- This can result in loss of respect. - Some people like being submissive – However , that is not the way to conduct a negotiation . Hence , stand up to your needs and be assertive .• A Middle Way – Between concession and competition lies balance. - A collaborative negotiation is often seen as a balance negotiation even with competitive elements. - Shared values are commonly used to protect the relationship and ensure fair

play.

Negotiation Skills

Basic skills required for Negotiation • Negotiation is a skill anyone can learn and practice• The necessary skills required for successful negotiation are: - The ability to define a range of objectives yet being flexible about

some of them - The ability to explore the possibilities of a wide range of options - The ability to be well prepared - The ability to listen to and question other parties - The ability to set priorities All of the above will help in building the ability to influence and

persuade . This is one of the most important management skills and is called the ability to negotiate

Negotiation and Selling by R.K.Srivastava

What Every Negotiator Needs

• Learning with regard to negotiation extends from the classroom to the outside world of work place .

• One learns everywhere all the time• One also gets better with practice of the

learning acquired

8 Points to become an Effective Negotiator• Know what’s going on-with regard to the organization’s goals and objectives• Prepare-Prepare-Being prepared is important. Have all the relevant information available• Learn-Probe-Learn – Learn from your counterpart regarding their needs and see the picture

from their point of view . This helps in evaluating their business proposal and preparing your business proposal

• See the BIG Picture - The negotiating process can be ever changing . Hence, the need to be flexible and ready to improvise . Have the main objective of negotiation in mind.

• Thick-skinned or staying cool – Be prepared to focus on issues and the objective of the negotiation . It is not about the parties negotiating . It is about the purpose of negotiation.

• Can break down the barriers – It is important to understand the barriers and the causes of these barriers . This will help in getting rid of the barriers and progress in the negotiation.

• Can find allies – This is often required in multi-party negotiations . We don’t always find ourselves operating from a position of strength . Hence , it is important to understand the strength of numbers and gather allies to enhance strength.

• Has a trusting reputation – Everyone with whom we negotiate forms an impression of who we are as a negotiator . It is important to have a positive image and not a negative perception. Integrity and trustworthiness are vital to our reputation.

Negotiation Quality

• Negotiation quality is defined as the degree of problem solving skill that people employ in reaching mutually satisfactory solutions.

• Negotiation quality includes the competence of the people and the proficiency of the communication systems individuals build for themselves.

• High quality negotiation avoids force , respects individuals , achieves mutually beneficial results.

• Low quality negotiation easily breaks down.

2 Hinges of Negotiation Quality

• One hinge represents the competence of those who actually conduct the negotiation.

• The other represents the atmosphere or style in which the negotiators negotiate . Here the negotiator is a product of the business system he represents and will reflect the popular assumptions of his compatriots.

What Make a Good Negotiator ?

• Negotiation is one of the most difficult tasks a person faces.

• It requires a number of qualities.• Negotiation requires good business judgment

and an understanding of human nature.

Qualities of a good negotiator• Stable person . One who does not have a need to be liked can be a

good negotiator.• Willingness to plan , know the product , the rules , the alternatives

and the ability to probe and gather information.• Good business judgment.• Be able to tolerate conflict and ambiguity.• Commit to high goals and take risks to achieve these goals.• Have patience.• Get involved on a personal and business level.• Have integrity.• Be willing to listen with an open mind.• Be able to see the hidden personal issues.• Be a good communicator

Qualities of a good negotiator• Good negotiators are realistic.• Understand and recognize that their

counterpart’s as well as their own evaluations may change during the negotiation.

• Good negotiators are flexible.• Must have willingness to win• Good negotiators do not make promises that

they cannot keep or negotiate in bad faith.• Good negotiators learn and understand their

counterparts’ values , motives , and objectives.

Negotiation Skills

• As you get involved in value-added projects you will need to sharpen your negotiation skills.

• The contracts and agreements you make for your organization will require serious negotiation.

• The stakes are high since the results will affect the viability of your business.

Let’s now look at some skill sets required for effective negotiations

Skills sets required for effective negotiations

• Communication Skills - One of the most important skills that is

required for being successful professionally. - Poor communication skills are often

identified as one of the causes for breakdown in the business development process.


• Conflict Management Skills - Conflict in business diverts attention away

from important business issues. - It also affects critical decisions relating to the

viability of the business. - Ability to understand conflict and manage

them skillfully is important for the success of not only negotiations but also for business at large.


• Creativity - We live in a world of change. - Creative solutions always help in negotiations - It also gives an edge to the negotiating parties


• Decision Making Skills - For being successful in negotiations , decision

making skills is an important requirement. - The outcome of any negotiation is highly

dependant on the decision making skills of the parties during negotiations.


• Entrepreneurship - Entrepreneurship is a skill that is at the heart

of successful business development. - It unleashes creativity and innovation in doing

business. - Entrepreneurship always addresses profitable

business outcomes.


• Ethics - Ethics is a major driving force in any

negotiation activity. - It reflects the value system of the

organization the parties represent.


• Interpersonal Skills - The negotiating parties are expected to have

very good interpersonal skills. - In today’s business scenario the person’s

emotional IQ – the ability to relate to people is as important as a person’s intelligence IQ

- This skill helps build relationship during business negotiations.


• Leadership Skills - Leadership skills is required to successfully

lead a team in negotiations. - This also helps in setting directions during

negotiations - The opposite party might dominate the

proceedings in case there is lack of leadership skills in one of the parties.


• Management Skills - Negotiations or any other business activity is

all about managing your resources and getting the best out of the available resources.

- Good Management skills will stand you in good stead to achieve the best in any negotiation table.


• Networking Skills - This is a very critical skill required not only in

negotiations but in business at large. - It is much more than a stack of business cards - It involves building contacts and relationships

and draw benefits from such contacts during negotiations and can extend beyond negotiations.


• Personnel Management Skills - This skill is required to get the best out of

negotiations from the employees. - If managed effectively it can address

productivity issues and at the same time increase the satisfaction levels of employees.


• Planning Skills - Very important skill which helps in focusing

your efforts on the activities required to accomplish the tasks that you have set out for during negotiations.

- This skill is the first step which sets the direction for negotiations or any other business activity.


• Presentation Skills - How people perceive you depends on how

you present your self. - Skills of presenting yourself , your ideas and

your business can be the key differentiators during negotiations.


• Selling Skills - Negotiations is all about selling your point of

view . Selling Skills is important to help people make a buying decision(eg. Products,ideas etc)

- A good sales person is often seen as a good negotiator.


• Stress Management Skills - Business and negotiations come with their

share of stress . The parties are expected to learn the art of stress management.

- It is seen that the people who mange well under stressful situations are often winners . It is no different in negotiation or business situations.


• Teamwork Skills - It is a skill that is defines success in business as

well as negotiations. - The relationship amongst team members and the

desire to focus on accomplishing their goals is the differentiator between a good team and a not so good team .

- A good team is often seen to have members with different skills sets complementing each other.


• Time Management Skills - In order to be successful in negotiations , it is

important to have time management skills . You desired out come must be achieved on time.

- Outcomes achieved after the timelines are sometimes of no use and hence a waste of time and resources.


• Writing Skills - Like communication skills writing skills is very

important. - Be it proposal , agreement or business plan –

they need to be written well . The out come of negotiations is highly dependant on the writing skills.

Negotiation Skills - Tips• Be willing to negotiate in the first place - Do not feel shy or hesitant to negotiate - In business you only get when you ask or

negotiate • Don’t get Emotionally involved - Don’t get emotionally attached to winning. Focus

on the issue - Keep calm , patient and be friendly - Leave behind your ego and pride before entering

the negotiations

Negotiation Skills - Tips

• Don’t get suckered by the ‘Rules’ Trick - Sign the contract only if all the terms and

conditions are acceptable to you - Make changes in the contract if you strongly

feel to do so after informing your counterpart - If the counter part insists that you sign the

contract as it is , seek to understand that as per rule you cannot change the contract.

- All contracts need to be mutually agreed upon

Negotiation skills - Tips

• Never be the First Person to Name a Figure - Always get your counterpart to say a number

to which you can respond. - Being the first person to name a figure , you

may under quote or grossly over quote . Both situations are not right . However , quoting reasonably higher than what you expect and keeping a margin for negotiation is a good idea.


• Let them Believe the Final Decision does not Rest with You

- Negotiate in a manner that gives your counter part that there is another level of authority for the final decision

- Try to get the best offer which you will carry for the authority to approve . Thereby you get time to evaluate and agree or negotiate further

- Always be the reluctant buyer or seller


• Don’t Leave the Other Person Feeling as If they have been Cheated

- Many people try to get every thing out of the negotiation at all costs.

- This sometimes leaves the other party feeling cheated and discourages future transactions.

- Most negotiations should leave both parties feeling that they have won.

Negotiation Skills - Tips• Solicit Other’s Perspective In a negotiating situation , use questions to find out what the other person’s concern’s and needs might be. 1. Don’t Argue – Negotiating is about finding solutions . Arguing is about trying to prove that the other

person is wrong . Argument leads to no progress . Difference of opinion can be communicated in a decent manner.

2. Consider Timing – There are good times to negotiate and bad time . Bad times include those situations where there is:

- A high degree of anger on either side - Pre-occupation with something else - A high level of stress - Tiredness on one side or the other If they arise during negotiations a time out/rest period is in order or perhaps rescheduling to a better time. 3. Listen before you speak – This is a very important skill in negotiation . You can communicate well if you

have listened well. Test understand after you have listened and then put forth your point . This makes it more effective in negotiations.

4. Smile when you say it – Smile , Courtesy , patience , empathy , and humor will serve to advance your ability to get the other side to co-operate and thereby the negotiation leads to the desired result.

5. Separate the person from the problem – Be easy on the other person but hard on the issue.Be firm in challenging the other side’s position but be cordial to the other party.


• Remember your BATNA Your Best Alternative to a Negotiated

Agreement is your legitimate walk away point in a negotiation . The deal has to be superior to your BATNA or it should be refused.


• How to get ‘Yes’ in Negotiation - Avoid Conflict - Be a good Listener - Learn to talk and understand the customer’s

language - Develop Empathy - Understand your limitation - Keep margin of safety - Know your customer

Documents

Negotiation Skills.mms Ppt