Negotiation and It's Sub Processes

Presented By:
AKSHAY KUMAR (006)

MBA 13-15
A dialogue between two or more people or parties
intended to:

reach an understanding
resolve points of difference
to gain advantage for an individual or collective, or
to craft outcomes to satisfy various interests
NEGOTIATION
The study of this subject is called Negotiation Theory.

NEGOTIATION
Two or more parties (or interests)
A basis for communication
Interest by the parties in entering into
negotiations
Interest by the parties in achieving an
outcome
Interdependence
Power of the parties to commit
Decision-making ability
Let us never negotiate out of fear, But let us never fear to negotiate.
NEGOTIATION TYPES
DISTRIBUTIVE
(Positional Bargaining)
Involves arguing based on a position
Each party takes an extreme position
always on opposite ends of the spectrum
Pie analogy
Zero-sum game
One-time relationship
Competitive approach
Intensifies the conflicts further
INTEGRATIVE
(Principled Bargaining)
Parties collaborate to find a "win-win"
solution to their dispute
Final goal is a result that is as good as
possible for both parties
Win-win game
Continuing long-term relationship
Collaborative approach
Works as a conflict management tool

We cannot negotiate with people who say what's mine is mine and what's yours is negotiable.
E.g.: One apple and two boys
NEGOTIATION STYLES
Any negotiation has a limit. Otherwise, war is irrelevant.
NEGOTIATION STYLES
Negotiating means getting the best of your opponent.
AVOIDING
Pros:
Defers confrontational
negotiation.
Displays tact and diplomacy.

Cons:
Causes stalemates.
Prefers hard-nosed bargaining.

Strategy:
When not interested in
negotiating.
ACCOMODATING
Pros:
Derives satisfaction from solving
problems.
Good team builder.

Cons:
May make unwise concessions.
Little patience for other partys
needs.

Strategy:
When hostilities need to be
lessened.

COMPETING
Pros:
Views negotiation as a game to win.
Excellent instincts for claiming
value.

Cons:
Focus on issues that are easy to
define win-loss.
Believes in treating people fair and
avoiding needless conflict.

Strategy:
substantive interests are important
but not the relationship.
NEGOTIATION STYLES
In business, you don't get what you deserve, you get what you negotiate.
COLLABORATING
Pros:
Enjoys participating in joint problem solving
Instinctively tries to discover and satisfy the
real interests of the parties

Cons:
May transform a simple problem into a
complex one
No patience for the give and take that comes
with collaborative thinking

Strategy:
Used when relationship and the substantive
outcomes are important
COMPROMISING
Pros:
Eager to conclude negotiation on fair
standards
Best when stakes are small and time is short

Cons:
Can rush the process and agree to
unnecessary concessions
Refuses to compromise on principle

Strategy:
Used when stakes are small, time is short, or
in a weak bargaining position

Best Alternative To a Negotiated Agreement
Value or point at which you will choose no agreement over a settlement
Similar to the walk-away value or point
Always decide your BATNA before entering any negotiation!
ZOPA : Zone Of Possible Agreement
Dont bargain yourself down before you get to the table.
BATNA
(Buyer)
(Seller)
Buyer walkaway position
Seller walkaway position
NEGOTIATION PROCESS
A miser and a liar bargain quickly.
PREPARATIO
N
Always start with a clearly defined BATNA and stick to it
List all key issues
Set priorities
Develop support arguments (Facts, Information, Logic etc.)
EXCHANGE
Stick to ground rules ( 5Ws Who, What, When, Where, Why)
Initial offers
Posturing to state ones case may present conflicting views
BARGAINING
Two critical variables shape the negotiation: number of parties, number of issues
02 party and single issue = zero-sum
02 party and multiple issues = trades to achieve an efficient settlement
03 parties and single issue = auction process
03 parties and multiple issues = consensus by all on some or all issues
SETTLEMENT
Result is always either a settlement or an impasse
Reasons for Impasse
non-communication of interests
excessive emotional involvement
failure of one or both to realize the interests of the other party
Start out with an ideal and end up with a deal.
Consider both, your interests and the other party's interests
Brainstorm options for the agreement
Consider how you can add validity to these options
Think about the alternatives for both parties
Focus on keeping lines of communication open
Assess your relationship with the other party
Consider the commitments at stake.
NEGOTIATION PREPARATION STRATEGIES

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Presented By:

AKSHAY KUMAR (006)

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