Project on Negotiation

“Negotiation is a form of decision making in which two or more parties talk with one another in an
effort to resolve their opposing interests”

Introduction

In my organization we got suggestions from employees’ to give food coupons to reduce their tax and
increase savings. We started hunting for companies providing Food Coupons.Many companies were
not up to the standards required by us as we were looking for easy access ,good reach in market.

Parties Involved

The company named Sodexo came to our rescue .The company was in business from Past 20 years
with huge network of handling 11,000 clients.

My organization was a Startup IT Firm which started in year 2008 and till then we have grown
manifolds with huge clientele and employee base of more than 1000.Our offices were in all major
cities .

Key Issue

We did not wanted any additional cost in providing services to the employees as our Last year’s
profit were not that good to manage this year additional burdens.We aimed at making a deal with
the Food coupon company who has a wider access and good network in the market with its easy
accessibility.Hence,our motive was to make efficient and effective utilization of Firm’s Profits with
no additional cost to be incurred on providing the benefits to employees . We started meetings with
companies offering services on the basis of cost, benefits and easy accessibility to employees.

Meeting Proceedings

We called up Sodexo Team to our Office to explain their features and over all product usage.In the
meeting the Company tried their level best to explain us about the great things which are unique to
the product .They tried to build up the trust by sharing all the information related to understand the
product.

The following details were highlighted by Sodexo team in the meeting :-

 They had one time charge of Card to be paid by company for issuing it to their
employees.Every time a new employee joins in; the cost has to be incurred by company. The
cost was 150 Rs.
 Each time a card is issued, a cost of 50Rs for courier would also be charged. In case of bulk
orders, the charge would remain slightly less.
 Every time, the company refills its account created in Sodexo website for recharging the
cards of employees monthly, they will charge a fee of 2% on the entire amount.

On the other hand, the management was not ready to bear this additional cost for employees .We
had to negotiate on the above mentioned pointers. We focussed to make the employees satisfied
and contented with the services .The worrying cause of concern was the unbearable cost the
management would have to bear to make Sodexo as a Food coupon solution to the organization. It
created a Conflict of Interests between us .Here both the parties became locked into positions
because of the rigid commitments .

For handling the effective conflict management we applied contending strategy to pursue our own
outcomes strongly and show little or less concern for the other party to obtain his/her desired
outcomes. We tried to maintain our own aspirations and asked the other party to yield.

Dual Concern Model

We tried to use the Dual Concern Model for making the choice of Negotiation Strategy .According to
this model a negotiator’s unilateral choice of strategy is reflected by answering two sets of
Questions.

1. How much concern does the Sodexo (company )have for achieving the substantive
outcomes at Stake in this negotiation?
 New Client,increased profits
 Long term relationship

2. How much concern does the negotiator(we) have for the current and future quality of the
relationship with the Sodexo Company?
 Reduction on taxes of employees
 Increased morale of employees
 Increase in Cost, Recurring in nature

The power of this model lies in requiring the negotiator to determine the relative importance and
priority of the desired settlement. In our scenario we were looking for long term relationship
maintenance with them, our focus was to get the best deal and win the negotiation by doing
integrative negotiation with them .Hence, we applied Collaborative Strategy to it.

The purpose of the negotiation was to create value by finding the solution in which both parties can
do well and achieve their goals. It was a non-zero-sum or integrative or mutual gains situation where
we wanted to make our employees happy with the services and the other party wanted to make a
new customer and increase their revenues. The heart of negotiation was to explore both the
common interests as well as different interests to create a value and employing such interests as the
foundation for a strong and lasting agreement.

ZOPA

Our starting and resistance points were arranged in reverse order .Resistance point was the high
price quoted(2 %) by the company and target point was to have .5% of the fees charged for filling
the account.Our initial offer was to free the fees of charges levied each time for making
transactionsThe spread between the resistance points was the Zone of Potential Agreement(ZOPA).

Negotiation

We entered into Negotiation with the Sodexo People to get concession on the rate card.then the
other party insisted that there will no concession to be made because the initial offer was fair and
reasonable based on their analysis. The Sodexo agents tried to get our organization in a
commitment position by considering bargaining on the cost mentioned earlier by them.

Negotiation Style

The negotiation style in usage was Analytical. As we were focussed to get the intended outcomes by
weighing down the options in a diligent manner. We focussed our attention on the details provided
by the Sodexo Team .Our critical thinking was based on hard facts on the cost expenses borne by the
company.

Negotiation Frames

A frame is the subjective mechanism through which people evaluate and make sense out of
situations, leading them to pursue or avoid subsequent actions.Sodexo created a strong “Identity”
frame by providing information about them and distinguish themselves from others. We were
concerned about the loss we would incur to provide the services to employees by spending too
much .Our was a “Loss-Gain” frame in which we defined them the risks associated with particular
outcome if availed by our organization.

Hardball Tactics

We applied some hardball tactics to get the best out of negotiation. We applied the “BOGEY” Tactic
to pretend that the issue of employee wellbeing was of little or no importance to us if it is involving
so much cost to the management .This tactic is fundamentally deceptive Typically the other party
will negotiate in good faith and take our proceedings seriously when you want to make a case of the
issue that we want a bogey. Also we used the “Low ball/High ball “tactic by providing them the
lowest possible offer. The theory behind making a ridiculously low offer was to make the Other party
revaluate their initial offer and move closer to their resistance points.

Closing Deal Offerings by Sodexo

Sodexo tried to Close the deal by presenting us with the final offer which consists of the following
technicalities:-

 The cost of issuing a card came down from 150 Rs to 75Rs .

 No courier charges were made for First 500 orders.
 They reduced the fee of 2% that was charged earlier to 1%.

The purpose of this action was to remove ambiguity about the negotiator’s intended course of
action. It was designed to reduce the portfolios of choices. For our Organization, we were still in
dilemma to go for it or not as the Sodexo People didn’t reached our Target point rather they
mentioned their comfortable proposition to be done. We found a way to abandon the commitment
position by “letting the matter die silently”. We were thinking if we take some time, the other party
will again make a new proposal for getting the agreement.

BATNA

We started Looking for alternatives so that we can visualize the best possible outcome for the
company.We were looking at many alternatives but our focus was to have a clear understanding of
their best alternative to a negotiated agreement or BATNA.Having a no of alternatives is useful but
it’s really one best alternative that will influence the decision to close the deal or
walkaway.Understanding the BATNA and making it as a strong as possible provides a negotiator with
more power in the current negotiation because the BATNA clarifies what we can do if the agreement
cannot be reached.We find out that the company named Paytm started with their Food wallet
services .We asked them to come for a meeting and following is the summary of the meeting.

 They didn’t had any card keeping system. It was based on App which was more convenient
and easy to carry.
 No amount was to be given to Company for availing the food services as they gave us the
offer of Opening a current account in their Paytm bank with zero balance and no hidden
charges.

This was a good deal for the management as they got the provided services in no additional cost.
They gave an exploding offer of giving 500Rs as cashback to all employees who avail the food wallet
service.With this they provided Sweeteners by providing free movie tickets to every employee of the
company.This BATNA was very positive alternative to a negotiated agreement.With this we got into
more powerful position throughout the negotiation and helped us in achieving all of our goals.

Outcomes

As we got a good alternative to our negotiation with a new Company stepping in to give fair
competition to the Sodexo Team. We achieved our motive of no additional cost incurred by the
management to provide the benefits to the employees.The employees got a good deal with the tax
savings on one hand and free offers on the other hand.It was also a good thing with easy
accessibility from phone and no card keeping required.If we had not searched for alternatives,we
would have incurred cost for our organization.By applying the Negotiation Skills,Tactics and
Concepts ,we were able to close the deal on a preferable note.