Module-2 - Decision Making - Negotiation - SV

Professional Skills
Module Number: 2
Module Name: Decision Making & Negotiation
1
Decision Making & Negotiation
AIM:
This chapter aims to familiarize the students with concept of decision

making, its process and techniques. It also introduces the students to the
concepts of negotiation.
2
Objectives:
At the end of this module, students will be able to
Explore the behaviors that promote effective decision-making in

1 their future decision making situations.
Enhance their awareness on strengths and weaknesses as a

2 negotiator to become better negotiators.
3
Outcomes:
At the end of this module, students will be able to
Have greater insight into decision-making processes and implement

1 them 100% in their real life.
Adapt their negotiation style to suit the context of the situation,

2 once they experience the activities given in this module.
4
Table of Contents:
What is Decision Making
Steps for Decision Making
Decision Making Techniques
Negotiation Fundamentals
Negotiation Styles
Major Negotiation Concepts

5
Introduction
6
Introduction
Unsuccessful people make decisions based on their current situation; successful people make decisions based on
where they want to be.
Stay committed to your decisions, but stay flexible in your approach.
Image Source:
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Decision Making Negotiation Skills
Negotiation skills are attributes that

Decision making is the method of making
allow two or more parties to achieve a
choices by identifying decisions, collecting
compromise. These are also soft skills
facts and determining alternative
which include strengths such as
decisions. Using a step-by-step decision-
communication, persuasion,
making approach will help you make more
preparation, strategy which
careful and informed decisions by
cooperation. Understanding these skills
arranging relevant information and
is the first step in being a better
identifying alternatives.
negotiator.
8
Ice Breaker
Learning Activity
9
Steps for Decision Making
Step 1: Identify the

Step 6: Take action
decision
Step 2: Gather Step 5: Choose

relevant information among alternatives
Step 7: Evaluate your decision
& its consequences
Step 3: Identify the Step 4: Weigh the

alternatives evidence
10
Step 1: Identify the Decision
 You know, you need to make a decision.
 Try to clearly describe the essence of the
decision you need to make.
 This first step is very significant.
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Step 1: Identify the Decision
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Step 2: Gather relevant information
 Collect some of the relevant information before you

make a decision: what knowledge is required, the
appropriate information sources, and how to get it.
 This step includes both internal and external work.
 Some knowledge is internal: you will be searching for
it through a self-assessment process.
 Other knowledge is external: you can find it online, in
books, from other people, and from other sources.
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Step 2: Gather relevant information
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Step 3: Identify the alternatives
 As you gather knowledge, you are likely to

find a variety of potential pathways of action
or alternatives.
 You may also use your creativity and
additional knowledge to build creative
alternatives.
 You will list all feasible and desirable
alternatives in this step.
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Step 3: Identify the alternatives
Image Source: https://image.freepik.com/free-vector/two-possible-choices-design_1133-16.jpg
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Step 4: Weigh the Evidence
 Drag on your knowledge and feelings to envision what it

would be like if you were to make any alternative to the
end.
 Assess if the need defined in Phase 1 will be satisfied or
addressed by the use of each alternative.
 As you go through this complicated internal phase, you
will begin to favor certain alternatives: those that seem
to have a higher potential to achieve your goal.
 Finally, put the alternatives in a priority order based on
your own value system.
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Step 4: Weigh the Evidence
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https://image.freepik.com/free-vector/illustration-weighing-scale_53876-28507.jpg
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Step 5: Choose among Alternatives
 If you have considered all the facts, you

are ready to choose an option that
seems to be the right one for you.
 You may also pick a mix of alternatives.
 Your option in Step 5 could very likely be
the same or similar alternative that you
put at the top of your list at the end of
Step 4.
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Step 5: Choose among Alternatives
Image Source: https://image.freepik.com/free-vector/choose-concept-illustration_114360-454.jpg
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Step 6: Take action
 You are now able to take some constructive steps by starting to apply the alternative
you selected in Phase 5.
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Step 6: Take action
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Step 7: Evaluate your decision & its consequences
 In this final stage, consider the outcomes of

your decision and determine whether or not
the need defined in Step 1 has been resolved.
 If the decision has not satisfied the established
need, you may want to repeat those steps of
the process in order to make a new decision.
 For example, you may want to collect more
specific or rather different details or explore
alternatives.
23
Step 7: Evaluate your decision & its consequences
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Decision Making
Learning Activity
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Decision Making
Learning Activity
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Decision Making Techniques-1
This is the first set of decision making techniques.
In this, there are ten techniques of decision-making. The techniques are:

• Marginal Analysis
• Financial Analysis
• Break-Even Analysis
• Ratio Analysis
• Operations Research
• Linear Programming
• Waiting-line Method
• Game Theory
• Simulation
• Decision Tree. 27
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563.jpg
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Decision Making Techniques - Marginal Analysis
Marginal Analysis technique is used in decision-

making to evaluate how much extra production
can occur if one more variable (e.g. raw
material, computer, and worker) is introduced.
In his book, 'Economics,' Paul Samuelson

describes marginal analysis as an extra output,
resulting in the addition of one extra unit of
some input variable, while other factors remain
constant.
Marginal analysis is especially useful for

determining alternatives in the decision-making
process.
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Decision Making Techniques - Marginal Analysis
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Decision Making Techniques - Financial Analysis
This decision-making method is used to estimate the

feasibility of the investment, to measure the payback
time (the time taken for cash gains to depict the
original cost of the investment) and to evaluate cash
inflows and cash outflows.
/Investment alternatives may be measured by

discounting cash inflows and cash outflows
(discounting is the process of assessing the present
value of the future amount, assuming that the
decision-maker has the potential to make a certain
return on his/her money).
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Decision Making Techniques - Financial Analysis
Image Source: https://image.freepik.com/free-vector/illustration-data-analysis-graph_53876-20422.jpg
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Decision Making Techniques - Break-Even Analysis
This method allows the decision-maker to

compare the alternatives available on the basis
of price, fixed cost and variable cost per unit.
Break-even analysis is a calculation by which the

amount of revenue required to cover all fixed
costs can be calculated.
Using this strategy, the decision-maker can

decide a break-even point for the company as a
whole or for any of its products.
At the break-even point, the total income is

equal to the total cost and the benefit is zero.
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Decision Making Techniques - Break-Even Analysis
Image Source: https://image.freepik.com/free-vector/break-even-point-graph_23-2148170485.jpg
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Decision Making Techniques - Ratio Analysis
It is an accounting method for the analysis of

accounting details.
Ratios describe the relationship between two

variables.
The basic financial ratios compare expenses and

profits over a given period of time.
The aim of a ratio review is to analyze the

financial statements to assess the strengths and
weaknesses of the company, as well as its
historical performance and current financial
condition.
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Decision Making Techniques - Ratio Analysis
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649.jpg
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Decision Making Techniques - Operations Research Techniques
Operational analysis is one of the most critical

collection of resources available to decision-makers.
Operational analysis (OR) includes the realistic

application of quantitative techniques to the
decision-making process.
When using these methods, the decision-maker uses

empirical, logical or mathematical means to provide
practical solutions to problems.
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Decision Making Techniques - Operations Research Techniques
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Decision Making Techniques - Linear Programming
Linear programming is a quantitative method used in decision

making.
It requires making the organization’s scarce or restricted resources

optimally distributed in order to accomplish a clear goal.
The term 'linear' means that the relationship between the various
variables is proportionate.
The term 'programming' implies the creation of a particular

mathematical model to maximize outputs when resources are
limited.
In order to apply this strategy, the situation must require two or

more activities vying for scarce resources and all interactions in the
situation must be linear.
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Image Source: https://image.freepik.com/free-vector/illustration-mathmetics-equation_53876-27179.jpg
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Some of the management decision-making areas where linear programming

methods can be applied are:
i. Decisions on product mix.
ii. Determination of the optimal size of operations.
iii. Problems with inventory management.
iv. Allocation of scarce capital under conditions of uncertain demand;
V. Scheduling of production and maintenance facilities.

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Image Source: https://image.freepik.com/free-vector/monopolist-owning-80-percent-share-market_3446-649.jpg
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Decision Making Techniques - Waiting-line Method
This is an operation analysis approach that uses a

statistical methodology for balancing the services
offered and the waiting lines.
Waiting lines (or queuing lines) arise if the demand for

the service exceeds the service facilities.
Since a perfect balance between demand and supply

cannot be achieved, either consumers will have to
wait for the service (excess demand) or no consumers
will have to serve the company (excess supply).
If the queue is long and customers have to wait a long

time, they will get annoyed. This can cost the
company to its customers.
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Image Source: https://image.freepik.com/free-vector/queue-concept-illustration_114360-503.jpg
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On the other hand, it might not be practical for the company

to maintain facilities to provide quick service all the time
because the expense of idle service facilities must be borne by
the company.
The firm must therefore strike a balance between the two.
The queuing strategy helps improve customer service on the

basis of quantitative criteria.
However, it only offers essential knowledge for decision-making

and does not solve the issue on its own.
Developing queuing models also includes specialized

mathematical and statistical expertise.
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Image Source: https://image.freepik.com/free-vector/queue-concept-illustration_114360-552.jpg
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Decision Making Techniques - Game Theory
This is a systematic and sophisticated strategy that allows competitors to choose logical strategies to achieve
their goals.
Game theory offers many valuable insights into competition-related circumstances.
This decision-making approach involves the choosing of the best strategy, taking into account one's own
actions and those of one’s competitors.
The primary objective of game theory is to establish rational criteria for strategy selection.
It is based on the premise that every player (competition) in the game (decision situation) is perfectly rational
and seeks to win the game.
In other words, the theory suggests that the adversary will carefully consider what the decision-maker will do
before choosing his own strategy.
Minimizing the maximum loss (minimax) and maximizing the minimum gain (maximin) are two principles that
are used in game theory.
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Decision Making Techniques - Simulation
This technique involves the creation of a model that depicts a true or current structure.
Simulation is useful for solving complex problems that cannot be easily solved by other techniques.
Computers have been commonly used for simulation in recent years.
The various variables and their inter-relationships are put into the model.
A collection of outputs is obtained when the model is programmed into the computer.
Simulation methods are helpful in assessing and choosing the best alternatives.
Simulation can be used to establish pricing strategies, delivery strategies, resource consumption, logistics, etc.
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Decision Making Techniques - Decision Tree
This is an interesting approach used to evaluate a decision.
The decision tree is a sophisticated mathematical method that

allows the decision-maker to analyze multiple alternative
courses of action and to choose the best alternative.
The decision tree is a visual representation of possible courses

of action and the potential consequences and risks associated
with each action.
In this strategy, the decision-maker traces the optimal direction

through the tree diagram.
The foundation, known as the 'decision point,' is represented in

the tree diagram.
From the decision stage, two or three random events follow.

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A chance event is portrayed by a circle and is a branch of the decision tree.
Each chance event results in two or more potential outcomes leading to

subsequent decision points.
The decision tree can be illustrated by an example.
If the company expects an increase in demand for its goods, it may consider
two alternative courses of action to meet increased demand:
(a) The introduction of modern systems,
(b) The implementation of a double shift.
There are two possibilities for each alternative, i.e. production can increase
(positive state) or decrease (negative state).
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Image Source: https://cdn.educba.com/academy/wp-content/uploads/2019/11/Create-Decision-Tree-1.png
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Although the decision tree does not provide the decision-

maker with a solution, it aids in decision-making by displaying
the alternatives available and their probabilities.
The decision tree helps the decision-maker to see the

application of multiple phases in the decision-making process
in a single diagram.
The success of this decision-making strategy depends on the

expectations and the probability estimates made by the
decision-maker.
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Decision Making - Desperate Situations
When you find yourself in a desperate situation, take a step back and consider these points:
Avoid making symbolic moves: It may look impressive, it may have a sense of drama to it, but it just
might not be necessary.
No action is action: Just because you remain silent doesn’t mean you’re out of the race. The tortoise,
after all, wins the race.
Don't lose sight of objective numbers: Often leaders rationalize in desperation to match their own ends.
Take an effort to put your emotions to the side while collecting, measuring, and evaluating the numbers
that are important.
Keep your ego in check: Sometimes arrogance and overconfidence force people to make actions they
shouldn't. Before going forward, make sure you do so for the right reasons, and don't allow your
personal feelings to affect your decision unnecessarily.
Don't get carried away with the idea of the doomsday: it's tempting to assume that if you don't make a
decision or take any action, you'll be forgotten everything.
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Decision Making
Learning Activity
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Decision Scenarios
Your friend’s parents are not very strict. They let your friend stay outside
and go more places independently. Your friend wants to go to a movie late
night, you also want to join him. You know that your parents will never
encourage this. After the movie, you can stay at your friend’s house, but it
would mean lying to your parents. What do you do?
57
Decision Scenarios
Someone you know has given you a copy (digital or hard copy) of a question
paper for the test happening tomorrow. You are actually struggling more
with that subject. You like the teacher a lot, but you could use this as an
extra “help” for an upcoming test. The chances of getting caught are
minimal. What do you do?
58
Decision Scenarios
You wake up on a Sunday morning with congestion, a sore throat, and a

cough. You’re pretty sure you have a cold. You have plans for later that day
to attend a party to celebrate your best friend’s birthday. You know that the
party is important to your friend, and that your attendance will mean a lot
to him. You suspect that it must be Covid-19. Your friend calls you to check
your travel. What decision do you have to make?
59
This is the second set of decision making techniques.
In this, there are six techniques of decision-making. The techniques are:

• Brainstorming
• Nominal Group
• Delphi Technique
• 5 Whys
• Cost/ Benefit Analysis
• Multi-voting
• Decision Matrix
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Decision Making Techniques - Brainstorming
In the brainstorming, group members responsible for solving the problem, think
together about the problem and add their thoughts to the most feasible solution.
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Decision Making Techniques - Brainstorming
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Decision Making Techniques - Nominal Group
First, each member mentions his / her solution briefly describing the reasons why
he / she opted for that solution. Then all solutions are listed and then ranked by
voting to select the most valued one.
Solution-1
Solution-2
Solution-3
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Decision Making Techniques - Nominal Group
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Decision Making Techniques - Delphi Technique
This strategy engages all members of the community to share their ideas through
questionnaires on a potential solution to a particular problem.
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Decision Making Techniques - Delphi Technique
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Decision Making Techniques - 5 Whys
In this strategy, a single problem is discussed thoroughly by repeating the question

of why.
Why? Why? Why? Why? Why?
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Decision Making Techniques - 5 Whys
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Decision Making Techniques - Cost/Benefit Analysis
This approach helps to weigh the financial consequences of any option suggested for
a project or business solution.
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Decision Making Techniques - Cost/Benefit Analysis
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Decision Making Techniques - Multi-voting
Multi-votes reduce or minimize a broad number of choices to a limited list of top

choices for further consideration or analysis.
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Decision Making Techniques - Multi-voting
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Decision Making Techniques - Decision Matrix Analysis
It allows leaders to consider and prioritize all options available when finding a
solution to a complex problem.
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Decision Making Techniques - Decision Matrix Analysis
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Decision Making
Learning Activity
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Self Assessment Question
1. Which of the following are need to be considered during desperate situation?
a) Avoid making symbolic moves
b) Don't lose sight of objective numbers
c) Keep your ego in check
d) All of the above
77
2. ______________includes a voting process to rank the ideas or solutions generated

by group members.
a) Multi voting
b) Brainstorming
c) Nominal group
d) 5 Whys
78
3. ____________ is the technique best suited for financial decisions.
a) Decision matrix
b) 5 Whys
c) Delphi technique
d) Cost/Benefit analysis
79
Self Assessment Questions - Answers
1. Answer: d) All of the above

2. Answer: a) Multi voting
3. Answer: d) Cost/Benefit analysis
80
What is Negotiation?
Negotiation skills are attributes that allow two or more parties to achieve a
compromise. These are also soft skills which include strengths such as communication,
persuasion, preparation, strategy which cooperation. Understanding these skills is the
first step in being a better negotiator.
81
What is Negotiation?
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Characteristics of Negotiation
 It is an explicit and deliberate

event..
 It takes place between the
representatives of parties
concerned.
 It intends to settle the
challenges/differences between the
parties involved.
 Its outcome is dependent on the
relative power relationships
between the parties involved.
83
Characteristics of Negotiation
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Features of Negotiation Process
 A negotiation process is based on the desire

of having a negotiation.
 Understanding of negotiation strategy is
very essential.
 One should have the ability to understand
negotiation to choose the best strategy.
 One should overcome obstacles to clear
objections and pave way for effective
negotiations.
 They should have the ability to learn to
apply specific negotiation theories.
 One should understand that creation of
conflict free negotiation comes from value
addition from all participants.
85
Features of Negotiation Process
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Objectives of Negotiation
 It fulfils the desire of both the parties

through durable resources.
 It uses talents and knowledge of people
involved in a negotiation.
 It aims to have a shared sense of
satisfaction through mutually fulfilling
the requirement.
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Objectives of Negotiation
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Stages in Negotiation
INITIATION
Preparation Relationship Building
DEVELOPMENT
Exchange Task-related
Persuasion
Information
CONCLUSION
Concessions & Agreement
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Stages in Negotiation
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Negotiation Skills
Learning Activity
91
Styles of Negotiation
Red Style Blue style Purple Style

• They are self-centered, hard • They focus on building long • They are called principled
negotiators who do not trust term relationships for mutual negotiators as they use a
the other party and therefore benefit of the parties involved strict tit-for-tat strategy. They
focus on gaining the in negotiations and create are open, learnable, cautious
maximum share of the pie. value for them (also called and decent.
non-zero sum or value
creation).
92
Negotiation Skills
Learning Activity
93
Major Negotiation Concepts
BATNA (Best Alternative to a • It means the best you can do if your counterpart
Negotiated Agreement) refuses to negotiate on terms acceptable to you.
WATNA (Worst Alternative to a • The term WATNA defines the leverage the other
Negotiated Agreement) party has over you in the negotiation process.
ZOPA (Zone of Possible • It refers to the overlapping of the aspiration

Agreement) ranges of the two negotiating parties.
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Negotiation Skills
Learning Activity
95
Decision Making & Negotiation - Summary
Decision making is the method of making choices by identifying

decisions, collecting facts and determining alternative decisions. Using a
step-by-step decision-making approach will help you make more careful
Decision Making and informed decisions by arranging relevant information and
identifying alternatives.
Negotiation skills are attributes that allow two or more parties to

Negotiation achieve a compromise. These are also soft skills which include strengths
Skills such as communication, persuasion, preparation, strategy which
cooperation. Understanding these skills is the first step in being a better
negotiator.
96
1. Which style of negotiation is compromising?

a) Red Style
b) Purple Style
c) Blue Style
d) Violet Style
97
2. _____________ refers to the overlapping of the aspiration ranges of the two

negotiating parties.
a) BATNA
b) WATNA
c) ZOPA
d) ZOPNA
98
Self Assessment Questions - Answers
1. Answer: c) Blue style

2. Answer: c) ZOPA
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Assignment
Complete the activity given in the link below.
Link: https://wardman.weebly.com/uploads/1/6/3/3/16339396/decision_making_scenarios.pdf
100
Document Links
Sl.No Topic URL Summary
https://www.umassd.edu/media/umassdartmouth/fycm/decision_making_pr
1 What is Decision Making 7 STEPS TO EFFECTIVE DECISION MAKING
ocess.pdf
2 Steps for Decision Making https://online.csp.edu/blog/business/decision-making-process 7 Steps of the Decision Making Process
https://www.businessmanagementideas.com/decision-making/top-10-
3 Decision Making Techniques Top 10 Techniques of Decision-Making
techniques-of-decision-making/3377
https://us.sagepub.com/sites/default/files/upm-
4 Negotiation Fundamentals Basics of negotiation
assets/110576_book_item_110576.pdf
5 Negotiation Styles https://trainingindustry.com/articles/leadership/understanding-negotiating- Understanding Negotiating Styles

styles/
http://www.successfulnegotiators.com/negotiators-blog/2017/1/16/basic- BASIC NEGOTIATION TERMINOLOGY: BATNA,
negotiation-terminology-batna-reservation-value-zopa RESERVATION VALUE, ZOPA
6 Major Negotiation Concepts
https://www.boldnewdirections.com/2013/07/19/part-5-the-power-of-the-
The Power of the WATNA in Negotiation Skills
watna-in-negotiation-skills/
101
Video Links
Sl.No Topic URL
1 What is Decision Making https://youtu.be/XtMMX4jZs2k
2 Steps for Decision Making https://youtu.be/5a0Fe3AchAI
3 Decision Making Techniques https://youtu.be/pPIhAm_WGbQ
4 Negotiation Fundamentals https://youtu.be/RfTalFEeKKE
5 Negotiation Styles https://youtu.be/WK7awi5LPDM
6 Major Negotiation Concepts https://youtu.be/rlkyGPVr1N4
102
E- Book Link
E-book name URL
Decision Making worksheet with an example https://cd1.edb.hkedcity.net/cd/pshe/download/Content_7455/eng/worksheet4_eng.pdf
103
Credits to the sources

Sl.No URL
1 https://www.umassd.edu/media/umassdartmouth/fycm/decision_making_process.pdf
2 https://online.csp.edu/blog/business/decision-making-process
3 https://www.businessmanagementideas.com/decision-making/top-10-techniques-of-decision-making/3377
4 https://us.sagepub.com/sites/default/files/upm-assets/110576_book_item_110576.pdf
5 https://trainingindustry.com/articles/leadership/understanding-negotiating-styles/
6 http://www.successfulnegotiators.com/negotiators-blog/2017/1/16/basic-negotiation-terminology-batna-reservation-value-zopa
7 https://www.boldnewdirections.com/2013/07/19/part-5-the-power-of-the-watna-in-negotiation-skills/
104
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Module-2 - Decision Making - Negotiation - SV

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Professional Skills

Module Name: Decision Making & Negotiation

This chapter aims to familiarize the students with concept of decision

Explore the behaviors that promote effective decision-making in

Enhance their awareness on strengths and weaknesses as a

Have greater insight into decision-making processes and implement

Adapt their negotiation style to suit the context of the situation,

What is Decision Making

Steps for Decision Making

Decision Making Techniques

Major Negotiation Concepts

Decision Making Negotiation Skills

Negotiation skills are attributes that

Step 1: Identify the

Step 2: Gather Step 5: Choose

Step 3: Identify the Step 4: Weigh the

 You know, you need to make a decision.

 Try to clearly describe the essence of the

decision you need to make.

 This first step is very significant.

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 Collect some of the relevant information before you

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 As you gather knowledge, you are likely to

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 Drag on your knowledge and feelings to envision what it

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 If you have considered all the facts, you

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 In this final stage, consider the outcomes of

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This is the first set of decision making techniques.

In this, there are ten techniques of decision-making. The techniques are:

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Marginal Analysis technique is used in decision-

In his book, 'Economics,' Paul Samuelson

Marginal analysis is especially useful for

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This decision-making method is used to estimate the

/Investment alternatives may be measured by

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This method allows the decision-maker to

Break-even analysis is a calculation by which the

Using this strategy, the decision-maker can

At the break-even point, the total income is

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It is an accounting method for the analysis of

Ratios describe the relationship between two

The basic financial ratios compare expenses and

The aim of a ratio review is to analyze the

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Operational analysis is one of the most critical

Operational analysis (OR) includes the realistic

When using these methods, the decision-maker uses

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Linear programming is a quantitative method used in decision

It requires making the organization’s scarce or restricted resources

The term 'programming' implies the creation of a particular

In order to apply this strategy, the situation must require two or

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Some of the management decision-making areas where linear programming