Negotiation

Negotiation is the art of trying to talk and use reason to convince the other party to meet your
demands. It is a way of dealing with disputes in a peaceful way, with the aim of maintaining a
cordial relationship with the part/parties concerned.
Negotiating Vs Bargaining
Bargaining and negotiating are similar in some aspects. While bargaining generally means an
attempt to strike a deal over a particular issue, usually price, negotiating applies to several other
issues such as time, space, resources and facilities, even personal attributes, such as dignity,
commitment and prestige. Negotiation is used in a much broader context; it involves a problem
solving attitude, like being creative about making an agreement.
All sorts of negotiation follow some degree of bargaining; give and take over a particular issue.
There are two basic ways in which this give and take is conducted:
• Distributive Bargaining: also known as fixed pie approach, or win/lose approach.
• Integrative bargaining: also known as enlarged pie approach, or win-win approach, or
mutual gains bargaining.
Distributive Bargaining: ‘I win what you lose’ is the mantra here, which is why it is also
referred to as win/lose bargaining. Here, parties are found to be in conflict over limited
resources and thus, whatever one party gains, it does so at the cost of the other party. Since
there is a fixed quantity of the particular resource at the heart of the conflict, it is also termed
as “fixed pie” approach.
Distributive Bargaining may not be the ideal approach for a long-term relationship. If one party
has to bear the stress of loss and competition at the hands of another, it will opt out of the
relationship
Integrative Bargaining: In conflicts that have several aspects, such as resources, relationship
and time too, distributive approach would be counterproductive. Manpower matter as much as
the quality of relationship; here, parties are effectively interdependent on one another and
traditional approaches of simple give and take do not work.
In an integrated negotiation, the parties cooperate to achieve maximum benefits by integrating
the interests into an agreement while also competing to divide the value. In integrative
negotiations you have to be good at both creating value and claiming it.
In an integrative negotiation, your task is twofold one to create as much value as possible for
you and for the other side and two to claim value for yourself. Many used the term win-win in
referring to this type of arrangement. Unfortunately, that term implies that all parties get
everything they want, which is rarely the case. More likely, each makes trade-offs to get the
things they value most, while giving up other, less critical factors.
Sometimes, the two sides interests do not compete at all. In these cases the task is to arrive at
a deal that integrates their interests as effectively as possible. Agreeing to heal more of what
one negotiator values does not necessarily require the other negotiator to take less of anything
he or she values. Thus, the ability of one side to claim or win what it wants or needs in the deal
does not necessarily detract from the others ability to claim or win just as much.
There are often many items or issues to be negotiated in an integrated negotiation- not simply
price, delivery date, or any other single issue. Indeed, opportunities for creativity abound.
Sometimes this type of negotiation is also called “collaborative bargaining.” This kind of
negotiation is only possible if both parties understand their own key interests and the key
interests of the other side.
Finding opportunities for mutual benefit naturally requires information sharing. Unlike the
distributive situation, in which you deliberately play your cards close to the vest, and integrated
negotiation encourages negotiators to do the following:
1. provide significant information about their circumstances.
2. explain why they want to make a deal.
3. talk about their real interests or business constraints.
4. Reveal and explain in general terms their preferences among issues or options.
5. consider and reveal any additional capabilities or resources they have that might meet
the other side's interests and could be added to the deal.
6. use what they learn to find creative options that will meet the interests of both parties
to the greatest possible extent.
Negotiation process and planning
The process of negotiation goes through 4 stages. The preparation or homework for negotiation
continues throughout these four stages and any additional information or a change of context
may impact the other stages. These four stages are:
1. Preparation
2. opening session
3. bargaining
4. settlement
Preparation
the first thing a negotiator must know is that any negotiation can fall through. This can specially
occur if there has not been enough homework done before the actual meeting. Preparation is
one of the key elements required in a deliberate activity such as negotiation. It involves
gathering as much essential information as possible beforehand, and using it to decide on key
points to drive the negotiation process forward. It involves researching on issues and details
and coming up with a strategy that can have a positive outcome. This can include getting
information on current prices, the competitive rates, most effective negotiation style and
strategy and so on.
Identifying the key priorities while in the preparation stage is another essential action for
negotiation. It is one of the starting points of this stage. There are several ways of identifying
priorities, including: ranking them in order of importance, assigning vintage, and dividing into
categories. From here, one can move to researching and establishing support for each point in
consideration, literally preparing for any discussions that come up in the meeting. Strong
support for ones own points can help in justification and increase confidence.
Another important element at this stage is to identify ones reason for being in the negotiation
and the goals to be achieved out of this particular scenario. Does, a new Goshen agenda- a list
of items to be discussed in a particular order- can come in handy to direct the meeting in a
constructive manner. Agendas can be formal or informal, direct or subtle in nature, depending
on the meeting
all of this will enable the party to establish their walk away value also known as Buttner- best
alternative to a negotiated agreement. Excepting an agreement below once partner
demonstrates a failure of the negotiation process to be able to develop a strong partner, various
factors have to be evaluated, including appealing alternative solutions.
In terms of information about the other party, it is essential to know what their priorities are,
their goals and expected outcomes, their reason for negotiation, capacity for negotiation and
their resources for negotiating a deal. Researching commonalities such as overlapping goals
and interests is also important and can contribute a great deal. Further, determining how
significant the negotiation process itself is, the risks involved, relevant costs and benefits can
help shape the overall agenda.
Once research and evaluation is complete, it is important to review the overall approach one
will take in the negotiation process. This will enable the negotiator to set the tone and start out
strong.
Opening session
the second stage of negotiation is the opening session. It includes an introduction of the parties
involved and their rules. It also consists of presentation of the information prepared in the first
stage after introductions one of the parties using neutral terms reviews the purpose of the
negotiations. At times, this process starts with one party presenting a direct exchange of issues
or items. There are two kinds of exchanges, the proposal-where the party proposes exchanging
one thing for another, and the request- where the party asks what can be exchanged for what
they are offering. Any offer can be accepted, rejected or lead to a counter offer. This is when
the negotiation really begins.
An important action at this stage is defining the ground rules- principles that allow the parties
to proceed systematically and that streamline the negotiation. While establishing principles
may seem like a waste of time in certain environments- if the other party is a close
acquaintance-it is absolutely essential to do so in order to reduce conflict or anxiety on all sides.
It is, however, possible that new ground rules are created and spontaneous, shadow or reluctant
party negotiations
one simple way to establish ground rules is to answer the 5W questions:
1. what is the negotiation an agreement that is acceptable to all parties? This is a large
question and includes the entire process.
2. Where will the opening- later sessions take place? The venue can sometimes create an
unequal part situation com especially in high stress scenarios such as union
negotiations.
3. When will they take place and how long are they going to last? This depends vastly on
the kind of negotiations taking place. Having a general expectation of duration,
however, can help both parties plan their negotiations and schedule work accordingly.
 4. Who is in charge of each party's negotiation- the final word on clauses or details,
authority to reject or approve offers and deciding vote?
5. How is the negotiation going to happen in terms of presentation and agreement? Is it
verbal, for example, written or with legal present?
Along with this, having a planning sheet in place before the opening session can be crucial.
This consists of all the information and research from the preparation stage correlated in a
format that makes it easy for the team or negotiator to look up and use as and when required
during the session. It can also work as a presentation aid during the meeting. Certain points in
the planning sheet can be the following:
• Commercials
• payment terms
• timelines and deadline
• deliverables
• possible outcomes of the session and way to deal with each one.
Bargaining
serious, deliberate negotiation happens in the third stage will stop bargaining is defined as the
process in which the buyer and seller of a good or service debate the price and exact nature of
the transaction. There are two major factors in this stage: the number of issues discussed, and
the number of parties involved. These factors interact with each other to form four potential
negotiation situations that can be anticipated by the negotiators.
Settlement
the settlement stage, the last step in most negotiation scenarios, is where the contract and
specifics are officially agreed upon, or settled. While all the stages are significant, this stage is
where everything is finalised. Therefore, it requires a large amount of attention to detail from
all parties. Often, the settlement stage is not even reached after bargaining. This can happen for
a number of reasons- for example, because the negotiations fall through or becauss that specific
process was related to information exchange rather than settling on something definite. If a
settlement falls through, it is usually because one or both parties believe that the negotiation is
not going to lead to a good enough deal for them.
This is where the walk away value is crucial. If one party believes that their walk away value
is not being met, they may, to put it simply, walk away. If both parties believe that there is
nothing of positive value in the negotiation process, then also a fall true is likely to occur. This
is known as impasse. In some impasses, a third party might intervene- a moderate are, who can
bring a fresh or objective point of view to the negotiation process. Lawyers, bankers and
industry experts are often seen as third party negotiators.
What can also occur in the settlement stages fatigue, where one or more negotiators, having
become exhausted by the negotiation process, give in to a certain extent and agree to a less than
effective deal for their party.
 Managing your Negotiating Team
Sometimes the biggest challenge comes from your own side of the table. There are two major
obstacles to a negotiating team’s success:
1. aligning the conflicting interests held by members of your own team.
2. Implementing a disciplined strategy at the bargaining table
Aligning Your Own Team’s Interests
Negotiating teams wrestle with internal conflict as well. Even though team members are all
technically on the same side, they often have different priorities and imagine different ideal
outcomes; Business Development just wants to close the deal. Finance is most concerned about
costs. The legal department is focused on patents and intellectual property. Teams that ignore
or fail to resolve their differences over negotiation, targets, trade-offs, concessions, and tactics
will not come to the table with a coherent negotiation strategy. They risk ending up with an
agreement that's good for one part of the Company, but bad for another.
There are four techniques for managing conflicts of interest within the team.
1. Plot out the conflicts.: Confronting diverging interests helps clarify team goals,
uncover personality conflicts, and ultimately build unity of purpose. Many managers
examined competing interests by creating a matrix of the issues that need to be
addressed. For each issue, they plot out their own priorities and position, as well as
what they think are the priorities and positions of each of the other team members.
2. Work with constituents. Underlying many conflicts of interest is the simple fact that
members represent different constituencies within the organisation. People don't want
to let their department down, so they dig in on an issue important to their constituents
that might not be in the best interest of the whole company. If constituents are presented
with all the facts, however, they might be able to concede more ground, because they
also see the bigger picture. To help get everyone on board with a single negotiation
strategy, some leaders deliberately assemble teams that contain only individuals good
at forming relationships across constituencies.
3. Mediate conflicts of interest. If, despite best efforts, the team cannot reconcile its
differences, the best approach may be mediation led by either a team member or an
outside facilitator. The mediator acts as a buffer of sorts.
4. Persuade with data. The fact that team members don't have access to the same data is
often the root of conflicts of interest. Interpersonal conflicts and contribute to these
problems. Emotional and personal differences can make people unpredictable and
difficult to align with the agreed upon strategy.

Three Tactics to avoid breakdowns at the negotiating table.

1. Simulate the negotiation. To head off surprises at the table teams role play ahead of
time, aspects of the negotiation that they expect to be contentious. Team members who
have prior negotiation experience with the other party can be especially valuable.
Rehearsals like that enable individuals to determine when they should contribute and
when they should keep silent. They help people anticipate their own and others likeliest
 emotional responses, predict where team discipline might breakdown, and clarify who
has authority to make concessions and decisions.
2. Assign roles to capitalise on team members, strengths and interests.: Most people
are familiar with the good cop-bad cop routine as a way to whipsaw an opponent. In a
variation of that theme, you can help individual members feel comfortable with the
team strategy by giving them specific roles. For example, one team protected the
member ultimately responsible for long term client care by keeping the bullets away
from him. His teammates were the ones who directly confronted the client about
pricing. Negotiating teams need to have a leader, but sometimes when a team lacks
hierarchy, it's not obvious who that leader should be. Hence, team leadership itself can
be the subject of intra team negotiation.
3. Establish a plan for intra team communication.: There are higher tech solutions for
sidebar communications. Text messaging also works well for teammates in the same
room who want to discuss what's happening without distracting the lead negotiator.
Large teams using text messaging or chat technology often had a gatekeeper decide
when the lead negotiator needed to be alerted about new ideas bubbling up during the
course of the talks.
The payoff from negotiating as a team is clear. With access to greater expertise and the ability
to assign members to specialised roles, teams can implement more complex strategies than a
sole negotiator can ever pull off. But negotiating as a team also clearly presents challenges.
How well a team resolves into on conflicts of interest is closely related to how well it performs
at the negotiating table. A lack of internal alignment increases the probability that team
discipline will break down. A lack of discipline increases the odds that team strategy will
breakdown. Either deficiency can push the team into a spiral that is hard to reverse. One that
the party will certainly capitalise on. That's why it's critical to engage in internal negotiations
before your team sits down at the table.