MU - Masters - SEM 4 - Business Negotiation Skills

Business
Negotiation Skills NAEMD BUSINESS NEGOTIATION SKILLS
Contents
UNIT I...............................................................................................................................
Types of Negotiations in Business
Types of Negotiations in Business - business to business, with distributors, customers,
vendors - in marketing, operations, HR, finance etc, bankers & equity funds, employees,
future employees, etc. Understanding the Dynamics of Cooperative and Competitive
Interaction in Negotiation.
UNIT II ............................................................................................................................
Defining negotiations
Defining negotiations - difference between lose - lose, lose - win, win - lose, win - win.
Setting a context for win-win for both parties.
UNIT III............................................................................................................................
Preparing for a negotiation
Preparing for a negotiation - Researching the opposite party, defining BATNA - best
alternative to a negotiated agreement, ZOPA - zone of possible agreement, defining
multiple variables in a negotiation, defining needs and wants, benefits & value, setting
the opening price, ideal price and walk away price
UNIT IV............................................................................................................................
Handling the negotiation.
Communicating value to the other party. Ways to justify price. Handling tactics with
counter-tactics - how to understand and respond to tactics like "good cop bad cop",
personal attacks, asking for more, trade-offs, tapering discounts, reluctant seller reluctant
buyer etc.
Note:
This document is strictly private, confidential and personal to its recipients and should not be copied, distributed
or reproduced in whole or in part, nor passed to any third party. The learner resource contains most of the topics,
however students are expected to refer other books and resources too.
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NAEMD BUSINESS NEGOTIATION SKILLS
Index
Serial Page Number
Number Name of the topic
1 Introduction to the subject 4
2 Unit I- Types of Negotiation in Business 5-52
3 Unit II- Defining Negotiations 53-89
4 Unit III- Preparing for a Negotiation 90-128
5 Unit IV- Handling the negotiation 129-167
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INTRODUCTION TO THE SUBJECT

This subject serves as a guide for students to understand the fundamental aspects of
business negotiation skills .At the very outset, the various types of negotiation are
discussed including business to business, business with distributors, customers and
vendors. In addition, business negotiation in marketing, operations, human resources,
finance, bankers and even with employees are discussed with a clarity on understanding
the dynamics of cooperative and competitive interaction in negotiation. In this
subsequent unit, students will learn about the definition of negotiations, difference
between lose-lose, lose-win, win-lose and win-win types of negotiations. In addition the
detail about each of these types of negotiations is also elaborated upon. The students
shall also learn how to set up a context for win-win negotiation for both the parties.
In the third unit, learning is imparted on ways to prepare for negotiations encompassing
the concepts of researching the opposite party, BATNA (Best Alternative to a Negotiated
Agreement), ZOPA (Zone of Possible Agreement), defining multiple variables in a
negotiation, defining needs and wants, benefits and value, setting the opening price, and
ideal price and walk away price.
The fourth unit will enable students with learning to handle the various aspects and
strategies of negotiations. Students will be able to understand and learn how to
communicate the value to the other party, ways to justify price, handling tactics with
counter-tactics. In addition, the students shall understand the concept of tactics like
"good cop bad cop", personal attacks, asking for more, trade-offs, tapering discounts and
reluctant seller or reluctant buyer which will facilitate effective communicating value to
the other party .
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Business Negotiations Skills
UNIT - I
Types of
Negotiations in
Business
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Unit Description
Negotiations are often called the ways of resolving disputes. Negotiation is considered as
similar to settlement, agreement, collaboration, and bargaining. It takes place in most of
the events and spheres of life - be it is business, personal circumstances like married life,
parenting, etc., legal procedures, government matters, etc. Almost every transaction with
another individual involves negotiation. We often use the methods of negotiation in our
personal, professional, business and political lives. Negotiation is a channel of
communication intended to reconcile differences between two or more parties and to
settle conflicts amicably. In most of the cases, the parties involved aim at achieving a
win-win situation.
In the present fiercely competitive modern business environment, managers expand their
business operations with the help of successful negotiations and long-term relationships
they develop with other parties. Therefore, negotiations, conflict resolution, and
relationship management are complex processes in business environment. Successful
business managers and business practitioners often possess and apply a combination of
perceptual, persuasive, analytical, and interpersonal skills in all their negotiations.
In this unit, you will learn about the types of negotiations in business, business to
business negotiations, negotiations with distributors, negotiations with customers,
negotiations with vendors, types of negotiations in marketing, negotiations in operations,
HR, finance, negotiations with bankers and equity funds, negotiations with employees,
future employees, and understanding the dynamics of cooperative and competitive
interactions in negotiations.
Learning Outcomes
At the end of this chapter, the student should be able to:
 Identify the different types of negotiations in business

 Describe negotiations with distributors, customers, vendors
 Identify the types of negotiations in marketing
 Describe negotiations in operations, HR, finance
 Appreciate the dynamics of cooperative and competitive interactions in
negotiations
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1.1 Types of Negotiations in Business

Meaning of Negotiation
The word ‘negotiation’ comes from a Latin word ‘Neg’ meaning “No” and ‘Otsia’
meaning “Leisure”. The combination of the two words -- “No Leisure” -- sets the tone
for the word –negotiation, thereby implying that something serious, meaningful and
important two way discussion, intended to yield mutual benefit to the negotiating parties.
These parties can be businessman, social groups. But, largely it is always and invariably
a business negotiation to reach an intended result. Therefore, negotiation is a process of
bringing together of two divergent stance or positions into joint agreement where the
concerned parties are unanimously agree to terms and conditions set therein.
The aim of negotiation is to resolve differences, to gain mutual advantages in the
foreseen outcome. It is process where an informed position is taken and concessions
given and leeway allowed in reaching an agreement. The trust placed in each other, by
the negotiating parties will determine the success of the negotiation.
People negotiate on daily basis, without actually being aware of it. It happens in
organizations-business or otherwise, between governments, sales deals and personal
situations-like in a marriage, divorce or parenting.
Professional negotiators are generally specialized, such as union negotiators, hostage
negotiators, leverage buyout negotiators or peace negotiators. Sometimes they are also
called diplomats, legislators, or brokers. Given below is the diagram which depicts the
types and style of negotiations.
Figure 1.1 Types and style of negotiations.
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According to Anna Mar, the Chief Marketing Officer for a telecom company in Tokyo,
there are 7 types of negotiations. And they are as listed below along with a brief
explanation for each of the types of negotiation.
All negotiations are for a win-win outcome, but, it is also true that every negotiation
cannot entail a win-win outcome.
1. Win-Lose Negotiations: This type of negotiation is also called distributive

negotiation. In these sorts of negotiations, the focus is on what is the other party’s
base price/base requirement. A distributive negotiation or a win-lose negotiation
often involve people who never had a previous interactive relationship. They are
likely to do so again in the near future. Once this is determined, it is easy to take the
deal further as it lets the parties know that the sellers is not over charging the price
and the buyer is not under valuing the asset price. As it is, such Win-Lose
negotiations always depend on the base price which is less than the actual market
value of the asset. “Prospect Theory” informs us that people value losses more than
gains and are more risk-averse about losses and therefore, such negotiations are on
the acrimonious side leading to counter-productiveness.
Example 1
Used car prices, used machinery prices are classical example in this category of
negotiations.
2. Win-Win Negotiations: This type of negotiation is also called integrative negotiation.

Integrative negotiation or win-win negotiation is interest-based, merit based &
principled negotiation. In a win-win negotiation, both the negotiating parties win.
Integrative negotiation or a win-win negotiation attempts to create value in the course
of the negotiation, which thereby expands the pie by either compensating loss of one
item with gains from another. However, either may gain slightly less or more, but it
is a gain nevertheless for example, salary negotiations, business to business
negotiations fall in this category.
3. Lose-Lose negotiations: This negotiation is a situation where both the parties going to
lose and law suits are a classic example of this category of negotiation. In such
negotiations, it is often found that the parties turn bitter, however, with the
knowledge that both the parties will lose, it is important to maintain calm and
understand each other’s situation.
4. Adversarial negotiations: The very title of this negotiation suggests that it is the
adversaries who are involved in negotiating who, actually, are not going to gain from
each other, but, at the same time want to inflict more or higher loss to the other party.
Win-Lose negotiations and lose-lose negotiations result in such adversarial
(combative) negotiations. The best example of this type of negotiation is that of
political parties as the contending parties will only be satisfied by inflicting major or
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maximum losses of the opponent party. These negotiations are done with battle like
strategies.
5. Collaborative negotiations: These are the coolest and the soberest negotiations of the
lot. Things discussed in a friendly, collaborative & corroborative manner. It is
observed that negotiations that project big gains are often corroborative negotiations.
In this kind of negotiations use of persuasiveness is at its peak. Such negotiations are
invariably informed discussions done in the ambience of optimism where creativity is
often resorted to for putting across a point of view.
Example 2
For example, two big business houses coming together to bring in modern
telecommunication services to a developing or an under-developed country, Local
businesses in collaboration with the leader of automotive industry join hands to
manufacture their leading car model in the host country.
6. Multi-party negotiations: These are the most complex and the most challenging of
all negotiations. Inter-governmental negotiations and international negotiations are
the classic examples of this type of negotiation. These negotiations take a long time
to be formulated and negotiated. It involves various departments-technical,
administrative and legal. This type of negotiations requires a very high degree of
proficiency and only those highly qualified in the subject as well as the nature of the
dealing participate in such negotiations where advanced diplomatic techniques are
the order of the day.
7. Bad Faith negotiations: When parties deal with each other, they are clear in their
minds that they have the least intention of keeping the commitment that they will get
into during the course of the negotiation. Bad faith negotiations are often dubious in
nature and often done under pressure from the local citizens or the government.
These negotiations are often intended to buy time or are diversionary tactic. For
example, an environmental treaty is signed with the intention of not keeping it but
done so under international pressure. It is advisable to include the penalty clause in
the negotiation, in case if one party apprehends that the other party is negotiating in
bad faith.
1.2 Business to Business Negotiations

What do we mean by business to business?
It refers to conduction or transaction of business between one company and another
company rather than company to individuals’ customers. In business parlance, this type
of this model of business is referred to as B2B.
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Example 3
A very good example of B2B model of business is the automotive industry. In this
industry, plethora of items and products like, the radiators, the batteries, the tyres, the
lamps and other products from the forging industry is used to manufacture an automobile.
All the above mentioned items are manufactured by other companies, which in turn
supplies the same to the automotive manufacturer. The finished product-car, bus, 3
wheeler, etc., manufactured by this automotive manufacturing company is used by a
different set of people-the end users.
However, the above items-manufactured by different business units- needed to

manufacture an automobile, is supplied to the manufacturer-a different unit altogether
such a business is called business to business-one business units supplying to other
business unit.
Five Keys of B2B negotiations: A company called Insight Square, the no. 1 company
specializing in overall sales analytics lists out 5 keys of B2B negotiations to become an
astute negotiator.
1) Negotiate only when you have an agreement in principle
Here agreement, in principle, means to ascertain that the product or the service in
question is really sought by the business in question-implying that the product or the
service is able to solve the problem or produce the result to the satisfaction of the buying
party.
Only when this has been ascertained that the buyer needs the products in questions and
the product or the services offered by you has solved the problems of the buyer to their
satisfaction, only then you should go further into the deal and discuss the price and the
discount, if any.
In B2B deals, it is most important not to start the negotiations with the price and the
discounts, lest it may lead to a major block and distraction in the deal. Therefore, it is
recommended to resolve the issue first, with the help of the product or services on offer,
get the agreement in principle and then can proceed with the other aspects of negotiation.
Let go of something if you are assured of getting something else of equal or greater
importance
The above approach-of letting go of something for something in return-can be engaged if
the negotiator comes of know of the clean intentions of the other party to go forward and
help and help you know about his company’s purchase policies and which are their
competitors who are also looking for the product or the service that you are negotiating
for. The hurry to sign the deal, before the ensuing the quarter end also emphasizes the
company intentions to transact the business with you. Discounts and other such offering
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should be talked about when one feels that the discussion is heading towards to a long
term association rather than a one-time indulgence. Such offers should be for win-win
situations only.
2) Appraise as many the non-monetary points of negotiation as possible
Businesses often appreciate early information on buying process is a clear indication of
non-monetary point of negotiation. To discuss in detail about non-monetary
emphatically, will help both the businesses to save for their respective companies.
Given below are some non-monetary points of negotiation for your understanding.
➢ Professional services, such as a full-service training program, where the customer

support team will help the client and their users get fully on board get to use the
product or the service with a high degree of proficiency.
➢ A short-instant-contract for new customers.

➢ A mention of client’s (buyer) name company in our (seller) blog which gives
free marketing publicity to the buying company.
➢ Tailor made Concessions on certain contractual terms, such as auto-renewal
➢ A company t-shirt, fleece or other branded gear.
3) Beware of the difference between trade-off and concession

A trade-off is situation where one has to accept a small quantity of Bad-Loss-for a Bigger
good-Revenue. Here the monetary loss is a small portion as compared to having not
received the order for the product or the service at all.
A concession is a compromise, an adjustment. A preferential treatment given to a clients
in order to appease them and is generally given to a long term buyer and or a quantity
buyer-who is also your regular client. Concessions generally work in a buyer’s market.
4) Don’t hasten up the negotiation process
In times of intense competition, there is always a latent urgency to close the deal and
clients are totally aware of this. Don’t let any urgency indicators come into conversations
lest it may trigger a trade-off or a concession demand and in the anxiety to close the deal
you may end up digging a hole in the bottom line of your company.
While in negotiation, it is important to be cool, calm and calculative. Believe me your
confident composure instills a lot of confidence in your buyer and is appreciative of this
trait in you. The buyer and grades your company positively.
The thumb rule in negotiation is 1) Don’t settle for less than you deserve and 2) Don’t be
bullied or strong-armed to do something which will hurt you and your company.
The biggest challenge for the B2B sales people is negotiating money. One should not
hesitate of talk about money-this the core of any business and businesses survive because
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they earn money. The thumb rule in this deal is to be humble, upfront, honest and
authentic.
B2B sales a challenging it is rigid and resistant to change and secondly, multiple
suppliers available to a buyer. Buying is a long drawn out process and it has many
departments to take a decision on the purchase. Having additional hindrances in your
B2B sales process delays the desired result.
Being aware of the pitfalls is a super way to hone your sales skills. Stephen Covey likens
it to sharpening your saw regularly so that we may work skillfully and tactfully not just
hard.
Zig Ziglar who specializes in personal development training says every sale has five
basic obstacles: you don’t need it, you don’t have money to buy it, you are not in hurry to
buy it, you have no desire to buy it, and you have no trust in the product. A sales person
has to overcome these obstacles to client’s liking without which he cannot obtain a
favorable response from the client. The diagram below shows how to present your
proposal to a prospect.
Figure 1.2 how to present your proposal to a prospect.

The seven hidden traps that hold one back from securing B2B sales deals are as follows:
1. Chasing only enterprise deals
2. Not asking the hard questions
3. Overselling your product
4. Rushing your prospects
5. Limiting sales to just phone and emails
6. Keeping it one-to-one
7. Never asking for the sale
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Chasing enterprise deals helps only when your company product/services have the
capacity to solve their problems. Without this assurance it is futile to chase only
enterprises.
Tunnel vision sales personnel-people interested only to know if customer is interested in
their product-fail to ask the hard question-in other words fail to carry out a proper
investigation.
In this situation, it is better if the sales person allows the customer to ask questions about
your business and the products.
Too much of information on the product or a service confuses the customer. Therefore it
is recommended that one should listen to the client’s requirement first and then with that
with such an understanding, make a proposal of how your product or the service will
help them solve their problem. This will help the client to assess the product or the
service and help them take a purchase decision. Don’t over sell your products/services.
It is good to follow up with your prospective clients and one should also be mindful if
the fact that not all prospects will be your customers. For example, if a customer
downloads content from your website, it does not mean a lead which has to be followed
up immediately. Don’t send them mails every other day. Initially, try to nurture the client
rather than follow up. Try and understand what your leads are looking for. If your
product or services matches their requirement then you can add value to their research by
informing about your product or services. This type of follow up becomes persistent and
polite. Don’t ever rush your prospects.
Do not limit sales to just phone call and e-mail. B2B buyers expectations are shifting
towards omnichannel experience, you can give your clients an integrated experience by
creating omnichannel sales funnel which will include their interaction with your website,
live chat agents, product marketers at an event, online advertisements and social media
pages.
Keep it one to one affair. B2B sales cycles are long and time consuming as lot of people
are involved to take a purchase decision. Sales people know that the fastest way to close
the sales is to know the right people in the deal. A rapport with them gives them an
opportunity to close the deal slightly faster than it may take the other way round. A good
salesman will take into confidence all the important people in the decision making
process which will facilitate the order placement process.
Ask for sales. However good your call might have gone with the prospect but unless you
ask you will never get an order. So you have to ask for an order. Many sales guys refrain
from asking for an order which is wrong as you have not closed your sale.
In the worst case, you might get a no for an answer. However, this will give scope to
further understand in depth the client’s requirement and this will facilitate the scope of
further negotiations.
How to negotiate the best event planner contracts?
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a) Specify What Services You Will Provide

You may think that, as an event planner, it is fairly obvious what services you will be
providing. All the more reason to describe these in great detail. Event planners offer a
broad range of services; the goal here is to establish what you will be providing to avoid
any confusion later on. Whether it is menu selection, floral arrangements or choosing the
venue, clearly state the items that are your responsibility. Once signed, your
responsibilities will be limited to the specific items included in the event planner
contract.
b) Read Between the Lines
When reviewing event contracts, pay attention to the details. Read every line carefully.
And then read between the lines. Be on the lookout for any language that is vague; items
that are addressed in generalities will be subject to interpretation and that can wreak
havoc for you and your event planning business. Watch for any hidden fees or clauses
that indicate there may be additional surcharges. Clarify those add-ons or negotiate to
have them completely removed from the event contract.
c) Question, Question, Question
When you are in the process of negotiating event contracts, question every charge. If a
hotel or vendor has an item listed in the event contract, they should be able to explain its
presence there and justify the associated cost. Sometimes merely asking for clarification
can result in having the fee waived.
Don’t be intimidated. As youngsters, we are taught that the only foolish question is the
question not asked. When negotiating, ask away. If something in a contract is unclear to
you, ask. If you notice a line item has been omitted, ask. Better to ask now than pay the
price for it later.
d) Don’t Accept What You Don’t Want; Ask for What You Do Want Instead If
free local calls are not important to your guests due to the availability of cell phones, then
don’t accept that as an included amenity. Instead, ask the hotel to exchange this line item
for something that is important to your guests. Lower rates or discounts may be far more
valuable to you so make a list of those “freebies” that you don’t want and instead
negotiate for something better that you do want. Amenities that are typically available
include airport transfers, complimentary health club passes, room upgrades, Internet
service, free shipping and receiving and more.
e) Payment Schedule
Be sure your event planning contract specifies your payment schedule. This includes the
initial deposit or retainer, and details regarding how future payments will be made. The
schedule for payments may be tied to certain milestones in the event planning process or
may be a set date on the calendar prior to the event. Develop the schedule that works best
for your event planning business and your cash flow. Be sure to include any taxes and
added fees. Most importantly, do not begin actual work on planning an event until after
you have received the initial deposit.
If the deposit never shows up, you did all of that work for nothing.
f) Event Cancellation
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While you are focusing your time and energy on planning an event, the last thing on your
mind may be cancellation of that very same event. However, if your client decides to
cancel the event at any point after work has begun – for whatever reason -- your contract
should specify what happens if the event is canceled. This is a necessary step to protect
yourself, your event planning business and your expected income.
The key point to include in writing is that the deposit and all previous payments made up
until the point of cancellation are non-refundable. In event planning, most of the work is
completed prior to the actual event. You deserve to be paid for work already completed.
To that point, depending upon your payment schedule, you may also want to include a
clause stating that clients will pay for services rendered up until the date you receive
written notification that the event is canceled.
g) Termination Clause or Force Majeure
A termination clause – or force majeure – is inserted into a contract to absolve either or
both parties from liability in the event they cannot fulfill the terms of the contract for
reasons beyond their control, such as labor stoppages, war or extreme weather. The intent
here is to protect you from any risk arising from uncontrollable circumstances. Be sure
that you are protected by this clause and specify the terms and timeframe for termination.
For example, “either party may terminate this agreement without liability due to one or
more of these or similar reasons upon written notice to the other party within ten days of
such occurrence.”
h) Indemnification.
An indemnification clause provides protection if the other party does something that
causes you harm or causes a third party to sue you for damages. The clause is a promise
that basically says the other party cannot hold you responsible for any claims, losses,
damages, liabilities and expenses that are a result of their negligence, failure to perform
or willful misconduct. Make sure your contract has this clause.
i) When Negotiating, Be Prepared
Before negotiating event contracts, do your homework. Determine what is involved in
planning this event and know what terms and protections you want. Your contract should
reflect shared responsibility so avoid any agreements that are one-sided. What is good for
one party is good for the other. When negotiating, be a good listener. Pay attention to
contract items that may be negotiable and those that make you uncomfortable. Be
confident and do not falter under pressure. Stand firm. Do not sign anything until you are
completely satisfied that the terms are fair and offer you the protection you need.
1.3 Negotiations with Distributors, Customers,

Vendors
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Who is a distributor?
A distributor is an intermediary between the manufacturer and the other entities in the
supply chain like the retailer or a value added retailer (VAR).
Glenn Balzer, an expert in the field of distribution negotiations, states 6 rules to be
followed for negotiating a better distribution agreement.
Distributors look for the possibility of greater sales and profit margin and manufacturer
looks for large sales volumes, geographical expansion of sales and increase in market
share. Invariably the details distribution is often overlooked by the distributor and
supplier or the manufacturer. In happier times, no one spends time to review the
distribution agreement but in bad times, negotiated agreement copy is often referred to
and more closely so.
Once the relations between the supplier and the distributor starts fading, minor blemishes
and flaws in the agreement assume gigantic proportion and this should be avoided.
Therefore sufficient management time should be spend in negotiations with the
distributors. The detail in the agreement is sometimes a bone of contention and a
distraction or a cause of frustration. Sufficient management time should be spent on
growing distribution relationship and thereby grow sales and profit.
A generic distributor negotiation flowchart given below:
Figure 1.3 Generic Negotiation Flowchart
By avoiding to include contentious points in the agreement, the management can spend it
valuable time on developing, sustaining and expanding between the
manufacturer/supplier and the distributor. Given below are the six rules to be followed
while negotiating a distributor agreement.
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1) Have Balance in the agreement:

In an agreement no party should have an undue advantage or hold undue power over the
other. Both parties should have equal opportunity to terminate the agreement under
similar conditions.
Example 4
If a party is allowed to terminate the contract in 60 days from resumption, then the other
party also should have the right to do so in during the same period. There should be no
imbalances of opportunities and power in favour of any party in the agreement.
2) Perform Due Diligence exercise:

Lack of due diligence leads to failures in distributor and supplier relationship. In the
early days, often, both the parties will observe only the good attributes and often ignore
the worst attributes. It is advised that a proper study of strength and weakness study
should be undertaken and note down steps to mitigate them or address them in order to
reduce unpleasant issues cropping up as the parties go along to improve their
relationships. Therefore a sincere due diligence should be performed and the issues
thrown up by the exercise should be addressed.
Due diligence is, besides taking note of the lovely things that the presentation say, it is
also good to take feedback from the market, their current clients, service quality and the
firm’s integrity as a distributor. This information should be gathered before the
agreement is signed cause after the signing of the agreement these revelations will be
costly and unpleasant.
3) Yearly termination & semi-automatic renewal:
A provision of Annual termination of distribution agreement and semi-renewal is a
routine procedure followed by the top player in the field. This procedure allows both the
parties to submit a notice of intention of not renewing the agreement. Performance and
nothing else acts as a binding force in such partnership.
4) Comparison with proven industry agreement:
Large companies rarely sign distributor agreement with errors. In fact errors are a result
of either of the partners resorting to ambiguity in the agreement with the intention of
gaining an upper hand in case of disputes as and when they arise.
Therefore in order to circumvent the unpleasant scenarios it is better the level the playing
field during the negotiation stage itself. This can be done by calling for a model
agreement copy from the relevant industry distributor association office. Such a
distribution agreement serves as a bench mark to compare the negotiation that is
underway.
5) More the merrier-four eyes are better than two eyes:
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Litigations can be avoided, down the line with correctly and sufficiently worded
distribution agreement. Such a worded distribution contracts should be reviewed and
revised if need be, by the experienced people in the industry. However, the review should
be done keeping in mind the administrative angle, the legal compatibility and best
industrial practices. Only such a distribution agreement should go through which stand
the scrutiny of administrators, the legal department and the best industry practice norm.
6) Causes and convenience:
Any distributor agreement should have the causes and convenience clause properly and
sufficiently worded in the agreement. This clause allows the supplier and the distributors
to dissolve the agreement for a cause or convenience, which result in saving time and
other elaborated procedures. However, in the real world, rarely a contract or an
agreement is terminated without lengthy discussions-socially or legally. However, save
time and money by inserting the causes and convenience clause to avoid frustrations.
Negotiation with the distributors should be free of any ambiguity and should be fair to
the parties involved, without any intentional inclination towards any of the parties. It
should also have clauses to mutually terminate contract, agreements for cause or
convenience.
Negotiations with Customers
Customers are the most important to any business and their satisfaction and happiness
ensures you their continued loyalty which rakes in your business volumes.
Service based business will thrive only on customer negotiation while the product based
industry can also make use of good negotiating techniques to secure sales. According to
Brad Douglas, sales and marketing vice president of Shipley associates says that in
learning the art of successful negotiations one has to unlearn the current bad habits.
Here are five things suggested by Brad Douglas that one should keep in mind while
negotiating with your customers.
1) Preparation-knowledge of your product and that of the competition:
To win in sales negotiating and secure orders for you, the first thing the sales person
should do is to eliminate the thought of the competition product from the customer’s
mind. It is of paramount importance that you should know your product, your customer
and the competition.
In case of your product not matching the customers requirement and expectation, you
will have to lure him with something to get his attention-it can be an extended warranty
which your competition product which has the features that your customer is looking out
for. In other words you should obfuscate the threat as early as possible from your
competition product. You have to provide an answer to the question why a customer
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should buy your product and not the competitions’ and for this you have to have in depth
knowledge of your competition products and how it compares visa Vis yours.
2) Have Negotiable items for an agreement:
There are many things that can be used as negotiables in customer negotiations. And this
can be anything from extended warranty, extended payment terms, early delivery
assurance and customization of the product to customer’s requirement, if that is possible.
Do not promise something that your company will not honour which will lead your
customer losing faith in you and your company and both these are very bad for any
business.
3) Please leave a wiggle room where you have a leeway for better negotiation:
Never talk of your best offer first. This will lead the customer to think that you have
further room for negotiation where you will offer him something more or else will walk
away if you don’t do so. Talking about your best offer first will also lead to loss of
revenue to your company as the customer may have been prepared to pay more for the
product or services on offer.
4) You have to learn from each negotiation:
Negotiating is not an inborn skill for many and therefore, Stuart Diamond, an American
Pulitzer Prize-winning journalist, professor, attorney, entrepreneur, and author who has
taught negotiation for more than 20 years at the University of Pennsylvania's Wharton
School of Business, in one of his books advises to make a list of what went well with the
negotiation process and what did not, immediately after having one. Learn from each of
the outcomes of negotiation encounters. It might also help to attend public speaking
class, a psychology class and learn how to be comfortable talking with people and
understand and take clues from their behavior.
5) It is important to leave a feeling consideration in your customer’s heart:
Even in the eventuality of being unable to negotiate a specific deal with a customer, if the
customer has enjoyed himself talking to you, there is still the chance of the door being
open for future transactions. See to it that you answer the customer’s entire query
honestly and offer future proposals to encourage the customer's return.
Here again there are 15 rules as listed by Geoffrey James, who is an American author,
journalist, and contributing editor on Inc.com, which if followed in earnest while
negotiating, it will work for your advantage and also benefit the customers.
After the deal is closed there is an important step to be complied with and that is
negotiating the final terms. In small purchases, it is just a formality, but in big complex
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purchases this negotiation can be a long affair. And therefore Geoffrey James suggests
15 rules to be followed and better outcome and they are as follows:
Before the negotiations start follow the following rules:
Rule 1: stamp your credibility. Help the customer to define their needs, define solutions.
Customer would then be apprehensive to walkout on the final deal, despite the terms not
being entirely favourable.
Rule 2: Ensure multiple contacts. Having many contacts will a clearer understanding on
what to negotiate and what not. Have this done early lest the contact may spot the threat.
Rule 3: eliminate the competition. A customer will always be enticed by the competitor if
the competitor represents a viable option. Before even negotiating, convince the
customer that your product or service is probably the only one that can adequately meet
his or her needs.
Rule 4: Prepare thoroughly and comprehensively. Have all the relevant information on
the dynamics of the negotiation.
Rule 5: Develop realistic expectations. See that your aspirations have the "feasibility"
based upon the expectation of the counterpart and reassess your knowledge on the same
as the talks’ progresses.
Rule 6: Know your pricing bench marks, know the deal you are negotiating and that you
are able to prove that you are being realistic. Offer a discount with some other trade-of,
to counterbalance it.
Rule 7: Decide on whether to open up or not. Don’t put your cards on the table first.
Rule 8: Give yourself a wiggle room to maneuver. Have some scope to haggle. Keep
ready super good rationale for any positions taken by you.
Rules to follow during negotiations:
Rule 9: Don't try to compete with the customer. Negotiations are the tools to get to
common areas of agreement, as it is not a rivalry. Make the relationship important so that
it becomes worth the work put in by both sides..
Rule 10: Do not peter out. Customers will sometimes take position that may not make a
good business sense to your company. If this happens, you will all out to pacify the
prospect and would give in to anything with the idea of not losing a customer.
Rule 11: Know how to manage the concession process and let your customer know that
every concession is a thought out process.
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Rule 12: Work to retain and sustain your credibility. Define any positions taken by you
with the relevant facts. Be data specific. Do not get into the emotion when negotiating.
Rule 13: It is important to know when it's time to stop. You will get what you want when
the negotiation goes will. Then refrain from further negotiations on that matter.
Rule 14: it is important to note that you should never agree to last-minute demands. This
little may sound like deal-killers, but it is how does a customer examines to ascertain
whether the negotiated deal is fair or not. And if you give in to the last minute demand, it
will tell your customer that you were fleecing them.
Rule 15: Negotiation should last until the contract ready and agreed upon and signed by
both the parties. Don't relax once there's a formal agreement on the terms of the
agreement
Negotiations with Vendors

Vendor and Supplier Negotiations hinge upon fairness, in that the buyer gets and supplier
provides the right quality at the right price. Given below is how buyers think of suppliers
and flowing that with a real scenario of how a buyer negotiated with a supplier.
Suppliers are seen as Demi-Gods or as servants who has to fulfil every wish of the
customer, in this case a buyer.
This is thought process is different in different geographies. In the U S, they feel the it is
the duty of the vendor/supplier to satisfy each and every need of the customer.
And in the Asian countries the buyers feel that the vendors and supplier have lot of
power and if negotiated too hard, will supply substandard material which will be
counterproductive to the very purpose of such supplies.
However, none of the above is correct. Both, the suppliers and well as buyers need each
other. But the fact is that the supplier and vendors need the buyer the most. Therefore,
the supplier must be seen as sellers who are soliciting business from you, who would not,
under any case, stoop low to shine your shoes, if you ask them to, putting it
metaphorically.
One more factor to be considered here is that Buyer may be few but suppliers and
vendors are in plenty, so ideally, none of them should act smart and make the each other
bend backwards to for business. Therefore, it is recommended to have alternative
business sources and none of them are irreplaceable.
There are four principles to be followed when negotiating with the suppliers. And they
are as follows:
1) It is better to have choices before you negotiate with the supplier:
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With only one supplier it is difficult to negotiate to your liking. Therefore it is

recommended that you have 2 to 3 more capable suppliers who are competing for your
business and this will ensure better services.
2) It is of utmost importance that you understand the price quoted by the supplier:
While negotiating the price, you have to ensure that the supplier makes a reasonable
profit at same time he is able to deliver good and or services of the quality that you need
to procure at a scheduled pace and in time. To do this you should have a good
understanding of price & cost analysis.
3) Understand what is your rank the supplier list:
If you are an important buyer and does business on long term basis then the supplies
would continue to do business with you even at cost of losing a percentage of your profit
and supplier values long term association over short term, irregular procurements.
4) Whenever you face price increase bouts from the suppliers-resist them:
Whenever the supplier brings in price increase you have to resist it. You can straight
away say no and refuse to accept the new price. This will work for you in fifty percent of
cases as the supplier is just trying to maximize his profit without a real increase in the
price of the good/services he is supplying. In rest of the cases the supplier will prove it to
you have the price increase has come about which you will have to accept it if his profit
margin after the price increase is as desired by you.
Dealing with suppliers puts your negotiation skills to the test. Thirteen tips for
negotiating with the suppliers.
1. Never Compromise on Communication: Start with and maintaining solid

communications. Starting well will be a great leverage in future negotiations. Being
attentive and responsive to issues, entrepreneurs can build a rapport with the supplier and
gain the upper hand to use it during a ensued meeting in future meeting.
2. Research the Actual Costs: It is imperative that you know the cost of product or
service that you are negotiating the price for. This will allow you to understand the price
that the vendor is quoting and you then have a much better idea of how much of a leeway
you have with regards to negotiating.
3. Know the Lingo: You have to meet several vendors or at least be in touch with them,
learn their lingo of their trade and by doing so you will be talking their language. Once
familiar with the vendor trade you would have an upper hand and therefore your
decisions and actions will be appreciated by the vendor trade and as a result gain respect
from the trade. Learn the jargon so you sound like you know what you're talking about
(or actually do!), and the vendors will treat with respect.
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4. Pitch the Supplier's Dream: Build trust, build credibility and the relations with the
vendor trade. This will determine the terms of your agreement and favorable rates.
5. Discover Areas of Mutual Gain: Check what the supplier has in mind as a target to
increase mutual profit. For example, if the supplier is rigid on price, then focus on other
areas of the agreement such as the quantum of the down payment, the length and scope
of the warranty, a discount for purchasing in bulk, and other areas of interest which
might provide even greater benefits for both parties.
6. Quote Multiple Suppliers: One more important thing to be kept in mind while
dealing with the vendors or suppliers is to have quotation from several suppliers in the
industry. This will let the vendor know that you are in know of the ongoing prices and
practices in the trade and therefore will refrain from fleecing you on price and you will
get a competitive price.
7. Play the High/Low Quality Game: Have your research done and have a target dollar
amount that you want to pay. Inform the supplier about your bulk order to get their
quote. Inform them that you are getting a lower quote on bulk purchase. Allow a decent
profit and they will take the order and execute it.
8. Reference Their Customers: Rate the supplier services from customers that he keeps.
Therefore before you begin negotiations ask for the list of his customers that you can
refer. Customers will always talk about how good a supplier is and the quality of goods
that he supplies and the regularity dependability of his supplies. They may even share the
prices with you.
9. Angle Your Start-up Strategically: Make your vendor feel that he is your vendor of
choice and someone with whom you are looking to build a long term relations with. And
if the vendors believe in you, it will help you to be in a stronger position and the vendor
will deal with all fairness with you.
10. Have Your Deposit Available: All the supplier are concerned about their payment
and if you show them that you are easy with that and are ready to make deposit more
than 50% amount of the order in advance you want to create leverage with a supplier.
11. Want It the Least: As always seen In most negotiations better deal is bagged by the
person who quotes the least or want it the least. Have backup suppliers ready to address a
situation if it presents itself. You are at peace then and that will allow you to come across
as more confident in any negotiation. If the situation demands, don’t be shy to walk
away.
12. Help Them Save Money: For company’s startup success, treat suppliers as partners
in business. Work with the supplier with the intention of making their life better by
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saving them money from their vendors or saving them time with your order. Understand
their business model.
13. Pass the Authority Around: Make sure your supplier knows they are not the only
one that you're working with and it a company policy to get three quotes of like-quality
product, and convey it to them that there are others to supply the same quality product so
that it boils down to the price factor.
It is always better to win the vendors over by showing small consideration towards them
which will work for you to create a feel good factor.
Event Vendors Negotiation
The event budget can vary as to the negotiation skills. If you know how to ask, you can
get a considerable discount for everything – from venue to volunteers’ uniforms. Why is
it necessary to negotiate the event venue price?
If you take everything as it is, the venue price may eat up 60% of your total event budget,
especially if it’s a large conference or a meeting lasting several days. In case you don’t
try to get a better event venue price, you risk ending up with poor event quality.
Negotiation helps you hold the ground, instead of retrenching on all event aspects to
maintain the venue cost.
Golden rules for Event specific negotiations
a) Be an initiator.
Don’t wait for someone to establish the tone for negotiations. There’s one stable
tendency here: whoever starts the deal, wins in the end. No deal will be successful only
because the first word is yours. However, you can make it work for your success if you
go for it with the proper preparation and confidence.
Make sure you have a solid understanding of the market before starting to negotiate
about event requirement such as the venue price. You can go through several similar
offers, consider all pros and cons (better write them down) and draw your master plan for
getting the proper venue at the best price.
When all numbers and figures are processed. Now it’s the right time to take control over
the starting point.
It’s important to claim your price first. It’s even ok if you make a polite interruption in
the beginning and state that you’d like to share what you have in mind.
b). Negotiate in writing.
Event specific negotiations should end with a written agreement. What if you have it
ready and waiting for a signature before a discussion starts. It’ll just add value to your
offer and show that you’ve come prepared. Start referring to the written document from
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the first moment the proposal has been made and get a signature when the right moment
comes. Result: no follow-up paperwork and no interference with your initial offer.
c).Keeping calm
Negotiating is a subtle process, which requires confidence and leadership. No matter how
much pressure one faces and what emotions jump over negotiating table, maintaining
calmness is important. If you display your firm intention and great composure, no one
will throw you off.
d) How to ask for a discount
Confidence is golden. However, sometimes over-ambitious plans and self-assurance may

leave you in a dump. Go through the rules on how to ask for a discount so that to stay on
the safe side.
e) Be confident, but realistic
You can’t ask for a discount if you’re all trembling and stuttering. Maintaining your
confidence through the whole negotiation process is a big must. At the same time, make
sure that your proposal is reasonable and based on the research. If you set realistic goals,
you have more chances to reach the expected results.
f) Decide how low you can go in advance
No matter how far your negotiations take you, establish a price barrier that you must not
cross.
Study the event venue prices and deduce the average. Then ask for a 10% (maximum
20%) discount rate, depending on the circumstances and features of your event.
g) Choose the right time
Your negotiation success may depend on whether you ask for a discount on event price at
the right time. If you plan on setting the event in the peak season, when the demand is
high, you’ll most likely fail, because the vendors will have more profitable proposals to
take. Think of what would be the best time for your event from the perspective of price
negotiation and you’ll get a big win for your budget.
h) Trial it
If you’re a newbie, you should consider setting a so-called negotiation trial. Based on the
research, go to several vendors that have similar offers and ask them what could be the
discount they’re ready to provide. This way, you’ll get a real picture of what you should
expect to pay.
i) Don’t pay full price
Now note the last golden rule is that don’t pay the whole price in advance. To ensure the
quality and safety of the deal, pay only a small deposit up front.
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j) How to create a winning proposition
In order to minimize an event expenditure, approach it strategically. Here’s the list of

small goals for you to accomplish in order to build a winning proposal: • Develop an estimate
of your budget to deduce the realistic cost of the event requirements you want to target.
• Make requirements crystal-clear.
• Think of several options to prove the other side that you’re flexible and want to reach a
mutually beneficial agreement.
• Clarify the roles. Since some vendors cooperate with third-party businesses, they may
include additional services into the price. Make sure you have your engagement clearly
defined to avoid unnecessary expenses.
• Don’t sign the contract until you double-check each line. Better yet, ask someone from your
colleagues to read it.
1.4 Types of Negotiations in Marketing

Let us first see what a negotiation is, in marketing context.
As per the business dictionary, “Negotiation is general bargaining (give and take) process
between two or more parties each with its own aims, needs and viewpoints seeking to
discover a common ground and reach an agreement to settle a matter of mutual concern
or resolve a conflict.”
Strategies
Given below are the 6 strategies that every marketer should know.
Have you observed that on TV there is a liking to and the screen time for strong,
powerful arguments?
For the marketers that last part is especially important and exciting – whether we know
or not, we all approve negotiation – the skill that all of us should master.
That could be why we're attracted to a well-written, televised version of a compelling
and sound argument. We appreciate seeing people making a case for themselves for what
they believe in and at the same time wish that we could do it as well for ourselves at the
time we try to negotiate a budget allocation on a project.
With the right strategies in place you can learn to negotiate. It’s practical and a valuable
knowledge that we can apply almost anywhere - especially in the marketing domain.
Why Do Marketers Need to Negotiate?
Marketers always need to negotiate on lot on things like allocation of resources,
allocation of budget, new manpower to hire, or time needed to accomplish the objective.
Maybe you’re working on a co-marketing agreement or you’re trying put across a case
for your ideas.
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Regardless of anything that you may be doing, being prepared for these conversations is
of utmost importance. With all the details in your mind it boosts your confidence.
Around 19% of the people don’t negotiate is because they are scared to be pushy.
Negotiating is scary, especially when you’re new to it.
According to Anna Mar, the Chief Marketing Officer for a telecom company in Tokyo,
there are 7 types of negotiations. And they are as listed below along with a brief
explanation for each of the types of negotiation.
All negotiations are for a win-win outcome, but, it is also true that every negotiation
cannot entail a win-win outcome.
1. Win-Lose Negotiations: This type of negotiation is also called distributive
negotiation. In these sorts of negotiations, the focus is on what is the other party’s base
price/base requirement. A distributive negotiation or a win-lose negotiation often involve
people who never had a previous interactive relationship. They are likely to do so again
in the near future. Once this is determined, it is easy to take the deal further as it lets the
parties know that the sellers is not over charging the price and the buyer is not under
valuing the asset price. As it is, such Win-Lose negotiations always depend on the base
price which is less than the actual market value of the asset. “Prospect Theory” informs
us that people value losses more than gains and are more risk-averse about losses and
therefore, such negotiations are on the acrimonious side leading to counter
productiveness. Used car prices, used machinery prices are classical example in this
category of negotiations.
2. Win-Win Negotiations: This type of negotiation is also called integrative negotiation.
Integrative negotiation or win-win negotiation is interest-based, merit-based & principled
negotiation. In a win-win negotiation, both the negotiating parties win. Integrative
negotiation or a win-win negotiation attempts to create value in the course of the
negotiation, which thereby expands the pie by either compensating loss of one item with
profit or gain from another item. However, either may gain slightly less or more, but it is
a gain nevertheless for example, salary negotiations, business to business negotiations
fall in this category.
3. Lose-Lose negotiations: This negotiation is a situation where both the parties going to
negotiations, it is often found that the parties turn bitter, however, with the knowledge
that both the parties will lose, it is important to maintain calm and understand each
other’s situation.
4. Adversarial negotiations: The very title of this negotiation suggests that it is the
adversaries who are involved in negotiating who, actually, are not going to gain from
each other, but, at the same time want to inflict more or higher loss to the other party.
Win-Lose negotiations and lose-lose negotiations result in such adversarial (combative)
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negotiations. The best example of this type of negotiation is that of political parties as the
contending parties will only be satisfied by inflicting major or maximum losses of the
opponent party. These negotiations are done with battle like strategies.
5. Collaborative negotiations: These are the coolest and the soberest negotiations of the
lot. Things discussed in a friendly, collaborative & corroborative manner. It is observed
that negotiations that project big gains are often corroborative negotiations. In this kind
of negotiations use of persuasiveness is at its peak. Such negotiations are invariably
informed discussions done in the ambience of optimism where creativity often resorted
to put across a point of view. For example, two big business houses coming together to
bring in modern telecommunication services to a developing or an under-developed
country, Local businesses in collaboration with the leader of automotive industry join
hands to manufacture their leading car model in the host country.
6. Multi-party negotiations: These are the most complex and the most challenging of
all negotiations. Inter-governmental negotiations and international negotiations are the
classic examples of this type of negotiation. These negotiations take a long time to be
formulated and negotiated. It involves various departments-technical, administrative and
legal. This type of negotiations requires a very high degree of proficiency and only those
highly qualified in the subject as well as the nature of the dealing participate in such
negotiations where advanced diplomatic techniques are the order of the day.
7. Bad Faith negotiations: When parties deal with each other, they are clear in their
minds that they have the least intention of keeping the commitment that they will get into
during the course of the negotiation. Bad faith negotiations are often dubious in nature
and often done under pressure from the local citizens or the government. These
negotiations are often intended to buy time or are diversionary tactic. For example,
environmental treaty is signed with the intention of not keeping it but done so under
international pressure. It is advisable to include the penalty clause in the negotiation, in
case if one party apprehends that the other party is negotiating in bad faith.
If you go to a meeting with the all the relevant data then the meeting becomes
meaningful.. There are 6 techniques that we can use to handle most negotiations and they
are as given below.
As a marketer you should know these 6 techniques:
1) Concentrate on your interests and not on your positions or stance.
You should understand that focusing on interests & focusing on positions are two
different things. Our interests are there where the outcome benefits you; positions are
your stances on a particular issue. This concept works out in the context of Co marketing.
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Example 5
For example, small and big business partner for a larger reach. It is possible that your
opponent has a different stand on this issue. You may or not have some interests that are
common to both. The knowledge of these common interests will help you to come up
with the conversation in a way that assures you success.
2) Have if this, then what-possibilities - and a backup plan.

It is advisable to have various in tow before you reach a negotiating table. In business
school, one is taught construct an “If-Then Matrix”: An ‘if and then’ table helps you to
take logical decisions on the negotiating table.
Having alternatives in mind can help to mitigate fear that is endemic while negotiating.
Having options clarifies your priorities: A recent survey shows that if women do not
know what to ask, they will not put up any questions in the negotiation.
It can be possible that work-life balance matters more to some than anything else. Then
can flexi-hour be negotiable or non-negotiable is what one has to decide.
What
we also need to consider is the fact that despite everything we may not reach an
agreement. What does one do then?
Therefore, have multiple alternatives will actually confuse you more and more if your
negotiation does not reach a desired result.
If so-Then what matrix can come to the rescue. Don’t focus on defeat - focus on what
can be done by you and the points that are actionable.
Remember that Negotiation, as it is said, is not an all-or-nothing process. Have your
interests in mind and then work out your options basis the most important interest and or
option to you.
3) Make use creativity and take advantage from it.
When it is about negotiation it is creativity that takes the cake.
Study of students who participated in survey grouped into two teams in different
workshops – one group was to focus on problem with some systems in place & other
group was advised to make merry while grappled with their assignment.
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Both the groups had to deliberate budget allocation. Those students who were give a free
hand fared well and executed the task better than those who followed the traditional path.
Innumerable Studies have shown that creativity is a very important and helps to come up
with alternative solutions. If there is no creativity, you will take positions and stances
instead of knowing why of what you need.
4) What matters to your opponents is utmost important.
If you understand your opponent’s priorities it will quickly uncover the underlying
interests of your opponent and will, in turn, help to align your interests with yours and
this will result in a mutually beneficial outcomes. Thinking about the opponents’ interest
will also help you to know what questions he will possibly pose so that you are prepared
with the answer.
Knowing the possibly questions by the opponents will also help you to figure the
questions you need to ask at the negotiating table.
So don’t be afraid to give in a little bit of domain during a negotiation when it a question
of your opponents priorities.
5) To know how other cultures negotiate is a must.
You need to maintain a pleasing ambience of your language, office etiquettes and the
protocol when you enter a negotiation which will set the stage for a healthy discussion.
You will also see to it that you do not offend your client or a counterpart in any way,
But accidentally you can be offending your counterparts especially when one negotiates
with the international peers. And this happens these days more and more likely in a
business.
It would be good to have an update on native business etiquette of your opponent. Given
below are the categories to be considered while prepare for an international negotiation.
Notice the physical Cues
Researching other cultures has found that elaborately moving ones arms when I talk
would take my colleague from another country by surprise. So apart from preparing
intellectually you have to prepare yourself for the right physical movements.
Leslie Ye, who is a senior executive communication strategist, informs us about some
correct and other incorrect physical behavior in each country.
The use of Silence
U.S. often joke a silence. But other countries like japan makes use of silence to think
about what to say and at the same time wait for someone to speak and end up relating
something that he should not have.
But instead use it to reflect. If you do decide to speak first, then take advantage of the
quiet to think carefully about what you have to say.
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How is Punctuality looked at by different cultures

Being on time varies from country to country.
France considers you on time even if you're late 10 minutes. Knowing how each culture
respects timeliness can help you keep your negotiation work on track.
6) You also need to prepare your team for the negotiation.
You are totally prepared for the negotiation but what about your team.
Notwithstanding the fact that you are one to do all of the talking, it is required that all
your colleagues are thoroughly prepared or the negotiation. To be fair to your colleagues
on the team they should be briefed thoroughly for the negotiation so that they can address
it accordingly during the meeting, should the occasion arise. Relevant subject
information available with your team can give them the opportunity to fresh and valuable
insights.
When you are preparing for any meeting, there are a few basic things you can do to
prepare your team.
➢ Set clear basic rules: check on team understanding on the actual problem being
addressed and what the desired solutions are. Also let them know when to speak up
to contribute to the discussion, and also what not to speak.
➢ Inform the team about the non-negotiables: Your colleagues should know of the
Ifs-Thens. Hand them over a list of items on which you are not going to compromise,
and also let them know how to handle those objections.
➢ Let the team ask questions: clear any uncertainties because If your team is off guard
it will probably show and the counterparts or the opponents can pounce upon you.
If you are ready with your data and other preparations it is time to get started on
negotiation.
Negotiating is kind of scary. But even if the worst case scenario actually plays out, by
following these steps, you’ll be covered with a backup plan.
1.5 Negotiations in Operations, HR, Finance &

Banking
Negotiations by Operations Manager
Let us first understand the role of an operations manager:
To manage overall operations of the company and is responsible for the effective and
successful management of labor, productivity, quality control and safety measures as
established and set for the Operations Department.
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Operations manager has also to ensure safe and efficient operations. Serve as a company
representative on regulatory issues. He has to enhance the operational procedure, systems
and principles in the areas of information flow and management, business processes,
enhanced management reporting. He has also to look for opportunities to expand
systems. He has to carry out supervisory responsibilities in accordance with company’s
policies and applicable laws. It is obvious that his role is very crucial and complex.
Operations manager often has to conduct vendor negotiations, salary negotiations, and
routine maintenance work negotiation for AMC. He is also involved with many
governmental and non-governmental agencies where he has to advocate on behalf of the
company- which is also a sort of negotiation. He has also to negotiate with the labor
department and see that there is no compromise on the duties discharged by the workers
and at the same time the policies does not impinge upon their rights.
So, we see that the scope for negotiation of the operational manager is quite big and
complex.
Negotiations in HR
HR has to deal with and persuade different types of people. The ability to persuade is one
of the most power skills that an HRM-Human Resource Manager-should has. Masters of
persuasion get what they want, how they want and when they want as compared to those
with poorer at persuasion. A good persuader besides possessing the skill is also good at
understanding the psychology of the opponent and where is he coming from.
The more you learn about people more adept you become in understanding them and are
able to handle them and deal with them which make you more sociable and likeable
person.
HR people often have to negotiate on salary, the responsibility of the incumbent, duties
that the incumbent has to discharge.
Human resource also deals in negotiating pay packages for the selected candidates. Bear
in mind that the positive employer and the positive employee is the result of successful
salary negotiation.
Tips on salary negotiation for the employer:
Know what leeway you have, as an employer, to negotiate salary package and other
conditions of employment. The answer, obviously, is that there is no much of a leeway as
far as these two things are concerned. But have much to negotiate on the working
conditions and the benefits that entail the incumbent job position in the company. You
have a big leeway of perks and other benefits with which you may attract a deserving
candidate.
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This is what an HRM has to skillfully discuss and negotiate with the candidate and
ensure the availability of deserving candidates to the company.
The employer's salary negotiation wiggle depends on these market factors. These factors
include the
• Level of the job within the organization
• Availability and or scarcity of the skills and experience needed for the job in the job
market
• Career path and the progress and experience of the individual selected •
Fair is the market value for the job position that you are filling
• Scope of salary range for the job within your organization
• Scope of salary range for the job within your geographic area
• Economic conditions, in general, within your job market
• Existing economic conditions within your industry.
You may also have company-specific or industry-specific factors that might have a
bearing on the given salary such as comparative jobs, your company culture and
company’s pay philosophy, and company’s promotion practices.
Negotiations in the Finance Department
What is financial negotiation?
A firm by the name Microfinance opportunities, a financial education library, says that
Communication with others is for the purposes of reaching agreement. Financial
negotiation involves reaching agreement about money.
There are three key areas in which financial negotiations can be useful:
• Dealing with suppliers

• Seeking financial services
• Making decisions involving members of the household, including a spouse
At some point, you or someone you know is likely to negotiate a price with a supplier or
buyer in business, determine repayment conditions with a lender, or decide with a spouse
how to use household money.
Financial negotiation involves funds which have to be negotiated and made available
from the lenders like commercial banks, financial institutions and general public. This
financing may be short term in nature or long term.
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There are two types of finance-1) Spontaneous finance and 2) negotiated finance.
Spontaneous finance is the one which naturally occurs in the course of business that is
credit from the trade creditors, credit from the employees, credit from the suppliers are
the examples of spontaneous finance.
Negotiated finance on the other hand is the finance that is negotiated with the money
lenders, financial institutions like banks and the general public. There are plenty of
sources of finance as shown in the figure given below:
Figure 1.4 Sources of Finance
There are 3 sources of finance-1) Security finance-involves equity shares, preference

shares and debentures. 2) Internal financing-involves retained earnings and depreciation
fund. 3) Long term financing-involves short term and long terms finance from banks and
other financial institutions.
The CFO of any organization has to negotiate about the sourcing of funds and allocation
of funds to the various departments within the organization. It is obvious that a
continuous flow of funds ensure smooth running of a company and therefore a CFO has
to decide from where to borrow funds that would be economical and fruitful to the
company, which activities of the company is to be financed by the internal funds, which
are to be financed with the borrowings from the financial institutions and has to decide
on how well the security finance is mobilized for overall wellbeing of the company.
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A good CFO should be highly result-oriented but nonetheless that alone is not all
enough. Most companies are gradually getting more demanding in this area, even when it
comes to CFOs. It is learnt that people are often very good at one particular aspect of
negotiation- for an example, they might be extremely assertive or they might adopt a
highly empathic approach or take a remarkably creative stance.
However, it's rare to find people who have all these skills rolled into one being. The
question now is to what extent their own CFO possesses these three skills. As because
finance is generally a top down affair, the smooth running of an organization often
depend on the ability of the CFO to ensure financial wellbeing of the organization.
Therefore in this chapter we have seen the scope of negotiation for a human resource
manager, a Finance manager or the CFO and the operations manager.
Negotiations with Bankers and Equity Funds
How can you more from your bankers?
Steven Singer, CPA-certified public accountant-of GROCO, CPAs & Tax advisors, has
shared with us the following technique to get more from your banker. Here is the
negotiation technique which keeps the funds flowing into your business.
As on this day, there are many a big clients who talking about their unhappiness with
their bankers and there are banks who want to keep the clients but are unable to get the
required detail and data to finance them further.
Steven Singer, the CPA, suggest simple rules to follow to ensure regular fund flow from
your bankers and they are as follows:
First and the foremost: you have to know where your business stands:
• If you want your banker to lend more to you, always negotiate when you are in a
position of power, meaning- when your business is in good bloom and has a
successful year.
• If your business has had a poor year, turn it around and inform the banker what
happened & present your plan to turn it around. Show them successful you are at
this effort.
• Meet with your key management and CPA before meeting the banker to ensure that
everyone is on the same page and conveying the same message.
Know what the requirement is and what you are negotiating:
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Bank loans are negotiable and certain key ratios like debt to equity, total equity and
borrowable assets (e.g. deferred income taxes) can be tweaked to fit your needs.
Do consider that little items can really add up. Audit, rate card, loan processing and
origination, bank statement analysis charges, credit card processing, lockbox fees can be
substantially reduced.
Negotiate the multiple services (e.g. audit, review, compilation) that your bank is
requires from your outside accountants. Usually, audits are done for loans over $10
million. Have a compilation with footnote disclosure if the total loans outstanding are
less than $1 million.
It helps to get competitive quotes from other banks. This will give you an idea of the
banking environment and what terms are available which you can use when you
negotiate.
Be prepared to subordinate some of your shareholder loans to the bank. If you

subordinate -e.g. bank will be paid before you if the company liquidates-your loans, the
bank will treat it as additional equity in the business.
Know Your Bank and Your Banker
• Keep up a good rapport with the bankers by regular periodic meeting-not less than
2 meeting a year.
• Let the banker know your business thoroughly so that they can structure your loan
accordingly.
• Bankers report and refer to loan committee and they would want to understand the
set of the approval process of what anticipated loans you desire so they are not
required to go back to the committee.
• Sometimes the way that you conduct your business changes. There are long cycles
between ordering goods and payment by the customer or you have shipped goods
to overseas customers which may imply that you need to talk to a trade financing
specialist at the bank.
• Always deal with a vice president at the bank when usually your loan size must
comparatively large for this purpose.
• Banks are wary of financing government receivables when negotiating with new
large customers. If the invoicing paperwork is not up to date, it may lead to long
delays in getting paid.
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• The payment terms that you have with your customer may negatively impact your
borrowing base.
• The banker could develop a loan structure (e.g. a trade cycle deal) that fits in with
what you are negotiating.
Have the Necessary Information Available When You Meet
Keep your cash flow projection charts ready, to get more from the banker. That indicates
your anticipated rate of growth for the coming year and the amounts that you anticipate
borrowing.
Cash flow plan, allows you t monitor your business on a running basis and revise it when
events are not going according to plan. Cash flow charts also highlight when a business is
growing too quickly. Although sales are necessary, too much growth will put your
Company in cash strapped position which can place too much risk for the bank.
Inform your banker of tax strategies that may dilute the capital of the Company and put it
into the individual shareholders pocket.
Paying year-end bonuses will reduce the corporate tax rate. However, if you intend to
borrow from the bank, you may need to lend some of the money back before your year
end financial statements are presented.
Planning to buy-out one of your shareholders- you can discuss it with your banker to see
how long it will take to finance the buy-out.
Planning a major acquisition -e.g. purchase of a building, large equipment or another

company-discuss it with your banker. They may be able to provide the necessary
financing.
Negotiating with Private Equity Fund
Private equities funds have specialists to guide you when they become your partners but
before this happens they are there as your opponents. Here you will learn about six
methods you can use when negotiating with a private equity firm. Continue reading.
Three recommendations to follow before sitting at the table with a private equity:
1. Negotiate with more than one private equity firm. Prepare alternatives, whether
they are private equities or other type of buyers and investors. Have multiple funds on
hand whom you can approach should the need arise.
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2. Use M&A advisor. The sale of a stake to a private equity is usually a more complex
process than selling to an industrial investor. Therefore, it is strongly recommend that
you don’t embark on negotiations alone. Hire a professional advisor who is as well
prepared as your equity fund people are. Every hundred projects shown to the fund the
managers’ private equity firms only invest in only one or two projects. Therefore it is
recommended that one prepares a good documentation in order to pass the filters of
many PEs and thereby create competition.
3. Clean the mess. Keep your business accounts clean without the mix up unwarranted
expenses erroneously charged to company accounts, which turn impacts profit and the
applicable taxes thereby. Some incomes are intentionally or otherwise are not declared
again leading to faulty account statement which lends itself to problems and query by the
lending institutions and banks, as in accounts income and profit do not exist if they are
not official and private equity funds keep away from such firm where unofficial money
in detected. Therefore it is advised that keep your account book as clean and official as
possible.
Make sure you have the following in place when sitting at the table negotiating with a
private equity.
4. Make a realistic business plan. Your information document should have details of
the amount of resources you are hoping to get and how do you plan to utilize it. It should
also include a sensitivity analysis and ROI forecast basis which for the private equity
firm will take their decision to fund or not.
If the sales forecast are not in line with reality and the forecasted growth percentage is
not in sync with the foreseeable reality and the expenses mentioned are hypothetical, will
cause the fund manager to distrust your plans and thereby shy away from funding your
firm.
5. Prepare for a cut after the due diligence. The equity fund managers will carry out
the due diligence which will throw up confusing data and they will make the most of this
confusion which will go against your objective of getting equity funds. And therefore it
is said that that negotiations continue until the very end.
6. You should conduct your own due diligence of the private equity. One should
analyze the private equity firm you are negotiating with. An excellent way of doing this
is to meet up with the owners who have worked with them earlier. It is a practice of the
private equity firms to put up the data of the companies that have worked with/invested
on their website.
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Negotiations with Employees and Future Employees

HR has to deal with and persuade different types of people. The ability to persuade is one
of the most power skills that an HRM-Human Resource Manager-should has. Masters of
persuasion get what they want, how they want and when they want as compared to those
with poorer at persuasion. A good persuader besides possessing the skill is also good at
understanding the psychology of the opponent and where is he coming from.
The more you learn about people more adept you become in understanding them and are
able to handle them and deal with them which make you more sociable and likeable
person.
HR people often have to negotiate on salary, the responsibility of the incumbent, duties
that the incumbent has to discharge.
Human resource also deals in negotiating pay packages for the selected candidates. Bear
in mind that the positive employer and the positive employee is the result of successful
salary negotiation.
Tips on salary negotiation for the employer:
Know what leeway you have, as an employer, to negotiate salary package and other
conditions of employment. The answer, obviously, is that there is no much of a leeway as
far as these two things are concerned. But have much to negotiate on the working
conditions and the benefits that entail the incumbent job position in the company. You
have a big leeway of perks and other benefits with which you may attract a deserving
candidate.
This is what an HRM has to skillfully discuss and negotiate with the candidate and
ensure the availability of deserving candidates to the company.
The employer's salary negotiation wiggle depends on these market factors. These factors
include the
• Level of the job within the organization,

• Availability and or scarcity of the skills and experience needed for the job in the job
market
• Career path and the progress and experience of the individual selected •
Fair is the market value for the job position that you are filling
• Scope of salary range for the job within your organization
• Scope of salary range for the job within your geographic area
• Economic conditions, in general, within your job market
• Existing economic conditions within your industry.
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You may also have company-specific or industry-specific factors that might have a
bearing on the given salary such as comparative jobs, your company culture and
company’s pay philosophy, and company’s promotion practices.
Losing a talented employee affects you severely and the replacement will have to be
trained sufficiently before he begins delivering results. One should also consider the fact
that the existing employees will also be demoralized when they see a talent walking out
on the company. Therefore, it is better to negotiate in order to keep the valued employee.
Doing this may not guarantee that the other will not walk out however, in best interest
one should try and keep the talent with you lest the competition will gobble him or her to
your chagrin.
Salary negotiation process is always a high anxiety experience for the employer as well
as the employee. Employee compensation means something, his survival kit basically
and therefore it is the red hot topic around the world. Your employee is likely to come to
you eventually for the talk. Is there anything you can do to make the situation a pleasing
one and bring in a win-win factor into the negotiation?
Mykkah Herner, CCP, a compensation consultant at online salary database PayScale.com
on negotiating compensation has some advice on this matter.
According to Mykkah Herner, there are 3 keys to a win-win salary negotiation.
1. Prepare, Prepare and Prepare:
It is important to know the market: What’s going on in your market in general?
Observe the companies within the similar industry, size, and geography. What is the
percentage of raise that companies are giving to their employees? It is imperative to have
reliable market data for each position on your team-in terms of the salaries paid, perks,
annual bonus, medical expense compensation & leave travel allowance
Important to know the organization inside out: How is the performance of your
company, what has your organization’s management has decided on salary raises this
year around? Is the budget been allocated for the said raise, ascertain as to what are your
company’s business priorities and most of all what are you trying to reward-is ti
performance, is it the tenure, or is it certain roles that your employees have played or is it
the hot jobs that you are trying to reward.
You also have to know the team thoroughly: Money is a finite resource. Increments
and raise cannot be equal across the board. Performance based increments are more for
better performers and less of an inferior performance. Here it is important to know who
has put in relevant efforts.
Knowing the-ins and outs-of your team: This knowledge will help you to recognize
the go getters in your team and help you determine who should get above average raises
and who should be get less. Articulate the rationale for different cadres getting different
raises, so that the same can be communicated of need be.
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Knowing the employee: You have to know how long he has worked for the company
and what has been his contribution to add value to the work he is doing, does his
deliverable meet the expectation of his bosses? Have they performed any such activity
that has high intrinsic value to the company?
2. Listen Actively, Communicate Assertively and Own Your Decisions
Plan a meeting, preferably at a place with no distractions, listen to what the cadre has to
say, make sure he feels that you have heard him or her in totality and it is of equal
importance that the employee also hear you and take note of your observation for
improving his performance in the year to come.
Hear the entire employee as they have put in the efforts to prepare the rationale for what
they have done and why they have done. They may be expecting a moon but if the
clearly show their contributions and accomplishment, hear them out.
Communicate Assertively: when you are talking about their performance be clear about
what you can and can’t do. Don’t promise them the heavens if what you can give them is
a piece of earth.
Own Your Decisions: if the top management feels otherwise of the percentage of raise
that is given to an employee, stand up for the employee and inform the management as to
why you have given a higher raise to this particular employee. Own your decision.
3. Follow Up
It is suggested to follow up on the compensation conversation that you had and if there
were queries, try and find the answers to them immediately. The learnings from dealing
with the current employees and be the stepping stones for any improvement needed in
the HR negotiation policy and accordingly can be set up as a bench mark to screen and
take a future employee on board in the years to come.
1.6 Understanding the Dynamics of Cooperative

and Competitive Interactions in Negotiations
Cooperative Negotiation and its dynamics
A cooperative approach is a process of interest-based or integrative negotiation, which

results in win-win solutions. This process of negotiation more or less develops
relationships of trust and works towards a mutually beneficial alternatives for settlement.
Mutual gains process is considered to be a constructive resolution process.
Examples of cooperative negotiation:
1) Win-win negotiation
2) Collaborative negotiation
3) Multi-party negotiation
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Competitive negotiation and its dynamic
In competitive negotiation, the stance taken by the parties is that of competition which
can be either won or lost. Competitive negotiation is also known as distributive,
positional or hard-bargaining negotiation.
Zero sum
The underlying assumption of competitive negotiation is that it is a zero sum game. In

this type of negotiation there is a fixed amount to be gained and if same has gone the
one party other party has to go without any amount. It is akin to arguing over a pie- if
one person gets a piece of the pie then the other person does not.
Win-lose
The result of this zero-sum negotiation is defined in terms of winners and losers. One
person gets the pie and fees elated and also bit guilt, may be. While the other person is
devoid of any gain and feels down and cheated or feels that he has failed.
Substance only
Competitive negotiation attaches importance attaches value to the item that is on offer
and therefore the dealing are done the hard way-what I can get out of this or conversely,
I will not allow him to take more than what I think is the value of the item.
Example 6
Zero-sum translates everything into money terms, for example, if you are buying or
selling a car, you think first in terms of its resale value- the resale value is the only
tangible negotiable value for the car.
Unimportant relationship
Competitive negotiation is devoid of any relationship between the people and it is not
important. They do not care a damn about one another. It is typically of a single sale
where caveat emptor is a key rule-the principle that only the buyer is held responsible
for checking the quality and suitability of products before a purchase is made.
Effects of Cooperative and Competitive Approaches
Morton Deutsch's theory of cooperation and competition includes predictions on the type
of interactions which will occur between negotiating parties as a result of their
negotiating or disputing style.
Effects of cooperative negotiations:

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1. Facilitates effective communication- where ideas are voiced. These groups feel
free to communicate with and agree to others point of view-if found to be correct.
2. Conversation is amicable, smooth and straight forward.
3. Cooperative groups often are characterized by Coordination of effort, division of

labor, aligned to task achievement, disciplined in discussion and high
productivity.
4. Aligned to accommodate other to help them achieve their goals another hallmark
of cooperative negotiations.
5. Cooperative negotiation limits the scope of conflicts.
Competitive process will most likely have the opposite effects on the parties:
Effects of competitive negotiations:
1. Competitive negotiations face communication obstruction.
2. Competitive negotiation leads to obstructiveness and lack of helpfulness which

leads to mutual negative attitudes and suspicion of one another's intentions.
3. Reduces self-confidence.
4. The conflicting parties seek over power each other.

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Case Study 1
Negotiating with Hotels for Events: In Search of the Win/Win

As an event owner and as the person who is present and working from start to finish, you’re used to
multitasking. You may even be used to dealing with difficult people in tough situations, and in having
to solve those last-minute problems that pop up.
Why is it, then, that you hesitate when it comes to negotiating with hotels for your event? You’re not
alone. Many people find the concept of negotiations – including making calls, reviewing contracts and
(gulp!) signing them – to be unnerving. But whether they’re balking at doing something that seems to
be legal in nature or whether they’re afraid of opening themselves up to possible financial penalties by
misreading the fine print, the hesitation to engage in negotiations continues.
Make no mistake: there are professionals in the industry who specialize in event planning and often
their expertise includes hotel negotiations and contracts. But even if you’re not one of those, you can
still achieve success – and maybe score a degree of confidence as a result. All you have to be is
attentive to detail.
Create a Request for Proposals Yes, you’re going to do this. Here’s how. Sit down and type up the
following: • The full title of your event: The XYZ Swim Meet, for example • A brief description of it:
This annual event, which takes place at the ABC Swim Center, brings
together (number of) swim teams, all age 15U. Athletes travel with at least one parent each. • The dates
it will be held • How many room nights you assume you’ll need, based on any past history you may
have • Move-in/Move-out pattern: Adhere to the ‘best surprise is no surprise’ adage. You’ll want to
make sure the hotel understands the nature of your event so there are no misunderstandings about
room night use. If, for example, your event is a tournament that has a single-elimination format, it can
lead to teams leaving sooner; you should be able to factor the start numbers and the amount it is
expected to decrease day over day. If you have pool play, more teams will be in town for a guaranteed
amount of time. When is the earliest they’ll be leaving? Is there any chance they’ll stick around for the
final, even if they’re not playing it? Study your history and find out • Any preference on room types:
double/double, etc. (If you expect your athletes and families to request items like roll-away cots or
rooms with pull-out sofas, note this on the RFP. If a hotel does not have access to such furnishings, it
will be essential to know this at the outset.) • Request for any additional space, such as meeting rooms
for officials, parents, coaches or anyone else involved with the event
• Spending history: This is particularly valuable. For example, if the previous host hotel had a bar or
restaurant(s), get the information on how much was spent by your group over the course of the event.
Good income can make your contract very appealing to the hotel and provide greater negotiating
power.
Those facts will make up the basic structure of your RFP. It will allow hotels to evaluate your needs
and their availability and get back to you.
A valuable resource to you will be the CVB or the sports commission in an area. The professionals in
these groups can help you direct your request to the appropriate lodging facilities since they’ll have a
better understanding of what is near your venue and what will make the most sense, given your
group’s specific needs.
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Once you have replies in hand from several hotels, you’ll want to evaluate them. There are many
criteria to consider, but chief among these should be their juxtaposition to the venue you’re using, the
room rate and whether the hotel is convenient to restaurants, shops and other entertainment. If your
athletes are driving in with their parents, for example, check on the availability and cost of parking. If
they’re flying in, see if there is shuttle service to and from the airport. If you have a team bus, ask
about parking for it. Does the hotel offer a free breakfast? Evaluate proposals so you are comparing
hotels fairly.
Assuming you have decided upon a preferred hotel, it’s time to get down to the actual business of
negotiations. Remember that unlike sports, this isn’t a win/lose situation. In negotiations, both the
hotel and the event need to come out on the winning end. This is best accomplished when each side
gives a little.
Take a hard look at what you’re requesting. What is essential, what is nice to have and what can you
do without? Since negotiating is all about giving something to get something, start with your third
category. The hotel representative will be looking at the same options.
By now, you have a contract. And while it’s easy to get butterflies in your belly looking at the fine
print, try to view it as a work in progress. Here are some of the things you’ll want to review (once you
have ascertained that all the information on your event, as presented in the RFP, is stated correctly): •
Make sure the hotel has stated correctly which charges are to be put on the event’s master account (for
example, catering, banquet space rentals, etc.) and what guests are responsible for (nightly room
charges, room service, dry cleaning/laundry, etc.) • Cancellation penalties, particularly if you’re
negotiating a year or more in advance
• Room block release date (that is, when the hotel stops holding hotel rooms exclusively for your
group and makes those rooms available to the public; usually, this is 30 days prior to the start of the
room block); check also to see whether reservations from your group that arrive past that date can
receive the rate you negotiated. • Any language locking you into payment for the entire room block or
penalizing you for shortfall; if such language exists, you may want to see if it’s negotiable. If it’s not
negotiable, make your room block lower and ask for the flexibility to have people still be able to
access the group rate if the room block fills early but rooms are still available in the hotel.
• Whether room rates stated on the contract are inclusive or exclusive of taxes, etc. Read the contract
carefully and see if the following information is included. If not, ask – and then ask for an updated
contract that reflects the information: • What will happen if the hotel suddenly finds itself unable to
accommodate one or more of your participants, who then needs to be moved to a different hotel?
(Hotels call this ‘walking,’ by the way.) What hotel will they be in? Will they have transportation to
and from all the sports events? How will they be compensated? What room rate will they be paying? •
If a participant has to leave unexpectedly in the middle of the tournament, does the hotel add penalties
for early departure? • Does the hotel have construction planned for that time or space, or even nearby?
If construction is planned, where in the hotel will it be? Can your people be located away from it? •
Are there charges for Wi-Fi (and if so, are they per room, per guest or per device)? • Are there any
other groups in-house that would constitute a problem or a distraction to your group? While you can’t
tell the hotel to relocate guests who are already contracted for the same hotel, you can look for a
different property, if necessary.
If there is language on the contract you don’t understand, don’t be afraid to ask the hotel to clarify it.
If you have a corporate attorney, you can always ask that person to review the contract for you as
well.When you go to the table, as it were, to discuss the contract with your hotel representative,
remember that they want your business as much as you want a place for your athletes to stay. You
wouldn’t be talking if this were not the case. Work together to craft a mutually agreeable arrangement
and you’ll create a relationship with your new business partner that can pay dividends if your event
comes back into town in the future.
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Case Study 2
Business Negotiations with Walmart Buyers

Introduction
Walmart sold goods worth $482.1 billion in 2016 under the banner of EDLP-Everyday
low prices. For suppliers – who are the partners of Walmart – it was a holy and divine
opportunity or a death knell. In such a situation, it is always the supplier who gets being
rode upon, but there are cases of survivors who managed to survive and make merry
while dealing with big corporations like Walmart.
The Study:
Sarah Talley and Frey Farms Produce, the firm, was negotiating with Walmart and Tom
Muccio Negotiating the P&G Relationship with Walmart, HBS professor Jim Sebenius
and Research Associate Ellen Knebel put up a case for two very different organizations
doing the hard bargaining for survival.
In such situations, if one goes by the book, they should go for a win-win bargaining. But
at times you do get people who have a disinterest to go by the rule book. So what is the
result when one meets someone who has great power like the Walmart, who is also a hard
nut to crack through negotiations?
The case shows how P&G executive Tom Muccio engineered a new supplier-retailer
partnership between P&G and Walmart. Proximity was the fulcrum around which -
Muccio relocated to Walmart’s turf in Arkansas-the whole proceeding were built. This
exercise helped both the companies to build trust which eliminated expensive and
elaborate legal contracts which were also time consuming. They planned to go ahead with
an instrument like a letter of intent.
This change, which focused on joint vision and problem solving, information sharing, and
subsequently moved away from the hitherto none of contention, the lowest common
denominator-the pricing issues that used to defined their transaction previously. With this
thought and creative initiative in 1987, when Muccio initiated thses changes and till 2003
P&G’s sales to Walmart grew from $350 million to $7.8 billion.
There are obvious differences between P&G and a much smaller entity like Frey Farms.
Here P&G which supplied Tide and Pampers to Walmart and these two items being the
main stream items for Walmart it became a case where Walmart could do without Frey
Farms but could not do without Tide and Pampers. It is interesting to note how a small
business, with earnest and thoughtful initiatives can make the big timer like Walmart
realize that there is a way to transact business other than the hardcore negotiating.
Sarah, of the Frey Farms, supported Walmart’s “Everyday lowest prices” initiative to
benefit the customer-which incidentally-expanded the customer base for both the
business.
The Strategy:
Sarah’s innovative ways of reducing down her cost of the produce:
• Used school busses for transporting her produce instead of tractor trolley-saving
$10500-huge savings by any standards and faster transport as well, saving time.
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• Sarah skillfully and successfully managed negotiating a “Co-management supplier

agreement” which showed how Frey Farms could help Walmart manage inventory and
sales to ultimately benefit customers.
• Frey Farms also was successful in weaning away the hardcore-lowest price negotiator
from a price point dealer-that is Walmart-to look to into developing customer, the
relationship and thereby, develop sales, Here price becomes one of the many point where
they are aligned on.
• The pioneering approach initiated by P&G’s Tom Muccio a new and out of the box
thinking for its time which other suppliers emulated and profited from.
The Learning:
Getting to the depth of an issue and a sincere effort on how to circumvent the issues at
hand of the two companies is how you bring about a corporate change-flexibility often
gives you wonderful and positive results. When macro concept and micro imperatives
when handled by adept innovative managerial skill leads to nothing else but gains-in
terms of profits and processes.
Negotiating principles in action in this case study.
• Don’t think in terms of agreements and negotiations-think in terms of partnership. Don’t
make demand statements, rather, ask. Negotiate to iron out differences and then you can
have more of agreement than disagreements as the field is now clear of any mental
blockages.
• Do not keep complaining or griping, be a problem solver. Ranting about problems all
the time is a put of factor in a meeting. Problem solving attitude and skill is respected at a
negotiation table and participants look forward to you take them across the blockage that
they have encounter at the negotiation.
• Associate with people-from across industries- have credible experience in problem
solving. Networking with people from across the industry helps one gain insight into the
problems that present itself in different industries and how it is circumvented to proceed
further is worth picking up.
• Never ignore small issues which later, becomes festering wound. Never depend on one
buyer who is a major buyer in your business. It is always difficult to negotiate with huge
corporations.
• Never go to meeting with preparations, avoid small talks, be up to the point, bring up
the underlying issues, attack them basis the data you have and find a satisfactory
resolution face to face.
• Never bluff-clear communications and negotiated comprises hold the key when you deal
with mega buyers. Never take your buyer on the face value-they may be young, but are
ambitious to move up the ladder and therefore could be one of toughest negotiator you
have come across. You should have end to end knowledge of your product-from
production to end use as there are chances that your buyer knows and he expects you to
know more so that he can learn from you.
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Case Study 3
How Microsoft Outnegotiated Netscape
In this case study, you will know how a competitive negotiation strategy was converted to
cooperative negotiation.
Companies involved: Microsoft, AOL & Netscape.
Introduction:
With superior negotiation strategy Microsoft won business with AOL in direct
completion against the browser market leader Netscape by getting the best out of their
marketing resources.
In the nineties, Steve Case’s AOL was frantically soliciting a top internet browser to
market his products. Bill Gates’ Microsoft and Netscape Navigator were in talks with
AOL to be associated with them. Netscape was very superior compared to Microsoft due
to its absolute technical superiority, its presence and dominance in the overall browser
market. Microsoft was just a new entrant in the market and held a small percentage of
business in the overall browser market and had a long way to go as compared to
Netscape’s much superior overall market stranglehold. To add to this, Microsoft’s
browser was also billed as technically inferior to Netscape’s in spite of this unequal
valuation of their positions, Bill Gates felt that he had to gain a greater presence and
market share of the browser market and this was his competitive priority.
The Strategy:
Netscape adopted a distributive negotiation strategy which based on zero sum conditions
which states that any gain to one party is at the expense of the other party. The strategy
they adopted was with the understanding that they were so powerfully based that only
they would negotiate with AOL by charging a high per copy fee. In this Netscape’s zero
sum negotiation style the deal would have been based on a “browser for dollars”
agreement and Steve Case, the CEO of AOL viewed the position of Netscape being very
aggressive about selling the browser& also wanted very high per-copy fee. The attitude
was that of highhandedness and in a negotiation it rarely works, unless you are a
monopoly-and these days monopolistic tendencies kept in check by the concerned
governments. This was a miscalculation that doomed Netscape.
Being new entrant to the market and having a product which was considered to be an
inferior product, Microsoft had very limited leverage at the negotiation table. On the other
side Netscape was resting on its laurels and engaged in waiting for AOL to respond to
their proposal. In the meantime Microsoft readjusted their focus by shifting their own
proposal to focus on their unique selling proposition-USP- rather than the technology
issue. In essence Microsoft used a creative strategy to change the nature of a weak
position by highlighting the best alternative that they had-BA or BATNA- to enhance
their position in this competition while weakening Netscape’s in the process.
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Microsoft concentrated their marketing features that they could give to AOL and knew
for sure that Netscape would never be able to match it. This was done when they offered
to take AOL on board into their operating software which Microsoft would do it for free.
Microsoft would also assist them with technical support if AOL agrees to sign a long term
contract.
Microsoft and AOL are actually competitors despite this fact the coming together of both
parties was great only because collaborative and integrative negotiator of Microsoft. It
had the capacity to foresee along with relevant negotiation skills to get the nature of the
offering altered and worked out an offer that was difficult for AOL to refuse. .
The end results were:
1) AOL icon and Microsoft icon will appear together on the Microsoft Network icon. It is
indeed incredible for AOL to be present with Microsoft on the most coveted digital real
estate in the world.
2) AOL would reach fifty million more people per year at zero cost. 3) AOL
would not have to send its discs at burdensome cost per new customer.
Microsoft had to give up some market share to AOL for a short term. However, Microsoft
latched on to their goal of getting their footprints on the digital market turf.
The Learning:
• The learning from this case study.
• Competitive negotiation rarely works in corporate situations.
• Zero sum negotiation strategy is indulged in by unknown entities and for one-time
deal.
• Collaborative negotiation works much better and both the parties gain-it facilitates
win-win situation. It creates long lasting values and brings people together.
• Such negotiations are invariably informed discussions done in the ambience of

optimism where creativity often resorted to put across a point of view.
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Summary
▪ The aim of negotiation is to resolve differences, to gain mutual advantages in the

foreseen outcome.
▪ There are 7 types of negotiations - Win-Win Negotiations, Win-Lose Negotiations,

Lose-Lose negotiations, Adversarial negotiations, Collaborative negotiations, Multi
party negotiations and Bad Faith negotiations.
▪ In B2B deals, it is most important not to start the negotiations with the price or
discounts, because it may lead to major block and distraction in the deal.
▪ A trade-off is situation where one has to accept a small quantity of bad-loss-for a

bigger good-revenue.
▪ While in negotiation, it is important to be cool, calm and calculative.
▪ Distributors look for the possibility of greater sales and profit margin.
▪ Manufacturers look for large sales volumes, geographical expansion of sales and
increase in market share.
▪ To win in sales negotiations, the first thing the sales person should do is to eliminate
the thought of competition product from the customer's mind.
▪ Vendor and supplier negotiations hinge upon fairness, in that the buyer gets and
supplier provides the right quality at the right price.
▪ Marketers always need to negotiate on lot on things like allocation of resources and
budget, manpower and time needed to accomplish the objectives.
▪ Having alternatives in mind can help to mitigate fear that is endemic while
negotiating.
▪ Financial negotiation involves funds which have to be negotiated and made available
from banks and general public.
▪ There are two types of finance - spontaneous finance and negotiated finance.
▪ A cooperative approach is a process of interest-based or integrative negotiation, which

results in win-win solution.
▪ In competitive negotiation, the stance taken by the parties is that of competition which
can be either won or lost.
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Objective Type Questions – MCQs
1. Which of the following type of negotiation is also known as integrative
negotiation? a) Win-Lose negotiations
b) Win-Win negotiations
c) Lose-Lose negotiations
d) Adversarial negotiations
2. Inter-governmental and international negotiations are classic examples of

____________.
a) Lose-Lose negotiations
b) Adversarial negotiations
c) Multi-party negotiations
d) Bad faith negotiations
3. "Negotiate only when you have an agreement in principle" is one of the keys of
________.
a) Business-to-customer (B2C) negotiations
b) Business-to-business (B2B) negotiations
c) Customer-to-customer (C2C) negotiations
d) Customer-to-business (C2B) negotiations
4. The concept of “If-Then Matrix” is useful in which of the following negotiations?

a) Marketing and HR negotiations
b) Lose-Lose negotiations
c) Adversarial negotiations
d) Negotiations with distributors
5. Win-win negotiations and multi-party negotiations are examples of _____________.

a) Competitive negotiations
b) Cooperative negotiations
c) Negotiations with distributors
d) Adversarial negotiations
Answers: 1.B, 2.C, 3.B, 4.A, 5.B
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Objective Type Questions – True or False
1. The aim of a negotiation is to resolve differences and gain mutual advantage.
2. The manufacturer does NOT bother for geographical expansion of sales. It is the
responsibility of distributor.
3. Equity shares and debentures are sources of security financing.
4. A distributive negotiation is NOT a win-lose negotiation.
5. The underlying assumption of competitive negotiation is that it is a zero sum game.
(Answers: 1. True; 2. False; 3. True; 4. False; 5. True)
Study Questions
Consider the following questions as you read through the unit.
Short answer type

1. What is the meaning and aim of a negotiation?
2. What are the 7 types of negotiations?
3. What are the important principles of B2B negotiations?
4. What are the non-monetary points of business negotiations?
5. Which are important thumb rules of a negotiation?
6. List out a few hidden traps that hold a person back from securing B2B sales deals.
7. What is the difference between a distributor and a manufacturer?
8. List out a few tips in dealing with suppliers through negotiations?
9. What are the two types of finance?
10. Provide a few examples of cooperative negotiations.
11. List down the steps for negotiating for events.
Long answer type

1. Explain briefly about the Win-Win Negotiations.
2. What are the multi-party negotiations? Explain with examples.
3. What do you understand by the statement, "Negotiate only when you have an
agreement in principle"?
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4. Briefly explain about "Perform due diligence exercise" rule followed while
negotiating a distributor agreement.
5. Briefly explain the statement, "It is of utmost importance that you understand the
price quoted by supplier".
6. What do you understand by the concept of “If-Then Matrix”? Explain with an
example.
7. What are the different market factors that influence the employer's salary
negotiations?
8. What are three key areas in which financial negotiations can be useful? 9. What are
the recommendations to follow before negotiating with a private equity fund
provider?
10. What are the effects of cooperative negotiations in business?
References
o Claude Cellich & Subhash Jain (2012). Practical Solutions to Global
Business Negotiations, Business Expert Press, New York, USA.
o Pervez Ghauri & Jean-Claude Usunier (2003). International Business
Negotiations, Emerald Group Publishing, Oxford, UK.
o Michael Mehnert (2008), Negotiation: Definition and Types, Manager's
Issues in Negotiation, Cultural Differences and the Negotiation Process,
Seminar Paper, GRIN Verlag.
o Richard E. Walton, et al (2000), Strategic Negotiations: A Theory of
Change in Labor-management Relations, Cornell University Press,
London, UK.
o AN Sarkar (2012), Global Business Negotiation, Pentagon Press, New
Delhi, India.
o Nichols, Lee. "How to Negotiate With Customers", Small Business -
Chron.com,Retrieved 13 Jan 2019 from
http://smallbusiness.chron.com/negotiate-customers-44610.html.
o Young Entrepreneur Council (2012). Tips for Negotiating With Suppliers.
Retrieved 13 Jan 2019 from https://www.inc.com/young-entrepreneur
council/tips-for-negotiating-with-a-supplier.html.
o Anna Mar (2013). 7 Types of Negotiation And 1 Big Myth. Retrieved 13
Jan 2019 from https://training.simplicable.com/training/new/7-types-of
negotiation-and-1-big-myth.
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Business Negotiation skills
UNIT - II
Defining
Negotiations
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Unit Description
Effective negotiators demonstrate flexibility by using creative ways to satisfy the
interests of both the parties involved in negotiations with the lowest cost to one another.
Successful negotiators play the win-win game very carefully and masterfully. They
demonstrate the necessary knowledge, skills and experience to navigate through the
negotiation process using the rules of the game and strategies and tactics in different
ways that achieve mutually benefited results and acceptable outcomes.
Negotiations are a blend and a complex mixture of winning and losing by the parties.
The results of most of the two party negotiations can be categorized as win-lose, in
which one party benefits and other party loses, lose-lose in which both parties lose after
the negotiation, and win-win in which both parties come out with positive outcomes. If
the negotiations fail, no agreement will be reached and the parties involved are forced to
search for alternative solutions to the issues and problems.
In this unit, you will learn the definition of negotiations, difference between lose-lose,
lose-win, win-lose and win-win types of negotiations. You will also learn in detail about
each of these types of negotiations. You will also know how to set up a context for win
win negotiation for both the parties.
Learning Outcomes
At the end of this chapter, the student should be able to:
 Define the term negotiation

 Explain the lose-lose type of negotiations
 Describe the lose-win type of negotiations
 Explain the win-lose type of negotiations
 Describe the win-win type of negotiations
 Identify the differences between lose-lose, lose-win, win-lose and win-win types of
negotiations
 Explain how to set up the context for win-win for both parties
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2.1 Defining Negotiations

Introduction
Negotiation takes place in a wide variety of situations and contexts in the business world.
While the objectives of this course focus on business negotiations, the principles of
negotiation apply to a wide range of personal and business situations. For example, at
home you may be negotiating for doing something to the other person in favor of
something. At work you will be negotiating an acquisition contract with new supplier, a
project with workers, or a merger between two companies. Within the public sector, you
will discuss something from a modern-day board of training coverage in faculty,
language in an extremely bill with the business enterprise consultant, or a global change
settlement with some other united states.
No matter the context, the essential standards of negotiations are the same inside the
global over. as an instance, one man or woman is involved in an exceptionally pleasant
change or high-stakes war choice, and moreover the opportunity individual could also be
involved in a truly two-way communication with the goal of attaining a commercial
enterprise settlement. Competencies used by diplomats to negotiate global peace
agreements can help you switch out to be a success negotiator in occasion manipulate.
Negotiation is form of a technique with the assist of which individuals solve issues and
variations. it is away by which compromise or settlement is reached while averting
argument, warfare or dispute. Information, the standards of equity, seeking mutual
income and preserving a relationship are crucial for top notch effects in negotiations.
Unique sorts of negotiation are hired in several situations: international affairs, the
device, authorities, commercial variations or domestic relationships as examples.
Information, state-of-the-art negotiation skills may be observed and applied in an
extremely big choice of activities. Negotiation abilities may be of superiority earnings in
choice any versions that arise among the individuals and parties.
Negotiating deals and handling versions is one of the essential abilities for experts in
control. The requirement to realise strategies, approaches and methods of negotiation has
emerge as sizeable inside the market. Negotiating to win-win gives precis model,
strategic insights, path of action processes and character evaluation to assist people
understand the dynamics of battle selection, talks and cooperative solutions.
The members increase a functionality to effectively manage negotiations in an

exceptionally shape of things – one to as a minimum one, team, structure and inter shape.
They develop partner of behavior of people, corporations and agencies in aggressive
matters and know-how an exceptional deal can alter it.
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Defining Negotiations
Negotiation is often defined as “a process where two or more parties with different needs
and goals discuss an issue to find a mutually acceptable solution.” In the business
environment, negotiation skills are important in the informal daily interactions as well as
formal transactions such as negotiating conditions of purchase, sale, lease, service
delivery, and other legal contracts.
Negotiation may be a technique at some point of which one or extra events treatment a
dispute or go back to a mutual settlement. Negotiations take region each day inside the
agency international; they are usually strategic in nature. In numerous cases, they need a
decent crook schooling and a decent money training so the activities will recognize each
other, create sound choices, and perceive the capacity consequences of these choices.
Correctly treated negotiations make a contribution appreciably to industrial employer

achievement. They help to build higher and semi-everlasting relationships with specific
events to supply lasting and satisfactory answers. Negotiations facilitate to keep away
from destiny issues and conflicts. Negotiating needs provide and withstand each of the
events. Therefore, the activities worried need to reason to make a courteous interaction
and positive dialogue, that is a win-win for each the occasions. Ideally, a prospering
negotiation occurs as soon as you will create concessions that advise very little to you,
information masses to the opposite party. The approach has to sell goodwill, regardless
of the versions in each party’s pursuits.
The excellent negotiators in the world put together themselves by way of learning the
things notably earlier than virtually going for the negotiations. They think about
innovative order, cultural expectancies, targets, personalities, and additionally the
transport of know-how of their negotiating methods. A decent negotiation leaves every
party satisfied and organized to attempt to enterprise with one another all over again.
This unit explains why negotiation could be very vital, and describes the methods for
success in negotiations.
Figure 2.1 Negotiation output

(Source: https://www.youtube.com/watch?v=jeASPXeIxQQ)
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Examples of Negotiations
Negotiations often take place in the business situations like the following:
• Company X and Company Y want to merge, but must agree on financing, price,
and changes in management.
• John wants to join a job with Company ABC, but before that he must negotiate on
his salary and other benefits with the management.
• Company A wants to purchase machinery and other supplies from Company B on

the agreed payment terms.
• Company K wants Company L to become a retailer and a customer.

• Labor Union XYZ wants higher wages and pension contributions from Company
A.
• Smith wants to buy a house from John on the negotiated price and other terms.
The list goes on like this. The important thing to remember is that negotiation is not
necessarily adversarial. It is often a strategic process in personal life as well as business
environment. The objective of the negotiation is to come up with an agreement which
benefits and agreeable to all the parties involved in negotiations. Sometimes, parties must
give up some things, but this is indeed part of the negotiation. Giving something up
allows for gains to the party in other areas of the negotiation.
2.2 Difference between Lose-Lose, Lose-Win, Win

Lose and Win-Win Negotiations
Negotiation is a means of resolving variations among individuals and business people.
Inside the method of negotiation, not only are unique evaluations taken into
consideration, but additionally individual needs, ambitions, similarities and differences in
background and tradition. There are extraordinary approaches we may also negotiate
including the 'Win-Lose' approach, additionally known as bargaining or haggling, and
the 'Win-Win' technique to negotiation, which is finest while you want to construct a
meaningful and sturdy interpersonal and business relationships.
While many humans consider negotiations as a competition in which one facet wins and
the alternative loses, in truth, negotiations contain extra complicated combination of
winning and losing. The final results of virtually all party negotiations can be classified
as win-lose, wherein one party blessings to the detriment of the other, lose-lose, where
both parties are worse off after the negotiation, or win-win, wherein each events come
out in advance. If the negotiation fails, no settlement has been reached and the parties are
pressured to seeking alternative solutions.
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Win-win, win-lose, and lose-lose are games and sports phrases that confer with the
possible outcomes of a sport or dispute involving two sides, and extra importantly, how
every side perceives their final results relative to their status before the game. For
instance, a "win" outcomes when the final results of a negotiation is higher than
expected, a "loss" whilst the final results is worse than predicted. Two people may also
receive the equal final results in measurable terms, say $10, but for one side that may be
a loss, whilst for the alternative it is a win. In different words, expectancies decide one's
notion of any given result.
(Source: https://www.flaticon.com/free-icon/meeting_1239726#term=business
%20negotiation&page=1&position=26) Figure 2.2 Expectations decide result of
negotiation
A win-win negotiation is a cautious exploration of both your personal role, and that of
your contrary range, to be able to find a at the same time proper final results that gives
you both as a good deal of what you need as feasible. If you both walk away satisfied
with what you have received from the deal, then it really is a win-win!
In excellent win-win negotiations, you may discover that the other character wants what
you're organized to trade, and that you are organized to offer what he or she needs. If this
is not the case, and one in every one of you ought to deliver manner, then it's far honest
to barter a few form of repayment for doing so. But both aspects need to still experience
relaxed with the final results. Human being’s positions are rarely as opposed as they will
to begin with appear, and the other man or woman may also have very one-of-a-kind
desires from those you anticipate! So, try to maintain an open mind and be flexible in
your wondering.
You may avoid this by using the use of a form of win-win negotiation called “principled
negotiation”. The parties involved in all negotiations look for a win-win outcome, but, it
is also true that every negotiation cannot provide a win-win outcome. There are several
types of negotiations.
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Figure 2.3 Types of Negotiation
Lose-Lose negotiations: This negotiation is a situation where both the parties going to
negotiations, it is often found that the parties turn bitter, however, with the knowledge
that both the parties will lose, it is important to maintain calm and understand each
other’s situation.
Win-Lose Negotiations: This type of negotiation is also called distributive negotiation.

In these sorts of negotiations, the focus is on what is the other party’s base price/base
requirement. A distributive negotiation or a win-lose negotiation often involve people
who never had a previous interactive relationship. Once this is determined, it is easy to
take the deal further as it lets the parties know that the sellers is not over charging the
price and the buyer is not under valuing the asset price. As it is, such Win-Lose
negotiations always depend on the base price which is less than the actual market value
of the asset.
Lose-Win Negotiations: This type of negotiation refers to a distributive negotiation, in

which one party’s gain is another party’s loss. In this type, both the parties will compete
to get the most value from the negotiation. This is also called the ‘fixed-pie’ scenario in
which there is only a limited amount to be distributed in this type of negotiations.
Win-Win Negotiations: This type of negotiation is also called integrative negotiation.

Integrative negotiation or win-win negotiation is interest-based, merit-based and
principled negotiation. In a win-win negotiation, both the negotiating parties win and
gain something with them. Integrative negotiation or a win-win negotiation attempts to
create value in the course of the negotiation, which thereby expands the pie by either
compensating loss of one item with gains from another. However, either may gain
slightly less or more, but it is a gain nevertheless for example, salary negotiations,
business to business negotiations fall in this category.
We shall discuss about all of these negotiation styles in detail in subsequent pages.
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2.3 Lose-Lose Negotiations
Lose-lose negotiation means that all events turn out to be being worse off. An example of
this would be a finances-reducing negotiation wherein all events lose money. The
intractable finances debates in Congress in 2012-13 are instance of lose-lose situations.
Cuts are essential--the query is wherein they'll be made and who will be hurt. In a few
lose-lose situations, all parties take into account that losses are unavoidable and that they
will be calmly disbursed. In such conditions, lose-lose effects can be most popular to
win-lose consequences due to the fact the distribution is as a minimum considered to be
fair.
In a Lose-Lose negotiation, either both events concede bargaining positions outside their
target levels. If the negotiators fail to attain an settlement, each parties may additionally
emerge as in worse positions than when they started the negotiations, this is frequently
covered as a lose-lose final results.
If one or each parties can’t stroll faraway from a negotiation, however are unwilling to
make concessions, both will be forced to cope with the poor results of not attaining an
agreement. rather, each events will be too short to make concessions, accomplishing a
compromise that is truthful, but unfavourable to each facets. Likewise, if both parties are
incorrect about the blessings of what the opposite aspect is offering, they will attain an
agreement they later come to remorse.
In relation to negotiating a deal, we've got all been taught to try to discover a so-known
as "win-win" solution. But while you watch the nice negotiators in action, they clearly
use a completely one of a kind tactic. Their purpose is to strike what you would possibly
name "lose-lose" deals. When most people method a negotiation, our intuition is to begin
excessive, figuring we will turn out to be settling for something lower. If we start a
suggestion with 10 and a person counters with two, we are able to eventually settle
someplace round 6, proper?
But the satisfactory negotiators method deal-making in a far more nuanced way, that's
why they're consistently capable of strike complicated deals that would have seemed
impossible at the outset. The first mystery pinnacle negotiators hire is that they by no
means start out a negotiation with a selected goal in thoughts. They do not lock
themselves into anyone position so that it will restriction them from placing a deal.
The second one mystery of negotiating is that you want to uncover the underlying trouble
of what the character on the alternative side of the deal is seeking out. What do they need
and why? The better knowledge, they've of the issues and needs, the high the possibility
to find an area for an answer. The concept is to attempt to find what the alternative party
virtually wishes out of the deal whilst additionally figuring out what you might not care
as a lot approximately yourself, which are tremendous locations for compromise.
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Example 1
John, a business enterprise man, was recently worried in a deal in which a person
approached me approximately obtaining a corporation John had an ownership stake in.
John honestly wasn't interested by dropping this business enterprise, however rather than
close it down, John requested questions to help me apprehend why this different man or
woman desired the company. Because it grew to become out, John found out that they
sincerely best desired the name of the business enterprise - a reality that completely
reshaped our communication.
The third mystery to a success negotiation is to locate the exceptional lose-lose

negotiations. What I imply through that is that it can be very tough to find answers in
which both events in a negotiation "win." However, if you technique the cope with an
eye fixed on finding an answer in which every party simply "loses" a touch, you can
often discover a healthy compromise that surely leads to a truthful deal. After all, would
not each party be happy getting 90% of what they wanted as opposed to 0% if you could
not strike the deal inside the first region?
So the following time you method negotiating a tough deal, overlook approximately
locating a win-win answer. Aim for locating the first-class lose-lose scenario, and you'll
significantly growth your chances for placing a successful deal.
Parties fail to attain agreement
In a Lose-Lose scenario, both each parties concede bargaining positions outside their
goal levels. If the negotiators fail to attain a settlement, each events may grow to be in
worse positions than after they started the negotiations, this is frequently blanketed as a
lose-lose final results. If one or each events can’t stroll faraway from a negotiation,
however are unwilling to make concessions, each could be compelled to deal with the
bad results of now not attaining a settlement. As an alternative, each event could be too
short to make concessions, accomplishing a compromise that is truthful, but adverse to
both aspects. Likewise, if each party is wrong approximately the benefits of what the
other facet is offering, they'll attain an agreement they later come to regret.
Example 2
Take the negotiations that happened among Starbucks and Kraft’s coffee. Now and again
even the satisfactory agreements that pop out of the sector of negotiation in enterprise are
prone to fail and such is the case with the dispute among meals giants Starbucks and
Kraft, now Kraft-Heinz. A 3-year dispute among Starbucks and Kraft ingredients over the
distribution of Starbucks packaged coffee in grocery stores became resolved whilst an
arbitrator decided that Starbucks had breached its settlement with Kraft and ordered the
coffeemaker to pay the food giant $2.seventy five billion, Stephanie Strom suggested in
the NY Times.
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The dispute dates back to an agreement negotiated back in 1998 while Kraft commenced
selling Starbucks packaged espresso through grocery shops. In 2010, with income of its
floor entire bean coffee achieving $500 million annually, Starbucks supplied Kraft $750
million to quit their negotiated agreement.
Starbucks desired greater flexibility to sell the single-serve espresso pods that had been
commencing within the market at the time. The organisation’s agreement with Kraft
constrained Starbucks to selling pods that worked in Kraft’s Tassimo machines.
Starbucks became in chance of being left at the back of in a race for market share in
opposition to inexperienced Mountain espresso’s Keurig device and ok-Cup single
serving packs. Kraft then objected to the deal termination, but Starbucks decided to break
off the business courting however and started out to promote ok-cup packs.
Afterward, Starbucks’ proportion of the single-serving pod market grew through 18.4%
in line with Strom. And, not sharing income with Kraft, Starbucks noticed their income
for its grocery save merchandise (along with their bottled drinks) climb by means of
approximately forty seven% over two years, with $1.4 billion in revenues accumulated in
monetary 2013.
The two parties’ disputes over Starbucks’ termination in their partnership ended up
transferring to arbitration while the two sides had been not able to settle the problem on
their very own. The charges become made to Mondelez, a snack and confectionary
business that spun off Kraft in 2012. Ultimately, Starbucks disagreed with the arbitrator’s
selection. “We consider Kraft did no longer deliver on its duties to our emblem below the
settlement,” the business enterprise had issued in a public declaration.
Adaptable agreements for converting conditions
The enterprise dispute illustrates how fluid market tendencies can be, that can reason
negotiated commercial enterprise agreements to turn out to be undesirable through the
years. Of their authentic settlement, Kraft and Starbucks might had been smart to agree
upon set times for renegotiation, throughout which they might have had leeway to revisit
current deal phrases inside the face of changed monetary and enterprise conditions.
They could additionally have negotiated situations for finishing the settlement early,
consisting of cancellation consequences and other forms of compensation. In commercial
enterprise negotiations, there's frequently little or no manner of telling how a settlement
will spread over the years. Smart negotiators anticipate this uncertainty – and the ability
for a steeply-priced commercial enterprise dispute – and build mechanisms for handling
it into their deals.
2.4 Lose-Win Negotiations

The term Lose-Win Negotiation refers to a distributive negotiation wherein one party’s
lose is some other party’s gain. Both events are competing to get the maximum cost from
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the negotiation. Also known as the ‘constant-pie’ type of negotiation, in which there is
the simplest restricted amount to be distributed.
It’s regularly mentioned that it’s unproductive to address warfare as a win-or-lose count,
as takes place in litigation. Lose-win procedures frequently (maybe normally) lead to
lose-lose outcomes. There are some authentic zero-sum conditions wherein my
triumphing necessarily requires your dropping (i.e., wherein “I win” and “you lose”
imply precisely the equal aspect), however they aren’t common. There are also situations
where we are able to both be winners in the experience that we’re both better off.
Negotiation and mediation look for those win-win possibilities, and every now and then
discover them.
There are lots of conditions in which a first-rate end result isn’t truly a win for every
person, although it’s also no longer a loss. Maximum of the time there can (in principle,
at the least) be bring about which I am satisfied (at the least in element) in which you are
not disenchanted or disappointed (as a minimum not absolutely). Call the primary an ok
for-me final results and the second one a now not-horrific-for-you final results.
In a few instances I would also use the word “win” to explain an adequate-for-me
outcome. But frequently I might call it a win due to the fact I don’t enjoy it as a win. And
but an ok-for-me final results that isn’t a “win” continues to be adequate for me. It can be
higher to break out from framing the resolution process as a sport in which there can be a
winner—or in which each participant’s end result is evaluated one after the other as a
win or a loss for her.
For example, the reliable regulations of the game of Scrabble outline it as a competition
among or greater gamers. At the end of the game there is a winner—the player who has
accrued the maximum points. Whether she has a hundred and fifty or two hundred or 250
factors or greater, as long as she has more points than the alternative players she wins
and they lose. If she can vicinity a long word on a Triple phrase square, the points she
rankings help her win. But if she will be able to try this, putting her letters which will
block the alternative gamers from getting a triple phrase score may even help her win.
But recognize that some individuals who performed the game differently. They have
been a married couple, each excellent Scrabble players, and that they played every Friday
night for years. However their video games didn’t produce a winner. As a substitute,
their purpose is become to maximize the overall range of points for the two of them. That
supposed each of them tried to place high-scoring letters at the Triple phrase squares if
feasible, but it also meant that every tried to keep away from blockading the alternative.
This is simply not a lose-win method, but it isn’t honestly a win-win strategy either. If
this week they got a higher total rating than ultimate week, they’d be pleased, however
neither could say “I received.”
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For example, in a well-known story used in lots of negotiation and conflict decision
trainings, sisters are combating over the one final orange. Their figure ends the sisters’
argument through cutting the orange in half and giving every sister one half—the King
Solomon method of compromising among the two parties’ positions. in the trainings that
is contrasted with an technique that appears at the two parties’ pursuits: it turns out that
Sister 1 desired only the peel (to taste a cake) and Sister 2 desired most effective the pulp
(to make orange juice). So had they explored their pursuits they could have located a
solution that happy each pastimes. in this solution each sister wins without the opposite
sister having to lose. but a fair higher solution may apprehend that there might be enough
cake (though in all likelihood not enough juice) for each of them to have a piece. So not
simplest could each sister’s interest be satisfied, but at the least Sister 2 changed into
better off than if she had had the complete orange—because she ended up with both juice
and a bit of cake.
Neither sister loses with that solution, however it’s now not simply that every sister wins
(with respect to her original intention or interest). Sister 2 discovers that she has a further
interest (in having a few cake) this is also happy by way of the answer. That’s now not
lose-win or win-win—it’s a multiplied outcome.
As an example, allow us to study the relational effect of the usage of win-win or lose-win
negotiation techniques within different types of customer-provider relationships. A
multi-method technique is used. Qualitative interviews with supply chain managers
reveal that courting-specific belongings and cooperation are critical relational factors in
purchaser-dealer negotiations. Framing interview insights within the social alternate idea
(SET), hypotheses are tested the use of a scenario-based totally behavioral test.
Experimental consequences endorse that lose-win negotiators lower their negotiating

partner’s commitment of dating-specific assets and degrees of cooperation. similarly, the
use of a lose-win negotiation method reduces levels of courting-unique belongings and
cooperation greater in exceptionally interdependent buyer-supplier relationships than
relationships that aren't as close. buyer-provider relationships are complex interactions.
Negotiation method desire selections could have lengthy-time period effects on the
overall courting. As verified in this examine, previous studies specializing in one aspect
“triumphing” a negotiation as a degree of success has oversimplified this complex
phenomenon.
Using a lose-win negotiation approach could have a terrible impact on relational effects
like cooperation and relationship-unique belongings. For companies inquisitive about
growing sturdy supply chain relationships, customer and providers have to choose their
negotiation strategy carefully as the relational impact extends beyond the unmarried
negotiation encounter.
Previous research predominantly advocates for using a win-win negotiation strategy

inside interdependent relationships. This research offers proof that the use of a lose-win
approach does have a long-time period relational impact.
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2.5 Win-Lose Negotiations

Win-lose negotiations result whilst simplest one facet perceives the outcome as
tremendous. Accordingly, win-lose effects are less possibly to be universal voluntarily.
Distributive bargaining processes, primarily based on a precept of competition among
participants, are more likely than integrative bargaining to end in win-lose consequences-
-or they'll bring about a negotiations where each aspect gets part of what she or he
wanted, however now not as tons as they might have gotten if they had used integrative
bargaining.
Distributive is likewise known as aggressive, zero sum, win-lose or claiming fee. On this
type of negotiation, one facet "wins" and one side "loses." In this case there are constant
sources to be divided so that the extra one receives, the less the alternative receives. In
this situation, one man or woman's pursuits oppose the others. In lots of "buying"
conditions, the extra the alternative character gets of your cash, the less you have got left.
The dominant concern in this type of bargaining is usually maximizing one's very own
pastimes. Dominant techniques on this mode consist of manipulation, forcing, and
withholding data. This version is also known as "claiming cost" for the reason that goal
in this form of situation is to increase your own cost and decrease your opponent's.
Negotiation is every so often seen in phrases of ‘getting your own manner’, ‘riding a hard
bargain’ or ‘beating off the opposition’. Even as within the short time period bargaining
may also well acquire the pursuits for one facet, it is also a Win-Lose technique, which
means that even as one facet wins the other loses and this outcome might also well
damage the business relationships among the events. It also will increase the chance of
relationships breaking down, of humans strolling out or refusing to deal with the
‘winners’ again and the process ending in a bitter dispute.
Win-Lose bargaining might be the maximum familiar shape of negotiating this is

undertaken. People determine what they want, then every facet takes up an excessive
position. In addition to asking the alternative aspect for a good deal extra than they
anticipate to get something in negotiations, via haggling–the giving and making of
concessions–a compromise is reached. Each party’s hope is that this compromise can be
of their favor.
While this form of bargaining can be suited in the used vehicle market, and even
anticipated in some cultures, for maximum conditions it has drawbacks. These
drawbacks will have serious consequences if implemented to social situations. For
example, win-lose negotiation may serve to show the negotiation right into a warfare
scenario, and might serve to damage any feasible lengthy-time period courting with other
party.
These negotiations are essentially cheating wherein each the parties attempt to hide their
real perspectives and misinform the other party. Reaches a compromise solution which
won't have be the first-class feasible final results – there might also were a few different
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settlement that changed into now not concept of at the time - an outcome that become
each feasible and might have better served each events.
In this, the settlement is less probable to be reached as each facet has made a public
commitment to a particular role and feels they need to guard it, despite the fact that they
understand it to be a severe role at the start. At the same time as there are times while
bargaining is the perfect means of reaching an agreement, including whilst shopping for
a used car, generally extra sensitive technique is best.
Negotiation regarding different people’s lives is perhaps fine treated by means of the use
of an technique which takes into account the impact of the final results on thoughts,
emotions and next relationships. You could discover our web page on emotional
intelligence useful.
Win-lose negotiation is taken into consideration a style of negotiation whereby some

negotiators will best near a deal if they sense that they have gained and the other side has
lost.
Example 3
A company will hire when they sense a candidate has negotiated poorly and the salary
is below the industry standard. This could have poor results inclusive of a failure to
obtain the maximum talented candidates with the aid of that specialize in "triumphing.
(Source: https://medium.com/@sunilvihaa/the-art-of-salary-negotiation-4b044ba8bd4)
Figure 2.4 Win Lose Negotiation
Examples
Win-lose negotiation is a fashion, negotiations or method that sees one aspect advantage
and the opposite side loses. This is regularly in comparison to win-win situations in
which every person builds new price and lose-lose conditions in which all choices and
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results are undesirable. The following are illustrative examples of a win-lose

negotiations.
Gamers: In games players are designed to be winner-take-all, which you both win or
lose.
Markets: It is common for maximum of the market percentage for a service or product to
go to the pinnacle three corporations. As such, commercial enterprise is often win-lose as
hundreds of companies might also compete in the market or industry, rising with most of
the earnings.
Business Practices: Practices that enhance income at the cost of the patron. For example,
the usage of a dangerous pesticide can be regarded as win-lose because it could increase
yield however many clients could pick their food now not be uncovered to a risky
chemical. It must be referred to that a safe pesticide may want to advantage the patron by
using decreasing fees.
Trade: Exchange is typically win-win as it lets in international locations to produce items

where they are efficient and buy items in which they are inefficient. But, scenarios may
be determined where change is win-lose. For instance, an organization that subsidizes a
company can also cause competition in foreign nations to exit of business. This will
allow the company to boom expenses and revel in a super deal of market electricity
which could harm competition on a global foundation.
Environment: A company or character who profits on the cost of the surroundings. this is
a win for an person and loss for everybody else. as an example, a trucking company that
purchases old diesel vans which have strangely excessive particulate emissions however
are extraordinarily cheap due to the fact most of the competition is making efforts to
reduce their environmental effect.
Office Politics: A win-lose fashion of office politics seeks rewards, authority and status
with the aid of diminishing the competition. As an instance, a supervisor who seeks a
merchandising via discrediting the popularity of friends and superiors to take their
strength. This is not tolerated in a few corporate cultures. it can additionally be high
danger as you could count on human beings to hit lower back at you.
Malicious compliance is an man or woman who gains a feel of energy and authority
through using their role to harm others at the same time as technically staying inside the
guidelines. for example, a customs agent who delights in diminishing people using rules
designed for security, immigration and import manipulate. This is a win for the person
who gains a sense of electricity and a loss for absolutely everyone else, especially the
kingdom being represented by way of the customs agent. It should be referred to that
malicious compliance may be used for a few sort of tremendous goal.
Advantages and drawbacks
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The discussion of the blessings and downsides of a ‘Win-Lose’ approach to negotiation

would possibly begin with an introduction to the terminology (i.e. one party wins, the
other loses). There's a place for win-lose approaches to negotiations in which the ‘win’ in
the difficulty or final results is deemed extra vital than the connection.
• Win-lose can carry more competitive gain as the negotiator is targeted with obtaining
their objectives to the detriment of the other party
• Very focused
• Win-lose extra suitable for sure kinds of purchases i.e. transactional •

Win-lose often perceived as a powerful attitude/position
Drawbacks:
• Win-lose should damage the purchaser-dealer dating, (not taking account of the
opposite individuals attitude)
• Might also go away the ‘losing’ party feeling envious
• Visible as a dominant/aggressive function
• An excessive amount of recognition on accomplishing very own targets, could suggest

missing an possibility
• Less flexible
2.6 Win-Win Negotiations

Win-Win Negotiation is a negotiation approach in which every party gains more or less
identical advantage. The parties conform to act in every their very own interest and
within the interest of the other party. The premise for any win-win situation is that
compromise and cooperation should be extra or at least as vital as competition. This
negotiation strategy is usual of cooperative negotiators that belong to the most advanced
nations like Scandinavian state, Canada or Japan. This approach is adversarial a win-lose
approach or sport.
(Source: https://www.negotiations.com/articles/win-win-settlements/)
Figure 2.5 Win-Win Negotiations
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These negotiations are also called integrative and collaborative. On this sort of
bargaining, there may be a variable quantity of sources to be divided and both sides can
"win." The dominant challenge here is to maximise joint effects. An instance is resolving
a specific opinion about wherein you and a friend need to go to dinner. Some other
example is overall performance appraisal negotiations with a subordinate or resolving a
scenario of a subordinate who keeps coming in overdue to paintings. Dominant
techniques on this mode include cooperation, sharing statistics, and mutual trouble
fixing. This kind is likewise referred to as "growing price" since the intention here is to
have each sides leave the negotiating feeling that they had more fee than earlier than.
The Win-Win approach to Negotiation
Many professional negotiators prefer to purpose toward what is called a Win-Win

resolution. This involves attempting to find resolutions that permit both facet to reap. In
alternative words, negotiators goal to determine alongside closer to finding a solution to
their versions that results in either facet being glad.
Key points once aiming for a Win-Win outcome include:
focus on preserving the connection - ‘separate the people from the hassle’.
cognizance on interests no longer positions.
Generate an expansion of alternatives that deliver gains to every events before deciding
what to try to do.
Aim for the end result to be supported accomplice diploma goal common.
Recognition on retaining the relationship
This means no longer permitting the disagreement to break the social relationship, no
longer blaming the others for the problem and going to confront the problem not the
individuals. this will involve actively assisting the alternative human beings while
undertaking the problem.
Separate the individuals from the matter
Disagreements and negotiations rectangular degree seldom ‘one-offs’. once in a while of

war of words, it's crucial to do not forget which you clearly may additionally perhaps
ought to be pressured to speak with a comparable individuals in the destiny. for that
reason, it is continuously fee considering whether or no longer ‘prevailing’ the real
difficulty is additional crucial than keeping a decent dating.
All too commonly disagreement is handled as a non-public affront. Rejecting what a

private says or will is seen as rejection of the individual. way to this, numerous attempts
to solve variations degenerate into private battles or energy struggles with those
concerned obtaining indignant, harm or disappointed.
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bear in mind negotiation is concerning locating a pleasant decision to a drag, no longer

accomplice diploma excuse to undermine others, consequently, to avoid negotiation
breaking down into argument, it is useful to consciously separate the troubles below
dispute from the individuals concerned. for example, it is pretty potential to carry people
in deep regard, to like them, to admire their charge, their emotions, values and ideals, and
despite the fact that to ail the real reason they may be growing. One valuable approach is
to nevertheless express tremendous regard for a personal, even as soon as disagreeing
with what he/she is voice communication.
The following square degree samples of statements which can be utilized by a

respectable negotiator:
“You’ve expressed your points absolutely and that i can presently recognize your
function. but...”
“It’s clear that you absolutely square measure terribly involved regarding this difficulty,
as i'm myself. nevertheless from my viewpoint...”
every other way of fending off non-public confrontation is to avoid blaming the other
party for making the problem. it is better to talk in phrases of the effect the problem has
in individual, or at the employer or negotiations, in place of commenting any mistakes.
instead of saying:
“You’re developing waste a fantastic deal of it slow by carrying on with this argument,”
The same purpose may be bestowed as,
“I’m useless to pay a excellent deal of your time in this downside, i wonder if there’s any
method we have a propensity to may additionally solve it speedy?”
by not permitting ‘disagreements over troubles’ to become ‘disagreements between

humans’, a decent relationship is maintained, notwithstanding the result of the
negotiation.
Win-Win Negotiation strategies
The commercial enterprise negotiators ought to understand the importance of achieving a

win-win negotiation. this is often as a result of once every events vicinity unit glad with
their settlement, then there may be an extended and effective enterprise partnership. there
are numerous approaches for generating a win-win negotiation, which might be given
underneath:
Make more than one offer: While in negotiations, the event managers have to build more
than one offers on the same time to move in advance in discussions. when you vicinity
most effective 1 provide on negotiation table at a time, you'll examine very little if the
alternative party turns it down. On the other hand, in opposition to this, trust in what
occurs after you at the same time gift more than one gives, each of that is similarly
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precious to you, negotiations would be simpler. If the other party refuses all your offers,
improve them that one they similar to the maximum.
Their preference for a selected offer ought to provide you with a powerful clue
concerning wherever you would probably comprehend win-win trades and generate
mutual profits. moreover to function potential win-win actions, once you construct
multiple gives at the equal time, you show off your accommodating and flexible nature,
likewise as your need to recognize the other party’s desires and possibilities. therefore,
following time you're getting ready to build a proposal, bear in mind growing multiple
gives that you definitely rate similarly as an alternative.
Include an equal right:
In enterprise negotiation, the communicator has to embody an equal proper in their

agreement.
The matching proper can be a assure that one party will healthy any provide that the
alternative party later receives. this may be a traditional win-win circulate.
as an instance, believe which you’re a landowner negotiating with a potential tenant. you
desire to stay the power to promote the housing to somebody else in the future, while the
feasible tenant desires a dedication to hire the housing for so long as she wishes.
supplying the tenant an same proper—the energy to match any legitimate party provide
—would allow you to hold your own flexibility whereas giving the tenant the danger to
avoid the disruption of a flow. at some point of this manner, matching rights will enhance
the percentages of a win-win agreement.
Try for a contingent settlement:
In negotiation, events generally reach deadlock as a result of they need absolutely unique
ideals concerning the risk of future events. you would likely be satisfied that your firm
can supply a task on time and below price range, as an instance, but the shopper may
want to study your notion as impractical. In such matters, a contingent settlement—
negotiated “if, then” ensures geared in the direction of decreasing danger regarding
future uncertainty—offers the most effective manner for events to conform with disagree
whereas nevertheless shifting ahead, writes Massachusetts Institute of technology prof
Lawrence Susskind in his ebook realistic for You, first-rate for Me: finding the
mercantilism area and winning at Win-Win Negotiation (PublicAffairs, 2014).
Contingent commitments normally produce incentives for compliance or penalties for
insubordination, explains Susskind. you would in all likelihood recommend paying
specific consequences for turning your task in overdue or comply with notably lower
your costs if you suppose once more price range, as an instance. to function a contingent
settlement in your settlement, start with the aid of having either aspect write out their
own conditions of but they expect the long run to unfold. Then hash out expectations and
needs that seem ideal to each negotiations. eventually, embody each the conditions and
consequently the negotiated repercussions and rewards to your settlement. A contingent
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agreement will greatly growth your odds of being happy with irrespective of treatments
location unit in vicinity—and facilitate generate a win-win deal.
Negotiate damages in advance:
because not all destiny events might be anticipated with contingent agreements,
differently to foster a win-win agreement is to contain liquidated damages clauses for
your settlement that stipulate what share are going to be paid if the agreement is broken,
steady with Subramanian. remember the fact that if one party sues the alternative facet
for breach of agreement down the road, the complainant (if she wins) are going to be
provided monetary damages rather than the correct product or offerings that had been
misplaced. consequently, negotiating direct especially what percentage are going to be
got every late or lost delivery, as an example, ought to contour any numerous dispute
decision measures or proceedings that get up. moreover, negotiating damages places a
cutting-edge difficulty at the table—and so expands the capability for fee introduction.
all through this way, adding new issues to the combination will growth the threat for
win-win negotiations.
Look for put up-agreement settlements:

Imagine which you’ve definitely reached accomplice in Nursing settlement. you are
fairly happy with the deal, however suspect you will have eked a variety of price out of
it. regular with traditional know-how, you ought to stop speaking concerning the
settlement at the side of your counterpart and bypass on, lest you smash the deal. towards
this, Bazerman advises asking the other party whether or not he would be inclined to
require some other go-test the agreement to visualize if it will likely be created higher.
indicate to your counterpart which you in reality might every be liberal to reject a revised
deal if it doesn’t enhance every of your effects. this type of put up-settlement agreement
will motive new sources treasured to divide between you. it could even facilitate generate
a win-win contract in case you didn’t have one earlier than. Your success in hammer out
your preliminary agreement may want to have set up the accept as true with required to
explore the probability of a good stronger deal.
Getting ready for win-win negotiations
Dreams: what does one want to set off out of the negotiation? What does one think the
alternative individual wants?
Trades: What does one and additionally the alternative person has which you definitely
will alternate? What does one each have that the other needs? What region unit you every
secure gifting away?
Options: in case you do not attain agreement with the alternative man or woman, what
options does one have? Vicinity unit those realistic or awful? What percentage will it
count in case you are doing not reach agreement? Will failure to acquire companion
agreement reduce you out of destiny possibilities?
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Relationships: what are the records of the relationship? Can there be any hidden issues
which could influence the negotiation? However will you handle those?
Expected results: what outcome can parents assume from this negotiation? What has the
end result been within the past, and what precedents are set?
Effects: what region unit the outcomes for you of winning or dropping this negotiation?
What vicinity unit the effects for the opposite individual?
Electricity: UN employer has what strength inside the relationship? UN Corporation

controls assets? UN employer stands to lose the most if agreement is not reached? What
strength will the opposite person want to supply what you desire for?
Feasible answers: supported all the issues, what potential compromises could possibly
there be?
Some policies and guidelines for Win-Win Negotiations
Pay attention fastidiously to the opposite party. Do not interrupt the opposite party; do
now not pay your listening time figuring out however you'll shock the alternative party
once he or she finally stops talking. Most of the people hold on associate internal
communicates with themselves whereas taking note of others.
Be open and flexible. This will additionally allow the individual you're negotiating with
to be open and flexible. Raise queries which can discover the requirements or interests of
the alternative party. One should attempt to provide pretty one solution to the problem. If
the individual you're negotiating with is aware of that she has quite one desire, she is
going to not feel as though she is being compelled into companion agreement.
Separate oldsters from the matter. You may now not much like the individual you're
negotiating with. It’s not sufficient to grasp what you desire out of negotiation. You
furthermore need to assume what the opposite celebration goals. The best negotiator
moreover attempts to assume what the alternative party thinks or she or he desires. When
you have were given created the grounds well, be willing to say "no" to the man or
woman negotiating with if his demands are unacceptable. A foul agreement is a long way
worse than no agreement.
See thereto that the other celebration wins, particularly if it does not compromise your
function. Negotiation ought to originate intercalary worth.
Be patient. Negotiating what you desire might take longer than you believe you studied
that. Apprehend what a win is. What's your great-case situation? What are your worst
case negotiations? The world in between is named settlement vary. If you'll attain
companion settlement among your agreement vary, that’s a win! Prevent as soon as you
may, now not after you ‘defeat’ the opposite celebration.
Realize your Best Alternative to a Negotiated Agreement (BATNA) and the opposite
party's BATNA.
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2.7 Setting a context for win-win for both parties

We learn many things from school and college education and later skills training, but the
truth is that unless we learn the most important lessons and can apply these skills outside
of the classroom in real life, our results will be less than stellar. We analyze loads from
faculty and later capabilities education, however the fact is that except we analyze the
maximum crucial lessons and can observe those talents outdoor of the school room inside
the difficult college of tough knocks we call ‘actual lifestyles‘, our results can be much
less than stellar.
So, which might be the education path theories to be able to serve us best inside the real
world in our business negotiation demanding situations? So negotiation capabilities
education with realistic hard hitting function performs accompanied via instantaneous
video remarks of your overall performance are what we find to be the most precious.
Planning for the Negotiation:
Before the negotiation it's far helpful to plan. Recognize whether you are in a win-win or
win-lose situation. Make certain of your dreams, positions, and underlying interests. Try
to discern out the first-class resolution you can anticipate, what is a honest and affordable
deal and what's a minimally proper deal. What information do you have got and what do
you need. What are your aggressive benefits and downsides? Provide a few concepts for
your strategy. Its is very important to be clear on what's essential to you. Be clear about
your real desires and real troubles and try and figure out the other man or woman's real
desires and issues. Too many negotiations fail due to the fact humans are so involved
approximately being taken advantage of that they forget their desires.
Have a "walk-away" function:
When entering a negotiation or resolution, make sure you have already concept
approximately solutions to those questions: making plans for the negotiation: The min
max method
1. What's the minimum I can take delivery of the negotiation?
2. What is the maximum I can ask for;
3. What's the maximum that I can supply away?
4. What is the least I’m able to offer without appearing outrageous?
5. Try to expect the answers the opposite person will must these questions it is important
to recognize the aggressive advantage-your strongest points. Additionally you want to
realize the benefits to the other's argument.
In maximum negotiation conditions you may have a persevering with dating with the
other individual so it is essential to depart the scenario with both facets feeling they've
"won." It is essential that the opposite person doesn't sense that he is misdirected. While
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the other character loses, the results are frequently loss of dedication to the settlement or
maybe worse, retaliation. The most not unusual failure is the failure of negotiating events
to understand (or look for) the integrative ability in a negotiating hassle.
Separate humans from the problem:
Address troubles, now not personalities: keep away from the tendency to assault your
opponent for my part. If the alternative character feels threatened, he protects his views
and makes attacking the actual hassle extra hard. Separate the people problems from the
problem maintain a rational, purpose orientated frame of thoughts. If your opponent
attacks you for my part, don't allow him hook you into an emotional response.
Emphasize win-win answers:
Sometimes it appears to be win-lose situations, there are regularly win-win answers; look
for an integrative answer; create extra options, such as low value concessions that would
have excessive cost to the alternative person; search for options that allow your opponent
to declare victory.
Locate underlying pursuits:
A key to success is locating the "integrative" problems--often they may be observed in

underlying interests. we are used to figuring out our personal pursuits, however a critical
detail in negotiation is to understanding the other man wants and needs. With probing
and changing information we can discover the commonalities between us and decrease
the differences between both parties. Expertise these interests is the key to "integrative
bargaining." the largest supply of failure in negotiation is the failure to look the
"integrative" element of maximum negotiation. Too often we assume a situation is win
lose when it's far clearly a win-win state of affairs.
This mistaken view reasons us to often use the wrong strategy. Recall a situation in
which your boss fees you lower on a performance appraisal than you suspect you
deserve. We regularly tend to see this as win-lose-both he/she offers in or I provide in.
There might be a miles better hazard of a success negotiation if you may flip this to a
win-win negotiation. It is essential to outline the trouble in a manner that is collectively
perfect to each facets. This includes depersonalizing the trouble so as not to elevate the
defensiveness of the other character. as a consequence the pupil negotiating a hassle with
a professor is likely to be greater powerful by using defining the trouble as "I want to
recognize this cloth better" or "I do not apprehend this" in place of "you're now not
coaching the fabric very well."
Use a goal fashionable:
Try and have the end result be based totally on a few goal wellknown. Make your
negotiated decision based on standards and effects, not emotions or strain; try to discover
goal standards that both events can use to assess alternatives; do not succumb to
emotional please, assertiveness, or stubbornness.
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Try to apprehend the other party:
Recognize the scenario often we tend to attention on our needs, our dreams, and our
positions. To efficaciously resolve struggle, it's far important to awareness also on the
other individual. We want to discern out what the opposite's goals, needs, and positions
are in addition to their underlying interests. We need to consider the persona of the
alternative individual, how a ways we will push, how open or concealed we must make
our positions. Acquire as a whole lot statistics about the opposite's pursuits and desires;
what are the real wishes vs. needs; what constituencies need to she or he appease? What's
her strategy? Be prepared to border solutions in terms of her pastimes.
A crucial part of that is to apprehend that human beings area very distinctive values on
issues than ourselves. for instance, a easy room may be much extra vital to you than it is
in your roommate. We should apprehend how the alternative man or woman sees truth,
not just how we see fact. If through stress, deception or sheer aggressiveness, we push
humans to the point wherein they see themselves as possibly to lose, this creates troubles.
The opponent will retaliate and combat back; losers regularly lose dedication to their
good buy. also negotiators get reputations which can backfire. Remember that
settlements which can be maximum first-class and sturdy are the ones that cope with the
needs of both events.
Checklist
Here are some checklist points you could assess to recognize what tendencies make a
powerful negotiator. It ought to help to discover wherein you're, and wherein you want to
move in your education progression.
Knows what’s occurring
We cannot be powerful negotiators if we don’t understand or have a take care of at the

dreams and objectives of our business enterprise or agency. We should be tuned in to the
strategic goals of what control is striving to obtain. Otherwise, we are able to find
ourselves inside the scenario of ‘the right hand doesn’t recognize what the left hand is
doing‘.
Naturally, it's far absolutely as much as management to evidently country and

communicates those training goals throughout the levels of its employees. in case you
find yourself in a state of affairs where you aren’t clean in which your business
enterprise is going, you need to find your education goals to be consistent with your
organization’s desires to hit your goal. Suitable negotiators always have their finger at
the pulse and thrust of the long time goals and goals of their agency or enterprise
Prepare – prepare – put together
An awesome negotiator can simplest be powerful while they're prepared. We ought to do

our homework and studies before the negotiation in any other case we will be left
groping about in the dark. We need to have all our ducks in a row via amassing all the to
76
be had and applicable facts to have reachable whilst we want it. To be unprepared is just
asking for hassle. Negotiation coaching is the most important degree of negotiation to be
powerful. Sellers experience the advantage of knowing their product and marketplace
more deeply than consumers. We train buyers in agreement negotiation to counter their
downside thru employing competitive tendering methods.
Research – probe – learn
Powerful negotiation competencies calls for that we hold our ear to the ground to snoop
like a nosy detective. While we sit down down with our negotiation counterpart, we
frequently don’t have quite a few facts approximately the ambitions of the alternative
facet. on every occasion we sit down down with our opposite numbers we need to be
effective in mastering to pry records from them to look the image from their point of
view. The extra we can study our opposite numbers and what they need or want, the
better are we able to expand our proposals or examine theirs. We have to usually know
our BATNA and walk away ranges. Of route with correct negotiation teamdiscipline and
education, we need recognise what lurks in the back of their motivations. So ensure
you’re talking with the proper human beings.
See the large photo
One very essential trait we need to increase and groom is the capacity to be dexterous
and bendy like a gymnast. The trainable negotiating technique is like the currents in a
river. they're ever-changing. we are able to’t go into the sport with a set thoughts-set as
this may bring about tunnel imaginative and prescient. Being flexible allows us to change
the policies of the negotiation sport as we might must assist our counterpart recognise the
merits of an agreement and the possibilities we both can revel in together. further, as we
study more from our contrary variety, we are able to learn new abilties and modify our
approach because the negotiation play unfolds.
Stay cool
Learn how to roll with the punches; feelings in negotiations can get heated. A smart
negotiator in no way takes what’s said as a private affront and has the talent to separate
the troubles from emotions. So, we have to usually be detached and maintain our attitude
and be focused on our objectives. It’s no longer about us and it’s no longer
approximately them – it’s approximately why we are negotiating.
Do not spoil down the boundaries
There are numerous styles of boundaries that act as sticking points, inflicting our
professional negotiators to turn out to be bogged down. powerful negotiation demands
that we understand the ‘fly within the ointment‘ and understand the nature of the trouble
that stands so resolutely in our way. as soon as we apprehend the sticking factor, we're
able to sniff out the reasons for those limitations. most things are the result of ‘reason and
impact‘, so once we recognise the character of the beast that stands in our manner, we
will teach our interest to discover solutions and alternatives to negate and neutralize
77
them. regularly our exceptional ideas come from others. So who has the talents on your
company to brainstorm with?
Can discover allies
In spite of the satisfactory schooling in the global, we don’t always discover ourselves
running from a position of power. It even might seem we don’t have a whole lot to
paintings with on the initial stages of our negotiation, so occasionally we need to
discover ways to skillfully enhance our position on the desk. This often takes place in
multi-party negotiations either inside a business enterprise or with more than one
external negotiating events. Those skilled in effective negotiation strategies recognise
that there may be electricity in numbers, and they ferret out allies to shape coalitions to
growth their negotiating strength.
Have a trusting recognition
‘Fool me as soon as – shame on you…’ everybody with whom we negotiate forms an

impression of who we're as a negotiator. If we create a terrible notion in which we appear
sneaky and disreputable, this man or woman trait goes to follow us round like a bad
smell. it will in all likelihood haunt us down the street in our destiny negotiations.
If you’ve haggled with a tricky negotiators who performed you like a fish, how do you
believe you studied you'll deal with this character once more? How effective will you be
in seeking to create a terrific agreement or courting with a person you don’t trust? It’s a
two manner avenue. We can't be effective in our negotiations when our counterpart
believes we're looking to stiff them. Integrity and trustworthiness are crucial to our
popularity as effective negotiators, sufficient said.
So, how did you fare? Take coronary heart if you have a possibility to improve your
abilities, there is little that education can't assist you in accomplishing. When you
pinpoint wherein you might be missing, you could take training steps and cope with any
shortcomings you would possibly have identified. Take precise training guides, study
fabric that may aid you in developing those developments. Notably else, experience is
one of the first-class instructors that let you on your quest to be a top-notched negotiator.
Examine from your mistakes, because we’ve all travelled down the same avenue.
Steps for Winning negotiations for events industry
The event industry is more competitive than ever. Companies all over are competing for
contracts with large corporations, vying to produce the corporations' annual events. While
you may have the most creative concepts for your prospective client, it may be your
overall presentation that ultimately decides your success in securing a contract. As a
presenter, you need to know just how to pull it off in order get those contracts. While
there are some companies that make mistake after mistake, you don’t have to land in the
same pitfalls that they do.
To avoid any obstacle that would decrease the success of your presentation process,
follow these five tips:
78
1. Stay on topic.
When companies put their corporate events out for bid, they will give you a request for
proposal (RFP). It’s important that you actually look over the RFP and stay on topic with
what they have outlined.
They provide the document for a reason, and aren’t looking for your “better” ideas for
their proposal. Failing to showcase all aspects of their RFP could really put you out of
the running for the job.
2. Stay on budget.
It’s not your job to “improve” the company’s budget. In fact, they have probably already
had their Procurement Division look at the RFP to make sure it’s all in line with what is
in their budget. You need to respect the amount of money they have to work with. If you
truly think there is a way to improve the budget, the time is not during the presentation
process. Once the contract is given to you, that is when you can speak to them about the
changes you would make. The most important part, however, is helping them to realize
right up front that you are there to make their lives easier, not more difficult.
3. Keep it simple.
Never feel as though you have to include every idea that you have ever had in your
presentation. Often times, someone will include them all so that the company can have
their pick from the very best ones. What this overcompensation often does, however, is
overwhelm a potential client.
You don’t need to provide them with the most ideas. You do need to provide them with
the best.
At most, two or three ideas are enough. When deciding on the ideas you wish to use,
weed out the ones that do not follow the RFP or that are not solid enough to stand alone.
4. Keep it short.
The company that you are providing a presentation to has a busy schedule. They do not
want to work with someone who goes over the amount of time they have set apart.
Keeping your presentation short does not necessarily mean that you go way under time,
either. It’s important that you respect the time frame they have given you. They have to
move on when time is up, so they need you to be done, but they also want enough time to
hear your ideas.
They get to decide how much time you take. You get to decide how you use that time.
5. Let them talk.
Perhaps one of the most important things you can do to avoid any delay or obstacle
during your presentation is to open it up to questions.
Oftentimes, the presentation, products, or services are not what sell. Conversation is so
important. The company you are presenting to needs to know that you value their
opinions and their questions, and that you have the knowledge to inform them
completely.
Sometimes a meaningful discussion makes all the difference between securing the
contract and not. By allowing your audience time for this conversation, they will have
79

MU - Masters - SEM 4 - Business Negotiation Skills

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Business

Negotiation Skills NAEMD BUSINESS NEGOTIATION SKILLS

1 Introduction to the subject 4

2 Unit I- Types of Negotiation in Business 5-52

3 Unit II- Defining Negotiations 53-89

4 Unit III- Preparing for a Negotiation 90-128

5 Unit IV- Handling the negotiation 129-167

INTRODUCTION TO THE SUBJECT

 Identify the different types of negotiations in business

1.1 Types of Negotiations in Business

Figure 1.1 Types and style of negotiations.

1. Win-Lose Negotiations: This type of negotiation is also called distributive

2. Win-Win Negotiations: This type of negotiation is also called integrative negotiation.

1.2 Business to Business Negotiations

However, the above items-manufactured by different business units- needed to

➢ Professional services, such as a full-service training program, where the customer

➢ A short-instant-contract for new customers.

➢ Tailor made Concessions on certain contractual terms, such as auto-renewal

➢ A company t-shirt, fleece or other branded gear.

3) Beware of the difference between trade-off and concession

Figure 1.2 how to present your proposal to a prospect.

a) Specify What Services You Will Provide

1.3 Negotiations with Distributors, Customers,

1) Have Balance in the agreement:

2) Perform Due Diligence exercise:

1) Preparation-knowledge of your product and that of the competition:

2) Have Negotiable items for an agreement:

4) You have to learn from each negotiation:

5) It is important to leave a feeling consideration in your customer’s heart:

Before the negotiations start follow the following rules:

Rules to follow during negotiations:

Negotiations with Vendors

With only one supplier it is difficult to negotiate to your liking. Therefore it is

1. Never Compromise on Communication: Start with and maintaining solid

Event Vendors Negotiation

Golden rules for Event specific negotiations

b). Negotiate in writing.

d) How to ask for a discount

Confidence is golden. However, sometimes over-ambitious plans and self-assurance may

e) Be confident, but realistic

f) Decide how low you can go in advance

g) Choose the right time

i) Don’t pay full price

j) How to create a winning proposition

In order to minimize an event expenditure, approach it strategically. Here’s the list of

1.4 Types of Negotiations in Marketing

2) Have if this, then what-possibilities - and a backup plan.

How is Punctuality looked at by different cultures

1.5 Negotiations in Operations, HR, Finance &

• Level of the job within the organization

• Scope of salary range for the job within your organization

• Economic conditions, in general, within your job market

• Existing economic conditions within your industry.

Negotiations in the Finance Department

What is financial negotiation?

• Dealing with suppliers

• Making decisions involving members of the household, including a spouse

Figure 1.4 Sources of Finance

There are 3 sources of finance-1) Security finance-involves equity shares, preference

Negotiations with Bankers and Equity Funds

How can you more from your bankers?

Know what the requirement is and what you are negotiating:

Be prepared to subordinate some of your shareholder loans to the bank. If you