Chapter 2

Negotiation and Dispute Resolution

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 Learning Objectives
1. Define what is meant by negotiation and apply that to a number of
different contexts
2. Identify types of negotiation that can determine the outcome of a
negotiation
3. Plan a strategy for successful negotiation
4. Understand the principle of ‘win-win’ negotiations and BATNA term
5. Understand the characteristics of effective negotiator
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 What do we mean by
negotiation
• Mutual discussions for the purpose of arriving at
the terms of a
transaction or agreement
• Negotiation takes place when two or more people, with
differing views, come together to attempt to reach
agreement on an issue. It is persuasive communication or
bargaining.
• “Negotiation is about getting the best possible deal in the
best possible way.” 3
 Negotiation is a
skill
• “Successful negotiating is a skill. It is not
something you have or don’t have.”
• Some people have a natural talent for it. Others do
not.
• If you do not have a natural tendency for negotiating,
you can learn how to do it, and do it well!
• If you do have a natural talent for it, you can improve
that skill with training and practice.
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 Aim of
Negotiation
• To reach a desired and durable result by including the
interests of both parties

• To reach agreement efficiently and fairly using talents

of all participants to solve problems

• To develop a shared sense of satisfaction from working

together successfully
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Why do negotiations
fail?
• Getting too emotional
• Focus on personalities, not issues
• Not trying to understand the other person (too focused
on our own needs)
• Wanting to win at all costs
• considering negotiation as confrontational

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A successful negotiator needs to
be….
• Professional
• Confident, Relaxed, at ease
• Open, honest, sincere & credible
• Respectful of other peoples values
• Show empathy, and understanding
• Committed to a WIN:WIN result
• Continually enhancing their skills

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Stages in the Negotiation
Process
• Preparation
• Relationship-Building
• Information Exchange
• Persuasion
• Agreement
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 10 Guidelines to Successful
Negotiation
1- Meet the other party in private. No press!
2-Face the future, not the past.
3 Be firm, but concerned and flexible.
4 Reframe the issues as a joint problem to
be solved.
5If there are blocking issues, be prepared to discuss them with an open,
creative mind.
6Make preparation meeting to get to know each other.
7-Establish good working relations with the other party.
8-Clarfiy your priorities and try to envision other party’s needs and desires.
9-Do lots of creative brainstorming sessions alone and with members’ of
your team.
10-Look for the hidden details by using help from experts.
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Types of Negotiation
(1)
Integrative/Distributive
Parties are looking for different things as they
approach the negotiation

Integrative negotiations are commonly referred

to as “win-win”

Distributive negotiations are referred to as “win-

lose”
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Types of Negotiation
(2)
Inductive/Deductive/Mixed
The inductive method involves starting on small
details and working upward

Deductive negotiations start with an agreed-

upon strategy and then work out the details

Mixed negotiations are a mix of inductive and

deductive methods
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Types of Negotiation
(3)
Soft/Hard
Soft and hard bargaining involves negotiating a
position (What) rather than interests (why).

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Types of Negotiation
(4)
Alternative Dispute Resolution
Alternative Dispute Resolution (ADR) is a popular
alternative to negotiation.
ADR allows the negotiating parties to take
advantage of a formal dispute resolution process
using mediators or facilitator.
Negotiating partners must both be satisfied with
the outcome.

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Types of Negotiation
(5)
Non-Negotiable Positions (blocked negotiations)
As a negotiator, you must not go to the table with
non-negotiable positions.
If you elect to draw the line, you must know your
limits and the room you have to negotiate.
Just because someone says no to your request
does not mean you have asked the only
question that is available.

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 Barriers to Successful
•Negotiations
Parties may not be open about their desired outcomes.
• Parties may not be clear in their own minds about what
they actually want to accomplish with their proposals.
• Parties may not reveal all of the truth regarding their
positions to each other.
• Parties may not be willing to believe all that they hear
from each other.
• Parties may not have the right negotiators.
• Parties may not be ready to settle.

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 Effective Communication &
Negotiations
It is imperative that we work well with people, listen effectively, and be able to communicate with
them to accomplish our goals
Thought Sender Encodes Message Transmits the Message

Words Pictures

Receiver receives message:

- Hears it
- Reads it Receiver decodes Receiver ACTS
- Feels it message — on message
Interprets meaning

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 Communication is a 2-way
process
Communication skills involve: sender

Listening to others (Receiving) message

Expressing (Sending) receiver

Barriers to communication can lead to misunderstanding and confusion

values and attitudes
“generation gap”
sender
language

Cultural differences

noise

hearing
receiver
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Effective Communication
Skills Eye contact & visible mouth

Some questions Body language

Encouragement Effective
Silence
to continue Communication
skills

Smiling face

Summarising Checking
what has been said for
understanding
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Barriers to Effective
Communication Language
Time Noise

Other people Distractions

Barriers to
effective
communication
Too many questions

Lack of interest
Distance

Discomfort Disability
with the topic
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Effective Teams Embrace
Communication
High-performing teams learn and adapt to the communication styles of
their members
• Extraversion is a personality trait shared by people who are friendly,
assertive, and outgoing
• Introversion is a personality trait characterizing people who are more
shy and reserved. Because of their more reserved nature.
• Communication apprehension which is worry or fear about
communicating with others.
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 Effective Teams Provide Feedback
High-performing teams provide feedback and evaluate their
performance often
Three keys to effective evaluation are: 1) the process should be positive and
goal-driven; 2) the process should include clear expectations; and, 3) all
team members should participate.
• Teams consistently provide their members with feedback, most of which
should be positive
• Many teams take time at each meeting to briefly evaluate their
performance
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Leaders Styles
Most team leaders enact one of three leadership styles, and each style has
its strengths
• Democratic engage as many people as possible in decision making.
• Autocratic see themselves as having both the authority and the
responsibility to make decisions on behalf of their teams.
• Laissez-faire believe team members should work independently, with
little direction or personal involvement from the leader.

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Leaders Manage Conflict
Leaders generally manage conflict in one of five different ways:
• Competing the goal is to win while the other party loses
• Avoiding means ignoring the conflict and hoping it will go away
on its own
• Accommodating is to sacrifice so the other party wins
• Compromising both parties give up something in order to gain
something
• Collaborating is to arrive at a win-win situation that maximizes
both parties’ gains
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 What Is Basically at Stake in Negotiating?
Every person, leads per day on average 3–5 negotiations outside the family. Negotiation is thus our daily

business and we do it day in, day out. Negotiating is so natural to us that we need to consider it as part of our

range of communication and indeed as a special form of communication. The truly remarkable thing is that

often we are not even aware of the fact that we actually negotiate.
 Negotiations are basically found in three areas:
Conflicts

Relationship

Transactions

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What Is Basically at Stake in Negotiating?
Conflicts: resolve disputes, solve problems and disagreements.

Relationship: to establish, strengthen, and protect relationships.

Transactions: in conducting business and projects, sales or any other
form of transaction .

a few basic concepts first need to be clarified:

• What do we mean by negotiation? And why we negotiate?
• How can we measure the success of a negotiation?
• what are the possible outcomes of a negotiation?
• what negotiation styles can be identified?

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 How can we measure the success of a negotiation?

Every form of negotiation is best assessed on the basis of three criteria:

• Effectiveness = quality of the result: The transaction will bring a reasonable
agreement to pass. The legitimate interests of each side are met to the greatest
possible extent.

• Efficiency = Time efficiency and economic benefit: The transaction should be

efficient, i.e., the effort expended stands in a reasonable relation to the benefits
gained.

• Negotiating climate = quality of relationship: Finally, a negotiation should

improve the relationship between the parties, or at the very least not destroy it.
A good negotiation is unique in its design, is feasible, fair, useful for the parties
involved and sustainable.
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 How can we measure the success of a negotiation?

The prerequisite for a successful agreement is the so-called bargaining zone.

Example:
Imagine that you already have a nice car you schedule the sale of the new
vehicle. If the average price for a car of this class is 80,000 €, then the
cornerstone of your negotiations will be determined by the following
considerations:

• You will be willing in any case to sell the car for 75,000 € to a prospective
buyer.

• If you ask for more than 85,000 €, potential buyers will find more
attractive offers on the market.

• Their bargaining zone is therefore between 75,000 € and 85,000 €.

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BAT NA
When you set the value of a possible agreement, or the point at which you
would accept this, if you have a BATNA or “Plan B” at the time of the negotiations then
you will find it much easier to negotiate.

BATNA is the best alternative to achieving a negotiated outcome or terminating any

agreement. Never accept a worse outcome than your BATNA

 The best alternative is thus the only criterion that can save you either before you
accept conditions that are too unfavorable or reject those which are in your best
interest to accept. Thus your best alternative is not only a useful measure, but also
has the advantage of giving you enough flexibility to exclude any solution that is
below your limit, as you can compare each proposal with your best alternative and
analyze what is ultimately more in your interest.

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Possible outcomes of Negotiation

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 Win-Lose

One party wins, and the other loses. This can happen when Win-lose. The parties are
mismatched, or when one party is not prepared. It can also result from cheating. In any
case, the loser will resent the winner, and any relationship between the parties will
suffer.

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 Win-win

Both parties get everything they want! This is the best of Win-win. all
possible worlds! It’s the ideal outcome. But while the win-win is much
talked about, much sought after, and much prized, it is rarely achieved.

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 Lose-Lose

Both parties lose. You may be thinking, “How can that Lose-lose. be? It’s easy to see how one
party might lose, but how can both parties voluntarily agree to lose? It just isn’t rational!” You’re
right, it isn’t rational. It is, however, surprisingly easy to become emotional in a negotiation, and
one may agree to lose so long as he takes the other person down with him.

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