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Negotiation

Course Objectives

Explain What is Negotiation


Explain the Basic Principles of
Negotiation
Describe the Benefits of Negotiation
Explain the Types of Negotiation
Strategies
Explain the Stages of the Negotiation
Process
Describe the Concepts of a Win-Win
Negotiation
Explain the Various Styles of Negotiation
Explain What is BATNA
Describe Strategies for Developing
Negotiation
Skills of Third Party
Explain the Types
Explain the PROBE Technique for
Negotiating
Describe the Negotiations in
Organizations
List the Issues in Negotiation
List the Characteristics of a Good
Negotiator
List the Tips for Effective Negotiation

Introduction

Globus Inc. is a
leading IT giant.
Peter Looney is
a Project
Manager in
Globus Inc. He is
responsible for
meeting the
clients for every
new software
development
project that
comes to

Introduction

Maxwell
Telecommunicati
ons, a leading
Telecom Service
company
recently came to
Globus to have
new SAP based
database
software to be
developed for
them.

Introduction

Peter carefully
reviewed and
analyzed
Maxwells
requirements
and came up
with a Project
Plan.

Introduction

Now, the only


thing that Peter
needed to go
ahead with
starting the
project and
develop the
software was
the clients
approval of the
Project Plan.

Introduction

Peter held a
meeting with the
clients to
discuss the
Project Plan and
gain overall
approval for the
terms and
conditions of the
Project.

Introduction

The client was in


a hurry to get
the software.
Peter tried to
negotiate upon
broader
deadlines but
due to clients
pressure, he
ultimately
agreed to finish
the project as
per their

Introduction

When the
project was
under progress,
Peter and his
team realized
that the
deadlines that
he had agreed
upon are nearly
impossible to
meet.

Introduction

Peter and his


team were not
able to complete
the project as
was promised to
the client due to
which Globus
had to pay some
penalty for late
delivery.

Introduction

Also, the client


added new
requirements
that had to be
incorporated in
the software.
However, Peter
had not
negotiated
about the terms
with the client
for any further
enhancements
or features

Introduction

Hence, Globus
had to incur a
loss in the
project because
the scope of
work had
increased but
the terms of the
project had not
been negotiated
well.

Introduction

Also, Peters
team was forced
to work 7-days,
even from home
to try to
complete the
project.

Introduction

Why do you
think Peters
team had to
suffer? Why did
Globus have to
incur a loss in
this Project?

Introduction

Yes, all this


happened
because Peter
had not initially
negotiated well
with the client
about the
deadlines and
the scope of
work.

Introduction

If Peter had
clearly
negotiated the
terms of the
project with the
client and
negotiated
realistic
deadlines,
Globus would
not have needed
to pay any
penalty.

Introduction

Also, if Peter
had negotiated
the scope of
work in detail
with the client,
then Globus
would not have
to incur any loss
in this project.

Introduction

Thus, you can


see that
negotiation
skills are a must
for anyone to
succeed when
dealing with
people.
LLeett us

us lleeaarrn
n aab
bo
ou
utt
N
e
Neg
t
go
otiiaattiio
on
n
S
Skkiillllss iin
nd
deettaaiill..

Objective

Explain What is Negotiation


Explain the Basic Principles of
Negotiation
Describe the Benefits of Negotiation
Explain the Types of Negotiation
Strategies
Explain the Stages of the Negotiation
Process
Describe the Concepts of a Win-Win
Negotiation
Explain the Various Styles of Negotiation
Explain What is BATNA
Describe Strategies for Developing
Negotiation
Skills of Third Party
Explain the Types
Explain the PROBE Technique for
Negotiating
Describe the Negotiations in
Organizations
List the Issues in Negotiation
List the Characteristics of a Good
Negotiator
List the Tips for Effective Negotiation

What is Negotiation?

Negotiation is a discussion
between two parties to find out
the solution and for the purpose
of reaching a joint agreement
about differing needs or
opinions.

It involves using the art of


persuasion to get others to
understand and agree with your
viewpoint. It works best when
an individual has a win-win
attitude.

What is Negotiation?

The key skills that are involved


in a successful negotiation are
that of good communication
skills, sales and marketing skills,
good psychological analytical
skills, sociology skills,
assertiveness and conflict
resolution skills.

Therefore, negotiations may


take place between various
kinds of different people such as
between a customer and seller,
a boss and employee, two
business partners, a diplomat or
a civil servant and a foreign
diplomat, between spouses,
between friends and between
parents and children.

Need for Negotiation


me . a l
a
s
actly individu
x
e
re
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a
ry
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ople
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ith
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Need for Negotiation

to
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Objective

Explain What is Negotiation


Explain the Basic Principles of
Negotiation
Describe the Benefits of Negotiation
Explain the Types of Negotiation
Strategies
Explain the Stages of the Negotiation
Process
Describe the Concepts of a Win-Win
Negotiation
Explain the Various Styles of Negotiation
Explain What is BATNA
Describe Strategies for Developing
Negotiation
Skills of Third Party
Explain the Types
Explain the PROBE Technique for
Negotiating
Describe the Negotiations in
Organizations
List the Issues in Negotiation
List the Characteristics of a Good
Negotiator
List the Tips for Effective Negotiation

Basic Principles of Negotiation


There are a few common basic principles that apply to all types of
negotiations and in all situations. Some of the basic principles of
negotiation are as follows:

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Basic Principles of Negotiation


There are a few common basic principles that apply to all types of
negotiations and in all situations. Some of the basic principles of
negotiation are as follows:
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Basic Principles of Negotiation


There are a few common basic principles that apply to all types of
negotiations and in all situations. Some of the basic principles of
negotiation are as follows:
T
tt
Th
n
hee n
a
t
n
neeg
r
a
o
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go
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ovveerr
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nd
d tth
hink

The Art of Negotiation


Negotiation is an art; you
can get better and better
with it.
If you feel that you dont
have an innate talent for
negotiations, dont be
disappointed because
these skills can be honed
and developed with the
proper training and
practice.
People who always speak
good things may feel
that they are good
negotiators, but that is
not always the case.
Negotiation is all about

The Art of Negotiation


Negotiation happens
everywhere its
omnipresent. You may
have to negotiate over
anything right from the
deadlines of a project to
which person will do
what chores at home.
In the real world, it is
sometimes difficult to
ascertain whether your
negotiation is good or
bad. You may think that
you are a good
negotiator, but in reality,
it may be just the
opposite.

Objective

Explain What is Negotiation


Explain the Basic Principles of
Negotiation
Describe the Benefits of Negotiation
Explain the Types of Negotiation
Strategies
Explain the Stages of the Negotiation
Process
Describe the Concepts of a Win-Win
Negotiation
Explain the Various Styles of Negotiation
Explain What is BATNA
Describe Strategies for Developing
Negotiation
Skills of Third Party
Explain the Types
Explain the PROBE Technique for
Negotiating
Describe the Negotiations in
Organizations
List the Issues in Negotiation
List the Characteristics of a Good
Negotiator
List the Tips for Effective Negotiation

Benefits of Negotiation
The following are some of the benefits of negotiations:

Good
negotiations
help you to gain
better control in
business as well
as personal
situations.

They help you to


identify and
understand youre
as well as the other
parties interests
and also
understand the
differences

It helps to
reach a WinWin Solution,
which is
mutually
beneficial to all
the parties
involved in a

Good
negotiations
also help to
improve
interpersonal
relationships.

Benefits of Negotiation
The following are some of the benefits of negotiations:

They help to
develop and
maintain an
overall
harmonious and
thriving
interpersonal
environment.

It is one of
the easiest
and quickest
ways to solve
conflicts and
disagreement
s.

Negotiations
help to
reduces
stress and
frustration
among two
conflicting
individuals.

Negotiations help
to reach an
agreement in
cases where a
dead-end may be
reached if a
consensus is not
established

Objective

Explain What is Negotiation


Explain the Basic Principles of
Negotiation
Describe the Benefits of Negotiation
Explain the Types of Negotiation
Strategies
Explain the Stages of the Negotiation
Process
Describe the Concepts of a Win-Win
Negotiation
Explain the Various Styles of Negotiation
Explain What is BATNA
Describe Strategies for Developing
Negotiation
Skills of Third Party
Explain the Types
Explain the PROBE Technique for
Negotiating
Describe the Negotiations in
Organizations
List the Issues in Negotiation
List the Characteristics of a Good
Negotiator
List the Tips for Effective Negotiation

Types of Negotiation Strategies


There are two main types of negotiation strategies which are as
follows:

e
v
i
t
u
b
i
r
t
s
Di
n
o
i
t
a
i
t
o
g
Ne

Integra
tive
Negoti
a ti o n

Lets look at each in detail.

Distributive Negotiation

Distributive Negotiation is
also known as Positional or
Competitive or Fixed Pie or
Win-Lose Negotiation. It is a
type or style of negotiation in
which the parties compete for
the distribution of a fixed
amount of value.

The involved parties in a


distributive negotiation
have a win-lose attitude
towards reaching the goal
and is based on an attempt to
divide up a fixed pie or
amount of resources for
oneself.

Distributive Negotiation
involves holding on to a fixed
idea, or position, of what you
want and arguing for it and it

iv e
t
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b
i
r
t
s
i
D
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o
i
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a
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o
g
Ne

Distributive Negotiation

The main foc


us in such a
t yp e o f
negotiation
strategy is o
n achieving
immediate g
oals, with lit
tle or no
regard for bu
ilding future
relationships
. Generally, n
o new
creative solu
tion is reach
ed in such
negotiations
as the partie
s spend
least possible
time and ene
rgy in
resolving the
confict. The
outcome of
the negotiat
ion is reache
d by
presentation
of fixed solu
tions and a
decision or c
hoice is mad
e quickly.

Integrative Negotiation

Integrative Negotiation is
also known as Interest-based
or Cooperative or Win-Win
or Non-zero Sum Negotiation.
It is a type or style of
negotiation in which the
parties cooperate to achieve a
satisfactory result for both.
The involved parties in an
integrative negotiation have
a win-win attitude towards
reaching the goal and attempt
to strive not just for their own
outcomes, but for favorable
outcomes for both sides.

Integra
ti v e
Negoti
ation

Integrative Negotiation
involves reaching an
agreement keeping into
consideration both the parties
interests which includes the
needs, desires, concerns, and

Integrative Negotiation
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The main foc


us in such a
t yp e o f
negotiation
strategy is o
n developing
mutually ben
eficial agree
ments based
on the intere
sts of the dis
putants.
Generally, ne
w creative s
olutions are
reached in s
uch negotiat
ions as the
parties spen
d maximum
possible tim
and energy in
e
resolving the
confict.
The outcome
of the negot
iation is
reached by c
ollaboration
between the
parties to fin
d a win-win
" solution to
their dispute
.

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Distributive vs. Integrative


Negotiation
The
given table shows the comparison between Distributive
Negotiation and Integrative Negotiation.
Distributive Negotiation
It involves discussion of only one
issue at a time.
Involved parties have a Win-Lose
attitude towards reaching the
negotiation outcome.
Each party wants to use the
negotiation to maximize its own
share of fixed pie.
It is an approach usually used in
one-time relationship between two
people.
The involved parties keep their
respective interests hidden.

Integrative Negotiation
It involves discussion of several
issues at a time.
Involved parties have a Win-Win
attitude towards reaching the
negotiation outcome.
Each party wants to use the
negotiation to expand its own share
of the pie by creating and claiming
value.
It is an approach usually used in a
continuing relationship between two
people.
The involved parties share their
respective interests with the other
party.

Distributive vs. Integrative


Negotiation
The
given table shows the comparison between Distributive
Negotiation and Integrative Negotiation.
Distributive Negotiation
The involved parties keep
information hidden.

Integrative Negotiation

The involved parties share


information with each other and try
to get to the root cause of the why
of the existence of the issue.
The involved parties are adversaries. The involved parties are joint
problem-solvers.
The aim of such negotiation is
The aim of such negotiation is
winning.
making a wise decision.
The main focus of involved parties is The main focus of involved parties is
on their stance or position.
on their goals and objectives.
The involved parties use pressure to The involved parties do not use
get what they want.
pressure but strive to get what they
want through principles.

MCQ

Q. Distributive Negotiation is
also commonly known as
___________.

Click on
the radio
button to
select the
correct
answer!

MCQ

Q.
Distributive Negotiation is
G
Go
o
oalso
od
d!!commonly
T
Th
ha
att''ss R
iig
Rknown
gh
htt!!as
___________.
C
Co
orrrreecctt A
An
nssw
weerr::
D
Diissttrriib
bu
uttiivvee N
Neeg
go
cco
ottiiaattiio
om
m
mmo
on
n iiss aallsso
n
onllyy kkn
o
o
w
n
o
n
w
a
n
s
N
a

P
s
Neeg
o
o

gottiiaattiio
Possiittiio
on
on
naall
n..

re to
e
h
k
c
i
Cl
e!
continu

MCQ

Q.
Negotiation is
T
Th
a
hDistributive
t
'
at'sscommonly
N
No
ott Q
also
as
Qu
tte
uiiknown
eR
Riig
gh
htt!!
___________.
C
Co
orrrreecctt A
An
nssw
weerr::
D
Diissttrriib
bu
uttiivvee N
Neeg
go
cco
ottiiaattiio
om
mm
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nlyy kkn
o
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w
n
own
a
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N
a

P
s
Neeg
o

t
s
go
P
otiiaattiio
osiittiio
on
on
naall
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re to
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continu

Objective

Explain What is Negotiation


Explain the Basic Principles of
Negotiation
Describe the Benefits of Negotiation
Explain the Types of Negotiation
Strategies
Explain the Stages of the Negotiation
Process
Describe the Concepts of a Win-Win
Negotiation
Explain the Various Styles of Negotiation
Explain What is BATNA
Describe Strategies for Developing
Negotiation
Skills of Third Party
Explain the Types
Explain the PROBE Technique for
Negotiating
Describe the Negotiations in
Organizations
List the Issues in Negotiation
List the Characteristics of a Good
Negotiator
List the Tips for Effective Negotiation

Stages of the Negotiation Process


The following are the stages of any negotiation process:

1
2
3
4
5

Let us look at each in detail.

Meeting
1

Meeting:

The first stage of the


negotiation process is
the negotiation meeting.

The meeting can be in an


informal or formal
setting.

When there are two


parties meeting, the
venue, date and time are
decided first.

The meeting begins with


introductions.

Inquiry
2

Inquiry:

The second stage of the


negotiation process is
the stage of inquiry.

During the inquiry stage,


both parties exchange
information and discuss
their concerns.

The main objective of


this stage is to ascertain
the strengths and
weaknesses, needs,
wants, desires and
issues.

Bargaining
3

Bargaining:

The third stage of the


negotiation process is
that of bargaining.

During the bargaining


stage, both parties make
offers and tradeoffs.

At this stage, both the


parties consider all the
possible options
available to find a middle
path between their
differences.

Closure
4

Closure:

This stage occurs after


both the parties have
looked at all the options
closely.

During the closure stage,


both parties restate their
positions and confirm
their tradeoffs they are
willing to negotiate.

Acceptance
5

Acceptance:

The final stage of the


negotiation process is
acceptance.

During the acceptance


stage, both parties
would either decide to
suspend negotiations or
they may reach an
agreement.

Real Life Example

Let us now look at a


real life example to
understand the
stages of the
negotiation process.

Real Life Example

You have seen in


the introduction
scenario how
Peter Looney, a
Project Manager
at Globus Inc.
failed to
negotiate well
with the Maxwell
client due to
which Peters
team had to
suffer and also
his company had

Real Life Example

Yes, all this


happened
because Peter
had not initially
negotiated well
with the client
about the
deadlines and
the scope of
work.

Real Life Example


Stage 5:

Stage 1: Meeting

Acceptance
Stage 4:
Closure
Stage 3:
Bargaining
Stage 2:
Inquiry
Stage 1:
Meeting

To negotiate well with the


client, the first thing that Peter
should do is to prepare well for
the meeting. Peter could go
through the Project Plans of
similar projects that Globus
had handled in the past, talk to
and seek guidance from his
superiors and put all the data
and information that he gets
related to the project at one
place.

Real Life Example

Peter should
also make a
list of all the
queries that
he has to cle
ar with the
client, thing
s that he can
agree to and
cannot agree
to with the c
lient etc.
Also, at the
meeting Pet
er should
come across
to the client
as a cool,
confident an
d profession
al person.

Real Life Example


Stage 5:

Stage 2: Inquiry

Acceptance
Stage 4:
Closure
Stage 3:
Bargaining
Stage 2:
Inquiry
Stage 1:
Meeting

During the inquiry stage, Peter


should exchange information
with the client and discuss
their concerns, scope of work,
deadlines, future
enhancements etc.

Real Life Example

At this stage
, Peter shou
ld find out
the clients r
equirements
, how, which
and when ca
n he fulfil th
ese
requirement
s and any ot
her terms an
conditions th
d
at may not b
e
agreeable
to Globus.

Real Life Example


Stage 5:

Stage 3: Bargaining

Acceptance
Stage 4:
Closure
Stage 3:
Bargaining
Stage 2:
Inquiry
Stage 1:
Meeting

At this stage, Peter should now


agree to terms that are
completely acceptable and
offer options and tradeoffs for
things that are unacceptable as
is stated by the client.

Real Life Example

Peter should
make sure th
a t he
ascertains h
is position a
nd takes a
stand in agr
eeing to only
possible and
acceptable d
eadlines, cu
rrent scope,
terms regard
ing future en
hancements
etc.

Real Life Example


Stage 5:

Stage 4: Closure

Acceptance
Stage 4:
Closure
Stage 3:
Bargaining
Stage 2:
Inquiry
Stage 1:
Meeting

At this stage, it is important


that both the client and Peter
restate their positions and
confirm their tradeoffs they are
willing to negotiate.

Real Life Example

So, agreeme
nt should be
achieved on
the agreed d
eadlines, cur
rent scope,
terms regard
ing future en
hancements
etc. It should
be agreed up
on by both
the parties t
hat the discu
ssed and
agreed upon
terms would
no w b e
drafted into
a legal and b
inding
contract bet
ween the tw
o parties.

Real Life Example


Stage 5:

Stage 5: Acceptance

Acceptance
Stage 4:
Closure
Stage 3:
Bargaining
Stage 2:
Inquiry
Stage 1:
Meeting

At this final stage of the


negotiation process, Peter
should make sure that both the
parties agree to signoff the
deal and reach an agreement
on the terms of the Project.

Negotiation Outcomes
The given image shows the various options of possible
outcomes with respect to the parties involved in a negotiation.

WIN

LOSE

WIN

We Both
Win

I Win,
You Lose

LOSE

ME

YOU

I Lose,
You Win

We Both
Lose

Objective

Explain What is Negotiation


Explain the Basic Principles of
Negotiation
Describe the Benefits of Negotiation
Explain the Types of Negotiation
Strategies
Explain the Stages of the Negotiation
Process
Describe the Concepts of a Win-Win
Negotiation
Explain the Various Styles of Negotiation
Explain What is BATNA
Describe Strategies for Developing
Negotiation
Skills of Third Party
Explain the Types
Explain the PROBE Technique for
Negotiating
Describe the Negotiations in
Organizations
List the Issues in Negotiation
List the Characteristics of a Good
Negotiator
List the Tips for Effective Negotiation

Critical Concepts of Win-Win


Negotiation
The
following are the five most critical concepts that you
should keep in mind for a win-win negotiation:
Pause for
reflectio
n
Control the
outcome

Agree on
factual
information
Lets look at each in detail.

Search for
needs and
requireme
nts

Clarify your
objectives
in the
beginning

Critical Concepts of Win-Win


Negotiation
Pause for
Reflectio
n
Control the
outcome

Agree on
factual
information

Pause for Refection

Search for
needs and
requireme
nts

Clarify your
objectives
in the
beginning

Ask the questions:


o

What do you want


from this
meeting?

What resistances
do you envisage?

What will you do


to overcome
these
resistances?

Critical Concepts of Win-Win


Negotiation

Search for needs and


requirements

Pause for
reflectio
n
Control the
outcome

Agree on
factual
information

Search for
needs and
requireme
nts

Clarify your
objectives
in the
beginning

Ask the questions:


o

What are my
needs and
requirements?

What are the


needs and
requirements of
the other party?

What do we have
in common?

What are the


biggest gaps?

Critical Concepts of Win-Win


Negotiation

Clarify your objectives


in the beginning

Pause for
reflectio
n
Control the
outcome

Agree on
factual
information

Search for
needs and
requireme
nts

Clarify your
objectives
in the
beginning

Ask the questions:


o

What are the


most important
issues that need
to be discussed?

What are the


most important
issues to the
other party?

What are the


levels of potential
outcomes?

Critical Concepts of Win-Win


Negotiation
Agree on factual
information

Pause for
reflectio
n

Ask the questions:


o

Have I examined
all arguments
that I intend to
use during the
meeting?

Which of the
arguments are
assumptions?

Which of the
arguments are
facts?

Control the
outcome

Agree on
factual
information

Search for
needs and
requireme
nts

Clarify your
objectives
in the
beginning

Critical Concepts of Win-Win


Negotiation

Control the outcome

Ask the questions:


o

What elements of
timing can you
control?

What is the best


combination or
channel?

Pause for
reflectio
n
Control the
outcome

Agree on
factual
information

Search for
needs and
requireme
nts

Clarify your
objectives
in the
beginning

Roll your mouse


over the icon, to
learn more.

Tip
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