WORKSHOP ON NEGOTIATION AND SELLING SKILLS

NEGOTIATING TO WIN v/s NEGOTIATING TO WIN-WIN

Prof. Ravi S. Prasad

NEGOTIATION - WE CAN WORK IT OUT (THE BEATLES)

Try to see it my way, Do I have to keep on talking till I can't go on? While you see it your way, Run the risk of knowing that our love may soon be gone. We can work it out, We can work it out. Think of what you're saying. You can get it wrong and still you think that it's all right. Think of what I'm saying, We can work it out and get it straight, or say good night. We can work it out, We can work it out.

WHAT IS NEGOTIATION?
Negotiation derived from Latin word negotiatus meaning to carry on business. In modern Spanish negocios means business. Negotiation is the process of two or more parties working together to arrive at a mutually acceptable solution for one or more issues, such as a commercial transaction, a contract or a deal of any sort. Improvement in negotiation skills can yield sizable payoffs such as a larger pay-rise, a better deal on home purchase or more effective working arrangements at the office.

TYPES OF NEGOTIATIONS

There are two types of negotiations:

Distributive negotiation - a negotiation in which the parties compete over the distribution of a fixed sum of value. A gain by one side is made at the expense of the other.

Integrative negotiation - a negotiation in which the parties co-operate to achieve maximum benefits by integrating their interests into an agreement. The deals are about creating value and claiming it.

DISTRIBUTIVE NEGOTIATION

Who will claim the best value?

Also known as zero-sum or constant-sum negotiation.

Win-Lose negotiation.

DISTRIBUTIVE NEGOTIATION CONTD.

Remember the following for success in a distributive negotiation:

Start with the right first offer.

Do not disclose any significant information about your circumstances.

Information about the other side can benefit you. Exploit what you learn about the other side in setting your first offer or demand. Dont overshoot.

INTEGRATIVE NEGOTIATION

Let us together create the best value. Win-win negotiation.

Emphasis on long term relationships.

Collaboration between parties in areas of common interest e.g. quality control and product development. Parties look for creative options to create values.

INTEGRATIVE NEGOTIATION CONTD.

In order to succeed in a integrative negotiation the parties should:

Provide significant information about their circumstances. Explain why they want to make the deal. Talk about their real interests or business constraints. Reveal and explain in general terms their preferences among issues or options. Consider and reveal any additional capabilities or resources that might meet the other sides interests and could be added to the deal. Use what they learn to find creative options that will meet the interests of both parties to the greatest extent possible.

THE THREE CS OF INTEREST

Common interest - Those interests shared by the negotiating parties who want the same things for the same reasons.
Complementary interest - Those interests that exist when the negotiating parties want the same result but because it will serve different interests. Conflicting interest - Those interests that exist when one or more negotiators interests are in opposition to the interest of other negotiators.

THE THREE CS OF INTEREST CONTD.

Common

Complementary

Conflicting

KEY CONCEPTS IN NEGOTIATIONS

BATNA
Reservation Price ZOPA Value creation through trades

BATNA - BEST ALTERNATIVE TO A NEGOTIATED AGREEMENT

Concept developed by Roger Fisher and William Ury. BATNA refers to ones preferred course of action in the absence of a deal. BATNAs are a measure of balance of power among the parties. Always know your BATNA before entering any negotiation. Strong and weak BATNAs. Improve your BATNA. Identify the other sides BATNA. Weaken the other partys BATNA. When you have no alternative, you must create an alternative.

ELEMENTS OF BATNAS
Deadlines Alternatives Your own resources Other partys resources Information Experience Interest Knowledge

RESERVATION PRICE

Least favourable point at which one will accept a deal.

Derived from your BATNA but not usually the same as BATNA.

ZOPA ZONE OF POSSIBLE AGREEMENT

ZOPA is the area or range in a which a deal that satisfies both parties can take place.
Each partys reservation price determines one end of the ZOPA.

Rs. 25 lacs ZOPA

Rs. 35 lacs

Sellers Reservation Price

Buyers Reservation Price

VALUE CREATION THROUGH TRADES

Negotiating parties can improve their positions by trading the values at their disposal.
Occurs in the context of integrated negotiations. Value creation through trades takes the form of each party getting something it wants in return for something it values much less.

VALUE CREATION CURVE

QUESTIONS

THANK YOU!