UNIT-IV

NegoTIaTIoN:

 Meaning;
 Different styles of negotiation;
 Different approaches to negotiation; - Mymoon Notes
 Phases of negotiation.
 Qualities of a negotiator,
 Power to negotiate.

NegoTIaTIoN:

Introduction

Negotiation is a process of discussion and communication between two or more

parties with the aim of reaching an agreement or resolving a dispute. It involves
identifying common interests, exploring potential solutions, and finding
compromises that satisfy all parties involved.

 When a dispute arises between two parties, they sit together and discuss it
with open mind without a third party intervention between them_
 e.g. a dispute between two partners is resolved by themselves sitting together
without inviting a third party's intervention.
 It is always better to talk about the problems between disputants themselves
so that they can find a solution which meets their own needs and interests.

MEANING OF NEGOTIATION
 Negotiation is primarily a common mean of securing one’s expectations
from others.
  It is a form of communication designed to reach an agreement when two or
more parties have certain interests that are shared and certain others that are
opposed.
 Ginny Pearsom Bames says negotiation is a resolution of a disagreement
using give and take within the context of a particular relationship.
 It involves sharing ideas and information and seeking a mutually acceptable
outcome.‘
 The Pepperdine University of USA has developed an explanatory definition
for ‘negotiation’:
o Negotiation is a communication process used to put deals together or
resolve conflict. It is a voluntary, non-binding process in which the
parties control the outcome as well as the procedures by which they
will make an agreement. Because most parties very few limitations on
the negotiation process, it allows for a wide range of possible solutions
maximizing the possibility of joint gains

Meaning :- In simplest terms, negotiation is a discussion between two or more

disputants who are trying to work out a solution to their problem
 The interpersonal or inter-group process can occur at a personal level as well
as at the corporate or international (diplomatic) level.
 Negotiations typically take place because the parties wish to create something
new that neither do on his or her own to resolve problem or dispute between
them.
 When parties negotiate, they usually expect give and take. While they have
Interlocking goals that they cannot accomplish independently, they usually
do Not want or need exactly the same thing.
 This Interdependence can be either, win-lose or win-win in nature, and the
type of negotiation that is appropriate will vary accordingly.
  The disputants will either attempt to force the other Side to comply with
their demands, to modify the opposing position and move toward
compromise, or to invent a solution that meets the objectives of all Sides.
 Mutual adjustment is one of the key causes of the changes that occur during
a Negotiation. Both parties know that they can influence the other's
outcome, and that the other side can influence theirs.
 The effective negotiator attempts to understand how people will adjust and
readjust their positions during Negotiations, based on what the other party
does and is expected to do.
 The Parties have to exchange information and make an effort to influence
each Other, As negotiations evolve, each side proposes changes to the other
party's Position and makes changes to its own.
 This process of give-and-take and Making concessions is necessary if a
settlement is to be reached. If one party makes several proposals that are
rejected, and the other party makes no alternate proposal, the first party may
break off negotiations.
 Parties typically will not want to concede too much if they do not sense that
those with whom they are negotiating are willing to compromise.

Definition of Negotiation:- Some of the definitions of negotiation given by eminent

writers of ADR are given below :

According to P.C. Rao, Secretary General of ICADR:- negotiation means a non-

binding procedure in which discussions between the parties are initiated without
the intervention of any third party with the object of arriving at a negotiated
settlement of the dispute.
Sarvesh Chandra in his article ADR: Is Conciliation the best choice?” defines
negotiation as a non-binding procedure involving direct interaction of the disputing
parties wherein a party approaches the other with the offer of a negotiated
settlement based on an objective assessment of each other’s position.
In the words of Chris Honeyman, negotiation is the process by which two or more
parties attempt to reach an agreement.

Negotiation is bargaining :- It is the process of discussion and give-and-take between

two or more disputants, who seek to find a solution to a common problem. :

DIffereNT sTyles of NegoTIaTIoN

NEGOTITION Styles.
 There are different styles of negotiation. Style of negotiation is also a strategy
 In some occasions the style reflects the attitude of the party and an
experienced negotiator can guess the result from such a conduct of the party
as becomes evident by the ‘style’.
 Negotiation style is reflected in communication skills, interpersonal
behaviour of negotiators, language, voice tones, choices, listening behaviour,
non-verbal gestures and judgment

Co-operative Style or Collaborative :

 Collaborative negotiators are open and honest, and understand the concerns
and interests of the other party.
 They like to find creative solutions to make sure both parties are satisfied.
 Negotiators adopting a cooperative style are mutually respectful in their
choice of language, place, listening and non verbal interaction and they
prefer positive interactions which promotes understanding and a culture of
working together.
Competitive Style :-
 Competitive personalities are results-driven.
 They are focussed and assertive in their communication and often
aggressive.
 Competitive negotiators are strategic thinkers therefore have very little time
for pleasantries.
 This style, in contrast, attacks others, seeks to create or tense interpersonal
dynamics, uses aggressive language, listening and non-verbal actions and
prefers to unnerve or coerce others.
 It seeks substantive concessions for maintaining relationships and wants to
induce emotional reactions.
 It also tend to create tension, distrust which may lead to retaliatory actions,
hostility, and even result in deadlock.

Compromising

 A compromising negotiator’s main concern is doing what is fair for both

parties and finding middle ground.
 They would rather compromise on your own outcome to satisfy the other
party.

Avoiding

 Avoiding personalities really dislike negotiations

 They may try to avoid situations that may result in conflict as they find them
intimidating and stressful by staying behind the scenes of a negotiation.
Accommodating

 Accommodating negotiators spend a great deal of time building and

maintaining relationships with the other party. They are highly sensitive to
the emotions, relationships and body language within the negotiation
situation.

DIffereNT approaches To NegoTIaTIoN

Please refer :

 Rajan R.D., A P J-iiffer or Alternative Dispute Resolution, Book -

 Page No : 362 to 368

phases of NegoTIaTIoN

Introduction – (From Text book)

There-are four phases of negotiation, and all negotiations are generally

characterised by these four phases. They include: preparation, opening, bargaining,
and closing.

 The Preparation involves information collection.

 The opening phase of a negotiation involves both sides presenting their
initial positions to one-another
 The third phase, bargaining, aims to narrow down the gap between the two
initial positions and persuade the other party to accept less than they
expected since their case is weaker.
 Lastly, the capitalisation of the work done reflects in closing phase .
PHASES OF NEGOTIATION: There are around seven recognised phases of
negotiation, these are

1. Planning and fact-finding phase

2. Opening phase
3. Discussion phase
4. Proposal phase
5. Bargaining phase
6. Closing phase
7. After Decision phase

Planning and fact-finding phase:

 This initial phase includes finding of facts and information related to the
other party and fact.
 It involves identification of matters and issues that could be raised during the
process of negotiation.
 The issues and matters that are recognised shall be prioritized for both the
parties. This process also helps in estimation of other side’s priorities.
 The needs of the other side should be contemplated upon.
 The space and zone for an agreement that is possible must be established
like , the agreement that is wanted by both the parties in favourable
circumstances, the agreement that could be acceptable to both the parties or
maybe a point from where no longer negotiation shall be continued.

Opening phase: An opportunity is provided in this phase to give a direction to the

process of discussion which helps in gaining control over the discussion. In this
phase, simple language should be used and the questions asked by the parties must
be answered carefully. Some important points to be remembered by the negotiator
at this point are:
 a. Use polite language and take questions from the parties and answer
them gently.
b. The fact that reputation is matters to a great extent in many cultures
must be remembered.
c. Any such act or speech that might embarrass the other party must be
avoided Criticism or use of strong language that might have an effect
of humiliation on the other party must always be avoided.

(3) Discussion phase: In this phase both the parties are allowed to present their
case with no interruption. It is important to ask questions so as to comprehend the
interests of the other party. Listening to the other party is very pertinent at this stage.

(4) Proposal phase: This phase involves making of offers and proposals for a
conclusion.

(5) Bargaining phase: The proposals and offers made by the other part must be
perused and see if it is compatible. If not, options for making the proposal more
effective for a mutual gain can be given. Common interest of the parties must be
kept in mind.

(6) Closing phase: At this stage the decision or the conclusion that is reached must
be summarized and explained to both the parties to avoid future disputes.

(7) After decision phase: Steps to strengthen the relationship must be taken. And
efforts must be made to make the relationship better and respectful. These were
the phases of negotiation that cover the process from the beginning to the last. Each
phase has a different theme and a negotiator must act accordingly. Each phase
when carried out properly result in a successful negotiation.
 QUalITIes of a NegoTIaTor
The basic qualities which a negotiator should possess are:

1. Ability to analyze
2. Sense of humour
3. Knowledge
4. Persistence and persuasiveness
5. Skill
6. Calm, quiet and impersonal
7. Right attitude.

Ability to analyze:

 He should have clear thinking and possess sound judgement to enable him
to plan and consider various alternatives objectively.
 He must discern the statements of others — those favouring his position,
those opposing and those suggesting alternative solutions and should be able
to use these statements to his advantage.

Sense of humour:

 He must be tactful and possess a sense of humour. Obviously, one cannot

win every point.
 He must, therefore, possess the ability to make a concession at the right
moment and still display good humour even when losing a point.

3. Knowledge: A good negotiator must have a good working knowledge of all

primary functions of business like, economics, business law, engineering, finance,
cost accounting etc. He should have studied in detail the methodology of contract
and techniques of negotiation. Prior to embarking on any negotiation, he must
study and acquire detailed knowledge of the product he is buying, the
manufacturing techniques, raw materials used, likely substitutes, breakdown of the
cost and factors affecting price etc. Though he will be assisted by various specialists
in different fields, he must himself possess sufficient knowledge in each field.

4. Persistence and persuasiveness:

Persistence - the quality that allows someone to continue doing something or trying
to do something even though it is difficult or opposed by other people

Persuasiveness - the quality of being able to make you want to do or believe a

particular thing

 He must be tenacious and should be able to persist in his efforts to solve the
problem to mutual satisfaction without causing offence. For this, he should
acquire the art of persuasiveness and the knock of getting along in an
agreement.
 He should be an optimist and need not give up midway in disgust. He should
be able to withstand adverse comments.

5. Skill: He must be skillful in identifying issues in a negotiation and their relative

importance, in planning strategy and tactics, in communicating, arguing and
persuading.

 He must possess fluency of expression and a technique of his own to lead

conferences.

6. Calm, quiet and impersonal: In all situations he should remain calm & quiet but
impersonal. These are difficult qualities to practise particularly in the heat of
discussion during negotiation. He should be a good listener, allowing others to talk.
Simultaneously, he himself should be a good talker.

7. Right attitude: He should have studied psychology and must understand human
relations and interaction of groups.
 power To NegoTIaTe

Negotiation is a process of communication. In which the parties aim to send a

message to the other side and Influence each other. Thus, power in negotiation lies
in the ability to favourably affect someone else’s decision.
 Some assume that because threats of physical force exert influence, the
ability to make such threats is the essence of negotiating power.
 But making threats is a costly and dangerous way of trying to exert influence.
 There is also a widespread belief that the best way to start a negotiation is
with an extreme position. The idea is that negotiators should let others know
they are in charge by taking a hard line, and should then soften thew position
later if appropriate.
 However, this may not be the most -effective tactic.
 The more extreme the opening positions are, and the smaller the
concessions, the more time and effort it often takes to move toward
agreement.
 And as each side tries to use force to make the other change its position,
anger and resentment result, putting a heavy strain on the relationship
between the parties.
 Thus, it is a mistake to try to use force or threats before one has exhausted
the other elements of negotiating power.

BATNA – Best Alternative To a Negotiated Agreement

First, having a good alternative to negotiation contributes substantially to a
negotiator’s power. A negotiator with very strong alternatives does not need the
negotiation in order to achieve at least a satisfactory outcome. In their 1981
bestseller, Getting to Yes, Roger Fisher and William Ury coined the term
“BATNA” (best alternative to a negotiated agreement) to refer to this type of
negotiating power.
  When parties have many options other than negotiation, they have more
leverage in making demands. Therefore, parties should develop a strong
understanding of their alternatives before participating in negotiations.
 Making one’s BATNA as strong as possible and then making that BATNA
known to one’s opponent can strengthen one’s negotiating position.

Skill - abilities to listen

 Second, a skilled negotiator who knows about the people and interests
involved as well as the relevant facts is better able to influence the decisions
of others.
 The abilities to listen, to empathise, and to communicate clearly and
effectively are crucial in. negotiating effective agreements.
 Likewise, an awareness of various negotiating styles and cultural differences
can be a huge asset.
 A good working relationship also increases a negotiator’s level of power.
Such relationships are characterised by trust and the ability to communicate
effectively and easily.
 A negotiator who understands the point of view from which the other party
is operating is more likely to communicate persuasively, with minimal
misunderstanding.

Facts and Ideas

Third, while facts and ideas are important in changing another person’s opinions
and perceptions, the effectiveness of persuasion depends on how these facts and
ideas are selected and presented. To be persuasive, negotiators must consider the
content of the message, the structure of the message, and the delivery style.
 First, negotiators must make the offer attractive to the other party and
emphasise those features of the offer that the other party is likely to find
appealing.
  Negotiators should also try to formulate a proposal, however minor, to
which the other party can agree. This will put the other negotiator into the
mindset of saying “yes” and will increase the likelihood that he or she will
agree with a second, more significant proposal or statement.
 These yesable propositions can also help to reduce tension and hostility and
create minor points of agreement.

Opponent's Values
Fourth, negotiators should try to make their messages consistent with their
opponent's values. Thus negotiators can enhance their chances of success by jointly
developing objective criteria and standards of legitimacy, and then Shaping
proposed solutions so that they meet these joint standards, which may include
appeals to principles of fairness and expert opinions. Negotiators should try to
demonstrate by following the suggested course of action, that the other party will
be acting in accordance with his own values or some higher code of conduct.
Agreements about general principles can be an important first step in the
negotiation process.

Invent a Good Solution to the Problem.

Fifth, one final way to influence the other side is to invent a good solution to the
problem. This typically involves devising an ingenious solution that addresses the
interests of both sides.
 Brainstorming can be used to help generate such solutions in advance and
increase a negotiator’s chances of affecting the out come in a favourable way.
 Introducing new opportunities for joint gain may also help to create a
situation that is ripe for settlement.
 Each side recognises that it has much to gain through collaboration, and that
if both sides work together, they can reap rewards.
Rather than seeking “power over’ the other side, negotiators in this way exercise
“power with” one another.

BEST ALTERNATIVE TO A NEGOTIATED AGREEMENT (BATNA).

BATNA is a term coined by Roger Fisher and William Ury (Harvard Law School
Professors) in their 1981 bestseller, Getting to Yes: Negotiating Without Giving In,
It stands for “best alternative to a negotiated agreement.”
 BATNAs are critical to negotiation because a party to the dispute as a
negotiator cannot make a wise decision about whether to accept a negotiated
agreement unless he knows what his alternatives are.
 His BATNA “is the only standard which can protect him both from
accepting terms that are too unfavourable and from rejecting terms it would
be in his interest to accept.
 In the simplest terms, if the proposed agreement is better than his BATNA,
then his should accept it If the agreement is not better than his BATNA,
then he should reopen negotiations.
 If he cannot improve the agreement, then he should at least consider
withdrawing from the negotiations and pursuing his alternative, (though the
costs of doing that must be considered as well).

ZONE OF POSSIBLE AGREEMENT (ZOPA).

A “Zone of Possibly Agreement” (ZOPA) exists if there is a potential agreement
that would benefit both sides more than their alternative options do. For example,
if Ram Want, to buy a second-hand car for Rs.2,00,000 or less, and Rahim wants
to sell one for Rs.1,80,000, those two have a ZOPA. But if Rahim will not go below
Rs.2,80,000 and Ram will not go above Rs.2,00,000 they do not have a zone of
possible agreement.
The ZOPA is critical to the successful outcome of negotiation, but it may take some
time to determine whether a ZOPA exists. It may only become known once the
parties explore their various interests and options. If the disputants can identify the
ZOPA, there is a good chance that they will come to an agreement.