NEGOTIATION

Negotiation is a dialogue between two or more people with the aim of reaching a consensus over
an issue or issues where conflict exists. Good negotiation tactics are important for negotiating
parties to know in order for their side to win or to create a win-win situation for both parties. The
outcome of the negotiation may benefit one of the parties involved or provide benefits to all
parties in the negotiation.

Usually, a negotiation takes place as follows:

1 – One of the parties to the negotiation puts forward a position

2 – The parties discuss – negotiate – until an agreement is reached

For a negotiation to be successful, the parties must cooperate to achieve the intended purpose of
the negotiation. They must also be able to trust each other to implement the negotiated solutions.

Negotiations occur daily, within organizations, between governments or businesses, or between

individuals. In high-stakes negotiations such as hostage rescues and sale of companies,
professional negotiators are frequently employed to increase the chances of success. For
example, investment firms engage the services of leveraged buyout negotiators to ensure they get
the best deal possible. Negotiators must be capable of utilizing excellent negotiation tactics to,
ideally, create win-win outcomes.

Forms of Negotiation

In mediation, a neutral party listens to both parties’ arguments and helps create an agreement.
Negotiating parties tend to work more toward securing a winning ground for their side.

Negotiations can be categorized by type, as follows:

Distributive negotiation

Distributive negotiation is also referred to as hard-bargaining negotiation. Any gains made by

one party are at the expense of the other party. If one party wins, the other party must lose.
Therefore, such negotiations typically start with one party taking an extreme position and then
ceding as little as possible before reaching an agreement.

Distributive negotiations are often between parties who have no past relationship. An example of
a distributive negotiation is a negotiation for the price of a car at a car dealership.

Integrative negotiation

An integrative negotiation is a merit-based negotiation that attempts to improve the quality of

negotiated agreements by appreciating the fact that each party values various outcomes
differently. It often aims to create a win-win situation. Integrative negotiation requires a high
degree of trust and the need to achieve mutual gains. One of the means of achieving mutual gains
is by trading one favor for another. This negotiating technique is referred to as “logrolling”. The
negotiating parties approach the negotiation as a shared problem, as opposed to a battle.
Negotiators attempt to focus on the underlying interests of both parties.

Integrated negotiation

Integrated negotiation was first identified and labeled by Peter Johnson, an international
negotiator and author of the book, “Negotiating with Giants”. It maximizes value in a
negotiation by linking it to other negotiations and decisions related to the parties’ operating
activities. This involves mapping out all related connections, conflicts, and operating decisions to
bring out helpful connections and minimize any harmful connections. Integrated negotiations are
more about establishing or developing relationships, as opposed to merely addressing a specific
issue or situation.

Bad faith

“Bad faith” in negotiations refers to a situation where parties pretend to negotiate but ultimately
have no intention of compromising on their demands. Bad faith negotiations often happen in
politics where a political party pretends to negotiate but has no intention to compromise or reach
an agreement.

Common Negotiation Tactics

Here are some of the most commonly used negotiation tactics:

Make the first offer

Many people are reluctant to go first in a negotiation, for fear that their bid may be too low or too
high. However, making the first offer may actually give you the upper hand since you quote a
price that is close to your target price. The first number sets the stage around which the
subsequent negotiations revolve.

Mirror words selectively

A quick way to create a rapport with the other party in a negotiation is to repeat the last three
words they said to you. This negotiation tactic engenders trust and may encourage the other party
to negotiate in good faith. It also buys you time to consider the other party’s latest offer and
prepare a well-thought-out response.

Know your target price and walk-away price

The target price is the price you are hoping for. The walk-away price is a price that is utterly
unacceptable. If the other party refuses to budge from a point beyond that price level, then you
would prefer to walk away without reaching an agreement.

It pays to have both a target price and walk-away price in mind prior to starting negotiations. In
contrast, If you go into a negotiation without clear notions of what you want, and let the other
party start the bidding, you are immediately in a disadvantaged position.

Create the illusion of control

Creating an illusion of control can give you an advantage in negotiations. By asking “how” or
“what” questions, you force the other side to engage their mental energy to find the right answer.
It also takes their focus off of their desired outcome, as they have to respond to your query first.
In terms of procedure, negotiations is probably the most flexible form of dispute resolution
process because it involves only those individuals or parties who are interested in the matter.
They shape the process of negotiation as per their own needs and at their own convenience. The
chances of reaching a mutually acceptable agreement is high in this process since the acceptance
by all the parties is ensured. Since the process of negation uses the interests-based approach
instead of the generally used positional-based approach, it provides a greater possibility of a
successful outcome. As mentioned above, there is no compulsion for either of the parties to
participate in the process which makes negotiation a voluntary process. Once an agreement is
reached between the parties, negotiation may also enhance the relations between them. Apart
from all of this, opting for negotiation over litigation may also reduce the number of delays and
turn out to be less expensive as well.

However, negotiation has some disadvantages as well. Though negotiation provides a greater
possibility of a successful outcome, if the parties are unequal the those in a weaker position may
be placed at a disadvantageous position. The parties may terminate the process whenever they
wish to during the proceedings, this may cause a huge loss of time and money invested in the
process. Negotiation does not ensure the good faith and trustworthiness of either of the parties. It
must also be mentioned that some issues may not be amenable to negotiation.

Despite all its disadvantages, negotiation is still on a rise as a medium for resolving disputes. It is
definitely a much more time and money saving process the litigation. It is high time that
the process of negotiation be used globally as a means for resolving disputes after working on its
disadvantages