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What Is Negotiation?
Direct:
• A process of formal communication, either face-to-face or via
electronic means, where two or more people come together
to seek mutual agreement about an issue or issues
• Involves the management of time, information, and power
between individuals and organizations who are
interdependent
Indirect:
• Relationships between people, not just organizations
• Persuasion
• Negotiation skills can be honed and practiced
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Terms Used in Negotiation
• Positions
• Interests
• Needs
• Wants
• BATNA (Best Alternative To a Negotiated Agreement)
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Interests
• The unspoken motivation or reason that underlies any
given position
• Unlikely to be expressly stated or acknowledged
during the negotiation
• May not be directly germane to the position
• May be personal in nature
Key Points on Interests
• Play detective and try to discern the other party’s
interests through a series of open-ended, probing
questions
• Always focus on the other party’s underlying interests, not
his/her stated positions
4
BATNA (Best Alternative To a Negotiated Agreement)
• What is BATNA:
• Negotiating Without Giving In.
• A party should generally not accept a worse resolution than its
BATNA.
• Need to ensure that a negotiator’s BATNA is never
revealed to the other party
• All settlements must be judged in light of all other viable
alternatives
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Triangle Talk
Step 3:
Propose Action in a Way that They Can Accept
The
Step 1: Negotiation Step 2:
Know Know
Process
Exactly Exactly
What You What They
Want Want
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Know Exactly What You Want
• Determine and write down specific goals and objectives
• Can be referred during the negotiation
• The more clearly defined, the more likely that can be
achieved
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Know Exactly What They Want
• Attempt to discern the other party’s likely needs and
wants
• Estimate underlying interests to the other party’s stated
positions
• Beware of expecting the other party to think in the same
way
• Ask open-ended questions to confirm or counter
preconceived notions
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Propose Action They Can Accept
• Frame your own needs in terms of the other party’s needs
• Make it easy for the other party to say, “Yes”
• Remain fair, flexible, and reasonable
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Negotiation Framework
Identify or anticipate a purchase requirement
Determine if negotiation is required
Plan for the negotiation
Conduct the negotiation
Execute the agreement
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Why Negotiation Required?
• Whole purchase process Secure my rights?
• Are many non-price issues involved?
• Are technical requirements complex?
• Will supplier perform value-adding activities?
• Will there be high risk or uncertainty?
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Plan for the Negotiation
• Identify participants
• Develop objectives
• Analyze strengths and weaknesses
• Gather information
• Recognize other party’s needs
• Identify facts and issues
• Establish positions
• Develop strategies and tactics
• Brief personnel
• Practice the negotiation
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Establish Positions
Example is a buyer-seller price negotiation
Aspiration Buyer
Aspiration
B.A.T.N.A.
B.A.T.N.A.
Point
Point
Zone of Likely
Agreement
Seller
Zone of Likely Agreement = Zone of Possible Agreement (ZOPA)
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Face-to-Face Negotiation Phases
• Fact finding and information sharing
• Recess to:
• Reassess relative strengths and weaknesses
• Review and revise objectives and positions
• Reorganize the negotiation agenda
• Narrow differences
• Seek agreement and conclusion
• May involve several iterations
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Guidelines for Making Concessions
• Give yourself enough room to make concessions
• Try to get the other party to start revealing its needs and
objectives first
• Be the first to concede on a minor issue but not the first
on a major one
• Make unimportant concessions and portray them as
valuable
• Make the other party work hard for every concession you
make
• Use tradeoffs to obtain something for every concession
you make
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Guidelines for Making Concessions
• Generally, concede slowly and give a little with each
concession
• Do not reveal your deadline to the other party – ever
• Occasionally, say “No” to the other party
• Be careful trying to take back concessions, even tentative
ones
• Keep a record of concessions made to try and identify a
pattern
• Do not concede too often, too soon, or too much
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Negotiation Tactics
• Low ball • High ball
• Honesty and • Best and final offer
openness • Silence
• Questions • Planned
• Caucus concessions
• Trial balloon • Venue
• Price increase
Win-Win Negotiation
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Barriers and Obstacles
• Miscommunication due to language
• Time limitations
• Cultural differences
• Limited authority of international negotiators
Characteristics to Overcome Barriers
• Patience
• Knowledge of the contract agreement
• Honest and polite attitude
• Familiarity with foreign cultures and customs
