Negotiating to WIN-WIN

Prof. Subir Verma

Management Development Institute

Gurgaon

Understanding Negotiations

What is Negotiation?

“Negotiation is a process of two or more parties

exchanging a series of offers to arrive at a

mutually acceptable resolution of their

conflict/disagreement over goals and interests

(or claims over resources)”.

Negotiation Situation is when… Two or more parties makes a decision about

their interdependent goals and objectives. The parties are committed to peaceful means

for resolving the dispute. There is no clear cut or established method

for making the decision.

3 fundamental questions in Negotiation

What do you want Why should they negotiate What are your alternatives

STRUCTURE OF•Outcomes•Goals

Influence on Goals and Outcomes

Personality, Values, Preferences, Social Context

INFLUENCING

PROCESSES

•Power

•Persuasion

•Communication

CONTENT

Interdependence

Trust

NEGOTIATION PROCESS•Offer•Counter offer•Concession•Compromise•Agreement

Your Negotiation Style

Negotiation Styles

DODGER

HAGGLER

DREAMER PROBLEM SOLVER

COMPETITOR

CONCERN FOR SELF

CONCERN FOR OTHERS

Dodger

Strength Weakness Best for

Shows indifferenceWill assess risk firstHas low needs

Cannot make decisionsDislikes negotiatingFails to prepareIs not comfortable with people /differences

Avoiding entry into bad dealsTesting the market when issues are trivialRelationship is insignificantAvoiding no win situation

Dreamer

Strength Weakness Best for

Seeks relationshipShows concern for othersValues friendship

Wants to be well likedConcedes easilyPreserves relationships at own expenseGives too much away

Seeking entry into new marketsDealing with relationship oriented marketsWhen you are powerless but have no wish to block the other personWhen you realize you are wrong

Haggler

Strength Weakness Best for

•Makes quick decisions•Likes making deals•Has no strong positions•Is easy to deal with•Is open to counter proposals

•Is win-lose oriented•Accepts lower outcomes•Is satisfied with quick results•Is short term oriented•Gives in easily

•Cooperation is important but time & resources are ltd.•When finding even sub-optimal solution is better than a stalemate•Issues that are not considered important•Breaking deadlocks•Restarting discussion

Competitor

Strength Weakness Best for

•Is a risk taker•Cares for own needs•Controls discussions•Is persuasive /persistent•Enjoys pressure

•Is not interested in other party•Is mostly short term oriented•Is unwilling to shift positions•Is poor listener•Leads to frequent breakdowns

•Emergency Decisions•You are right and being right is more important than preserving relationships•Competitive Markets•When similar styles are used

Problem Solver

Strength Weakness Best forShares informationCreates valuesIs win-win orientedSeeks win-win dealsDevelops optionsIs good listenerAsks a lot of questions

Is a slow decision makerCan be unrealistic at timesTakes timeRequires thorough preparation

Long term dealsRepeat businessComplex negotiationsImportant Deals

The Perceived Feasibility Perspective1. The extent of aspirations of both parties

2. The degree of firmness in aspirations and resistance to yield

3. The perceived integrative potential Faith in own problem solving ability Momentum from previous success Availability of mediator Other’s perceived readiness for problem solving

4. The Role of Trust5. The Perceived cost

Selecting an Interactive Strategy1. Integrating-Integrating=Integrating2. Integrating-Competing=Principled collaboration or

soft competition3. Integration-Accommodating=Integrating4. Integration-Avoiding= Focused Accommodation5. Competing-Competing= Competing or Principled

collaboration6. Competing-Accommodating= Soft Competition or

integration7. Competing-Avoiding= Principled Collaboration or

Soft Competition

From Positional Bargaining to Principled Negotiation

Focus on Interests not positions How do you identify interests:

Ask Why Ask Why Not: Think about their choices

Understand Human Needs Talk about Interests

Invent Options for Mutual GainsDiagnosis: 4 obstacles

Premature judgment Searching for the single answer The assumption of a fixed pie Thinking that solving their problem is

their problem

Prescription:

Separate inventing options from deciding

Broaden the options rather than look for a

single answer: The circle chart

Search for mutual gains: identify shared

interests

Make their decision easy

Step III Approaches

•What are possible Strategies/ideas

•Generate and List them

Step IV Action Ideas

•What might be done

•What Specific Steps?

Step I Problem•What’s wrong•What are current symptoms•What are disliked facts

Step II Analysis•Diagnose Problems•Categorize Symptoms•Suggest Causes•Discover Barriers

Insist on Objective Criteria Fair Standards Fair Procedure Negotiate on that basis

Frame each issue as a joint search for objective criteria

Reason and be open to reason Never yield to pressure, only to principle

Negotiation Strategy

The Negotiation Strategy…

Distributive Strategy: Claiming all the profit or the maximum share for oneself—winning it all

Integrative Strategy: Creating Value (expanding the pie) and finding solutions that best fit needs of all or most parties—especially over time.

Mixed-Motive Strategy: Expanding the pie and meeting the needs of all or most parties as much as possible while claiming appropriate share.

Negotiation Issues

Reservation Price BATNA: Know yours and Others Better your BATNA, the greater your power

Learning Points

BATNA is your power in negotiations Reservation Price is your worst deal acceptable.

It is based on BATNA What is Bargaining zone or ZOPA (area of

overlap of RPs) What is the role of Aspiration point (Target):

keeps you motivated

5 20 25 30 35 40 451510

Buyer’sReservation Price

Buyer’sAspiration

Seller’sAspiration

ZOPA

Seller’sReservation Price

Buyer (AccelMedia)

Seller (GTechnica)

Goals/Interests:-Purchase 10,000-18,000 units-One Shot DealBATNA = No Alternative Source

Goals/Interests:-Sell up to 15,000 units-One Shot DealBATNA = No Alternative Buyer

Negotiation Tactics

Aspirations The Openings (who makes the first offer) Anchorings Pattern of concessions (larger first and small

later to signal that you are reaching your RP) Threats (if you continue negotiating after that

you lose credibility)

Issues…

SIMPLE AND DIRECT You’ve worked with the party before Deal is bogging down Immediate closure is a goal

PRESS AND PUSH Your side is stronger The other side needs a quick close You want to asses limits

Strategic Attitude

Strategic Attitudes

COOL & ALOOF The other side is stronger Your side is under time pressure You have other alternative deals

Commonly Used Tactics…

Patience: helps to defuse and control the deal

Slow Agony: Defense against High Pressure

Apathy: Defense against High Pressure

Empathy: Breaks deadlocks & Bridge Gaps

Sudden Shifts: To dislodge blockages and overcome obstacles

Faking: An art in Trading

Some Commonly Used Tactics…

Walking: When other side has more power and pushed you too hard

Fait Accompli: To control a critical issue

Salami: To make small gains

Limits: To set bounds to further pushing

Deadlines: To clinch a deal

Antagonism: Not a good tactic: evokes same response

Limited Authority: Side A uses to bargain hard,

to use time for agonizing and testing patience. Counter: by Asking what the authority wants and the way they want.

Bottom Line: To help you come up with creative solution to ensure a deal.

Saying No: To get “No” to elicit why of it and know the needs of the customer more

Expectation and Control: Split non-negotiable with negotiable

Auction: Find out where is it the lowest and then build solutions/trade-offs around it.

Rationale: Satisfies the others and makes them negotiate

Concessions: Make it conditional and not unilateral

Negotiations Involves…

Interests, Rights and Power

Operational Implications

Do your Homework Build relationships whenever possible Avoid quick concessions Accentuate the positives Maintain your composure Don’t Give up

Thank You