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Negotiation
“Let us never negotiate out
of fear, but let us never fear
to negotiate.”



             ACHLA TYAGI         1
Negotiation
• Negotiation: It is a decision making process
  among interdependent parties who do not
  share identical preferences. It is through
  negotiation that the parties will decide what
  each will give & take in their relationship/s.

• “It is a face-to-face decision making process
  between parties concerning a specific
  issues.”
                      ACHLA TYAGI                  2
Negotiation
• Features of Negotiation:
 There are a minimum of two parties present.
 Both parties have predetermined goals.
 Some of the predetermined goals are not
  shared by both the parties.
 There is an expectation of outcome.
 Both parties believe that the outcome of
  negotiation may be satisfactory.

                    ACHLA TYAGI                 3
Negotiation
 Both the parties are willing to modify their
  positions.
 The parties’ incompatible positions might
  make modification of position difficult.
 The parties understand the purpose of
  negotiation.



                      ACHLA TYAGI                4
Negotiation
• Objectives of Negotiation:
 Understand what negotiations are all about.
 Select a strategy to negotiate effectively.
 Learn the range of negotiation approaches &
  their results based on your interaction/s.
 Plan for negotiation session.
 Use communication techniques to avert potential
  conflicts.
 Practice your general negotiation technique.
                      ACHLA TYAGI               5
Negotiation
 Negotiation – Remember two elements are
  essential:
1.Reasonableness
2.Flexibility




                   ACHLA TYAGI             6
Negotiation
• The basic components:
 Preparation
 Objectivity
 Strategy
 Technique.




                   ACHLA TYAGI   7
Negotiation
• Identification of issues – Factors to consider:
 The Facts
 The Problem
 The Result
 The Reason




                      ACHLA TYAGI                   8
Negotiation
• Types of Negotiation: On the basis of stability
  aspect of negotiated settlement, the
  negotiation processes have been divided into
  two categories:
1.Integrative Approach (Win-Win Strategy)
2.Distributive approach (Win-Loose Strategy/
  Zero-Sum Strategy)


                      ACHLA TYAGI                   9
Negotiation
• Principles to Integrative Approach:
1. Separate people from problem
2. Focus on interest, not positions.
3. Invent options for mutual gains.
4. Insist on using objective criteria.




                     ACHLA TYAGI         10
Negotiation
• Principles to Distributive approach:
1.I want it all.
2.Time wrap
3.Good cop – bad cop
4.Ultimatum




                     ACHLA TYAGI         11
Negotiation
• The five elements of Negotiation:
1.The parties & their interests.
2.Interdependency
3.Common Goals
4.Flexibility
5.Decision – making ability/authority


                     ACHLA TYAGI        12
Negotiation
• Need of developing Negotiating Skills:
   Following are the key concern areas that are needed
   to be focused while one begins to build these
   negotiating skills –
1. Negotiations are rarely pure win-lose or win-win
   propositions
2. Negotiations takes place under conditions of
   ambiguity & uncertainty.
3. Most negotiations involve existing or potential
   sources of conflict that impede reaching an
   agreement.
                        ACHLA TYAGI                  13
Negotiation
4. Negotiations are chaotic & seldom pass sequentially
     through distinct phases such as pre-negotiation,
     deal structuring, detailed bargaining & agreement.
5.   Most negotiations are linked to other negotiations.
6.   Negotiation process comes in, stops & restarts.
7.   Most complex negotiations takes place between
     agents of groups & not the group themselves.
8.   Complex negotiations often involves a team
     approach.
9.   Negotiating skills can be learned.
                          ACHLA TYAGI                      14
Bargaining Styles
People have different organizing styles –
varying from relatively stable to
personality driven clusters of behavior
and their reaction/s. These styles, when
followed in a set pattern leads to the
formation of certain specific models
known as models of negotiation.

                 ACHLA TYAGI                15
Dual Concern Model
• This was proposed by Dean G. Pruitt, Jeffery
  Z. Rubin & Sung Hee Kin. This model explains
  how one’s behavior while bargaining or during
  conflict, is influenced by two concerns:
1.The desire to satisfy oneself.
2.The desire to satisfy the other party.



                     ACHLA TYAGI              16
Dual Concern Model
   The bargaining styles associated with Dual
   Concern Model stems from two personality
   dimensions:
1. Assertiveness
2. Co-operation
   These two concerns yield five negotiating styles:
     i.     Avoiding
     ii.    Accommodating
     iii.   Compromising
     iv.    Competing
     v.     Collaborating
                            ACHLA TYAGI                17
Five Factor Model
• This is also known as Big-5 Personality
  Dimension, presented by Zhenzhong Ma. He
  sought to determine whether personality
  factors could predict an individual’s bargaining
  style & whether one’s bargaining style
  adequately predicts bargaining behavior?
  The dimensions of personality are also
  referred to as OCEAN Approach.

                      ACHLA TYAGI                18
PRAM Model
• Ross & Long developed the PRAM Model to
  put win-win approach into practice. This
  model guides the negotiator through four
  steps of:
1.Planning for Agreement
2.Building Relationship/s
3.Reaching Agreement/s
4.Maintaining Relationship/s
                    ACHLA TYAGI              19
The Negotiation Process
    The process of negotiation has following
    4 stages:
•   Stage I: Preparation
•   Stage II: Opening Session
•   Stage III: Bargaining
•   Stage IV: Settlement

                     ACHLA TYAGI           20
The Negotiation Process
• Stage I: Preparation

  Identify all the issues
  Set priorities
  Develop supportive arguments


                 ACHLA TYAGI      21
The Negotiation Process
• Stage II: Opening Session

  Ground Rules
  Framework for Success
  Initial Offers
  Posturing

                 ACHLA TYAGI   22
The Negotiation Process
• Stage III: Bargaining

  Single Issue Negotiation
  Multiple Issue Negotiation




                  ACHLA TYAGI   23
The Negotiation Process
• Stage IV: Settlement

  Impasse
  Third Party Intervention
  The Closing


                 ACHLA TYAGI   24
The Negotiators/ Agents
  Negotiation/s can take place between two
  individuals who are representing their own
  interests such as:
 Individual & his lawyer who are representing
  negotiating deal.
 Between a group of people engaged in decision
  making process.
 Between parties representing interest other than
  their own as is typically found in a business
  transaction between a company & its suppliers.
                        ACHLA TYAGI                  25
Types of Negotiators/ Agents
Broadly we classify the negotiators as:


1.Independent Agents
2.Non – Independent Agents




                   ACHLA TYAGI             26
The Challenge
 Bargaining is a process that includes:
1.Gathering general information
2.Learning the priorities of the other side in a
  specific negotiation
3.Assessing the strengths & weakness of their
  own positions.



                      ACHLA TYAGI                  27
The Challenge(cont..)
 The challenge in being an agent of the
  principal party who is not into negotiation, is
  to make sure the principal party is aware of
  how the negotiation process is progressing. If
  the principal party is not a direct part of that
  process, the agent must discuss the
  information gathered at the negotiating table
  & get direction from the principal party on
  how to proceed.
                      ACHLA TYAGI                28

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Negotiation

  • 1. Negotiation “Let us never negotiate out of fear, but let us never fear to negotiate.” ACHLA TYAGI 1
  • 2. Negotiation • Negotiation: It is a decision making process among interdependent parties who do not share identical preferences. It is through negotiation that the parties will decide what each will give & take in their relationship/s. • “It is a face-to-face decision making process between parties concerning a specific issues.” ACHLA TYAGI 2
  • 3. Negotiation • Features of Negotiation:  There are a minimum of two parties present.  Both parties have predetermined goals.  Some of the predetermined goals are not shared by both the parties.  There is an expectation of outcome.  Both parties believe that the outcome of negotiation may be satisfactory. ACHLA TYAGI 3
  • 4. Negotiation  Both the parties are willing to modify their positions.  The parties’ incompatible positions might make modification of position difficult.  The parties understand the purpose of negotiation. ACHLA TYAGI 4
  • 5. Negotiation • Objectives of Negotiation:  Understand what negotiations are all about.  Select a strategy to negotiate effectively.  Learn the range of negotiation approaches & their results based on your interaction/s.  Plan for negotiation session.  Use communication techniques to avert potential conflicts.  Practice your general negotiation technique. ACHLA TYAGI 5
  • 6. Negotiation Negotiation – Remember two elements are essential: 1.Reasonableness 2.Flexibility ACHLA TYAGI 6
  • 7. Negotiation • The basic components:  Preparation  Objectivity  Strategy  Technique. ACHLA TYAGI 7
  • 8. Negotiation • Identification of issues – Factors to consider:  The Facts  The Problem  The Result  The Reason ACHLA TYAGI 8
  • 9. Negotiation • Types of Negotiation: On the basis of stability aspect of negotiated settlement, the negotiation processes have been divided into two categories: 1.Integrative Approach (Win-Win Strategy) 2.Distributive approach (Win-Loose Strategy/ Zero-Sum Strategy) ACHLA TYAGI 9
  • 10. Negotiation • Principles to Integrative Approach: 1. Separate people from problem 2. Focus on interest, not positions. 3. Invent options for mutual gains. 4. Insist on using objective criteria. ACHLA TYAGI 10
  • 11. Negotiation • Principles to Distributive approach: 1.I want it all. 2.Time wrap 3.Good cop – bad cop 4.Ultimatum ACHLA TYAGI 11
  • 12. Negotiation • The five elements of Negotiation: 1.The parties & their interests. 2.Interdependency 3.Common Goals 4.Flexibility 5.Decision – making ability/authority ACHLA TYAGI 12
  • 13. Negotiation • Need of developing Negotiating Skills: Following are the key concern areas that are needed to be focused while one begins to build these negotiating skills – 1. Negotiations are rarely pure win-lose or win-win propositions 2. Negotiations takes place under conditions of ambiguity & uncertainty. 3. Most negotiations involve existing or potential sources of conflict that impede reaching an agreement. ACHLA TYAGI 13
  • 14. Negotiation 4. Negotiations are chaotic & seldom pass sequentially through distinct phases such as pre-negotiation, deal structuring, detailed bargaining & agreement. 5. Most negotiations are linked to other negotiations. 6. Negotiation process comes in, stops & restarts. 7. Most complex negotiations takes place between agents of groups & not the group themselves. 8. Complex negotiations often involves a team approach. 9. Negotiating skills can be learned. ACHLA TYAGI 14
  • 15. Bargaining Styles People have different organizing styles – varying from relatively stable to personality driven clusters of behavior and their reaction/s. These styles, when followed in a set pattern leads to the formation of certain specific models known as models of negotiation. ACHLA TYAGI 15
  • 16. Dual Concern Model • This was proposed by Dean G. Pruitt, Jeffery Z. Rubin & Sung Hee Kin. This model explains how one’s behavior while bargaining or during conflict, is influenced by two concerns: 1.The desire to satisfy oneself. 2.The desire to satisfy the other party. ACHLA TYAGI 16
  • 17. Dual Concern Model The bargaining styles associated with Dual Concern Model stems from two personality dimensions: 1. Assertiveness 2. Co-operation These two concerns yield five negotiating styles: i. Avoiding ii. Accommodating iii. Compromising iv. Competing v. Collaborating ACHLA TYAGI 17
  • 18. Five Factor Model • This is also known as Big-5 Personality Dimension, presented by Zhenzhong Ma. He sought to determine whether personality factors could predict an individual’s bargaining style & whether one’s bargaining style adequately predicts bargaining behavior? The dimensions of personality are also referred to as OCEAN Approach. ACHLA TYAGI 18
  • 19. PRAM Model • Ross & Long developed the PRAM Model to put win-win approach into practice. This model guides the negotiator through four steps of: 1.Planning for Agreement 2.Building Relationship/s 3.Reaching Agreement/s 4.Maintaining Relationship/s ACHLA TYAGI 19
  • 20. The Negotiation Process The process of negotiation has following 4 stages: • Stage I: Preparation • Stage II: Opening Session • Stage III: Bargaining • Stage IV: Settlement ACHLA TYAGI 20
  • 21. The Negotiation Process • Stage I: Preparation Identify all the issues Set priorities Develop supportive arguments ACHLA TYAGI 21
  • 22. The Negotiation Process • Stage II: Opening Session Ground Rules Framework for Success Initial Offers Posturing ACHLA TYAGI 22
  • 23. The Negotiation Process • Stage III: Bargaining Single Issue Negotiation Multiple Issue Negotiation ACHLA TYAGI 23
  • 24. The Negotiation Process • Stage IV: Settlement Impasse Third Party Intervention The Closing ACHLA TYAGI 24
  • 25. The Negotiators/ Agents Negotiation/s can take place between two individuals who are representing their own interests such as:  Individual & his lawyer who are representing negotiating deal.  Between a group of people engaged in decision making process.  Between parties representing interest other than their own as is typically found in a business transaction between a company & its suppliers. ACHLA TYAGI 25
  • 26. Types of Negotiators/ Agents Broadly we classify the negotiators as: 1.Independent Agents 2.Non – Independent Agents ACHLA TYAGI 26
  • 27. The Challenge  Bargaining is a process that includes: 1.Gathering general information 2.Learning the priorities of the other side in a specific negotiation 3.Assessing the strengths & weakness of their own positions. ACHLA TYAGI 27
  • 28. The Challenge(cont..)  The challenge in being an agent of the principal party who is not into negotiation, is to make sure the principal party is aware of how the negotiation process is progressing. If the principal party is not a direct part of that process, the agent must discuss the information gathered at the negotiating table & get direction from the principal party on how to proceed. ACHLA TYAGI 28