Procurement and Materials

Management - Negotiation
Arvind Tiwari
Guest Faculty IIFT

Overview

Negotiation
Definition
Types
Key Requirements
Tactics

Negotiation

We negotiate everyday with everyone

Started when we were children
Negotiation with parents for rewards
Rewards for good work or good performance
Small rewards for small things but important at
that stage
Moved on negotiation with friends and class
mates
Expectation increased with age and events

Definition
An interactive process between two or more
parties seeking to find common ground on an
issue or issues of mutual interest or dispute
where the involved parties seek to make or
find a mutually acceptable agreement that will
be honoured by all the parties concerned.

Definition
Key
Process
Interactive
Two or more parties
Common ground
Mutual interest
Agreement honoured

Types
Can be classified in many ways

With someone who you

will not deal with again
may deal with again
will deal with again and again

We will focus on second and third types.

Styles
Different types require different negotiation
styles
One can acquire skills and become a
successful negotiator for any type of situation
It also requires practice in actual situations to
hone these skills

Key Requirements
Problem Analysis
Identify and analyse issues for both parties
Expected outcomes

Preparation

Objectives
Areas of trade
Alternative to objectives
History of relationship
Past precedents
Outcomes

Active Listening
Verbal communication
Body language

Key Requirements
Emotional control
Impacts
Body language
Words used
Tone used

Can send wrong signals

Verbal communication
Clear
Effective
With reasoning

Key Requirements
Collaboration and Team work
Ability to work together with the other side
Ability to get other members of own team to
agree

Problem Solving
Approach to find a solution than only pursue
objective

Decision Making Ability

Should be able to decide in a reasonable time

Key Requirements
Interpersonal skills
Good working relationship with those involved

Ethics & Reliability

Trust is important for good outcomes

Tactics
Ensure you are negotiating with the right
person or team
Is not the first of a series.
Have the authority to decide
No joint stakeholders who appear later

Try and find out about the other party team

members
Technical competence
Personal traits
Cultural background

Tactics
Location
Neutral location preferred though not always
possible

Dress code
Depends on organisation / country culture
Should not be an aberration

Dont get overawed

Be polite always

Tactics
In a multipoint negotiation , prioritise your
points
For each of the points of negotiation
Know your target . Make a Wish List
Know the acceptable limit

Know your BATNA Best Alternative to a

Negotiated Agreement
Essential because if you are not prepared to
walk away then the negotiation can become
one sided

Tactics
Remember the negotiation will always go
south from the starting point
So start with your target
Better to start first to let your position be clear
If not possible to start still make your point
Dont make another offer till a counter offer
has been made
Dont give bigger concessions than the other
party. At most match them

Tactics
Avoid negotiating and settling point by point
Make offer / take a position for many points at
the same time
This helps understand other partys position
on various and provides scope for give and
take
Make notes as the negotiation progresses.
Important to record all offers and
counteroffers even if they get changed during
a session

Tactics
Example
Advice Seeking
How would you feel ?
Ideas to solve the problem
Felt flattered
Tried to put yourself in other persons shoes

Problem Solving
Disarm potentially defensive opponents
Encourages him to propose solutions

Tactics
Advice seeking
Flattery
Increases likability
Signals respect
Implicit endorsement of expertise & values

Perspective Taking
Prompt them to look at it from your point of view

Tactics
Comfort during negotiations
Relaxing techniques
Breaks

Non aggressive , friendly

Sharing information
Take the initiative
Too much / too little

Tactics

Show patience
Understand time pressures
Break down bigger issues into smaller ones
Separate problem from self worth
Avoid threats and manipulative tactics