Negotiating Strategies

Ms Charmie Jayaweera
BSc Marketing Management Special(Sri.J),
Master of Business Administration(MBA),PIM
Reading for PhD(University of Colombo)

Lesson Outline
What is Negotiation ?
Key Concepts in Negotiation
Types of Negotiation
Stages of Negotiation
Negotiation Skills
Third Party Interventions
Barriers to an Agreement

We spend a great deal of time

negotiating...most managers and
supervisors spend up to 50% of their
time negotiating. The outcomes of
these negotiations determine our
success in both our professional and
personal lives.

Define Negotiation
Negotiation takes place when two
or more people, with differing
views, come together to attempt to
reach an agreement on an issue
Negotiation is about getting the best
possible deal in the best possible
way.

Define Negotiation
Negotiation involves two or more
parties with competing or conflicting
interests or needs, working towards an
agreement on how they will
cooperate.
The process of making joint decisions
when the parties involved have
different preferences

Define Negotiation
Negotiating is the art of reaching an
agreement by resolving differences
through creativity

Key Concepts in Negotiation

BATNA

( Best Alternative To a
Negotiated Agreement)
Your options if you fail to reach agreement
during a negotiation

Reservation Price
The least favorable point at which you will
accept a negotiated deal; the walkway price

Key Concepts in Negotiation

ZOPA
( Zone Of Possible Agreement)
The range in which a potential deal can take
place.
Buyers Target Price

Buyers Reservation Price (BR)

(e.g., $25M)

Sellers Reservation Price (SR)

(e.g., $17M)

Sellers Target

A Negative Bargaining Zone

Sellers Reservation Price (SR)
(e.g., $25M)

Buyers Reservation Price (BR)

(e.g., $17M)

If BR < SR, then there is no zone of possible agreement.

Types of Negotiation
Distributive (win-lose)

Integrative (win-win)

Integrative (win-win)
A negotiating process in which the parties
involved strive to integrate their interests,
as effectively as possible in the final
agreement
Create as much value as possible for
both sides
Parties cooperate to achieve maximum
benefits by integrating their interest in to
an agreement

Integrative (win-win)
Going back to underlying needs
Recognizing individual differences
Adapting positions in light of shared
information and attitudes
Attacking the problem, not the people

Distributive (Win-lose)
A negotiation method in which two parties
strive to divide a fixed pool of resources,
each trying to maximize its share of the
distribution
Example:

Negotiated sale of a car/House

(each dollar gained by one
party is lost by the other
party

Distributive (Win-lose)
.The objective of both parties is to maximize
their self-interest, or share of the pie
The parties are only concerned about the
content of the current negotiation and act as
if they expect no future relationship

Differences Between Distributive and

Integrative Negotiation
Integrative

Distributive
1.
2.
3.
4.
5.
6.
7.

One issue (or one at a

time)
Win-Lose
Maximize share of
fixed pie
One-time relationship
Keep interests hidden
One expressed
position for each issue
Keep information
hidden

1.
2.
3.
4.
5.
6.
7.

Several issues
Win-Win
Expand the pie by creating
and claiming value
Continuing long-term
relationship
Share interests with other
party
Create many options per
issue to maximize mutual
gains
Share information, explain
why of issue

Stages in Negotiation
Preparation

Opening Statement
Bargaining
Settlement

Stage 01 Preparation
Decide your BATNA - always start with a
clearly defined BATNA and stick to it
List all key issues either party will want
decided. Include tangibles, intangibles,
throwawaysthe more the better!
Set priorities for the key issues by either: 1.
Ranking; 2. Weights (%); 3. Assign each issue to
one of four priority levelsEssential, Important,
Desirable, Throwaway
Develop support arguments based on
information, facts, logic

Stage 02 Opening Statement

Many prefer to make the opening offer while
others prefer to receive the opening offer!
Sets positive tone for negotiations
Ensure common understanding of process
Ground rules
WHO speaks for each party, is authorized to make/reject offers, and
how many people will be on each team?
WHERE will negotiation take place, and what will be the seating
arrangement?
WHEN will negotiations begin, and how long will sessions last?
HOW will offers be made, issues included in the discussion?
WHAT form of final agreement is acceptable (handshake, verbal,
written, notarized)?

Stage 03 Bargaining
Satisfaction is not absolute, it depends on the way

people value things

Bargaining to our advantage, we are concerned to
make a fair deal in which both parties will be
equally satisfied
Or equally dissatisfied in that case we must
bargain in such a way that the dissatisfaction
will be equally shared between us

The bargaining stage could be said to be the most

important of the four stages. This is where most of
the work is done by both parties. This is where the
actual deal will begin to take shape. Terms and
conditions are laid down
Bargaining is never easy. Both parties would have to
learn to compromise on several aspects to come to a
final agreement
This would mean that each party would therefore
have to give up something to gain another. It is
essential for you to always have an open mind and
be tactful while at the same time not giving away
too much and settling for less

Stage 04 Settlement/Closing
Negotiations result in either a settlement or an
impasse
Impasse = both parties still seek an agreement but
negotiations have stalled
Why do parties declare an impasse even though
they both still seek a settlement? Common reasons:
(1) noncommunication of interests; (2) excessive
emotional involvement; (3) failure of one or both to
realize the interests of the other party

Are You a Good Negotiator?

Are You a Good Negotiator?

Q1
After a job interview, HR calls to offer you the job.

The staffer names a salary 15% higher than you're

making and says the benefits are generous.
She doesn't have time to negotiate the terms right
now, but wants to know if you're going to accept.
Since you really want the job, you should say yes
now and hammer out the details tomorrow.
True

False

Are You a Good Negotiator?

Q2
You're about to meet with your boss to negotiate
for a promotion and a raise. You've put together a
strong pitch, and practiced it numerous times, but
you're still anxious.
In the hour before the meeting, the best thing to do
is review your supporting materials one more time
to make sure they're fresh in your mind so you feel
calm and confident. .
True
False

Are You a Good Negotiator?

Q3
You want to switch to a division in your company
where you'd have more to contribute and the
work would make better use of your skills. A
friend recommends that you lay out your case in a
detailed e-mail.
Instead, you decide to negotiate face-to-face. This
will produce better results..

True

False

Are You a Good Negotiator?

Q4
An employer makes you a job offer and asks you
to name the salary you want. Your prospective
boss agrees to your number immediately, so you
go home and celebrate. Not only did you get the
position, you win the negotiation.

True

False

Are You a Good Negotiator?

Q5
You're based in Kandy and apply for an executive
position at your firm's Colombo headquarters.
Partway through the interview process, your
personal situation changes and you can no longer
move.
Rather than inform management now or withdraw
your candidacy, you should continue to pursue it. If
things get to the offer stage, you can try to work
things out then. .

True

False

Are You a Good Negotiator?

Q6
You want a raise. You've researched the current
market for your skills and found that an 8%
increase would bring your salary in line with your
peers.
You decide to ask your boss directly for the 8%. A
straightforward, honest approach will be most
persuasive and likely to get you what you want. . .

True

False

Are You a Good Negotiator?

Q7
You're negotiating to rent office space for your
business. You ask if the rent, listed at the high end
for your area, is carved in stone.
In response, the broker drops the price per square
foot by almost half.
Your counteroffer should be close to that number -they've already cut the price so much they
probably can't reduce it much more. . .

True

False

Are You a Good Negotiator?

Q8

You have a strong case for a bonus this year, but

feel anxious about asking and worry your nerves
will make you look like you think you don't
deserve it.
Rather than wait till you feel more confident, you
should go ahead and schedule the negotiation
anyway
True

False

Are You a Good Negotiator?

Q9
It's time to renegotiate your top client's contract. He
loves your work, depends heavily on your
services, and pays you more than all your other
clients.
To make sure you get the raise you seek, it's best
to bluff. You should say you need a 6% increase to
bring his fees in line with what your other clients
pay, and without one, you won't be able to afford
to renew the contract.

True

False

Are You a Good Negotiator?

Q10
You're one of two finalists for a much bigger job, one where
you'd be the only woman working with a group of highpowered men.
In the interview, you want to seem professional, goaloriented, and capable, so you decide to wear a
conservative suit, tone down your usual lively social
manner, and speak in a direct, no-nonsense way.
This will win the team's respect, allay any concerns they may
have about your ability to play with the "big boys," and
give you the best chance of being their final choice

True

False

Negotiation Skills
Professional standards
Product Knowledge
Self Confidence
Good Learner /Observer
Can understand the body language of the
people at the negotiation process
Open and Flexible yet firm
Exercise great patience, coolness and maturity
Confident and Optimist
Listening skills

Positive Behaviors in Negotiation

Listening and Asking Questions
Maintain confident body language
Willingness to trust other party
Willingness to share information
Willingness to ask concrete questions
Separate people from the problem
Dont allow emotional considerations to
affect the negotiation
Avoid premature judgments
Know your BATNA

Negative Behaviors in Negotiation

Attitude of gaining the fixed pie
Extremely demanding
Overconfidence that their positions are the
correct
Communication problems
Defend/attack spirals
Irritating behavior
Counter proposals

Third Party Intervention in

Negotiation
Facilitation --- known friend or family member is
trusted to provide assistance by
meeting separately with both
parties and suggesting a settlement

Mediation --- third party assists the parties in the

development of a mutually
acceptable settlement

Arbitration --third party is empowered to make a

final and binding decision on all
unresolved issues

Barriers to Good Negotiating

(Agreement)
Communication Problems
Die Hard Bargainers (Fixed Pie approach)
Differences in Gender and Culture
Lack of Trust
Negotiators Dilemma
Overconfidence