Professional Documents
Culture Documents
Syllabus
• Types of Negotiation
• Negotiation Strategies
• Selling Skills – Selling to Customers
• Selling to Superiors
• Selling to peer groups , team mates &
subordinates
• Conceptual Selling, Strategic selling
• Selling Skills – Body Language
Reference Text
• Negotiations & Selling - by Sameer A. Kulkarni
• Getting to Yes - by Roger Fisher & William Ury
• Negotiations and Selling - by R.K.Srivastava
• Negotiation - Harvard Business Essentials
• Winning Negotiations - Harvard Business
School Press
Negotiations – What about it?
Negotiation & Selling by Sameer A.Kulkarni and Marketing Management by Philip Kotler
Features of Principled Negotiations
• Liberation of problem – Detach the people from
the problem
• Objectivity – Focus on interest not on position
• Determine alternate options – What if this does
not workout.
• Objective evaluation criteria – Being well
informed will help . Collect as much information
on the subject of negotiation to get the best deal.
Negotiation & Selling by Sameer A.Kulkarni and Marketing Management by Philip Kotler
Concepts of Negotiation
• Any successful negotiation must have a
fundamental framework based on knowing the
following:
- The alternative to negotiation
- The minimum threshold for a negotiated deal
- How flexible a party is willing to be , and what
trade – offs it is willing to make
- Value Creation through Trade
Negotiation (Harvard Business Essentials)
4 Key Concepts of Negotiations
• BATNA (Best Alternative To a Negotiated
Agreement)
• Reservation Price
• ZOPA (Zone Of Possible Agreement)
• Value Creation Through Trades
Know your BATNA
• The concept has been developed by Roger
Fisher and William Ury
• It is one’s preferred course of action in the
absence of a deal
• Knowing your BATNA means knowing what
you will do if you fail to reach an agreement in
the negotiation
• Know your BATNA before the Negotiation.
Know your BATNA
• If you don’t know your BATNA – you will not
know if the deal makes sense or when to walk
away from the negotiation table
• Not Knowing BATNA can result in opportunity
loss- you may reject a good offer that is better
than the alternatives you have
Improving your position in the
negotiation table
• Improve your BATNA to improve your
negotiating position
• Identify the other side’s BATNA
• Weaken the other party’s BATNA
BATNA - Example
A consultant is negotiating with a potential client
about a month –long assignment . It’s not clear
what fee arrangement she’ll be able to
negotiate , or even if she’ll reach an agreement,
So before she meets with this potential client ,
she considers her best alternative to an
acceptable agreement . In this case , the best
alternative to a negotiated agreement - the
consultant’s BATNA – is spending that month
developing marketing studies for other clients –
work that she calculates can be billed out at
$15,000.
A King who knew his BATNA
Long before the acronym BATNA was invented , savvy operators kept their best
alternatives in mind as they dealt with opponents . Consider France’s Louis XI ,one of
the most crafty monarchs in fifteenth century Europe . When England’s Edward IV
brought his army across the Channel to grab territory from his weaker rival , the
French King decided to negotiate . Knowing that his BATNA was to fight a long and
costly war , Louis calculated that it is was safer and cheaper to strike a deal with
Edward . So he signed a peace treaty with the English in 1475,paying 50,000 crowns
upfront and an annuity of 50,000 crowns for the rest of Edward’s life (which proved
to be short).To seal the deal , Louis treated his royal counterpart and the English
army to forty-eight hours of eating , drinking , and merry making .As an added
token , he signed the Cardinal of Bourbon to be Edward’s “jolly companion” and to
forgive his sins as he committed them.
As Edward and his army staggered back to their boats ending the Hundred Years
War , Louis remarked:”I have chased the English out of France more easily than my
father ever did ; he drove them out by force of arms while I have driven them out by
force of meat pies and good wine.”Such is the power of negotiating when you know
your BATNA.
Reservation Prices
• Also Known as the “walk away price”
• Reservation price should be derived from your
BATNA
• Don’t enter a negotiation without a clear
reservation price
Reservation Price - Example
You are currently paying $20 per square foot for the
suburban office space . The location is satisfactory and you
believe that the price is fair , but you wouldn’t mind paying
more to be closer to your downtown customers . While
preparing to negotiate with a commercial landlord for an
office lease in a downtown highrise , you decided that you
would not pay more than $30 per square foot . That’s your
reservation price . If the landlord insists on more ,you can
stay where you are at $20 per square foot(your BATNA).
At the end of a lengthy negotiation session , the landlord
declares that he will not accept less than $35 per square
foot – and he won’t budge . You graciously terminate the
negotiation and walk away from the deal.
Zone of Possible Agreement
(ZOPA)
• ZOPA is the area or range in which a deal that
satisfies both parties can take place
• It is the set of agreement that potentially
satisfy both parties
• Each Party’s reservation price determines one
end of the ZOPA.
ZOPA - Example
A buyer has set a reservation price of $2,75,000 for the purchase of
a commercial warehouse . “That’s as high as I’m willing to go,” she
tells herself . Naturally , she would prefer paying less . Unknown to
her , the seller has set a reservation price of $2,50,000.That is the
least he’ll take for the property . The ZOPA, therefore , is the range
between $2,50,000 and $2,75,000.The two parties might haggle a
bit in reaching agreement , but an agreement in this range would
satisfy each.
Buyer : What would you say to an offer of $2,55,000?I could agree
to that.
Seller : Thanks , but I believe that the building is worth more and I
can get more if I wait for a month.
Buyer : You may or you may not .I would be willing to pay $2,60,000
Seller : Pay $2,65,000 and it is yours
Buyer : I agree to pay $2,65,000
Value Creation Through Trades
• The negotiating parties can improve their
position by trading the values at their disposal
– Getting what one wants in return for
something it values much less
• Both parties often emerge as winners
Value Creation Through Trades- Examples
• Make sure you are negotiating with the MAN ie. the decision
maker.
This will help you in the following manner:
- All your reasoning is heard directly by the decision maker.
- The benefits of good relationship built at the bargaining table
are likely to be reflected in the deal and its implementation
- The chances of disputes/misunderstanding/
misrepresentation is minimized
So , do whatever you can, to identify the real decision maker and
ensure that he is there during the negotiation.
It is also important to know if the decision making is to be done
by an individual , a team or a committee .
Understand the decision making process.
Step 5:Anticipate the Authority Issue (cont’d)
Role of Concession Concessions are made Concessions are demanded Based on a problem solving
mode
Focus Is on relationship Non-emotional Soft on relationship and hard
on issues
Atmosphere Trust others Distrust others Objectivity is maintained
Flexibility Easy to change your position Disturb others position Interest is rigid , position is
flexible
Tactics Make offers Make threats to walkout Explore Interests
Goals-The selection will be guided mainly by the objectives or goals expected to derive a consent
upon in the negotiation process.There may be multiple goals.
Authorities -The selection of strategy largely depends on the levels of authority conferred to the
representative participating in the interaction.
Personality Profile - The context of exhibited values in the previous negotiations should be given
a prime focus for designing a suitable strategy .It is observed that most negotiators seek to
maintain a coherent personality profile all the time.
Counterparts – It is clear that a strategy appropriate for one type of counterpart may be
inappropriate for another and experience of past interactions will have a say on the strategy.
• Communication Skills
- One of the most important skills that is
required for being successful professionally.
- Poor communication skills are often
identified as one of the causes for breakdown
in the business development process.
Skills sets required for effective negotiations
• Creativity
- We live in a world of change.
- Creative solutions always help in negotiations
- It also gives an edge to the negotiating parties
Skills sets required for effective negotiations
• Entrepreneurship
- Entrepreneurship is a skill that is at the heart
of successful business development.
- It unleashes creativity and innovation in doing
business.
- Entrepreneurship always addresses profitable
business outcomes.
Skills sets required for effective negotiations
• Ethics
- Ethics is a major driving force in any
negotiation activity.
- It reflects the value system of the
organization the parties represent.
Skills sets required for effective negotiations
• Interpersonal Skills
- The negotiating parties are expected to have
very good interpersonal skills.
- In today’s business scenario the person’s
emotional IQ – the ability to relate to people
is as important as a person’s intelligence IQ
- This skill helps build relationship during
business negotiations.
Skills sets required for effective negotiations
• Leadership Skills
- Leadership skills is required to successfully
lead a team in negotiations.
- This also helps in setting directions during
negotiations
- The opposite party might dominate the
proceedings in case there is lack of leadership
skills in one of the parties.
Skills sets required for effective negotiations
• Management Skills
- Negotiations or any other business activity is
all about managing your resources and getting
the best out of the available resources.
- Good Management skills will stand you in
good stead to achieve the best in any
negotiation table.
Skills sets required for effective negotiations
• Networking Skills
- This is a very critical skill required not only in
negotiations but in business at large.
- It is much more than a stack of business cards
- It involves building contacts and relationships
and draw benefits from such contacts during
negotiations and can extend beyond
negotiations.
Skills sets required for effective negotiations
• Planning Skills
- Very important skill which helps in focusing
your efforts on the activities required to
accomplish the tasks that you have set out for
during negotiations.
- This skill is the first step which sets the
direction for negotiations or any other
business activity.
Skills sets required for effective negotiations
• Presentation Skills
- How people perceive you depends on how
you present your self.
- Skills of presenting yourself , your ideas and
your business can be the key differentiators
during negotiations.
Skills sets required for effective negotiations
• Selling Skills
- Negotiations is all about selling your point of
view . Selling Skills is important to help people
make a buying decision(eg. Products,ideas
etc)
- A good sales person is often seen as a good
negotiator.
Skills sets required for effective negotiations
• Teamwork Skills
- It is a skill that is defines success in business as
well as negotiations.
- The relationship amongst team members and the
desire to focus on accomplishing their goals is the
differentiator between a good team and a not so
good team .
- A good team is often seen to have members with
different skills sets complementing each other.
Skills sets required for effective negotiations
• Writing Skills
- Like communication skills writing skills is very
important.
- Be it proposal , agreement or business plan –
they need to be written well . The out come of
negotiations is highly dependant on the
writing skills.
Negotiation Skills - Tips
• Be willing to negotiate in the first place
- Do not feel shy or hesitant to negotiate
- In business you only get when you ask or
negotiate
• Don’t get Emotionally involved
- Don’t get emotionally attached to winning. Focus
on the issue
- Keep calm , patient and be friendly
- Leave behind your ego and pride before entering
the negotiations
Negotiation Skills - Tips
• Don’t get suckered by the ‘Rules’ Trick
- Sign the contract only if all the terms and
conditions are acceptable to you
- Make changes in the contract if you strongly
feel to do so after informing your counterpart
- If the counter part insists that you sign the
contract as it is , seek to understand that as per
rule you cannot change the contract.
- All contracts need to be mutually agreed upon
Negotiation skills - Tips
• Never be the First Person to Name a Figure
- Always get your counterpart to say a number
to which you can respond.
- Being the first person to name a figure , you
may under quote or grossly over quote . Both
situations are not right . However , quoting
reasonably higher than what you expect and
keeping a margin for negotiation is a good
idea.
Negotiation Skills - Tips
• Let them Believe the Final Decision does not
Rest with You
- Negotiate in a manner that gives your counter
part that there is another level of authority for
the final decision
- Try to get the best offer which you will carry for
the authority to approve . Thereby you get time
to evaluate and agree or negotiate further
- Always be the reluctant buyer or seller
Negotiation Skills - Tips
• Don’t Leave the Other Person Feeling as If
they have been Cheated
- Many people try to get every thing out of the
negotiation at all costs.
- This sometimes leaves the other party feeling
cheated and discourages future transactions.
- Most negotiations should leave both parties
feeling that they have won.
Negotiation Skills - Tips
• Solicit Other’s Perspective
In a negotiating situation , use questions to find out what the other person’s concern’s and needs might be.
1. Don’t Argue – Negotiating is about finding solutions . Arguing is about trying to prove that the other person
is wrong . Argument leads to no progress . Difference of opinion can be communicated in a decent manner.
2. Consider Timing – There are good times to negotiate and bad time . Bad times include those situations
where there is:
- A high degree of anger on either side
- Pre-occupation with something else
- A high level of stress
- Tiredness on one side or the other
If they arise during negotiations a time out/rest period is in order or perhaps rescheduling to a better time.
3. Listen before you speak – This is a very important skill in negotiation . You can communicate well if you have
listened well. Test understand after you have listened and then put forth your point . This makes it more
effective in negotiations.
4. Smile when you say it – Smile , Courtesy , patience , empathy , and humor will serve to advance your ability
to get the other side to co-operate and thereby the negotiation leads to the desired result.
5. Separate the person from the problem – Be easy on the other person but hard on the issue.Be firm in
challenging the other side’s position but be cordial to the other party.
Negotiation Skills - Tips
• Remember your BATNA
Your Best Alternative to a Negotiated
Agreement is your legitimate walk away point
in a negotiation . The deal has to be superior
to your BATNA or it should be refused.
Negotiation Skills - Tips
• How to get ‘Yes’ in Negotiation
- Avoid Conflict
- Be a good Listener
- Learn to talk and understand the customer’s
language
- Develop Empathy
- Understand your limitation
- Keep margin of safety
- Know your customer