The Art of Negot

The Art of Negotiating
T. Sivasankaran
Advesh Consultancy Services
Chennai India
tss@advesh.com
Mobile: 09790971951

12/03/09 Advesh Consultancy Services 1
Master
y
Skill
Knowledge
Awareness

BASICS OF
NEGOTIATION

◦ We all negotiate, all the time- at home, with friends, at office, in
public
◦ These negotiations can be about anything
◦ Negotiation is the most effective way of resolving conflicts and
securing agreement
◦ A two way discussion to agree terms
◦ Conferring for the purpose of mutual agreement
◦ A process of discussion aimed at reaching agreement
◦ Establishing consensus amongst two or more parties

Negotiation Is
 A dialogue between two or more parties, with
the intent of coming to a mutually agreed
solution, because each party has something the other
wants.
 A communication process between two or more

people in which they consider alternatives to
arrive at mutually agreeable solutions or
mutually satisfactory objectives

 Setting Goals
 Balancing Outcome and Relationships

SETTING GOALS
BATNA
RESERVATION PRICE
ZOPA

BATNA
Best
Alternative
To a
Negotiated
Agreement

WHAT IS BATNA?
 How do the proposals match your
realistic alternative if you cannot come to
a deal?
 The more attractive your BATNA is
compared with the proposals you
receive, the more POWER you have; the
less attractive your BATNA is compared
to the deal on offer, the less power you
have.
BATNA
 Retain the existing supplier
 Go to another supplier
 Strike/Lockout
 Not an immediate requirement

DEVELOPING BATNA
 List what you would do if you fail to reach an
agreement
 Convert the most promising options into practical
choices.
 Select the single best option; that is your BATNA
 Compare your BATNA to all proposals
 If an offer is better than your BATNA,consider
improving or accepting it
 If an offer is worse than your BATNA, consider
rejecting it
 If they will not improve their offer consider exercising
your BATNA
BATNA
 Know your BATNA
 Work with all the BATNAs
 Be ready to walk

BATNA
Developed
by
Roger Fisher
and
William Ury

RESERVATION PRICE
Reservation Price
is
the least favourable point
at which
one will accept
a deal

ZOPA
ZONE OF POSSIBLE AGREEMENT
 ZOPA is the area or range in which a

deal that satisfies both parties can take
place.
 It is the set of agreements that potentially

satisfy both parties.

EXAMPLE
Sellers Buyers
Expectation Expectation

BATNA Exercise 1
 You have a good motor cycle which is 4
years old. It gives good mileage. However
you want to replace it with a new one.
 You have Rs 30000 cash in hand You
want the balance to be arranged thru
loan
 You have 12% interest in your mind.
 The financier is asking for 15%
 What is your BATNA?
BATNA EXERCISE 3
 You are attending an interview for change
of job. You are in salary negotiation stage.
You are concerned about your child’s
education. Currently you are on a
transferable job.You are demanding 30%
increase. The new company is offering
the same salary.
 What is your BATNA?

BALANCING OUTCOME
AND RELATIONSHIPS
DISTRIBUTIVE NEGOTIATION
INTEGRATIVE NEGOTIATION

Distributive Negotiation
 A negotiation in which the parties
compete over the distribution of a fixed
sum of value.
 Key question here is “Who will claim the
most value?”
 A gain by one party is at the expense of
the other.
 Win-lose situation

Integrative Negotiation
 A negotiation in which the parties
cooperate to achieve the maximum
benefits by integrating their interests into
an agreement.
 These deals are about creating value and

claiming it.
 Win-win situation.

STAGES OF NEGOTIATION
 Phase 1: Preparation
 Phase 2: Interacting
 Phase 3: Agreement

Negotiation Process
Closing Preparation
Bargaining Opening

PREPARATION

PREPARATION
Understanding
one’s own position
and
interests of the other party or parties
the issues at stake,
and
alternative solutions.
PREPARATION
1. Consider What a good outcome would be
for you and the other side.
2. Identify potential value creation

opportunities
3. Identify your BATNA and Reservation Price

and do the same for the other side.
4. Shore up your BATNA

PREPARATION
1. Anticipate the Authority Issue
2. Learn All you can About the Other Side
3. Prepare for Flexibility in the Process
4. Gather External Standards and Criteria
Relevant to Fairness
5. Alter the process in your favour

CRITICAL ELEMENTS/DIMENSIONS OF
NEGOTIATION
 Knowledge or information
 Time or Deadline Pressure
 Strength or Power
 All the above are inter-twined

INFORMATION
 More information you have, the better
you will be able to negotiate
 Information and facts help you to
generate alternatives, strategies and
convince the other party
 Information about the other party,
market information, trends, technologies
 Published Standards, guidelines, data
equip you to put your points effectively
TIME
 Time plays a critical role in Negotiation
 Pareto’s Law 80/20
 80% of results are generally agreed upon
in the last 20% of the time
 Time / Deadline pressure weakens you /
builds tension

POWER / STRENGTH
 The ability to influence / control the group and
the events
 Besides the authority of your position,
knowledge is your strength
 The balance of power keeps shifting from one
side to the other during the negotiation
process
 Negotiation will end when -The balance of
power shifts totally to one side – a Win-Lose
situation
 When the balance of powerTheisArt ofshared
Negotiating
equally –
a Win-Win situation 12/03/09 Advesh Consultancy Services 31
INTERACTING

INTERACTING
 Getting the other side to the Table
 Getting off to a good start
 Power of Anchoring
 Using Concessionary moves
 Tactics for Distributive negotiation
 General Tactics

Getting the other side to the Table
 Offer incentives
 Put a price for on the status-quo
 Mobilise Support

Getting off to a good start
 Express respect for the other side’s

experience and expertise
 Frame the task positively, as a joint
endeavour
 Emphasise your openness to the other
side’s interests and concerns.
 Start with the agenda

Getting off to a good start
Some tips
 “Breaking Bread” Have coffee, snacks or
light drinks available.
 Use small talk to dispel tension
 If the other side is very formal, don’t

speak casually. If the other side is
decidedly informal, speak in a more casual
way.
HIGH
ACCOMMODATE COLLABORATE
Problem solved creatively, aiming for win-win
Build friendly relationship
Characteristics:
Characteristics:
Search for common interests
Promote harmony
Problem-solving behaviours
Avoid substantive differences
Recognising both parties’ needs
Give into pressure to save relationship
Synergistic solutions
Place relationship above fairness of COMPROMISE
CONCERN FOR RELATIONSHIP
Win-win becomes the main purpose of the

the outcomes negotiator
Split the difference
Characteristics:
Meeting half way
Look for trade offs
AVOID DEFEAT
Accept half-way measures
Take whatever you can get/Inaction
Be a winner at any cost/Competitive
Aims to reduce conflict rather than problem solve
Characteristics:
synergistically Characteristics:
Feeling of powerlessness
Win-Lose competition
Indifference to the result
Pressure/Intimidation
Resignation, surrender
Adversarial relationships
Take what the other party is willing to
Defeating the other becomes a goal for the
concede
negotiator
Withdraw & remove = behaviour of
negotiator
CONCERN FOR SUBSTANCE

LOW HIGH

Distributive Negotiations
 Win-Lose Negotiations
 Anchoring is an attempt to establish a
reference point around which
negotiations will make adjustments.
 When should you anchor
 Counter anchoring
 Be prepared for concessionary moves

Integrative Negotiations
 Slower and more explorative opening
 Don’t start with numbers.
 Making a good start is critical
 Ask open ended questions Probe the other side’s willingness
to trade off one thing for the other.
 Inquire about the other party’s underlying interests
 Listen closely
 Be an active listener
 Express empathy
 Work to create a two-way exchange of information
 Continue relationship building efforts
 Refrain from personal attacks.
 Maintain a sense of humour

The Art of Listening

NONVERBAL
BEHAVIOUR
What is going on
in the inside
shows
on the outside

Face and Head
 Broken Eye Contact(Hide)
 Looking pat you(Bored)
 Piercing(Angry)
 Steady(Honest)
 Head Turned slightly(Evaluating you)
 Tilted Head(Uncertain about what you said)
 Nodding(In agreement)
 Smiling(Confident)

Arms and Hands
 Arms folded tightly(not receptive)
 Arm over the back of the chair(need for
dominance or negative reaction)
 Open palms(Positive)
 Hands clasped behind head(Need for
dominance)
 Steeling of the fingers(Need to control
negotiation)
 Hand wringling(Nervousness)
 Self touching(General nervousness)
Legs
 Crossing your legs has a devastating
effect
 Out of 2000 videotaped sales meetings,
not one sale was made by people who
had their legs crossed
 Source How to Read a Person like a
Book by Gerard I. Nirenberg and Henry
H. Calero

Dominance/Power
 Making piercing eye contact
 Putting hands behind head or neck
 Placing hands on hips
 Standing while counterpart is seated
 Steepling

Submission/Nervousness
 Fidgetting
 Making minimum eye contact
 Touching hands to face , hair etc
 Using briefcase to “guard” body
 Clearing throat

Disagreement/Anger
 Getting red
 Pointing a finger
 Squinting
 Turning body away
 Crossing arms or legs

Boredom and Lack of Interest
 Failing to make eye contact
 Playing with objects
 Staring blankly
 Picking at clothes
 Looking at watch/door

Uncertainty/Indecision
 Cleaning glasses
 Looking puzzled
 Putting fingers to mouth
 Biting lip
 Tilting head

Suspicion/Dishonesty
 Touching nose while speaking
 Covering mouth
 Avoiding eye contact
 Crossing arms/legs
 Moving body away

Evaluation
 Nodding
 Maintaining good eye contact
 Tilting head slightly
 Stroking chin
 Touching index finger to lips

Confidence, Cooperation and
Honesty
 Leaning forward
 Keeping arms and palms open
 Maintaining great eye contact
 Placing feet flat on floor
 Sitting with legs uncrossed
 Smiling

Challenges & Obstacles

TACTICS REGARDING PRICE
 Should I ever state my acceptable range?
 Should I ever tell the other side my

bottom line?
 Suppose that the other side opens with

an incredibly unreasonable number,
should I counter with an equally
unreasonable number, or decline to
counter at all? The Art of Negotiating
TACTICS REGARDING PROCESS
 Is it acceptable to make two moves at a
time?
 Is it smart or fair to bluff?
 In a complex deal, is it better to reach
agreement issue by issue or wait until the
end?
 Is it better to deal with difficult or easy
issues first?

TACTICS REGARDING
PEOPLE
 Collaborative negotiator vs. positional hard
bargainer?
 How should I react if the other side seeks to
change something in its offer after a deal has
been reached?
 What should I do when the negotiator on the
other side has a temper tantrum?
 I don’t believe in what the other side says.
 Is it essential to negotiate face to face?
 How should I react when the other side
challenges my credentials, status or authority to
make a deal?

CLOSURE

Closing
Be Prepared to Concede
Begin with those of Low
Priority and seek High
Priority Items
Never Concede on More
than possible by your
Brief
Use your Concessions
Wisely
Don’t just give these away
expect and receive
something in return

 Being Confident
 Being Prepared
 Being Willing to Walk Away

 Convince
 Collaborate
 Create


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The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

 A communication process between two or more

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

 Know your BATNA

 Work with all the BATNAs

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

 ZOPA is the area or range in which a

 It is the set of agreements that potentially

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

 These deals are about creating value and

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

2. Identify potential value creation

3. Identify your BATNA and Reservation Price

4. Shore up your BATNA

The Art of Negotiating

The Art of Negotiating

 Time or Deadline Pressure

 All the above are inter-twined

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

 Put a price for on the status-quo

The Art of Negotiating

 Express respect for the other side’s

The Art of Negotiating

 Use small talk to dispel tension

 If the other side is very formal, don’t

Win-win becomes the main purpose of the

CONCERN FOR SUBSTANCE

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating

The Art of Negotiating