ASSIGNMENT

SUBMITTED BY : DEEPIKA BHATNAGAR &

SITU SINGH
MBA 4th SEM (SEC-A)

Negotiating Skills :
(Ken Shah & Prof. Param J. Shah)

Defined :

Negotiating is the process of communicating back and forth, for the purpose of reaching a joint
agreement about differing needs or ideas. It is a collection of behaviors that involves communication,
sales, marketing, psychology, sociology, assertiveness and conflict resolution. A negotiator may be a
buyer or seller, a customer or supplier, a boss or employee, a business partner, a diplomat or a civil
servant. On a more personal level negotiation takes place between spouse’s friends, parents or
children.

It is a process of interaction by which two or more parties who consider that they need to be jointly
involved in an outcome, but who initially have different objectives, seek by the use of argument and
persuasion to resolve their difference in order to achieve a mutually acceptable solution. Another
important consideration is that negotiation implies acceptance by both parties that agreement
between them is required before a decision can be implemented.

Negotiation is a dialogue between two or more people or parties, intended to reach an understanding,
resolve point of difference, or gain advantage in outcome of dialogue, to produce an agreement upon
courses of action, to bargain for individual or collective advantage, to craft outcomes to satisfy various
interests of two person/ parties involved in negotiation process. Negotiation is a process where each party
involved in negotiating tries to gain an advantage for themselves by the end of the process. Negotiation is
intended to aim atcompromise.

Negotiation occurs in business, non-profit organizations, government branches, legal proceedings, among
nations and in personal situations such as marriage, divorce, parenting, and everyday life. The study of
the subject is called negotiation theory. Professional negotiators are often specialized, such as union
negotiators, leverage buyout negotiators, peace negotiators, hostage negotiators, or may work under
other titles, such as diplomats, legislators or brokers

Types of negotiation in Organisation :

Depending upon the situation and time, the way the negotiations are to be conducted differs. The skills of
negotiations depends and differs widely from one situation to the other. Basically the types can be divided
into three broad categories.

Types Parties Examples

Involved
Day-to-day/
1. Different levels of 1. Negotiation for pay, terms and
Managerial
Management working conditions.
Negotiations
2. In between 2. Description of the job and
colleagues fixation of responsibility.

3. Trade unions 3. Increasing productivity.

4. Legal advisers

Commercial
1. Management 1. Striking a contract with the
Negotiations
customer.
2. Suppliers
2. Negotiations for the price and
3. Government
quality of goods to be purchased.
4. Customers
3. Negotiations with financial
5. Trade unions institutions as regarding the
availability of capital.
6. Legal advisors

7. Public

Legal Negotiations
1. Government 1. Adhereing to the laws of the local
and national government.
2. Management

3. Customers

1. Day-to-day / Managerial Negotiations

Such types of negotiations are done within the organization and are related to the internal problems in the
organization. It is in regards to the working relationship between the groups of employees. Usually, the
manager needs to interact with the members at different levels in the organization structure. For
conducting the day-to-day business, internally, the superior needs to allot job responsibilities, maintain a
flow of information, direct the record keeping and many more activities for smooth functioning. All this
requires entering into negotiations with the parties internal to the organization.
2. Commercial Negotiations

Such types of negotiations are conducted with external parties. The driving forces behind such
negotiations are usually financial gains. They are based on a give-and-take relationship. Commercial
negotiations successfully end up into contracts. It relates to foregoing of one resource to get the other.

3. Legal Negotiations

These negotiations are usually formal and legally binding. Disputes over precedents can become as
significant as the main issue. They are also contractual in nature and relate to gaining legal ground.

IS NEGOTIATION NECESSARY ?

Negotiation, at times can be a lengthy and cumbersome process. By asking whether it is necessary, time
may sometimes be saved and unnecessary compromise avoided. On occasions, a request to negotiate
may best be met by pointing out that the party making the request has no standing in the matter. If a
manager has the undoubted authority to act, making a decision rather than negotiating about it may be
the best tactic.

Alternatively, there are cases in which the best response to a request or a claim is to concede it without
argument. Why waste time negotiating if the other party has a good case and there are no adverse
consequences in conceding ? Unnecessary negotiation, followed, perhaps, by a grudging concession of
the other party’s claim, will lose all the advantage that might be gained with a quick unexpected yes.

An alternative to a simple yes or no when a difference of view occurs is to skip negotiation and proceed
immediately to some form of third – party intervention. An alternative to a simple yes or no when a
difference of view occurs, is to skip negotiation and proceed immediately to some form of third – party
intervention. On the most formal basis, this might imply a decision to take a dispute to court : informally,
two managers who quickly realize that they cannot reach agreement about a working problem may jointly
agree to stop wasting time in argument and refer the matter to a senior manager for resolution.

It is good to follow the general rule :

Do not negotiate unless you have to – or unless you can obtain some direct or indirect advantage by
doing so.

Emotion in negotiation

Emotions play an important part in the negotiation process, although it is only in recent years that their
effect is being studied. Emotions have the potential to play either a positive or negative role in negotiation.
During negotiations, the decision as to whether or not to settle, rests in part on emotional factors.
Negative emotions can cause intense and even irrational behavior, and can cause conflicts to escalate
and negotiations to break down, but may be instrumental in attaining concessions. On the other hand,
positive emotions often facilitate reaching an agreement and help to maximize joint gains, but can also be
instrumental in attaining concessions. Positive and negative discrete emotions can be strategically
displayed to influence task and relational outcomes and may play out differently across cultural
boundaries.

Role of Emotions in Negotiation

Negotiation is defined as a discussion among individuals where everyone contributes equally to reach to
a conclusion benefiting all. Lot of factors influence the process of negotiation, our emotions being one of
the major factors. Our mood decides a lot many things.

If one is in a happy mood, everything seems perfect and good to him. Individuals with a positive
attitude tend to trust each other better. They take keen interest in the negotiation and actively participate
in discussions. They try their level best to come up with a suggestion and contribute effectively in the
discussion. They do not unnecessarily find faults in other people and always try to take things in a positive
way. A happy and a positive person would always look forward towards a concrete solution which would
benefit him as well as the other party involved. Try to be cheerful always. One looks his best when he
smiles.

Anger is one of the most negative emotions acting as a hurdle to an effective negotiation. A person
loses control on his mind and is not in a position to think constructively in a state of anger. One’s anger
must be kept under control for an effective negotiation. Don’t overreact on petty issues. Anger only leads
to conflicts and misunderstandings and does not solve any problem. An individual should learn to keep a
control on his tongue. Don’t say anything which might hurt the other person. If you are getting angry on
someone, it’s always better to think something pleasant; your anger would soon disappear. Take a pause
and think will this anger benefit you?

One needs to be friendly with the second party. Learn to trust him but don’t get too involved in
friendships. Everything has a limit and same goes with friendship as well. The other person might expect
unnecessary favours from your side.

Nadia knew Mac since childhood; Mac was working with a retail outlet. Nadia wanted to purchase some
clothes for herself and went straight to Mac’s outlet. Nadia and Mac were child hood friends and thus
Nadia asked for more discounts as compared to what originally is offered to the other customers. Mac
was bound by the store policies but he could not even refuse Nadia. He was really helpless and could not
manage to offer Nadia the discounts she had quoted. Nadia went back empty handed, the negotiation
was not at all fruitful and no body gained anything out of it.

Friendship should be within a limit, otherwise unrealistic expectations arise which are a little
difficult to fulfill.

Negotiations must be with a clear and a tension free mind. A mind clouded with tensions can’t
concentrate on anything and eventually one loses focus. An individual’s mind is unable to take any
decisions and he finds it difficult to develop an interest in the negotiation. We all know that tensions come
uninvited, but it would be wise, if you keep the tensions on the back burner for some time when you are
involved in negotiation.

One should be calm and composed. Never lose your cool and shout on the second party.Always
ensure that you are comfortable with the second party.Don’t take rash decisions and one should not
interfere while the other person is speaking. Always analyze the situation well and then only come to any
conclusion. One should try and adopt a step by step approach. Don’t expect the result to come out within
a second. Take your time to convince the other party but do not drag the conversation too long. It
becomes monotonous and one tends to lose interest.

Don’t stress yourself at the time of negotiation. Relax. Whatever has to happen will definitely happen.
Taking stress does not help. It’s better to relax and let things happen on their own. No one will kill you, if
you are not able to close the deal, there is always another opportunity. Unnecessary stress makes you
feel nervous and you tend to lose your confidence as well.

Take interest in the discussion. Don’t develop a laid back attitude. Be active and participate willingly in the
discussion. Don’t sit in the negotiation just because your boss has asked you to do the same. It’s better to
express your opinion at the time of negotiation rather than cribbing later. If you are not satisfied with
anything, express your displeasure. If you feel you are not prepared for the negotiation; it’s better to
postpone it, rather than attending it half-heartedly and messing up things.

Avoid being clever. Don’t try to fool the other person. One should not fake things or manipulate the truth.
Tampering data would only add to confusions. Be honest in your dealings. Never underestimate anyone.
The second party is also aware of what is happening around you and is well prepared just like you.

Learn to compromise sometimes. An individual must not be too rigid. At times it’s good to take the
initiative and be the first one to accept things. One should avoid being adamant.

Being positive always helps. Negative emotions only lead to negativity around and trigger conflicts and
misunderstandings among individuals. Fighting till date has never benefited anyone; it simply adds on to
one’s tensions and nullifies the effect of negotiation.
Whenever you are going for any negotiation make sure you are not in a foul mood, otherwise you will
definitely end up fighting with the other person. One should not let his emotions come in between
negotiations. Avoid being partial. A deal is a deal whether it is with a friend or with a stranger. Don’t ignore
things just because you know the other person well. It is always better to be safe from the beginning than
suffer later. Paper work is important and the documents must be signed in the presence of both the
parties. Don’t skip agreements if you are dealing with your friend. He will not feel bad; instead appreciate
your professional approach. Don’t mix your personal interests with your professional life. Negotiation is
just a mere discussion to reach to a common solution, nothing more. Don’t treat it as a battle field. Keep
your emotions under control and just be normal.

Affect effect: Dispositional affects affect the various stages of the negotiation process: which strategies
are planned to be used, which strategies are actually chosen, the way the other party and his or her
intentions are perceived, their willingness to reach an agreement and the final negotiated
outcomes. Positive affectivity (PA) and negative affectivity (NA) of one or more of the negotiating sides
can lead to very different outcomes.

Positive affect in negotiation

Even before the negotiation process starts, people in a positive mood have more confidence, and higher
tendencies to plan to use a cooperative strategy. During the negotiation, negotiators who are in a positive
mood tend to enjoy the interaction more, show less contentious behavior, use less aggressive tactics and
more cooperative strategies. This in turn increases the likelihood that parties will reach their instrumental
goals, and enhance the ability to find integrative gains. Indeed, compared with negotiators with negative
or natural affectivity, negotiators with positive affectivity reached more agreements and tended to honor
those agreements moreThose favorable outcomes are due to better decision makingprocesses, such as
flexible thinking, creative problem solving, respect for others' perspectives, willingness to take risks and
higher confidence. Post negotiation positive affect has beneficial consequences as well. It increases
satisfaction with achieved outcome and influences one’s desire for future interactions. The PA aroused by
reaching an agreement facilitates the dyadic relationship, which result in affective commitment that sets
the stage for subsequent interactions.
PA also has its drawbacks: it distorts perception of self performance, such that performance is judged to
be relatively better than it actually is.[24] Thus, studies involving self reports on achieved outcomes might
be biased.

Negative affect in negotiation

Negative affect has detrimental effects on various stages in the negotiation process. Although various
negative emotions affect negotiation outcomes, by far the most researched is anger. Angry negotiators
plan to use more competitive strategies and to cooperate less, even before the negotiation starts. These
competitive strategies are related to reduced joint outcomes. During negotiations, anger disrupts the
process by reducing the level of trust, clouding parties' judgment, narrowing parties' focus of attention and
changing their central goal from reaching agreement to retaliating against the other side. Angry
negotiators pay less attention to opponent’s interests and are less accurate in judging their interests, thus
achieve lower joint gains. Moreover, because anger makes negotiators more self-centered in their
preferences, it increases the likelihood that they will reject profitable offers. Opponents who really get
angry (or cry, or otherwise lose control) are more likely to make errors:make sure they are in your
favor Anger doesn’t help in achieving negotiation goals either: it reduces joint gains and does not help to
boost personal gains, as angry negotiators don’t succeed in claiming more for themselves. Moreover,
negative emotions lead to acceptance of settlements that are not in the positive utility function but rather
have a negative utility. However, expression of negative emotions during negotiation can sometimes be
beneficial: legitimately expressed anger can be an effective way to show one's commitment, sincerity, and
needs. Moreover, although NA reduces gains in integrative tasks, it is a better strategy than PA in
distributive tasks (such as zero-sum). In his work on negative affect arousal and white noise, Seidner
found support for the existence of a negative affect arousal mechanism through observations regarding
the devaluation of speakers from other ethnic origins." Negotiation may be negatively affected, in turn, by
submerged hostility toward an ethnic or gender group.

Conditions for emotion affect in negotiation

Research indicates that negotiator’s emotions do not necessarily affect the negotiation process.
Albarracın et al. (2003) suggested that there are two conditions for emotional affect, both related to the
ability (presence of environmental or cognitive disturbances) and the motivation:

1. Identification of the affect: requires high motivation, high ability or both.

2. Determination that the affect is relevant and important for the judgment: requires that
either the motivation, the ability or both are low.

According to this model, emotions are expected to affect negotiations only when one is high and the other
is low. When both ability and motivation are low the affect will not be identified, and when both are high
the affect will be identify but discounted as irrelevant for judgment. A possible implication of this model is,
for example, that the positive effects PA has on negotiations (as described above) will be seen only when
either motivation or ability are low.

The effect of the partner’s emotions

Most studies on emotion in negotiations focus on the effect of the negotiator’s own emotions on the
process. However, what the other party feels might be just as important, as group emotions are known to
affect processes both at the group and the personal levels. When it comes to negotiations, trust in the
other party is a necessary condition for its emotion to affect, and visibility enhances the effect. Emotions
contribute to negotiation processes by signaling what one feels and thinks and can thus prevent the other
party from engaging in destructive behaviors and to indicate what steps should be taken next: PA signals
to keep in the same way, while NA points that mental or behavioral adjustments are needed.
Partner’s emotions can have two basic effects on negotiator’s emotions and behavior: mimetic/ reciprocal
or complementary. For example, disappointment or sadness might lead tocompassion and more
cooperation. In a study by Butt et al. (2005) which simulated real multi-phase negotiation, most people
reacted to the partner’s emotions in reciprocal, rather than complementary, manner. Specific emotions
were found to have different effects on the opponent’s feelings and strategies chosen:

 Anger caused the opponents to place lower demands and to concede more in a zero-
sum negotiation, but also to evaluate the negotiation less favorably. It provoked both dominating and
yielding behaviors of the opponent.
 Pride led to more integrative and compromise strategies by the partner.
 Guilt or regret expressed by the negotiator led to better impression of him by the opponent,
however it also led the opponent to place higher demands. On the other hand, personal guilt was
related to more satisfaction with what one achieved.

Worry or disappointment left bad impression on the opponent, but led to relatively lower demands by
the opponent.