UNIT 3: NEGOTIATION

3.1 PROCEDURES OF NEGOTIATION

A. Warm-up:
1. In what circumstances do you have to negotiate in your everyday life or negotiate at
work?
2. What do customer and supplier often negotiate?
3. What skills and qualities do you think a good negotiator has?
4. Do you think people should tell the complete truth when negotiating?

B. Types of Negotiation:
If people negotiate with each other, they talk in order to reach an agreement which is not
their mutual advantage (good for them both). For example:
- customer-supplier negotiations
- merger or takeover negotiations
- wage negotiations
- trade negotiations
Negotiations also take place to settle disputes (decide arguments) such as:
- contract disputes - labour disputes - trade disputes
❖ Match the headlines to the types of negotiations mentioned above:

C. Negotiating scenario:
At the beginning of a negotiation, follow these steps:

1> Arrange these phrases Jose uses at the beginning of the negotiation in the correct order:

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 a. As you all probably know, Mr. Watanabe and I met at Aerospace Trade Fair in
Frankfurt last year and we had a very interesting discussion about the possibility of our
two companies working together.
b. I believe you’re flying back on Friday evening, so that gives us three days. I think two
days should be enough to cover all the points. On the third day, Friday, if we have an
agreement, I’ll ask our lawyers to finalize conditions for the contract with you.
c. Mr. Watanabe, good to see you again. How are you? Let me introduce my colleague:
Sandra Lisboa, our chief purchasing officer.
d. Shall we go to the conference room and make a start?
e. Well, we’ve looked at the potential market for our new plane, and looks as if we will
need 100 engines over the next three years.
f. Would you like some coffee or tea, or would you prefer juice? How was the flight?

2> Discussion: Discuss these questions with other members of your group:
a. Is socializing an important pre-negotiation strategy in your country? What does
this socializing typically consist of?

b. What elements help you in judging whether you wish to negotiate with a particular
person or group of people (e.g. physical appearance, level of responsibility)? Or do you
consider such factors to be irrelevant?

A. Reading
1. You are going to read about negotiating. Before you read, check your understanding of the
words and phrases(1-10) below by matching them with their definitions (a-j)

1. compromise a. a description of a possible event in the future.

2. concession b. a useful piece of information or advice.
3. counter-proposal c. an agreement that settles an argument when people reduce
their demands in order to agree.
4. deal point d. an exchange involving giving up one thing to get something else
5. to leave something hanging e. an individual item or element in a negotiation.
6. parameters f. an offer responding to somebody else’s offer
7. scenario g. fixed limits within which something can or must happen or be
done
8. to set something aside h. to delay making (or to forget to make) a decision about
something
9. tip i. to temporarily ignore or not think about a particular fact
10. trade-off j. something which is accepted or given up by one side in order
to end a disagreement.
+

2. Read the text by Eric J. Adams, which gives advice about negotiating. Which of the negotiating
tips do you think is the most difficult to put into practice?

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 The Art of Business: Learn to Love Negotiating
Business Tips
A few tips.
Be prepared. Before you negotiate, know exactly what you want and be ready
to articulate your position; a negotiating meeting is no place to figure out the terms
that are acceptable to you. You won’t get every deal point, but at last you’ll know in
advance what your parameters are. In fact, it helps to break down your concerns into
three categories: nice to have, like to have, and must have. Walk through several
“what if” scenarios beforehand. Anticipate counter-proposals and compromises and
think about how you will react to each.
Be inquisitive. Don’t be shy about asking questions. Skilful questions can
transform a negotiation from an adversarial conflict into a partnership. By asking
questions, you’ll also get your client to reveal more. Start with open-ended questions
and move narrower, more direct questions. Once you have asked a question, be quiet
and listen carefully.
Avoid significant early concessions. At the very least, remain neutral to the
customer’s initial demands until trade-off opportunities emerge or your gentle
attempts at persuasion don’t work.
Be prepared for disagreement. There will be disagreement and disappointment
during any negotiation. But how you disagree will affect the outcome and ultimately
affect your relationship with the client. When you disagree, look for the common
ground or set the point aside until later. At the end of your discussions, you may find
you have four or five points of disagreement. You can then exchange deal-point
concessions until all points of contention are dealt with.
Expect the unexpected. Always have a good idea in advance of how you’ll
respond if things do not work out as you plan.
Finalize all agreements. Don’t leave details hanging. It is often amazing how
two people sitting in the same room can have different perspectives concerning what
was agreed upon. To ensure that everyone is clear, summarize the agreement verbally
or shortly afterward in a letter of agreement.

3. Put the following elements of a typical negotiation into a logical order.

a. Listen carefully to what the other side says.
b. Make trade-offs: you concede something they want for something you want.
c. Decide what you want and determine your minimum requirements – what you must get if
there is to be an agreement.
d. Think about acceptable compromises in relation to expected counter-proposals, and try to
imagine the counter-proposals the other side will make.
e. Summarize, verbally or in writing, what has been agreed.

2. Which of these things are done before the actual negotiation begins?

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3.2 NEGOTIATING STYLES
A. Warm-up:
1. A lot of people regard negotiation as a win-lose contest in which there must
always be a winner and a loser. How possible is it for a negotiation to be win-win?
2. Read the suggestions in The guide to tough trading:
a) Is the philosophy a win-lose or a win-win one?
b) Who is each piece of advice for: the buyer, the seller, or both?
c) Are there any rules you would change, or others you would add?

The guide to tough trading

a. No price is fixed, everything b. Never accept anyone's first offer

is negotiable.
c. Be tough, but pleasant. d. Do not be afraid to shock with your first
order.
e. Don't just haggle about the price, f. It's always easier to get
negotiate the whole deal. extra goods than a lower price.
g. Never say how much you h. When selling, pretend not to have
can spend. total authority.
i. Don't be the first to make a j. Never just complain, always try
concession. to get something in return.

B. Reading:
Read the article and then fill each gap below with one word.

CO-OPERATION AND COMPETITION IN NEGOTIATION

Negotiations are complex because
one is dealing with both facts and people.
It is clear that negotiators must above all
have a good understanding of the subject.
They must also be aware of the general
policy of the company or institution in
relation to the issues and they must be
familiar with the organizational structure
and the decision-making process.
However, awareness of these facts
may not necessarily suffice to reach a
successful outcome. Personal, human
factors must be taken into account. The
approach and strategy adopted in
negotiating are influenced by attitude as well as by a cool, clear logical analysis of the facts
and one’s interests. The personal needs of the actors in negotiating must therefore be
considered. These can include a need for friendship, goodwill, credibility, recognition of
status and authority, a desire to be appreciated by one’s own side and to be promoted and,
finally, an occasional need to get home reasonably early on a Friday evening. It is a well-
known fact that meetings scheduled on a Friday evening are shorter than those held at other

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times. Timing can pressure people into reaching a decision and personal factors can become
part of the bargaining process.
Researchers who have studied the negotiating process recommend separating the
people from the problem. An analysis of negotiating language shows that, for example,
indirect and impersonal forms are used. This necessity to be hard on the facts and soft on the
people can result in the sometimes complex, almost ritualistic, style of negotiating language.
Language varies according to the negotiating style. In negotiating you can use either
co-operative style or a competitive one. In the co-operative style the basic principle is that
both parties can gain something from the negotiation without harming the interests of the
other. Or in other words that both parties will benefit more in the long run in friendship and
co-operation even if they make some concessions. This type of negotiation is likely to take
place in-house between colleagues and departments, or between companies where there is a
longstanding relationship and common goals are being pursued.
Unfortunately co-operative style negotiations without a trace of competition are rare. In
most negotiating situations there is something to be gained or lost. There can be a danger in
adopting a co-operative mode, as unscrupulous people may take advantage of co-operative
people.
The opposite mode to co-operative negotiating is competitive negotiating. Negotiators
see each other as opponents. Knowledge of the other party’s needs is used to develop
strategies to exploit weaknesses rather than to seek a solution satisfactory to both sides. This
type of negotiating may be appropriate in the case of one-off contracts where the aim is to
get the best result possible without considering future relationships or the risk of a
breakdown in negotiations. Needless to say, the language in this type of discussion may
become hostile and threatening even if it remains formal.
In reality most negotiations are a complex blend of co-operative and competitive mode.
Negotiating successfully implies dealing appropriately with the four main components of any
negotiation: facts, people, competition, cooperation.
Skilled negotiators are sensitive to the linguistic signals, as well as the non-verbal ones
of facial expressions, gesture and behaviour, which show the type of negotiating mode they
are in.
Language reflects tactics and therefore a study of the language used in negotiating
brings a greater awareness of the negotiating process.

(Adapted from Negotiate in French and English by Pamela Sheppard and Benedicte Lapeyre)

1. Good negotiators must know their ………………. well and they must know their
company’s ………………. But they must also consider ……………… factors because they
are dealing with …………….
2. Negotiators are affected by the participant’s ………………., as well as logic.
3. Research has shown that it can help to separate the …………….. from the …………….
This can be done by using special negotiating ………………
4. In a …………….. style of negotiation, the participants try not to harm each other’s
……….... In order to maintain a good long-term …………. they both make …….............
5. In a …………… style of negotiation, the parties are ……………. This style may be
suitable for a …………….. contract. The language here can become …………… and
……………
6. Most negotiations are a …………… of the two styles. A good negotiator must be aware
of the ……………. and …………….. signals which show the style being used.

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 7. The four main factors involved in a negotiation are ……………..., …………………..,
……………. and ………………….

3.3 LANGUAGE SKILL: NEGOTIATING

A. Language of Negotiation:
1. Probing: One way of furthering negotiation is probing (asking the right questions and
listening carefully to the answers). Here are some probing questions:
a. What is the situation on production at your plant at the moment?
b. What sort of quantities are you looking for?
c. What are we looking at in the way of discount?
d. What did you have in mind regarding specifications?
e. What were you thinking of in terms of delivery dates?
f. How important to you is the currency for payment?
❖Match the replies (1-6) to the probing questions (a-f):
1) Perhaps 100 units per year over five years.
2) We can offer ten per cent if the quantities are right.
3) We’d like to see a ten per cent improvement in performance.
4) We’d prefer US dollars.
5) We’ll need the first 30 units in six months.
6) We’re operating at full capacity.
Practice:
Practise by probing in a negotiation. First check you understand the terms below:
• Price : $65 per piece
• Credit period : 30 days
• Delivery time : 8 weeks
• Minimum order : 500 pieces
• Discount : 5%
• Warranty period : one year

Work with a partner. Take it in turns to be the customer and supplier:

Customer: What price do you have in mind?
Supplier: It's $65 per piece.
Customer: That's rather high.
Supplier: It compares favourably with our competitors.

These phrases will help the supplier to justify his or her position:
I'm afraid it's customary.
it's company policy.
we always insist on this.
2. Proposal and counter-proposal:
Through a series of proposals or offers from one side and counter-proposals or
counter-offers from the other side, the two sides work towards an agreement which
will benefit them both. Here are some ways of making compromise:
If you offer more flexible payment conditions, will be able to + infinitive
As long as engine performance improve by ten per cent, can agree to + infinitive
On condition that you deliver 20 engines by May, then we could consider + V-ing
Supposing that you provide good technical support, may offer + noun
Provided that you supply documentation in Portuguese, might offer to+ infinitive
Providing that this contract works out OK,

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 1> Use expressions above to complete phrases below, using the correct form of the words
in brackets:
a) If you offer more flexible payment conditions / might / consider / pay / higher price.
b) As long as engine performance improve by ten per cent / may / offer / price/ $550,000 per unit
c) On condition that you deliver 20 engines by May / will/ able / consider / more flexible
/price.
d) Supposing that you provide good technical support / might / agree / work / you / future
e) Provided that you supply documentation in Portuguese / could / consider / send ‘
personnel /you /training.

2> Practise by making more compromises. Here are some cues:

The supplier wants the customer to:
- make their payment in dollars
- pay in cash
- pay a 20% deposit immediately
- pay the balance within 30 days
- accept a penalty clause for cancellation
- place regular monthly order of at least 750 pieces
- recommend them to other potential clients

Supplier: We'd like you to make your payment in dollars.

Customer: If we pay in dollar, will you give us a discount for bulk purchase?
Supplier: Yes, we could accept that. / No, I'm afraid that's not possible.

3. Reaching agreement:
It’s important to check the points of an agreement to avoid misunderstandings. You could
say:
- Let me just go / run over the main points. (repeat and summarize)
- On A, we agreed that ……..
- As far as B is concerned (in relation to B), we agreed ………..
- We still have the question of C to settle….
- And there’s still the outstanding issue of D.
- We’ll send you a written proposal.
- We’ll draw up a contract based on these points.
- I think that covers everything.
❖Arrange the phrases Jose uses to close negotiations in the correct order:
1. Let me just run over the main points. On engine quantities,
2. I think that covers everything.
3. If you agree to the proposal, we’ll draw up a contract based on those points.
4. payment to settle, and there is also still the outstanding issue of documentation.
5. we agreed that you would improve the power of the engine by ten per cent.
6. we agreed that you would supply us with 120 units over four years. As far as performance
is concerned,
7. We still have the question of the currency for
8. We’ll send you a written proposal on these last two issues.
B. Listening:
1. You will hear three parts of a negotiation between Michelle, the manager of a bookstore
chain, and a website designer. Listen to each part and complete the chart.

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 What the
Negotiating point What Michelle wants What they agree
designer wants
Schedule for
setting up the Two months
website

Payment terms Fixed amount $6,000

Two covers per

Website design
page

2. Listen again to the first two parts of the conversation. After each part, complete the missing
words.

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3. Listen again to the third part of the negotiation. Note down all the expressions for agreeing and
disagreeing. Decide whether they express a) strong b) polite or c) hesitant agreement or
disagreement.

C. Speaking: Practise negotiating. Learner A look at File A. Learner B look at File B

FILE A
You are a builder and are looking for a supplier of windows for some offices you are
building. This is what you want. When you have finished, fill in what you get.

You want You get

Delivery in two weeks
Warranty 2 years
Price $5,000
Discount 10%
Credit period 60 days

FILE B

You are a supplier of window. This is what you want. When you have finished, fill in
what you get.

You want You get

Delivery in six weeks
Warranty 6 months
Price $10,000
Discount 0%
Credit period 30 days