POWER & NEGOTIATION

POWER IN NEGOTIATION

 Negotiation is a deliberative process between

two or more actors that seek a solution to a
common issue or who are bartering over an
item of value.
 Power may be defined as the ability of a
negotiator to influence the behaviour of an
opponent.
PRINCIPLES OF POWER

 Power is always relative. Rarely does an

individual enjoy complete power.
 Power may be real or apparent – it depends
on how it is perceived by the negotiating
parties.
 Power may be exerted without action. If an
opponent believes that action can and will be
taken against him or her, it may be
unnecessary to act.
PRINCIPLES OF POWER

 Power is always limited. Its range depends on

the situation, govt. regulations, ethical
standards and competition.
 The ends of power cannot be separated from
the means – one cannot hope to develop a
loyal customer by using exploitative tactics.
 Exercise of power always entails cost and
risk.
 Power relationships change over time.
SOURCES OF POWER

 Expert Power – having unique in-depth

knowledge or information about the subject.
 Reward Power– ability to reward others for
what is being done.
 Coercive (punishment) power – ability to
punish others for not doing what needs to be
done.
 Legitimate power – from the hierarchical
structure within the organization.
SOURCES OF POWER

 Referent power - from respect or admiration

one commands due to attributes like
personality, integrity, interpersonal style and
the like.
 Power of time – the party that is most
constrained by time limits provides the
opponent with a base of strength.
PERCEIVING POWER

 Questions related to Negotiator’s power:

 How does Negotiator perceive his own power?
 How does Negotiator believe that Opponent
perceives Negotiator’s power?
 How does Negotiator want Opponent to perceive
Negotiator’s power?
PERCEIVING POWER

 Questions related to Opponent’s power:

 How does Negotiator perceive Opponent’s
power?
 How does Opponent perceive his own power?
 How does Opponent want Negotiator to perceive
Opponent’s power?
POWER IN NEGOTIATION

 Power in Negotiation is based on NO TRICKS

(acronym for Need, Options, Time,
Relationships, Investment, Credibility,
Knowledge, and Skills)
 Need: Who needs this sale more, the buyer or
the Seller? The more intense the buyer's
need, the more power the Seller has. The
more intense your need to make the sale, the
more power your buyer will have.
POWER IN NEGOTIATION

 Options: What are the options for each party

if an agreement is not reached? The more
options you have, and the fewer acceptable
options your buyer has, the greater your
negotiating power.
 Time: If the buyer is under time pressure, it
usually gives the salesperson negotiating
strength.
POWER IN NEGOTIATION

 Relationship Power: How strong is your

relationship with your prospect?
 Investment: How much time and energy has
been invested in the buying process? The
more effort someone invests, the more
committed he or she will be to reaching an
agreement.
 Credibility: Your clients help establish your
credibility and enhance your reputation in the
market.
POWER IN NEGOTIATION

 Knowledge - You have knowledge power

when you thoroughly understand your
customers' problems and needs and can
foresee how the products or services you are
offering will help them achieve those needs.
 Skills - Who is the most skillful negotiator?
you must constantly improve your skills, just
to keep up.
EFFECTIVE NEGOTIATION

 Analyze and cultivate your BATNA (best

alternative to a negotiated agreement),
wherein you can walk away and take another
deal.
 Negotiate the process of negotiation (when
and where to meet, agenda, people present)
 Build rapport (get to know and establish
rapport before the meeting begins)
EFFECTIVE NEGOTIATION

 Listen actively (paraphrase what is being

said, acknowledge difficult feelings like
frustration)
 Ask good questions (open ended questions
seeking detailed answers)
 Present multiple equivalent offers
simultaneously (Rather than making one
offer at a time, consider presenting several
offers at once).
DEALING WITH THOSE WHO HAVE
MORE POWER
 Never do an all-or-nothing deal
 Make the other party smaller- diversify into
multiple negotiations by establishing
relationships with several departments or
individuals in an organization
 Make yourself bigger- build coalitions
 Build momentum through doing deals in
sequence
DEALING WITH THOSE WHO HAVE
MORE POWER
 Use the power of competition to leverage power-
create competition among partners
 Constrain yourself- limit the ways you can do
business
 Good information is always a source of power –
seek information that is most compelling and
persuasive to the counterpart
 Do what you can to manage the process – steer
the deal in an advantageous direction. Do not let
the high-power party control the process
 https://www.youtube.com/watch?
v=_m7gBu0kXQI