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Negotiation Skills
Ankit Gupta
Capgemini ndia Pvt. Ltd.
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earning Objecties
Understanding Negotiation
Stages of Negotiation
Personal Power
Negotiation Tactics
The don'ts of Negotiation
Conclusion
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"You don't get what you deserve. You get what you negotiate."
:siness Negotiations 1 - Introd:ction
1.1 The PrincipIes of Negotiating
This section introduces the view that nearly everything is negotiable,
and the four phases that characterize most negotiations.
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Negotiation
When people want to do something together, buy or sell, make a
business deal, hire or fire, they need some sort of mechanism for
reaching an agreement.
They need a mutually acceptable process.
Negotiation is one name for a process of Joint Decision Making.
Knitting and Weaving.
A good negotiating process weaves a durable agreement whose
strength derives from the fact that parties reached agreement
together
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Negotiation
Negotiation:
The process of two or more parties working together to arrive at a
mutually acceptable resolution of one or more issues.
Negotiation is not a competitive sport.
Explain.
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Negotiate
The World is full of countries that prove the precept that those that
live closer to the principles of free trade do better than those who
have abandoned them.
Adam Smith in 1776 wrote 'An nquiry into The Nature and Causes
of the Wealth of Nations.' n it he remarked on the propensity to
truck, barter and exchange which he found to be common to all
people on the planet and yet was not present in any other species.
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Negotiate
Smith wrote:
"Nobody ever saw a dog make a fair and deliberate exchange of one
bone for another with another dog. Nobody ever saw one animal by
its gestures and natural cries signify to another, this is mine; that is
yours, I am willing to give this for that."
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Negotiate
f you want to trade, you have to negotiate, the alternative is to
accept what you have been offered. There are many opportunities to
negotiate better deals and terms, however these chances are often
missed because neither side makes it clear that negotiating is an
option.
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Negotiate
Many people wrongly assume that nothing is negotiable unless the
other party indicates that this is the case a more realistic view is
that everything is negotiable.
ey Points
The alternative to negotiating is to accept the terms that you're
offered.
Opportunities to negotiate a better deal are often missed.
Assume that everything is negotiable.
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%e lo:r Pases o Negotiation
Nearly all negotiations are characterized by four phases
Preparation
Opening
Bargaining
Closing
n large scale negotiations, each of these phases are normally
tackled sequentially. However, in smaller scale negotiations it is
quite common for these phases to merge possibly into a single
unstructured process.
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Pase 1: Preparation
Preparation involves information gathering knowing the state of
the market, being aware of the supply and demand status, being
aware of any current or imminent discounts and special offers and
so on.
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Pase 2: Opening
The pening Phase of a negotiation involves both sides presenting
their starting positions to one another. t usually represents the
single most important opportunity to influence the other side.
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Pase 3: argaining
n the argaining Phase your aim is to narrow the gap between the
two initial positions and to persuade the other side that your case is
so strong that they must accept less than they had planned. n order
to do this, you should use clearly thought out, planned and logical
debate.
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Pase 4: Closing
The Iosing Phase of a negotiation represents the opportunity to
capitalize on all of the work done in the earlier phases. The research
that you've done in the preparation phase, combined wit all of the
information that you've gained since, should guide you in the closing
phase.
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%e lo:r Pases o Negotiating
ey Points
Preparation doing the research before negotiations begin.
Opening where both sides present their starting positions.
Bargaining involves using clearly thought out planned and logical
debate.
Closing the opportunity to capitalize on the work done in the earlier
phases.
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":estion 1
f you were asked to supply your services at a reduced price on the
understanding that it could lead to a long term business relationship,
what would you do?
a) Accept the request.
b) Ask for your usual rate.
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Sol:tion
Option B is correct. Asking for a price reduction in return for future
business is a common negotiating tactic usually aimed at getting
goods and services at a discount. f you accept such a proposal you
will undermine your own credibility and make it very difficult to ever
get your usual rate from this customer.
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ercise 1
Car Dealer
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ect on Proits
Let's look at an example:
$ 2 m $ 2 m Profits
$ 8 m $ 8 m Costs
$ 10 m $ 10 m Sales
Company A Company B
Assume Company A has sales people and buyers who by improved negotiating
techniques, increase sales by 5% and reduce cost by 5%.
$ 2 m $ 2.9 m Profits
$ 8 m $ 7.6 m Costs
$ 10 m $ 10.5 m Sales
Company A Company B
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ect on C:stomers
Successful negotiation increased profits greater
customer satisfaction
For e.g.
You are buying a second hand car and you see an ad for Rs.
1,45,000. You decide to make an ambitious offer of Rs. 1,00,000
and see how they react. You offer, and they immediately accept.
How do you feel?
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ect on C:stomers
could have done better.
There must be something wrong with the car.
feel cheated.
The next time you negotiate, ask yourself, what impact has your
action had on the way the other side feels?
The objective is not to charge the highest possible price or pay the
minimum price possible. But, to ensure:
a) Mutual Benefit and Best Outcome
b) Fairness
c) Reputation and Respect
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1.2 %e Negotiation Process
This section introduces the three characteristics that define
negotiations, the five dependent variables that influence the
outcome, and some fundamental principles for improving your
negotiating performance.
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lactors Inl:encing Negotiations
The actual negotiation process depends on the following factors:
1. The goals and interests of the parties.
2. The perception of the other parties.
3. The history that exists between the parties.
4. The personalities of the people involved.
5. The persuasive ability of each party.
Negotiation is a complex communication process
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":estion 2
f you were purchasing an office photocopier and one of the
suppliers made an opening offer that you found acceptable, what
would you do?
a) Accept the offer.
b) Offer them significantly less.
c) Clarify precisely what is included in the price.
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Sol:tion
Option C is correct. Accepting an offer before you have established
the precise terms of the deal is not a good idea. Offering them
significantly less is a reasonable thing to do, but this is best done
after you are clear about all of the terms of the deal.
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%e Spirit o te Deal
ne Sided DeaI
Unfairly negotiated deals may be undermined or rejected sooner
or later.
The Win Win / Integrative Approach
n this both sides tend to gain.
The end result is an agreement under which both parties benefit.
Therefore, the resultant agreement tends to be more stable over
a period of time.
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in in Negotiation
They are characterized by open and empathetic communications
and are commonly referred to as partnership agreements.
Integrative
=
StabIe
Distributive
=
UnstabIe
Win / Win Win / Lose
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e Points
The integrative or Win Win approach seeks an agreement that
benefits both sides.
The distributive or Win Lose approach seeks to maximize the benefit
for one side.
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":estion 3
You are about to begin negotiations with the representatives of an
organisation that you would like to develop a long term business
relationship with. Would you put your best offer to them at the outset
to demonstrate your commitment to the relationship?
a) Yes
b) No
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Sol:tion
Option B is correct. You should never open a negotiation by tabling
your best offer. f you open with your best offer, you leave yourself
no room to negotiate you effectively create a 'take it or leave it'
scenario.
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See you in the next session...tiII
then Iet's NEGTIATE!!!