Negotiation Process

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Chapter 1: The Negotiation Process What is Negotiation? Negotiation is a process in which two or more persons, groups, or entities with conflicting interests voluntarily engage in a dialogue or discussion in order to arrive at an agreement that will benefit all the parties concerned. The Negotiator  Four Negotiation Styles Situation #1 Lose-Win (Conciliator) Lito is a car salesman. He has been in the business for less than three months and is eager to make his first sale. He is so eager, in fact, that when the first prospective customer comes along he determines to do all he can to convince the client to buy the car. Lito knows that it is very important for a sales person to establish a good relationship with his customers, and he is willing to pull out all the stops in order to please his prospective client. During negotiations, Lito concedes to almost all of the client’s demands. He even agrees to the client’s offered price, which is so low it would take a hefty amount off of his commission. Situation # Win-Lose (!ccountant)  Edgar illareal and his wife !athy are migrating to the "# and are selling their house for $hp%.& '. (hey need all the money they can get to start their new life abroad so they are looking for a buyer who can pay the full amount as soon as possible. 'rs. Lita Di)on is such a buyer. #he really likes the neighborhood and she thinks the location of the house is perfect. However, when she comes to inspect the property, she noticed that the house had not been properly maintained and needs a lot of repairs. #he therefore asks the illareals to lower the asking price* she tells them it is way too high given the state of the house. #he says she needs the e+tra money to pay for the repairs. Edgar and !athy are adamantthey want the full amount paid within the month, no more, no less. Not only that, they want the buyer to pay for the real estate ta+ and the transfer of deeds. Situation #" Lose-Lose (loc$er) (he brothers Ely, (ony, and -une 'aranan are selling the si+ hectare piece of agricultural land that they inherited from their father. During negotiations with 'r. Ng, a wealthy !hinese businessman interested in buying the property, Ely and (ony do all they can to convince the prospect to sign the deed of sale. hen 'r. Ng finally agrees, -un suddenly announces that he is no longer sure he wants to sell their land. His brothers are flabbergastedthey are both in desperate need of money. (hey agree to give their brother some time to think. (he days turn into weeks and the weeks turn into months and still -un could not make up his mind. /n the end, 'r. Ng grows tired of waiting and finds another piece of land to buy.

Situation #% Win-Win (&eal Negotiator) 0eth illanueva is selling her internet caf1 to a middle aged couple, 'arie and 2red 3on)ales. Her conditions are they will buy everythingthe air conditioners, the chairs and tables, the counters, the cash registers, the decors, and of course, the computers, all twelve of them including four that need repairs and upgrading. /n addition, she will supply the 3on)aleses with the cakes and pastries they will serve at the caf1, from the new bakeshop that she is putting up. the buyers agree, but they plead to 0eth to lower her asking price. (hey need some e+tra money to pay for the repairs as well as for the renovation of the caf1 itself, they say. 0esides, their knowledge of the computers and the internet is limited* they would need to hire somebody who would manage the business for them. 0eth agrees to grant them a small discount. 2urthermore, she advises them that if they want their business to prosper, they should learn to manage it themselves. 4s an added bonus, she offers to teach them what she knows about computer maintenance and the internet. (he 3on)aleses gratefully accepted her offer, and promptly agree to sell the contract. 'ighteen points to reeer aout negotiation* 5. (he goal of negotiation is not to win but to reach an agreement that will benefit everyone concerned. 6. 4 good negotiation fosters stronger working relationship between people or groups and promotes mutual understanding among everyone concerned, especially after a healthy agreement has been reached. &. 4ll negotiators must be willing to work with those who have conflicting interest and to compromise or e+change value for value in order for the negotiation to be a success. 7. 4 negotiation can only be when both parties acknowledge the legitimacy of each other’s conflicting viewpoints and are willing to work out a solution or agreement in order to arrive at a winwin situation. %. 0oth parties should enter into negotiation in the spirit of 8competition9 a healthy competition aimed at achieving goals that can be shared e:ually, mi+ed with a dose of cooperation in finding mutual interest and needs. ;. 4ll negotiators should learn how to give and take in order to achieve their desired outcomes and to find lasting solutions. <. 4 good negotiation ends with all players winning or gaining something. =. Negotiation involves an e+change of ideas between human beings and its success thus depends on the participants understanding of human nature and the ability to empathi)e with and anticipate each other’s needs.

>. Every negotiation must have a high stress threshold, a knowledge of human psychology and an open mind that will allow him to change his appraisal of a situation whenever necessary. 5?. 0efore entering into any negotiation, do your homework. 55. eigh all your options before agreeing to enter into negotiation. 56. @ou must have the courage to take calculated risks while negotiating. 5&. hen negotiating as a group, always get the commitment of every team member before entering the meeting. 57. /n all negotiations, always look beyond what the other party in openly demanding. 5%. /f possible, end all your negotiations with a formal written agreement detailing all the actions to be implemented. 5;. Aeep the door of communications wide open even if the negotiation appears to have failed. 5<. Not all things in life are negotiable. 5=. Negotiators must be alert and always ready to spot and resolve tactics such as deadline and deadlock, as well deadline and deadlock. The Negotiation Process Preparation /n order for you to effectively manage a negotiation, you must prepare ahead of time. % most important steps you should takeB 5. $repare all relevant tools and information that can help you strengthen your position and create a favorable climate for a successful negotiation. 6. #et your goals. &. $lan your initial stance. 7. $repare your backup and bottomline positions. %. Lastly, you should prepare some ready answers and solutions to the e+pected issues or concerns of the other party. +ra,ing p a Negotiation Strategy /n preparing your initial, backup and bottomline positions, you should take certain essential things into consideration. 5. 4ssess what you will do if you don’t reach an agreement with the other party. 6. 4ssess what the other party will do if they do not reach an agreement with you. &. 4ssess the true issues in the negotiation.

7. %. ;. <.

4ssess how important each issue is to you. 4ssess how important each issue is to the other party. 4ssess the bargaining issue. 4ssess where the tradeoffs e+ist.

T.' N'/0T!T0N P&0P'&  Eight easy steps in the negotiation process 5. 6. &. 7. %. ;. <.

4ll of the players should spell out their interests and demands. /dentify and acknowledge all the conflicts and issues that need to be resolves 4gree on a common goal 0argain for a better deal (rade concessions (ry to resolve the issues and problems of all those concerned !ompromise =. !onclude with a formal or a written agreement F0& N'/0T!T0N ST!/'S !N+ C&TC!L T!S2S 5. 5.$reliminary #tage !reate a climate conducive to the positive e+change of views and issues such as resolving all past disputesCconflicts. Establish rapport 3et aggreement on agenda and ground rules. /dentify issues and roles. Establish timeless 6. (he opening stage  !learly state your opening possition or initial offer. !larify the other partys opening position or initial demands, test these for firmness in a logical and rational manner. &. (he E+ploratory #tage  /dentify the other partys underlying demands and needs by probing or asking :uestions or through active listening.   2ind out and test alternative currencies of e+change. (his is the part where you trade concessions and make compromises in order to arrive at a meeting point or a n agreement. 7. (he conclusion or the closing stage 'atch currencies to needs and formali)e the agreement after having resolved the potential problems and all lingering concern.

Ensure that what has been agreed upon is enacted or implemented as planned using the appropriate from such as a contract or a memorandum of agreement.

The Critical Tas$ Chec$list /n order to ensure that negotiation will go properly throughout all the stages, prepare a critical tasks checklist such as the one below. 0ring a copy with you to negotiation table, and tick off each critical task as it is performed. rite down the details in the bo+ on the right. this will help you manage the process better.

(ask

Details $reliminary #tage

#trategy !larify issues and concerns





 4cknowledge common interests served by agreement



Establish the negotiation process

$eople •



/dentify parties with vested interests and e+pectations 'ake sure appropriate people are negotiating

!limate •



!ommunicate willingness to negotiate maor issues !ommunicate optimism about ability to resolve conflict

 4genda

Fpening #tage Fwn position !learly communicate position



Defend position in manner appropriate to situation



Demonstrate belief in own position and conviction



Fther party’s position Listen to the other party’s position





 4sk probing :uestions to the other party’s position

!limate •

Demonstrate acknowledgement and understanding of the other party’s position E+ploration #tage

 4lternative !urrencies •







$osition own alternatives as benefits to others  4sk :uestion to test value of own currencies.  4sk :uestion to test the availability of other party’s currencies Gank importance of alternative proposal and costbenefit

"nderlying Needs •

 4sk :uestions regarding other party’s

needs and wants •

 4sk followup :uestions to deepen understanding of issues



Geveal proprietary information when appropriate

!limate •





'aintain non udgmental approach with obectivity "se creativity to suggest additional alternatives Encourage openness among players of both sides !losing #tage

!losing offers •



'ake clear e+change offer  $ursue balanced agreements that meet the needs of all parties

!ontract •

!larify final agreement



/dentify ne+t steps implementationI

!limate •





0ring process to conclusions #how willingness to return to e+ploratory stage, if necessary #how willingness to test viability of agreement prior to finali)ing the deal

N'/0T!T0N 3!LT4 !SS'SS5'NT

Encircle the number of your answer. 5 ery much 6 #lightly

& Not sure 7 Not really

% Not at all

5. (o what e+tent has the dispute between the parties been resolvedJ 6. 4re both parties happy with the agreementJ &. Have all my needs and wants been metJ 7. Have all the other party’s needs and wants been metJ %. Has the relationship between the parties become strongerJ ;. Have both parties agreed to keep the relationship mutually beneficial and lasting in the long runJ <. Have all the implementation pitfalls been anticipated and fully covered by the agreementJ =. 4re additional alternatives and contingencies also covered by the agreementJ >. /s the final contract or agreement clear to both partiesJ(o terminal decision makersJ 5?. Do both parties agree to implement the agreement at the soonest possible timeJ

5 6 & 7 % 5 5 5 5

6 6 6 6

& & & &

7 7 7 7

% % % %

5 6 & 7 % 5 6 & 7 % 5 6 & 7 % 5 6 & 7 % 5 6 & 7 %

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