NEGOTIATION

Question 1

WHAT IS NEGOTIATION?

Answer 1

• It referes to any form of direct or indirect communication whereby parties who have opposing interests discuss the form of any joint action which they might take to manage and ultimately resolve the dispute between them. In these discussions, the parties exchange proposals and demands, make arguments, and continue the discussion until a solution is reached, or an impasse is declared.
• It involves the parties themselves, or with their advisors trying to settle their dispute without involving a neutral third party. Parties have autonomy over the process of reaching a mutually acceptable decision without assistant from third parties.
• The aim of negotiation is to harmonize the interests of the parties concerned amicably.

Question 2

CHARACTERISTICS OF NEGOTIATION

Answer 2

1. Voluntary:No party is forced to participate in a negotiation. Parties may participate directly in the negotiations or they may choose to be represented by someone else, such as a family member, friend, a lawyer or other professional.
2. Bilateral/Multilateral:Negotiations can involve two, three or dozens of parties.
3. Non-adjudicative:Negotiation involves only the parties. The outcome of a negotiation is reached by the parties together without recourse to a third-party neutral.
4. Informal:There are no prescribed rules in negotiation. The parties are free to adopt whatever rules they choose, if any. Generally they will agree on issues such as the subject matter, timing and location of negotiations.
5. Confidential
6. Flexible:The scope of a negotiation depends on the choice of the parties.

Question 3

FACTORS AFFECTING NEGOTIATION

Answer 3

1. Preparation: Researching the subject matter, understanding the opposing party’s position, and setting clear objectives are crucial steps in effective preparation for Negotiation.
2. Power: Understanding who holds power and how it can beleveraged is essential. Power can be derived from various sources, such as expertise, authority, information, or resources.
   Recognising the power dynamics at play allows negotiators to adapt theirstrategiesaccordingly, ensuring a fair and balanced Negotiation process.
3. Trust/Credibility: If parties are negotiating for the first time with each other, it is highly recommended that they spend some time to develop rapport and build trust. This requires as much transparency and ethical behavior as possible.
4. Communication and active listening: Expressing ideas clearly, using persuasive language, and maintaining a respectful tone are essential skills. By attentively listening to the other party’s concerns, needs, and perspectives, negotiators can build rapport, gain valuable insights, and find common ground.
5. Emotional intelligence: Being aware of one’s emotions and managing them effectively, as well as understanding the emotions of others, enables negotiators to navigate through challenging situations. Emotional intelligence helps in building empathy, defusing tensions, and finding mutually beneficial solutions.
6. Clarity: People develop skepticism in the absence of clarity and this harms the negotiation process. Negotiation often proceeds on the basis of facts, figures, past data, future trends and outlooks, studies, empirical data, and calculations. Information, to repeat a cliché, is power.
7. Flexibility and adaptability: It involves being open to alternative solutions, adjusting strategies, and finding creative compromises. Flexibility allows negotiators to overcome obstacles and maintain progress towards reaching a mutually satisfactory agreement.
8. Cultural and social factors: Cultural norms, values, communication styles, and decision-making processes can significantly impact Negotiation dynamics. Being aware of and adapting to these cultural and social factors fosters mutual understanding and increases the likelihood of successful negotiations.
9. Time
10. Personalities

Question 4

STYLES/APPROACHES TO NEGOTIATION

Answer 4

a. Position Based approach
b. Interest Based approach

Question 5

POSITION-BASED APPROACH

Answer 5

• Anegotiation strategythat involves holding onto a fixed position, of what you want and arguing for it and it alone, regardless of any underlying interests. They negotiate until a compromise is reaches, or not.
• Positional bargaining frames negotiation as an adversarial, zero-sum exercise focused on claiming rather than creating value.
• Typically in positional bargaining, one party will stake out a high (or low) opening position (demand or offer) and the other a correspondingly low (or high) one.
  Then a series of (usually reciprocal) concessions are made until an agreement is reached somewhere in the middle of theopening positions, or no agreement is reached at all.
• Substance is important and the other party is often seen as an enemy to overcome with each party tending to be self-serving in an attempt to see victory over the other.

Question 6

ADVANTAGES OF POSITIONAL BARGAINING

Answer 6

• It can be a speedy and effective negotiation tactic, as negotiations can move more quickly when both parties are adamant about a certain point, since less time is spent debating potential solutions.
• When both sides are aware of their goals and the worth of the objects being negotiated, positional bargaining can be helpful as well. It may be simpler to come to a mutually beneficial arrangement if both sides are clear on what they want and how much it is worth.

Question 7

DISADVANTAGES OF POSITIONAL BARGAINING

Answer 7

• The fact that positional negotiating frequently results in a lose-lose situation is one of its key drawbacks. Finding a middle ground and coming to a mutually beneficial agreement can be challenging when both parties are negotiating aggressively.
• One partner can feel exploited as a result, which could cause resentment and strain in the relationship.
• When both sides are unwilling to compromise or make compromises, positional negotiating may also prove to be a fruitless tactic. In these circumstances, discussions may stall out and result in no resolution.

Question 8

INTEREST-BASED APPROACH/PRINCIPLED NEGOTIATION

Answer 8

• It involves exploring the deeper interests underlying parties’ stated positions to identify potential tradeoffs andwin-win opportunitiesacross issues and interests.
• Behind every position in an interest. An interest represents the need or want that motivated you to select the item you want of arrive at your solution. Interests are often rooted in human needs. Here substances is still important.
• In interest-based negotiations, the intent is to reach a mutually acceptable outcome, something that is mutually beneficial to both parties. The interest of both parties are being met. If a problem does emerge, the parties are hard on the problem and not on the person.
  And if they do yield, people yield to objective criteria, something that both parties can agree to as being legitimate and fair.
• Remember, that in interest-based negotiations power is used to influence and work with people, not used against people.
  Our intention is to bring people their senses rather than to their knees

Question 9

GETTIGN TO YES: 4 MAIN ELEMENTS OF PRINCIPLES NEGOTIATION

Answer 9

1. Separate the people from the problem.Strong emotions can become wrapped up with the substantive issues in a negotiation and complicate it even further.
   In principled negotiation, negotiators work to deal with emotions and personality issues separately from the issues at stake.
2. Focus on interests, not positions.Negotiators often waste time arguing over who should get their way or, alternatively, trying to find a compromise point in between the two firm positions they have staked.
3. Invent options for mutual gain.In principled negotiation, negotiators devote significant time to brainstorming a wide range of possible options before choosing the best one.
4. Insist on using objective criteria.In principled negotiation, negotiators rely on objective criteria—a fair, independent standard—to settle their differences.
   For example, they might agree to abide by standards such as market value, expert opinion, industry protocol, or law. Importantly, parties should agree in advance about which objective criteria to consult and agree to abide by the outcome.

Question 10

ADVANTAGES OF INTEREST BASED NEGOTIATION

Answer 10

• The fact that interest-based negotiation results in a win-win solution is one of its key benefits. An agreement that benefits both parties can be reached when the parties collaborate to define their interests and come up with original solutions.
• When there is a long-term cooperation or relationship between the parties, interest-based negotiating can also be helpful. It might help to develop trust and deepen the relationship between the parties if they cooperate to find a solution.

Question 11

DISADVANTAGES OF INTEREST-BASED NEGOTIATION

Answer 11

• Interest-based bargaining’s key drawback is that it can be time-consuming and labor-intensive. More time may be needed than with positional negotiation when both sides are attempting to define their interests and come up with a novel solution.
• When both sides are unwilling to make concessions or when there is a considerable power disparity between the parties, interest-based negotiation may also be fruitless.

Question 12

PLANNING TO NEGOTIATE

Answer 12

• Before entering any negotiation, it’s essential to clearly understand what you aim to achieve. This includes identifying your must-haves, nice-to-haves, and deal-breakers.
• Try to figure out the best resolution you can expect, what is a fair and reasonable deal and what is a minimally acceptable deal
• Avoid setting too low or unrealistically high targets that could hinder the negotiation process. It’s important to set achievable and realistic goals to ensure a successful outcome
• What is the other party’s advantages and disadvantages? Conduct thorough research to understand the interests, strengths, and weaknesses of the other party.
• Give some thought to your strategy. Develop a comprehensive strategy that includes your tactics and potential fallback positions.
• It is very important to be clear on what is important to you. Be clear about your real goals and real issues and try to figure out the other person’s real goals and issues.
• Engage in regular practice sessions to build confidence and refine your negotiation skills.
• Be prepared to adapt your strategy based on the negotiation flow and the other party’s responses. Flexibility can lead to better outcomes, especially when unexpected challenges arise.
• Performing research, meeting with stakeholders or decision-makers within an organization and developing contingency plans can provide you with more options when you meet with the other parties to hold a negotiation.

Question 13

THE NEGOTIATOR’S DILEMMA: CREATING OR CLAIMING VALUE

Answer 13

• In any negotiation, the parties must decide whether to be competitive, cooperative, or some of both.
• In the value-creating view negotiators work primarily to increase the available resources, to find joint gains or “win-win” solutions, wherein all the parties will benefit.
• In other words, value creation, orintegrative negotiation, involves looking beyond the most obvious issue, such as price, for new sources of value that can be brought to the table to expand the pie.
• Value-creating opportunities can be uncovered by searching for a common interest, rather than letting the differences that exist between you dominate the discussion.
• Other promising value-creation strategies include asking lots of questions to learn about what matters to your counterpart and sharing information about your own interests and priorities.
• Value claiming, also known asdistributive negotiationor single-issue negotiation, involves trying to get as much of the pre-existing value on the negotiating table for yourself—and away from the other party
• To be successful negotiators must engage in hard bargaining; they must “start high, concede slowly, exaggerate the value of concessions, minimize the benefits of the other’s concessions, conceal information, argue forcefully on behalf of principles that imply favorable settlements, make commitments to accept only highly favorable agreements, and be willing to outwait the other fellow.
• To succeed at the bargaining table,professional negotiatorsbecome effective at both distributive negotiationandintegrative negotiation.
• Ideally, you should be able tocreatemore value by negotiating trades across issues and thenclaimthe lion’s share of that value for yourself through distributive negotiation strategies.

Question 14

PROFESSOR LEIGH: 4 FEY STEPS YOU CAN TAKE TO IMPROVE YOUR NEGOTIATION SKILLS AND THOROUGHLY PREPARE TO CLAIM VALUE.

Answer 14

1. Assess and improve your BATNA. This is an alternative you can independently turn to if you have to walk away from negotiations altogether. When you have a strong alternative, you will be ready to walk away from any deal that is inferior to your BATNA.
2. Calculate—but do not disclose—your reservation point.In negotiation, yourreservation point is typically a figure or offer that represents what you need to get at the table that will prevent you from pursuing your BATNA. Because your reservation point, also known as your walkaway point or bottom line, is the least amount you are willing to accept, it is generally wise not to share it or your BATNA with your counterpart across the table, even if you trust and like the other party, lest they take advantage of this information.
3. Research the other party’s BATNA and reservation point.It is important not only to determine your own BATNA and reservation point but to estimate your counterpart’s BATNA and reservation point. This knowledge will help you determine how far you can push the other side.
   You can make these estimates by thinking about and researching the other party’s alternatives and resources, such as how much they might have to spend and what other negotiating opportunities might arise for them.
4. Evaluate the ZOPA.The ZOPA encompasses the range of all possible deals that both parties would find acceptable. Your ZOPA will also help you set an ambitious but realistic target.

Question 15

NEGOTIATION SKILLS

Answer 15

• Communication: Broad, open-ended questions tend to elicit the most new information since they induce opponents to talk.
• Active listening: Try to maintain good eye contact. Take as few notes as possible to permit you to focus upon opponent’s verbal and nonverbal signals.Restate, in your own words, important information the opponent has apparently disclosed, to verify/clarify information actually divulged.
• Emotional intelligence
• Persuasion
• Planning
• Expectation management
• Patience
• Flexibility/adaptability
• Problem solving: Finally, creativity is critical to generate and develop novel solutions. Skills such as brainstorming, analogies, envisioning a better future, and using a third-party can aid the process.
• Decision making
• Rapport-building:Negotiators earn trust by demonstrating alignment between actions and words and treating others with dignity, while negotiators establish rapport through professionalism, courtesy, positivity, and friendliness.
• Integrity
  By the conclusion, negotiators should be able to articulate, at a minimum, what matters most, what they are afraid of, what their ideal outcome would be, and what alternatives exist, from the perspective of each individual involved.
  Use of threats/warnings at this stage is generally counter-productive, since threats/ warnings are offensive rather than cooperative and are more likely to disrupt the process.
  Use of promise technique is particularly effective, since it permits parties to move together– e.g., agreeing to “split difference” between positions currently on negotiating table.

Question 16

NEGOTIATING GAMES/TECHNIQUES

Answer 16

a. Numerically superior Bargaining Team.
b. Asymmetrical Time Pressure.
c. Extreme Initial Offer/Demand
d. Probing Questions
e. Best Offer First Bargaining
f. Take-it-or-leave-it negotiation strategy
g. Inviting unreciprocated offers
h. Trying to make you flinch.
i. Threats and warnings
j. Personal insults and feather ruffling.
k. Bluffing, puffing, and lying.
l. Belittling your alternatives.
m. Good cop, bad cop

Question 17

NUMERICALLY SUPERIOR BARGAINING TEAM

Answer 17

• Individuals who must negotiate against several opponents should have colleagues join them to counteract the numerical superiority possessed by the other side.
• People who have 15 or 20 persons on their side of table are at disadvantage against smaller teams, and they should conduct intra-organizational interaction during Preparation Stage to generate common goals and common strategy.

Question 18

ASYMMETRICAL TIME PRESSURE

Answer 18

• Negotiators must recognize that opponents also have deadlines that affect their behavior.
  Advocates can often hide their time constraints.
• Transaction negotiators may preempt the time element by announcing the deadline that must be met by both sides if a deal is to be consummated.

Question 19

EXTREME INITIAL OFFER/DEMAND

Answer 19

• Creates high aspirations in self and may induce careless opponent to reconsider own evaluation.
  -May cause opponent to conclude that matter cannot be reasonably resolved, or may place offeror in position from which he/she may end up retreating in uncontrolled fashion.

Counter- measures:
- Important to directly inform the offeror of how unreasonable his/her opening position is, to disabuse him/her of any notion that position is even remotely realistic.
- You may refuse to state your own opening position until some meaningful offer is presented to you, but this forces opponents to bid against themselves.
- You may respond with equally outrageous position of your own, hoping to talk opponent into joint resort to realistic positions.
- May come out with own realistic position, but must realize that this will require opponent to make concessions on 10:1 basis.

Question 20

PROBING QUESTIONS

Answer 20

• Advocates confronted by truly extreme positions may generate a more flexible atmosphere through the use of probing questions designed to induce opponents to explain the positions being taken.
• Use of neutral, nonjudgmental inquiries is often more effective than direct challenge to positions being taken by intransigent persons.

Question 21

BEST OFFER FIRST BARGAINING

Answer 21

• Presenting best offer at outset, explaining that you do not wish to waste time engaging in usual “auction” bargaining since this is all you are willing to offer.
• Impossible to know true value of transaction from own side’s perspective because you must meet with opponent to determine how much he/she wants an agreement.
• May only be employed effectively by person with bargaining power. This is because a party with such power can afford to be generous with process and let the other party think he/she has influenced the outcome, since he/she may be willing to pay for privilege.

Question 22

TAKE-IT-OR-LEAVE-IT NEGOTIATION STRATEGY

Answer 22

Offers should rarely be nonnegotiable. To defuse this hard-bargaining tactic, try ignoring it and focus on the content of the offer instead, then make a counter-offer that meets both parties’ needs.

Question 23

INVITING UNRECIPROCATED OFFERS

Answer 23

When you make an offer, you may find that your counterpart asks you to make a concession before making a counteroffer herself. Don’t bid against yourself by reducing your demands; instead, indicate that you are waiting for a counteroffer.

Question 24

TRYING TO MAKE YOU FLINCH

Answer 24

Sometimes you may find that your opponent keeps making greater and greater demands, waiting for you to reach your breaking point and concede. Name the hard-bargaining tactic and clarify that you will only engage in a reciprocal exchange of offers.

Question 25

PERSONAL INSULTS AND FEATHER RUFFLING

Answer 25

Personal attacks can feed on your insecurities and make you vulnerable. Take a break if you feel yourself getting flustered, and let the other party know that you won’t tolerate insults and other cheap ploys.

Question 26

BLUFFING, PUFFING AND LYING

Answer 26

Exaggerating and misrepresenting facts can throw you off guard. Be skeptical about claims that seem too good to be true and investigate them closely.

Question 27

THREATS AND WARNINGS

Answer 27

Want to know how to deal with threats? The first step is recognizing threats and oblique warnings as the hard-bargaining tactics they are. Ignoring a threat and naming a threat can be two effective strategies for defusing them.

Question 28

BELITTLING YOUR ALTERNATIVES

Answer 28

The other party might try to make you cave in by belittling your BATNA. Don’t let her shake your resolve.

Question 29

GOOD COP, BAD COP

Answer 29

When facing off with a two-negotiator team, you may find that one person is reasonable and the other is tough. Realize that they are working together and don’t be taken in by such hard-bargaining tactics.

Question 30

ETHICS AND NEGOTIATION: PRINCIPLES TO GUIDE YOU TO ACT/BEHAVE ETHICALLY

Answer 30

Ethics establish the means of doing what is right, fair and honest. - Reciprocity: Would I want others to treat me or someone close to me this way? - Publicity: Would I be comfortable if my actions were fully and fairly described in the newspaper? - Trusted friend: Would I be comfortable telling my best friend, spouse, or children what I am doing? - Universality: Would I advise anyone else in my situation to act this way? - Legacy: Does this action reflect how I want to be known and remembered? Doing the right thing sometimes means that we must accept a known cost. But in the long run, doing the wrong thing may be even more costly

Question 31

TIPS TO ENSURE YOU BUILD ALL YOUR NEGOTIATIONS ON A FOUNDATION OF ETHICS

Answer 31

Ethical negotiators don't think only about what they can "get" out of a negotiation but also about what they can "give" to their counterpart. 1. Know what is not negotiable. This will make you a much more effective negotiator. 2. Be honest. In a negotiation, whenever you are ethical and honest even though it costs you something, you gain points. If a counterpart makes an invoice error that is to your advantage and you inform him of it, that costs you something--but it also earns you respect. 3. Keep your promises. In your eagerness to put a deal together, you may sometimes make promises and concessions you hadn't planned to make. You demonstrate your ethics when you fulfill those promises long after the desire to do so has left you. 4. Have multiple options. Going into a negotiation with multiple options will help both you and your counterpart achieve your goals. If someone proposes an option you feel is unethical, you will be ready with another, ethical option for accomplishing the same goal. Sometimes you may encounter negotiators who are unilateral thinkers who have only one option. With them, it's their way or the highway. If their way is unethical in your opinion, you have only one option--to walk away from the deal. 5. Be willing to say "no." Being willing to say "no" to something that is not right is a great strength. 6. Follow the Platinum Rule: treat people the way we would like to be treated. It helps build long-term relationships based on ethics and trust.