Negotiation Skills

By: Kunal Samani

President-Business Development
Rolex Lanolin Products Ltd
 Why Negotiation?
• Negotiation is needed to resolve intra-person or inter-person
conflicts / disagreements / clash of interests.
• Negotiation is something that we do all the time and is not only used
for business purposes. The aim of negotiation is to explore the
situation, and to find a solution that is acceptable to both the sides.
• Only man negotiates; animals do not; when faced with larger
predator, they do not ask for negotiation or justice rather just run
away.
• Negotiation is one of the most difficult jobs a person can do. It
requires not only good business judgment but also a keen
understanding of human nature
 Negotiation

Inter-
person
Intra-person Negotiatio
Negotiation n

Unplanned Planned
Negotiatio Negotiatio
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Integrative Distributiv
e
Negotiatio Negotiatio
n n

Hard Soft Principled

Negotiatio Negotiatio Negotiatio
n n n
 Hard Negotiation
• Hard negotiation involves the negotiation of positions, rather
than interests.
• It is highly competitive, seeing victory as the number one goal.
• Hard bargainers, see the participants as adversaries. They
distrust the other side and play sneaky games to try to gain the
negotiating advantage.
• Hard bargainers refuse to make concessions and demand one-
sided gains as the price of an agreement.
• When confronted with a softer opponent, hard bargainers
almost always will win. When confronted with another hard
bargainer, however, it can result in no agreement, both losing.
 Soft Negotiation
• Soft negotiation also involves the negotiation of positions,
rather than interests. However, it treats the participants as
friends, seeking agreement at almost any cost, and offering
concessions easily in the interests of preserving (or creating) a
good relationship with the other side.
• Soft bargainers trust the other side, and are open and honest
about their bottom line.
• This leaves them vulnerable to hard bargainers who act
competitively–offering few, if any concessions.
 Principled Negotiation
• Principled negotiation is the interest-based
approach to negotiation.
• Fundamental principles of principled
negotiation are:
1. it separates the people from the problem;
2. focuses on interests, not positions;
3. insists on objective criteria of the solution.
Negotiation Styles
Assertive
Win / Lose Win / Win
(Collaborating)

Compromise
Unasserti

Avoidance Accommodati
ve

ng
Uncooperative Cooperative
 Win – Lose Style
• The win-lose is the most common style of distributive
negotiation wherein a person pursues his or her own
wishes at the expense of other party.
• Under this style negotiation is viewed as a game to be
won. Losing may be taken as failure, weakness, and a
loss of status.
• When engaged in this style, the parties may use
different tactics to win like: persuasion, argument,
power, or even threat.
 Usefulness

• A forceful position during negotiation may be appropriate

when the stakes are high and costs of indecision and
compromise are non-affordable.
• It is useful when issues of legality and ethics are at hand.
• Where you do not expect to deal with people ever again, and
you do not need their goodwill.
• When there is only one prize.
• At management level, this style is helping when unpopular
but necessary decisions must be made.
• Win-lose is also a style to use when the other party has a
tendency to take advantage of you.
 Avoiding Style
• Avoiding the conflict in certain situations – need of no
negotiation at all – is also a negotiation.
• People may physically withdraw by simply leaving the
scene of conflict or they can refuse to get involved by
using silence, or changing the topic of conversation.
• Psychologically, avoiders can also deny the existence
of conflict.
• During formal negotiation, avoiding style is exercised
by paying deaf ear and / or blind eye to the conflicting
stimulus.
 Usefulness
Useful when:
• your involvement will only result in negative
outcomes for you;
• issue is insignificant;
• cost of challenge / cost is quite high;
• there is little chance of success;
• relationships are more important to be maintained;
• to buy time and / or get other party cool down.
 Accommodating Style
• Accommodating style of negotiation entails giving in to
the wishes of the opponent party.
• Like avoidance, accommodating the other party
almost in one-sided way, is also a negotiation.
• Unlike avoiders, the accommodators enter into
negotiation and give in a way that strengthens the
relationships.
• During negotiation, giving in totally / partially may be
part of strategic maneuvering.
 Usefulness
• When other issues are more important that need
satisfying others and maintaining cooperation.
• When social credit is to be built for some latter issue.
• To minimize loss when one is already losing.
• When relationships are more important than the
interests.
• Though frequent yielding is not a virtue, a yielding to a
fellow in ire, a balanced yielding among spouses, or
even the frequent yielding obedience of a child to a
parent or teacher is a healthy move.
 Compromising Style
• Compromising, the most common style of conflict
resolution, entails splitting the differences and
reaching an acceptable middle ground solution
through give-and-take whereby each party should gain
something and may have to lose something.
• Parties under this style of negotiation, generally use
techniques like trading, bargaining, smoothing over
differences, and voting etc.
• Most of the negotiations though start with lose-win
style, do end up at the compromising style.
 Usefulness
It is useful:
• when two parties have relatively equal power and
have mutually exclusive goals;
• when time is not available to solve problems that
are complex and require a great deal of effort to
sort out all the issues;
• to allow for a temporary solution until more time
could be devoted to unravel and analyze the
complexities; and
• when competition or collaboration fails to lead to a
solution.
 Collaborating (Win-Win) Style

• Collaborating is based on a willingness to accept other

party’s needs while asserting your own needs as well.
• It assumes that there is some reasonable chance that
a solution can be found to satisfy both parties in
conflict without losing much.
• Such solution, most of the time, is not possible but a
collaborator believes that it is worth trying to find that.
 Illustrative Story
• Two brothers had an orange. Each of them wanted
to have it.
• Ultimately they resolved the conflict through
splitting the orange into two halves, one half for the
each.
• Elder brother ate the pulp and threw the peeling.
• The younger brother who did not have an innate
liking for the oranges and just wanted the peeling
as a recipe ingredient, used the peeling and
discarded the pulp.
 Your Comments…

What negotiation style(s) the two

brothers adopted to resolve the conflict?
Offer your comments over degree of
usefulness of the style(s) used in this
situation.
 Preparing for Negotiation

The “Es” of Negotiations:

1. Establish GOAL
2. Establish TRUST
3. Establish RULES
4. Establish TRADE
5. Establish ALTERNATIVES
Establish GOAL
Establish TRUST
Establish RULES
Establish TRADE
Establish ALTERNATIVES
 At the Table………
• Negotiation Strategies
• Communication Skills
 Negotiation Strategies
Ahmad and Hassan decided to purchase an office for
their newly started business three months ago.
Their first choice was an office located in a new
development, and priced Rs. 500, 000 (about Rs.
25,000 above their limit). Ahmad thought they could
get the price down through negotiation with the
salesman Mr. Sheikh around their limit while
Hassan was less optimistic in that regard.
 Ahmad conducted some research on the
development and learned that several of the
offices including the one they liked had been
on the market almost a year. Though the
house they liked was their first choice, other
offices were also quality offices and could be
accepted as a second choice. Ahmad met
the other salesman, Mr. Agha and learned
that the prices of those offices were also
within their limit. With this homework done,
he made an appointment with Mr. Sheikh and
decided to meet him alone.
 Approach Strategy

Ahmad informed the LOWBALL

salesman he really VINEGAR-HONEY
liked the office and
might be sincerely He was going for the
interested at a lower lowest possible
price such as Rs. price.
450,000.
 Approach Strategy
The salesperson
sounded shocked and PINPOINT THE NEED
said, “That is
impossible, we would
not even consider it”. It had been
Ahmad anticipated that established that the
response, and asked, seller would take
“If you would not accept less than the asking
Rs. 450,000, what will price but not Rs.
you ask?” 450,000. The task
then was to pinpoint
how much less than
 Approach
The salesperson did some
figuring before he said “Rs.
490,000”. Ahmad was
prepared for this response
who tried another strategy
saying, “Mr. Agha has
recently sold two office of
similar stature for Rs.
470,000, and several
others are available with
him. Why would not you do
the same for me?”
Strategy
CHALLENGE
A strategy designed
to put the other
party on the
defensive in an
effort to win some
concessions. Added
to the Pinpoint, the
Need strategy
assists in
determining what
 Approach Strategy
The salesperson said,
“That house went
cheaper, anyway perhaps
I could trim the price to
Rs. 485,000 but you will
have to pay 20% cash
down and the rest within
one week.” Ahmad
guessed the salesman
has a room to tread
downward and said,
 Approach
“Down payment is not the FEINTING
problem but I cannot pay
the rest before three
weeks.” “It is impossible”,
said the salesman, “our
company rules do not
permit it”. Ahmad replied,
“But I cannot pay at least
this much within this
period of time.”
Strategy
This strategy gives
the impression one
thing is desired
whereas primary
objective is really
something else.
 Approach Strategy

Politicians use a
variation of this This planned
strategy to test action is
receptivity by the “leaked” by a
public to something “reliable
they plan to do. resource” to test
acceptability
before final
action is taken.
 Approach
“I do not think I could make
further concession”, said
the salesman. “Ok! Let me
consult my business
partner since final decision
will only be after our
mutual consensus”, said
Ahmad and left the
salesman’s office.
Strategy
LIMITED AUTHORITY
Limited authority is an
attempt to postpone the
decision on a pretext to
get approval from a
competent authority.
Whereas the real aim is
to gain time for
reconsideration, and / or
keeping the opponent
under pressure for a
possible negotiation
breakage.
 Approach Strategy
Next day, Ahmad appeared in
the salesman’s office again
along with Hassan, his
business partner and reiterated
his yesterday’s position that
they could not pay Rs. 485,000
at least within one week. “It
seems difficult to give any
further concession without
consulting the builder”, said the
salesman.
 Approach Strategy
“I told you not to approach this When bad guy steps out
agency, you could never conclude
any deal with them”, growled for a few minutes, the
Hassan and stepped out of the good guy offers the deal
office.
that under the
“You are spoiling almost a
circumstances seems too
concluded deal. I offer Rs. good to refuse. Bad guys
475,000 though I am not sure usually comprise
my partner will agree to it. A slight spouses, lawyers etc.
budge from your position can bring
the deal back on track”, murmured
Ahmed to the salesman in confiding
style.
 Approach Strategy

“By the time you bring

your partner back, I call GOOD GUY / BAD GUY
to the builder for his
opinion. I think it is The good guy /
possible to reach a deal”, bad guy is an
said the salesman while internationally
dialing a telephone used strategy. One
number when Ahmad member of a team
walked out of his office takes a hard line
to trace his “estranged” approach while
business partner. other member is
friendly and easy
 Approach Strategy
After few minutes Ahmad
entered the salesman’s office
along with Hassan.

“The builder has not been

around, but I have availed my
own limit and reduced the
price to Rs. 482,000 provided
you could give us your offer in
writing today with
the 20% deposit.”
 Approach Strategy
Ahmad sensing they were
close to their goal replied, DEFER
“We really do like this
office, but it is still more Deferring
than we want to pay.
strategy allows
Please excuse us while we
discuss ways in which we the negotiators
might increase our offer. time to
Would you please reevaluate their
reevaluate your position positions.
too?
Deferring a
decision to make
 Approach Strategy
Ahmad and Hassan
returned in an hour
and offered Rs.
478,000.
The salesperson told
them,
I called the builder while
you were away. He gave
a
little, but Rs. 478,000
just
won’t do.
 Approach Strategy
However, if you would be
willing to split the differences,
and make it Rs. 480,000, we SPLIT THE DIFFERENCE
can make a deal, providing you
sign the paper and put down
your 20% cash today.

Ahmad and Hassan

looked
towards each other and
accepted with pleasure.
 Communication Skills
• Oral Communication
• Non-verbal Communication
 Oral Communication
• Phrase the words properly; it delivers.

o priests were so addicted to smoking that they

sperately needed to puff on cigarettes even when they praye
oth decided to ask their superior for permission to smoke.
e first asked if it was okay to smoke while praying?
rmission was denied. The second priest asked if he was
owed to pray while he was smoking. His superior found his
dication admirable and immediately granted his request.
• Use simple language instead of complex
terminology. However use frequent jargons
when negotiating with your professional
counterpart.
• Be as descriptive as possible. Avoid
generalities.
Listening: a strong negotiation tool!
• Perhaps the best strategy to adopt while the other
side lets off steam is to listen quietly without
responding to their attacks.
• You often get more through listening by finding out
what the other person wants than you do by clever
arguments supporting what you need.
• Standard techniques of good listening are to pay
close attention to what is said, to ask the other party
to spell out carefully and clearly exactly what they
mean, and to request that ideas be repeated if there
is any ambiguity or uncertainty.
 Non-verbal
Communicatio
n

Feelings and
emotions
received from
others through
their body
Symbolic Vibes
actions

Paralanguage Kinesics
How something is Facial
said instead of what is
said i.e. volume, rate expressions, body
and rhythm, silent gestures, dress
 Body Language What it could mean

Avoiding eye contact Lack of confidence in bargaining

position

Making excessive eye Trying to bully or intimidate

contact
Fiddling with objects such Lack of confidence in bargaining
as hair, pencils, or papers position

Crossing and uncrossing Impatient – wants to cut a deal

the legs quickly

Keeping legs and arms Not receptive to your bargaining

crossed position
careful, actions speak louder than the words…

• When we do not know others, there body language

remains the first source of building image about
them.
• What people say may be reinforced or contradicted
by the non-verbal cues.
• When there is no congruence between the verbal
and non-verbal communication, reliance is placed
on the non-verbal aspect that creates a credibility
gap on part of the speaker labeled as the “non-
verbal liar”.
 Negotiation Tips
1. Do not underestimate your power.
2. Do not assume that other party knows your weaknesses.
3. Don’t be intimidated by status.
4. Don’t be intimidated by statistics, precedents, principles,
or regulations.
5. Most negotiation will require some concession making.
6. It is a mistake to assume you know what the other party
wants.
7. Never accept the 1st offer.
8. Don’t fear to negotiate.
 Common mistakes to be avoided
1. Inadequate Preparation
2. Ignoring the give/get principle
3. Use of intimidating behavior.
4. Impatience.
5. Loss of temper.
6. Talking too much, listening too little, and remaining
indifferent to body language.
7. Arguing instead of influencing.
8. Ignoring conflict.