Negotiations Skills

Bharat Pagare
 Meaning of Negotiation
The word “Negotiate” comes from the
Latin Word
Elements of “Negotium” is
Nag (Not) + Otium (Leisure)
Negotiate = Not Leisure
 John F Kenedy said

“Let us never negotiate out of

fear
But let us never fear to
negotiate.”
 Negotiations
NEGOTIATIONS

It is the process whereby two or more

parties, with differing views initially, attempt
to reach an agreement on a common
objective by the selective use of different
methods of persuasion.
 NEGOTIATIONS
Negotiations is concerned with resolving

the conflicts between the two parties,

usually by the exchange of concession

 Necessity for Negotiations
Why to Negotiate ?

What to Negotiate?

How to Negotiate ?

When to Negotiate ?

Expected outcome of Negotiations

 Why to Negotiate ?
Deviations in expectation and proposal
Has scope for negotiations
To ensure reasonability of the proposal
To have clarity of the proposal
To break the cartel
For overall & better understanding
To remove misunderstanding
To creat atmosphere for trust
 When to Negotiate ?

Both parties are willing to negotiate

Both parties has agreement
Both parties has conflicting views
Both parties has authority
Ensure that there is noting to loose by
asking a better deal
 When not to negotiate?

There is nothing to bargain

Lack of preparation

Rising trend in market

No issues for discussion

Chances of collapse is more
5 Main Motives of Receivers
Gain

Pride

Fear

Imitation

Pleasure
 5 Motives

Gain : To obtain financial advantage and

Increase present worth
Pride : To satisy the ego..
Fear : To stem competition of product &
Market goods at lower cost.
Imitation : To increase social standings &
enhance self image
Pleasure : To gain a more comfortable
Existence, experience and happiness.
 Stages of Negotiations

Pre Contract Stage Negotiations

Negotiated Agreement

Post Contract Stage Negotiations

 Price & Cost Parameters
Cost based pricing
Demand based pricing
Too low pricing
Analyse the pricing
Build a cost model –
Material Cost, Labour Cost, Overheads, Profits
Obtain Market information on prices & costs
Invite quotations, reference prices, RM price
Bench marking, Trend Analysis
Independent estimates by experts / consultants
 SWOT Analysis
Analysis reflects perception of supplier situation
Determine opportunities
Identify potential threats
SWOT analysis to be done scientifically
Known to all team members
 SWOT ANALYSIS

Strengths of both the parties

Weakness of both the parties

Opportunities for both the parties

Threats for both the parties

Setting Targest from Objectives
Relevant Targets
Ambitious Targets
Specific Targets
Measurable Targets
Impartial Targets
Compatible Targets
 Know the Counter Part
Counter Part's capabilities & strategy
Technical & Financial capabilities
Market related capacities
Management capabilities
Management Culture and Ethics
Industrial Relations
Cost factors
Reliability
Specialization
Knoweldge Management
Sources for information
 Negotiation Phases

Preparing Meeting

Follow up
 Human Nature
Warm - person who is friendly, and easily
relates to other people
Tough – An adversarial negotiator who may
be hard on the problem and on the people
involved.
Logical – A person who resorts to rational
arguments , facts and figures.
Creative – A person who is inventive and
imaginative, who looks at the total picture but
leaves details to others.
Deal Maker - A person who enjoys the
barganing involved in negotiation, and looks
for quick solutions
 Strengths of Warm Person
Friendly & accessible
Good Listner
Shows concern and empathy
Looks for mutual gain
Patience
Trusting
Values Personal Relationships
 Weakness of Warm Person

Too accomodating
Can lose sights of the essentials
Finds it difficult to deal with conflict and
pressure
Discloses information easily
May focus too much on personal issues
Finds it difficult to deal with people who do
not have personal relationship
 Managing Warm Person
Build Trust
Use logic that shows understanding
Emphasise the importance of the deal to
them as individuals
Summarise frequently and keep the
discussions focused
Emphasise the long term relationship
Ask open questions to determine their need
and concerns
 Strengths of Tough Person

Natural Leader
Strong desire to achieve
Persistent
Assumes leading role in meetings
Decisive & keep things moving
Deals well with pressure
Assertive
 Weakness of Tough Person
Adopts right positions
Tends not to build on the ideas of others
A selective listener
Impulsive and can be impatient
Insensitive to personal relationships
May create resentment
 Managing Tough Person

Do not give a concession without obtaining

something in return
Be warm but firm (not tough)
Recess frequently to relieve the pressure
Use your organisation's power
Use only compelling arguments and do not
dilute the discussions
 Strength of Logical Person
Focuses on the issues
Grasp details
Precise
Methodical
Well-prepared
Backs up statements with facts & figures
Logical Reasoning
Good Record Keeping
Linkage with other issues
 Weakness of Logical Person
Tries to “force” logic on others
Unimaginative – relies too much on facts
and figures
Tends to ignore the people involved
Gets too absorbed in the details
Cannot readily change persuasion styles
May not see the global picture
Reaches deadlock easily
 Managing Logical Person
Do not allow yourself to get caught into their
logic stranglehold
Get their list of requirements at the start
Listen and evaluate their facts carefully
Recess often to analyse the issues
Show respect for their expertise
Back up your own arguments with facts and
figures
Use emotion as a counter-persuasion
 Strength of Creative Person

Inventive, good at imagining solutions

Visionary, intutive
Sees the global picture
Interrelates issues easily
Persuasive
Strong drive to reach goal
Builds co-operative approach
 Weakness of Creative Person

May propose unrealistic solutions

Disregards the short-term / medium term
May neglect details
Can be insensitive to interests of others
Impatient with those who do not have a
global approach
Overlooks immediate problems and
obstacles too easily
Underestimates the importance of facts
 Managing Creative Person

Listen attentively, and ask many questions

Take advantages of their creative thinking
skills to solve joint problems
Try to demonstrate commonality of interets
Keep the discussion focused and down to
earth
Builds on their ideas
Summarise frequently
 Strength of Deal-Maker

Sees opportunities
Makes quick decisions
Builds relationships easily
Strong desire to achieve
Dynamic
Flexible
Enjoys Bargaining
 Weakness of Deal-Maker

Tends to neglect long-term goals

May neglect details
Shifts positions quickly and easily
Tends to be superficial in personal
relationships
May try to manipulate people and situations
Can propose risky solutions, which may be
difficult to implement
 Managing Deal-Maker

Try to understand their underlying interests

Summarise and test their understanding
frequently
Trade Concessions
Do not move too easily
Separate facts from assumptions
Make sure you understand all the
implications of the day before agreeing
 Impact of Power Balancing

Organisation Power

Personal Power
 Organisation Power
Market Power
Relative Value Power
Financial Power
Reputation Power
Time Power
Reward Power
The power of Choice
 Personal Power
Position Power
Expert Power
Information Power
Disruptive Power
Charismatic Power
Connection Power
 NEGOTIATION STYLE

Co-operative Style
Both parties should gain some benefit

Competitive Style
Maximize only one side’s advantage
 Parameter Targets
Quality
Delivery
Price
Payment Terms
Remember :
Negotiation Zone is the range within which
the chances for an agreement are located.
 Formulate Your Positions
For each issue, formulate your position :
Initial Position :
What is the best you could hope for?
You never get more than you ask for.
Objectives :
What is likely to be obtained ?
Worst :
Absolute situation you can live with which if not
reached, you will walk away
Tradeoffs :
Potential tradeoff position that you may consider
 Negotiation Strategy
Position
Your own &
Objectives Posible
& Interset
Targets of the
Your other side

Negotiation

Strategy

Relative
Strengths
&
Weaknesses
of both sides
 Phases of Negotiation

Preparation
Establishing Rapport
Discussions : Starting of Negotiations
Proposals
Counter Proposals
Bargaining
Reach Settlement
 Negotiation Approach
Win-Win
Long Terms Contracts
Repetitive deals
Co-operative suppliers
Win-Lose
One off, short-term deals
Adversarial suppliers
 Important Points for win-win

Be nicely prepared
Listen, Listen & Listen
Use your strategy
Stay with your agenda
But be flexible
Take breaks
Aim High
Develop positive assumptions about your
bargaining position
 Important Points for win-win
Develop a variety of positions on issues that
Will allow you room to compromise and
Demonstarte flexibility
When compromising, know the value of the
issues to each side.
Always get a concessions of equal value in
return
Concede concessions slowly and in small
amounts
 Important Points for win-win
Make your concessions appear valuable
If facing a win / lose negotiator, put pressure
on the other side and resist pressure being
placed on you.
Do not disclose your weaknesses.
Always be aware of what you say and how
you say it
Be calm and keep emotions out of the way
Non price issues should be covered
 Important Points for win-win
Be patience
Patience enhances bargaining skill.
The best deal from both the sides usually
takes time.
Be willing to bail out from a bad deal if at
all possible.
Be willing to come to back and resolve a
deadlock
Document results and minutes evaluate the
result
 Quality Targets
Best Target
Specifications as per tender enquiry
Rejections to be replaced within 24 hours
Worst Targets
Accept deviations as per tolerances
Rejections to be replaced within 3 days
 Delivery Target

Best Target
Within 15 days

Worst Target
Within 25 days
 Price Target
Best Target
As low as Rs 450 per Unit

Worst Target
Not more than Rs 490 per Unit
 Payment Term Targets
Best Targets
Open Account
Interest Free Credit for 90 days
Worst Targets
Letter of Credit
Payment within 30 days
 Persuasion Methods
Emotional Persuasion

Logical Persuasion

Barganining

Compromise

Threats
 Negotiations Tactics
The “Buliding Block” technique
Silence
Repeat, Repeat, Repeat
Recess
Divide and Rule
Empathy
Re-escalation of demand
One more thing
Deadlines
Slicing
 Team Members
Team Leader

Specialised Supporter

Summariser

Observer
 Phases of Negotiations
Opening Phase
Testing Phase
Proposal Phase
Barganing Phase
Agreement
 Opening Phase – Do's
✔ In case you are host, be Welcoming
✔ Show respect and interset
✔ Ensure refreshments are ready
✔ Make purposeful small talk
✔ Findout guests as people
✔ Check their authority to negotiate
✔ Be warm as individual
✔ Be firm on issues
✔ Agree on agenda, expected outcomes
✔ Decide time factor & discuss
 Opening Phase – Do not
Be demanding
Put down any conditions
Refer to contracts with other suppliers
Refer other negotiations you have taken
Make the other side feel uneasy
Do not start substantive discussions
 Agreement Phase – Do's
➔ Watch for closing signal from other party
➔ Make sure that all issues are resolved
➔ Be aware of the temptation of other side
to reopen the negotiation on a particular issues
➔ Make a joint closing summary
➔ Get an agreement in principle
➔ Use visual aids to summarise
➔ Specify responsibility for any followup
➔ Offer to prepare the agreement document
 Agreement Phase – Do Not
Force the agreement by making “final offers”
Fall for the “quick deal” tactics of “splitting
the differences”
Give or ask for additional concessions
This may lead to go back to start of the
bargaining phase
Tell them what a good deal they could have
had if they had done something differently
 Asking questions
Open Questions
Closed Questions
Probing Questions
Multiple Questions
Leading Questions
Reflective Questions
Hypothetical Questions
 Tips on Listening
Stop Talking & allow others to make their point
Concentrate on what they are saying
Donot interrupt or answer back
Try to understand their underlying concern
Do not jump to premature conclusions
 Conclusion of Negotiation

Formalising the Agreement

Monitoring the Agreement
Managing the implementation of Agreement
Evaluation of Negotiation Performance
Review of Negotiation
Discussions amongst collegues & seniors
Corrective Actions
 Conclusion of Negotiations

Find out the answers to following questions :

Did we meet our objectives ?
What went well?
What went wrong?
What could have been better?
What did not go well that should have
gone Well?
 Conclusion of Negotiations

What did the other party do well?

What did the other party did not do well?
What are the learning mistakes ?
 Negotiations
Negotiations is continous process and most
of what we learn is from the experience
One needs to change with time
Changes required for Awarness, Attitude
Changes required for Knowledge Updation,

Chagnes required for rapid implementation

of new and old concepts & techniques
NEGOTIATION PREPARATION CHECK LIST

SR DETAILS

1 Meeting WithM/s ___________________ At_________ On________

2 PARTICIPANTS
Ours Them

Name Designation Name Designation

a)
b)
c)
3 MAIN TOPICS
a)
b)
c)
4 SUBSIDARY TOPICS
a)
b)
c)
NEGOTIATION PREPARATION CHECK LIST

5 OUR STRENGTHS OUR WEAKNESS

a) a)
b) b)
c) c)
6 OUR OBJECTIVES

A MUST HAVE VALUE TO US COST TO THEM

1
2

B WOULD LIKE VALUE TO US COST TO THEM

TO HAVE

C OTHER CONCESSION
WE MIGHT LIKE

7 THEIR OBJECTIVES

A MUST HAVE VALUE TO THEM COST TO US

1
2

B WOULD LIKE VALUE TO THEM COST TO US

TO HAVE

C OTHER CONCESSION
THEY MIGHT LIKE
 DETAILS
8 INFORMATION OF OTHER PARTY
a)
b)
c)

9 COMMON GROUND
a)
b)
c)

10 POSSIBLE COMPROMISES
a)
b)
c)

11 STRATEGY
a) WIN – WIN
b) WIN – LOOSE
 APPENDIX – IV
NEGOTIATION ANALYSIS
1 OBJECTIVES
Objectives
Achieved WON LOST
Value to
Value to us Cost to them Cost to us Them
1)
2)
3)
4)
NET BALANCE
2 ASSUMPTIONS
ASSUMPTIONS RIGHT WRONG NOT CHECKED
1)
2)
3)
4)
3 POWER
POWER US THEM

4 STYLE
STYLE US THEM
5 HOW COULD WE HAVE DONE BETTER
1)
2)
3)
6 PERSONAL PERFORMANCE
OURS Their
(to learns
MATTER from) (For when we next meet)
1)
2)
3)
7 FUTURE ACTIONS
1)
2)
3)

SIGNATURE DATE:-
 APPENDIX-III
NEGOTIATION RECORD SHEET
SR. NO. DETAILS
1 MEETING WITH M/s. AT __________ ON _________
2 PARTICIPANTS
Ours Them
Name Designation Name Designation
a) a)
b) b)
c) c)
3 ASSUMPTIONS TRUE FALSE
a)
b)
c)
d)
4 SHOPPING LIST
Ours Them
Sr. Priority Sr. Priority
a) a)
b) b)
c) c)
5 SEQUENCE
Sr. US MID POINT THEM
A
B
C
D
E
F
6 OUT COME
MATTER CONFIRMED
1
2
3
7 ACTIONS NEEDED
MATTER BY WHOM BY WHEN
1
2
3
Thank You