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 clients demands. He even agrees to the clients offered price,
which is so low it would take a hefty amount off of his commission.
Situation #2 Win-Lose (Accountant)
Edgar Villareal and his wife Cathy are migrating to the US and are selling their house for
Php5.3 M. They 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. Mrs. Lita Dizon is such a
buyer. She 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. She therefore asks the Villareals to lower the
asking price; she tells them it is way too high given the state of the house. She says she needs
the extra money to pay for the repairs. Edgar and Cathy 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 tax and the transfer of deeds.
Situation #3 Lose-Lose (Blocker)
The brothers Ely, Tony, and June Maranan are selling the six hectare piece of agricultural land
that they inherited from their father. During negotiations with Mr. Ng, a wealthy Chinese
businessman interested in buying the property, Ely and Tony do all they can to convince the
prospect to sign the deed of sale. When Mr. Ng finally agrees, Jun 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. They agree to give their brother some time to think. The days turn
into weeks and the weeks turn into months and still Jun could not make up his mind. In the end,
Mr. Ng grows tired of waiting and finds another piece of land to buy.

Situation #4 Win-Win (Real Negotiator)

Beth Villanueva is selling her internet caf to a middle aged couple, Marie and Fred Gonzales.
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. In addition, she will supply the Gonzaleses with
the cakes and pastries they will serve at the caf, from the new bakeshop that she is putting up.
the buyers agree, but they plead to Beth to lower her asking price. They need some extra
money to pay for the repairs as well as for the renovation of the caf itself, they say. Besides,
their knowledge of the computers and the internet is limited; they would need to hire somebody
who would manage the business for them.
Beth agrees to grant them a small discount. Furthermore, she advises them that if they want
their business to prosper, they should learn to manage it themselves. As an added bonus, she
offers to teach them what she knows about computer maintenance and the internet. The
Gonzaleses gratefully accepted her offer, and promptly agree to sell the contract.
Eighteen points to remember about negotiation.
1. The goal of negotiation is not to win but to reach an agreement that will benefit everyone
concerned.
2. A 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.
3. All negotiators must be willing to work with those who have conflicting interest and to
compromise or exchange value for value in order for the negotiation to be a success.
4. A negotiation can only be when both parties acknowledge the legitimacy of each others
conflicting viewpoints and are willing to work out a solution or agreement in order to arrive at a
win-win situation.
5. Both parties should enter into negotiation in the spirit of competition- a healthy competition
aimed at achieving goals that can be shared equally, mixed with a dose of cooperation in finding
mutual interest and needs.
6. All negotiators should learn how to give and take in order to achieve their desired outcomes
and to find lasting solutions.
7. A good negotiation ends with all players winning or gaining something.
8. Negotiation involves an exchange of ideas between human beings and its success thus
depends on the participants understanding of human nature and the ability to empathize with
and anticipate each others needs.

9. 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.
10. Before entering into any negotiation, do your homework.
11. Weigh all your options before agreeing to enter into negotiation.
12. You must have the courage to take calculated risks while negotiating.
13. When negotiating as a group, always get the commitment of every team member before
entering the meeting.
14. In all negotiations, always look beyond what the other party in openly demanding.
15. If possible, end all your negotiations with a formal written agreement detailing all the actions
to be implemented.
16. Keep the door of communications wide open even if the negotiation appears to have failed.
17. Not all things in life are negotiable.
18. 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
In order for you to effectively manage a negotiation, you must prepare ahead of time.
5 most important steps you should take:
1. Prepare all relevant tools and information that can help you strengthen your position and
create a favorable climate for a successful negotiation.
2. Set your goals.
3. Plan your initial stance.
4. Prepare your back-up and bottom-line positions.
5. Lastly, you should prepare some ready answers and solutions to the expected issues or
concerns of the other party.
Drawing Up a Negotiation Strategy
In preparing your initial, back-up and bottom-line positions, you should take certain essential
things into consideration.
1. Assess what you will do if you dont reach an agreement with the other party.
2. Assess what the other party will do if they do not reach an agreement with you.
3. Assess the true issues in the negotiation.

4.
5.
6.
7.

Assess how important each issue is to you.

Assess how important each issue is to the other party.
Assess the bargaining issue.
Assess where the trade-offs exist.

THE NEGOTIATION PROPER

Eight easy steps in the negotiation process
1.
2.
3.
4.
5.
6.
7.
8.

All of the players should spell out their interests and demands.
Identify and acknowledge all the conflicts and issues that need to be resolves
Agree on a common goal
Bargain for a better deal
Trade concessions
Try to resolve the issues and problems of all those concerned
Compromise
Conclude with a formal or a written agreement

FOUR NEGOTIATION STAGES AND CRITICAL TASKS

1. [Link] Stage
-Create a climate conducive to the positive exchange of views and issues such as resolving
all past disputes/conflicts.
-Establish rapport
-Get aggreement on agenda and ground rules. Identify issues and roles. Establish timeless
2. The opening stage
-Clearly state your opening possition or initial offer.
-Clarify the other party's opening position or initial demands, test these for firmness in a
logical and rational manner.
3. The Exploratory Stage
-Identify the other party's underlying demands and needs by probing or asking questions or
through active listening.
- Find out and test alternative currencies of exchange. This is the part where you trade
concessions and make compromises in order to arrive at a meeting point or an agreement.
4. The conclusion or the closing stage
-Match currencies to needs and formalize 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 Task Checklist

In order to ensure that negotiation will go properly throughout all the stages, prepare a critical tasks
checklist such as the one below. Bring a copy with you to negotiation table, and tick off each critical
task as it is performed. Write down the details in the box on the right. this will help you manage the
process better.

Task

Details
Preliminary Stage

Strategy

Clarify issues and concerns

Acknowledge common interests served

by agreement

Establish the negotiation process

People

Identify parties with vested interests and

expectations

Make sure appropriate people are

negotiating

Climate

Communicate willingness to negotiate

major issues

Communicate optimism about ability to

resolve conflict

Agenda

Opening Stage
Own position

Clearly communicate position

Defend position in manner appropriate to

situation

Demonstrate belief in own position and

conviction

Other partys position

Listen to the other partys position

Ask probing questions to the other

partys position

Climate

Demonstrate acknowledgement and

understanding of the other partys
position
Exploration Stage

Alternative Currencies

Position own alternatives as benefits to

others

Ask question to test value of own

currencies.

Ask question to test the availability of

other partys currencies

Rank importance of alternative proposal

and cost-benefit

Underlying Needs

Ask questions regarding other partys

needs and wants

Ask follow-up questions to deepen

understanding of issues

Reveal proprietary information when

appropriate

Climate

Maintain non judgmental approach with

objectivity

Use creativity to suggest additional

alternatives

Encourage openness among players of

both sides
Closing Stage

Closing offers

Make clear exchange offer

Pursue balanced agreements that meet

the needs of all parties

Contract

Clarify final agreement

Identify next steps (implementation)

Climate

Bring process to conclusions

Show willingness to return to exploratory

stage, if necessary

Show willingness to test viability of

agreement prior to finalizing the deal

NEGOTIATION QUALITY ASSESSMENT

Encircle the number of your answer.
1- Very much
2- Slightly

3- Not sure
4- Not really

5- Not at all

1. To what extent has the dispute between the

parties been resolved?
2. Are both parties happy with the agreement?
3. Have all my needs and wants been met?
4. Have all the other partys needs and wants been
met?
5. Has the relationship between the parties become
stronger?
6. Have both parties agreed to keep the relationship
mutually beneficial and lasting in the long run?
7. Have all the implementation pitfalls been
anticipated and fully covered by the agreement?
8. Are additional alternatives and contingencies
also covered by the agreement?
9. Is the final contract or agreement clear to both
parties?To terminal decision makers?
10. Do both parties agree to implement the
agreement at the soonest possible time?

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