Training Module

NEGOTIATION

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MODULE OUTLINE
• INTRODUCTION
• NEGOTIATION AS A PROCESS
• TO NEGOTIATE OR NOT?
• TYPES AND NEGOTIATION STYLES
• NEGOTIATION STRATEGY
• CLOSING THE DEAL
• CASE STUDY
 INTRODUCTION

Defining negotiation
Exercise 1
INTRODUCTION

What does it mean „to negotiate“?

Let‘s watch the two videos below:

[Link]
[Link]

? Is there any difference between the two scenes

? If yes, how would you explain what is different
INTRODUCTION

Negotiation is „a process through which two or more

parties who are in conflict over outcomes attempt to
reach an argument. It is the constructive, positive
alternative to haggling or arguing; it is aimed at
building an agreement rather than winning a battle“
Pillutla, M. And Nicholson, N. (eds). (2004). Negotiation: how to make deals to reach agreement
FOOD FOR THOUGHT

How often do you negotiate in your everyday life activities?

Do you always use the same method of negotiation?
What do you look for in every negotiation you partake?

What do you think are the key elements of every negotiation?

AGREEMENT TIME-LOSS COMMUNICATION CONFLICT

RELATIONSHIP FEAR OF FAILURE RELATIONSHIP
ANGER CONSENSUS
DEVELOPMENT RUINED
MOTIVATION
Exercise 1 TASK
Take another look at the two videos:

Using the key words form the previous slide, describe the two situations

Video 1:
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
_________________________________
Video 2:
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
_________________________________
 NEGOTIATION AS A PROCESS
Minimum requirements
Competitiveness and cooperation
Creative aspects of negotiation vs. exchange of offers
NEGOTIATION AS A PROCESS

A process, sequence of activities connecting number of events, different tactics, many

choices and decisions in a limited time span
Negotiation requires:
• Minimum two parties
• Differences
• A need to resolve the differences
• An attempt to reach an agreement
• Exploration of different possibilities
• Developing options
 In negotiation, reciprocity
is known as „tit for tat“
COMPETITIVENESS AND COOPERATION strategy

Being competitive is the choice of Being cooperative is the choice you to

maximizing your own benefits which maximize joint benefits, implying trust
might lead to loosing the trust of the
other party.

Think about the following statement:

• THE OUTCOME DEPENDS ON WHAT THE OTHER PARTY DOES
• NEGOTIATORS SHOULD SECOND GUESS THE OTHER PARTY‘S OPTIONS AND MOTIVATIONS
CREATIVE ASPECTS OF NEGOTIATION VS. EXCHANGE
OF OFFERS (COMPROMISE)
Creative aspects of negotiation include:
• Listening
• Ability to identify the interests of both sides
• Persuasion
• Diplomacy
• Building and preserving relationships
rather than the sole process of making an offer and reaching a compromise
CREATIVE ASPECTS OF NEGOTIATION VS. EXCHANGE
OF OFFERS (COMPROMISE)
Personal aspects:
• Be smart
• Be able to analyze and plan
• Be able to perceive and take into consideration other perspectives (be open minded)
• Be able to perceive and manage your own emotions and emotions of others (emotional
intelligence)
• Treat others and yourself with respect
• Don‘t challenge people‘s statements
• Suggest alternatives ways of interaction
CREATIVE ASPECTS OF NEGOTIATION VS. EXCHANGE
OF OFFERS (COMPROMISE)
Cultural aspect
In almost every negotiation, cultural awareness is a crucial factor for achieving the best
possible outcome.
Culture impacts the perception and approach to negotiation. Cultural differences are the
differences in power, time, risk, communication and complexity.
Let‘s take a look at some of cultural differences relevant for negotiation process:

Goal Thai, Chinese, and Japanese negotiators value long-term relationships. Western negotiators aim
at signing a contract.

Protocol The degree of formality in a negotiation can vary from culture to culture. Thais value etiquette
and respectful manners. English and German negotiators are very formal and highly concerned
with proper protocol.
Communication Thais tend to speak softly and use almost no gestures, and prefer indirect language.
Americans are direct and prefer a straightforward presentation with a minimum of game
playing.
Time Americans are sensitive to time. They view it as a limited resource that must not be
wasted. Japanese regard time as long duration, spending time to learn counterparts. Thais have a
very relaxed attitude to time and scheduling
Risk propensity Japanese prefer predictable situations, being strict to the rules. Thais are more flexible to
the rules, and accepting changes
Groups versus In decision making, a more collective culture places emphasis on group priority. An
individuals individual-oriented culture is more independent and assertive. Thai culture is group-
oriented, but hierarchical; decisions are made by the top managers. Japanese negotiators
rely on consensus.
Nature of Thais generally respect contracts, but personal commitment has more value. Germans
agreements are detail-oriented and prefer specific provisions.
Gesteland 2002, Brett 2001, Hendon 2001, Lewicki et al. 1999, Martin et al. 1999, Salacuse 1998,
Wise 1997, Usunier 1996, and Weiss 1994.
Exercise 2

After looking at some of cultural differences, try to define your own cultural characteristics
for the following elements:
Goal:_______________________________________________________________________
Protocol:____________________________________________________________________
Communication:______________________________________________________________
Time:_______________________________________________________________________
Risk propensity:______________________________________________________________
Groups vs individuals:__________________________________________________________
Nature of agreements:_________________________________________________________
 TO NEGOTIATE OR NOT?
Goals and outcomes of negotiation
Elements of negotiation
Best alternatives to negotiated agreement (BATNA)
Exercise
TO NEGOTIATE OR NOT
Here are some of the benefits of negotiation:
• Better outcomes
• Resolving differences of opinion without bad feelings
• A better understanding of the parties involved
• Better business relations
• Less stressful negotiations
• Reduced business costs
• More opportunities for professional development
• Better relationship with stakeholders and other parties involved
• More positive working atmosphere and less stress
Goals and outcomes of negotiation
Goals represent the needs, wants and preferences that are considered before
negotiating
Outcomes present possible results of negotiation

→ Before you start negotiations, think carefully what is it that you need, want or prefer, and
what results are realistically possible.
→ Every negotiation can have one of the three possible outcomes:
• Win – win (both sides win)
• Win – lose (one side wins, the other loses)
• Inefficient (outcomes shared equally)
Goals and outcomes of negotiation
→Goals determine your acceptable outcomes. The wider the goals, the better the
outcomes
→Having more than one goal allows you to have more possible outcomes.
Hard goals: Soft goals:
Strategy – long term goals Cultural – overall business culture,
Change – desire to change the existing employee involvement
state Personal – motivation and ambition
Adaptation – adapt the changes
Improvement – better, efficient, less
time consuming and greater profit
Growth – new products and/or services
Elements of negotiation
Reciprocity

Outcome Trust

NEGOTIATION

Information Power

Ethics
 Reciprocity

Outcome Trust

Elements of negotiation NEGOTIATION

Information Power

• Reciprocity represents a process within which you „return a favour“ and Ethics

reciprocate the offer made by the other party.

• Trust means that the parties will work to achieve an outcome that is beneficial
to all parties involved.
• Ethics is connected to negotiators personal behaviour.
• Power means dealing with the situations when negotiations do not go as
expected. It relates to the alternatives open to the parties involved, more power
– more alternatives.
• Information represent knowing what is and what is not possible as an outcome.
• The better the negotiation, the better the outcome.
BATNA
WHAT HAPPENS WHEN NEGOTIATIONS GO AWRY!

• Every negotiator must have a Best Alternative to Negotiated Agreement (BATNA)

• BATNA is only used in cases when an agreement cannot be reached and
negotiations fails
• Improve your BATNA before the negotiations start
• Convince the other party that you have a good BATNA
EXERCISE 3
One of your suppliers recently lost its only other big customer. The contract with
your company comes up for renegotiation next month.
You know that the supplier can’t afford to lose your business. In fact, it faces
bankruptcy if you don’t continue your relationship.
You have a good idea of the supplier’s cost structure. Should you leave the same
terms as before, or demand more, knowing their position.
[Link]

ANSWER:_____________________
FOOD FOR THOUGHT
According to the studies conducted, if the two parties find themselves in a position
to either accept or reject the offer, where rejection of one party would mean a lose-
lose situation, fairness of the offer plays a big part in negotiations.
If one party offers only a token of the offer to the other party, the other party
would reject the offer.
Further research has proven that negative emotional responses appear when we
are faced with the proposal that dimish the value. Therefore, the rejection!
[Link]
 TYPES AND NEGOTIATION STYLES
Types of negotiation styles/types of negotiator
Integrative and distributive negotiation
Stages of negotiation
Exercise
Types of negotiation styles/types of negotiator
Warm Tough Numbers Dealer

• Friendly • Assertive • Logical and • Socially

• Good listener • Dynamic prone to facts skillful
• Constructive • Decisive • Persistent • Charming
• Open • Leader and patient • Avoids giving
• Informative • Seizes • Weighs all offence
opportunity alternatives • Seeks
• Patient and
Calm • Gets the best • Confident opportunities
• Team player for offer • Articulate
• Trustful

What negotiation style best fits your personality?

Take a look at the video below taking you on a tour around the world

[Link]
INTEGRATIVE AND DISTRIBUTIVE NEGOTIATION

INTEGRATIVE / win- win or win - lose

Placing different levels of importance to various factors
Items shared out using a combination of personal preferences or
Items shared equally

DISTRIBUTIVE / win-lose
One side wins and the other side loses
An aggressive negotiator
INTEGRATIVE AND DISTRIBUTIVE NEGOTIATION

How to achieve integrative negotiation

• Plan and have a concrete strategy
• Separate people from the problem
• Emphasize win-win solution
• Focus on interests, not positions
• Create options for mutual gain
• Aim for an outcome to be based on some objective standard
• Consider the other party‘s situation
• Know your BATNA
• Pay a lot of attention to the flow of negotiation
• Use active listening skills
[Link]
INTEGRATIVE AND DISTRIBUTIVE NEGOTIATION

How change from a win – lose to win – win situation

• Reduce tension
• Increase the accuracy of communication
• Control issues
• Establish common grounds
• Focus less on your position
• Make a more acceptable proposal
• Find an objective criteria to evaluate the solution
[Link]
 Stages of negotiation

•Structuring activities
Accepting/Rejecting •Information
•Procedure
•Outcome activity •More information
•Acknowledgment Positive: own sides
•Settlement point: initial, new and both sides, other side
•Other limits
•Positive consequences •Negative: own and both sides, other
•Negative consequences side
•Other statements about outcomes

Offer Seeking
EXERCISE 4
Try to think of a situation in which you were not able to reach an agreement, and
negotiations failed. What would you single out as the main cause of negotiation
failure?
ANSWER:_____________________

Take a look at the video, and think about perspectives in negotiation procedure.
Have the two Zaxes actually won?
[Link]
 NEGOTIATION STRATEGY
Negotiation skills
Negotiation tactics
Prejudices in negotiation process
Exercise
Negotiation skills

Active
listening
Being a good
Discipline
interviewer

Making the
other party Negotiation Cultural
want to skills differences
engage in talks
 Negotiation skills
Listening might be one of the crucial skills of a good
negotiator.
It allows a negotiator to have an insight into the
negotiating style of the other party.

Take a look at an episode of „active listening“

[Link]

Here are some useful videos with advices as to how to

be an active listener!
[Link]
Negotiation tactics
• All negotiations deploy tactics
• Different tactics correspond to different
negotiation conditions

Time related Authority

Hard tactics Soft tactics
tactics related tactics
• Threat • Delay • Limited • Revealing
• Scare • Setting a final authority information
• Attack date • Unauthorized • Concessions
• Ultimatum • Controlling negotiations • Active
• Cutting off schedule and listening
ties setting the • Promises
agenda

Zohar, Ilana. (2015). “The Art of Negotiation” Leadership Skills Required for Negotiation in Time of
Crisis. Procedia - Social and Behavioral Sciences. 209. 540-548. 10.1016/[Link].2015.11.285.
Negotiation tactics
• Anchoring
Experience and information is key to anchoring!
o When in offense:
Set high goals before negotiations
Open with the deal that is best for you
o When in defense:
Think about the opposite perspective
Ignore the details, use the concrete and overall information
Negotiation tactics
• Nudging

o Subtle signs of what you want to achieve made visible to the other side
o Setting something as a choice to achieve a non-ideal result
o Place some minor issues as big issues, so the other side does not think of an issue at
hand, and deals with less important notions
o Keep in mind that small and insignificant details (for yourself) can be a cause of major
concern to the other side
Negotiation tactics
• Authority
Tactic used all the time!

o Cite and engage an expert and reference their experiences

o A great deal of papers containing data of key opinion leaders
o Use your superiors and people in charge as a cause for refunding to compromise
o Can lead the other side to not take into consideration the competitor information
Negotiation tactics
• Risk of loss
When people think on what they get to gain, they think less of what they
can lose

o People will always try to reach greater gains

o People prefer to be sure rather than to lose
o Good news should be shared in great volumes, while bad news should be kept to a
minimum
o Choices should be presented in terms of what people have to lose rather than what
they can gain
Prejudices in negotiation process
• Be rational during your negotiations
• Develop perspective thinking
• Be aware of your instinctive reactions
• Control your emotional reactions
• Understand the interests of the other party
• Change mindsets
EXERCISE 4 – How to plan your negotiations

You are negotiating for a job position as a manager of a new sport center!

Plan your negotiations well, by answering to some of the questions

bellow:
EXERCISE 4 – How to plan your negotiations
1. Understanding the issues—that is, what is to be negotiated.
2. 2. Assembling the issues and defining the bargaining mix:
• Which issues are most important and which issues are less important?
• Which issues are linked to other issues, and which are separate or unconnected?
3. Defining the interests:
• What are your primary interests?
• What are the other’s primary interests?
4. Defining limits:
• What is my walkaway point on each issue—that is, what is a minimally
acceptable settlement for each issue or the issues as a package?
• If this negotiation fails, what is my best alternative to a negotiated agreement
(BATNA)?
EXERCISE 4 – How to plan your negotiations
5. Defining targets and openings:
• What will be our preferred settlement in each issue?
• What will be our opening request for each issue?
6. Constituencies: To whom is the other accountable for the solution—that is, to
whom does he or she report or have to explain or defend the outcome? Does this
party also have to be involved in issue definition and goal setting?
7. Opposite negotiators: Who is the other party (or parties) in the negotiation?
• What information do we have about them?
• What issues will they have?
• What priorities are they likely to have for their issues?
• What are their interests?
• What has been my past relationship with them?
EXERCISE 4 – How to plan your negotiations
8. Selecting a strategy:
• What overall negotiation and strategy do I want to select? How important are the outcome and
the relationship with the other?
• What strategy do I expect the other will be selecting?
9. Planning the issue presentation and defense:
• What research do I need to do on the issues so that I can argue for them convincingly and
compellingly?
• Do I have (or can I prepare) graphs, charts, and figures that will clearly communicate my
preferences?
• In what order and sequence should I present the information?
• What arguments can I anticipate from the other party, and how am I going to counteract their
arguments?
• What tactics will I use to present my arguments or defend against the other’s arguments?
• What tactics will I use to try to move us toward agreement?
• What roles will different people play in the negotiation?
EXERCISE 4 – How to plan your negotiations
10. Protocol:
• Where will we negotiate? Do we wish to influence the choice of location?
• When will we negotiate? Do we wish to influence the time and length of
negotiation?
• Who will be at the actual negotiation meeting? Do we want to bring other
parties to serve a particular purpose (e.g., an expert or an observer)?
• Do we have an agenda? How can we help to either create the agenda or
participate in its development?
• What will we do if the negotiation fails?
• Who will write down and confirm the agreement? Do we need to have the
contract reviewed by a professional (e.g., attorney, accountant, agent)?
Lewicki, R. J., Saunders, D. M., & Barry, B. (2010). Negotiation: Readings, exercises,
and cases. New York: McGraw-Hill Irwin.
 Closing the deal
Finalizing your negotiation
„Walking away“
Case study
Finalising your negotiation
• When you have reached an agreement
o Do not gloat over your victories
o Do not brood over your defeats
• Continue your cooperation with the other party
• Remain responsive to identifying problems on time and negotiate
solutions
• Never lose sight of your goal, even after the negotiations
Walking away
• And remember, a good negotiator knows when to negotiate and when to
simply „walk away“.
Case study

• Take a look at the video, depicting a win - win scenario!

• [Link]
References and further readings

• “The Art of Negotiation” Leadership Skills Required for Negotiation in

Time of Crisis, Procedia - Social and Behavioral Sciences, Volume 209,
2015, Pages 540-548, ISSN 1877-0428
• E. Wertheim, "Negotiations and Resolving Conflicts: An Overview," College
of Business Administration, Northeastern University, [available at:
[Link]
[Link]]
• Fells, Railton Edward. (2016). Effective negotiation : from research to
results. Port Melbourne, VIC : Cambridge University Press
References and further readings

• “The Art of Negotiation” Leadership Skills Required for Negotiation in

Time of Crisis, Procedia - Social and Behavioral Sciences, Volume 209,
2015, Pages 540-548, ISSN 1877-0428
• E. Wertheim, "Negotiations and Resolving Conflicts: An Overview," College
of Business Administration, Northeastern University, [available at:
[Link]
[Link]]
• Fells, Railton Edward. (2016). Effective negotiation : from research to
results. Port Melbourne, VIC : Cambridge University Press
References and further readings

• Fisher, R., Patton, B., & Ury, W. (2011). Getting to yes: Negotiating
agreement without giving in (Rev. ed.). New York: Penguin Books.
• Lewicki, R. J., Barry, B., & Saunders, D. M. (2007). Essentials of negotiation.
Boston, Mass: McGraw-Hill/Irwin.
• Lewicki, R. J., Saunders, D. M., & Barry, B. (2010). Negotiation: Readings,
exercises, and cases. New York: McGraw-Hill Irwin.
• Tsay, Chia-Jung & Bazerman, Max. (2009). A Decision‐Making Perspective
to Negotiation: A Review of the Past and a Look to the Future. Negotiation
Journal. 25. 467 - 480. 10.1111/j.1571-9979.2009.00239.x.
References and further readings

• Voss, C., & Raz, T. (2016). Never split the difference: Negotiating as if your
life depended on it (First edition.). New York, NY: Harper Business, an
imprint of HarperCollins Publishers
• [Link]
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YouTube videos

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