Negotiation and its relevance to Business
Presentation By :-Ankit Rawat
Diwakar
Sharma
Athul C Sasi h
Rajdeep Lamba
Yatin Nodiyal
What is Negotiation?
The term ‘ Negotiation’ is a discussion between two or more
people or parties intended to reach a beneficial outcome over one
or more issues where a conflict exists with respect to at least one
of these issues. This beneficial outcome can be for all of the parties
involved, or just for one or some of them.
People negotiate daily, often without considering it a negotiation.
Negotiation occurs in organizations, including businesses, non-
profits, and within and between governments as well as in sales
and legal proceedings, and in personal situations such as marriage,
divorce, parenting, etc. Professional negotiators are often
specialized, such as union negotiators, leverage buyout negotiators,
peace negotiator, or hostage negotiators.
Out come of Negotiation can be
DEFINATIONS
1- ROBBINS:
A process in which two or more parties exchange goods and
services and attempt to agree upon the exchange rate for them.
2- Rubin and Brown (1975)
Negotiation refers to a process in which individuals work
together to formulate agreements about the issues in dispute. This
process assumes that the parties involved are willing to
communicate and to generate offers, counter- offers, or both.
Agreement occurs if and only if the offers made are accepted by
both of the parties.
Nature/characteristics of negotiation
It requires two parties: A negotiation is a meeting between two parties
over issues, which is important in the opinion of both parties. The parties
must be in conflict and it requires the parties to work together to achieve
some desired outcomes.
It is a continuous process: Negotiation is a continuous process in an
industrial or in a business organization. It occurs between the
employers and the employees on wages, terms and conditions of the
employment, between sales representatives and buyers on price and
contracts and between the departments over resources allocation
Usually there is no winner/loser: Negotiation need not have a winner or
loser. In every negotiation, there are opportunities to be created especially
while using social skills and effective communication to bring both parties
together toward win-win outcomes in which mutual interest of the parties is
involved.
Require flexibility: The parties which are involved in negotiation need to
be flexible. The areas of the agreement are to be identified clearly.
Without flexibility, there will be very little room to maneuver during the
negotiation process itself. It will result in putting the issue into a corner.
Ultimately it leads to a negative attitude where there is non- co-
operation and refusal to reach a conclusion.
Needs effective communication: Negotiation based on effective
communication. The C’s for its effectiveness are completeness,
consciousness, courtesy, cordial, correctness and consideration.
Types of negotiation
1 DISTRIBUTIVE NEGOTIATION(The Fixed Pie)
also called "claiming value," "zero-sum," or "win-lose" , is a
competitive negotiation that is used to decide how to
distribute a fixed resource, such as money.
Each person involved in the negotiation defines
ultimate point where the settlement will be made.
2 INTEGRATIVE NEGOTIATION
The characteristic feature of integrative negotiation is that
it relies in win-win situation and therefore uses a
collaborative model of conflict resolution. Both parties
involved in negotiation process jointly look at the
problem, try to search for alternatives and try to evaluate
them and reach a mutually acceptable decision or solution.
Types of negotiation:-
MULTIPARTY AND MULTIPHASE NEGOTIATION
Some negotiations go through phases and deal is done
at last. Some negotiations have many parties as
shareholder. It is multiparty. Business and professional
negotiations commonly involve more than two parties, and
generally more than two people. In multiparty negotiations,
coalitions or alliances can form among the parties and
influence the process and outcome. Coalitions have more
power than any individual party involved in the negotiation.
Negotiation Styles-
Competitive: Competitive strategies assume a
"win-lose" situation in which the negotiating
parties have opposing interests. Hostile, coercive
negotiation tactics are used to force an
advantage, and pre negotiation binding
greements are not allowed. Concessions,
distorted communication, confrontational
tactics, and emotional ploys are used. used to
divide limited resources; the assumption is that
the pie finite.
Negotiation Styles-
Cooperative: Negotiation is based on a win-win
mentality and is designed to increase joint gain;
the pie to be divided is perceived as expanding.
an assumption that common Interests, benefits,
and needs exist. Trust building thorough and
accurate exchange of information , exploration
of issues presented as problems and solutions.
1-DISTRIBUTIVE NEGOTIATION
Strategies used in it are
I want it all
Good cop, bad cop
ultimatums
2-INTEGRATIVE NEGOTIATION
Strategies used in it are
Focus on interests(create value) and not position
Separate the people from the problem
Insist on using objective criteria
Invest option for mutual gains
The best deal
Seeking clarity does not conflict with the view that negotiations should achieve
the best deal, it merely points out that both parties to a negotiation have to
understand what it is that they have agreed to.
Achievement of an Organization's objectives
The goal of every negotiation must be to achieve a result which, even if it
falls short of the original objective, can be considered a satisfactory
advancement towards it.
Create of a long-term relationship between the parties
Whilst this is not always possible, and some cultures, such as the
Japanese, place more emphasis on this aspect of negotiation, this is
increasingly important as companies build networks of alliance partners.
Nuclear Deal with Iran
When the United States and five other world powers
announced an interim agreement to temporarily freeze
Iran’s nuclear program, the six-month accord, which
eventually led to a full-scale agreement in 2015, was
designed to give international negotiators time to negotiate
a more comprehensive pact that would remove the threat of
Iran producing nuclear weapons. As Iranian President
Hassan Rouhani insisted that Iran had a sovereign right to
enrich uranium, the United States rejected Iran’s claim to
having a “right to enrich” but agreed to allow Iran to
continue to enrich at a low level, a concession that allowed
a deal to emerge.
Apple
Samsung
Apple and Samsung’s Dispute Resolution
Case Study
Back in April 2011, Apple had filed a lawsuit accusing
Samsung of copying the “look and feel” of the iPhone
when the Korean company created its Galaxy line of
phones. Samsung countersued Apple for not paying
royalties for using its wireless transmission
technology. The two companies have repeatedly
accused each other of copying the appearance and
functions of their smartphones and tablet devices. The
companies showed some willingness to compromise in
an effort to avoid going to court: at the California
court’s suggestion, they cut the number of disputed
patents in half.
Apple and Samsung’s Dispute
Resolution Case Study
Apple filed a motion asking the presiding judge to bar the
sale of Samsung’s Galaxy Tab 10.1 on the grounds that the
tablet was designed to “mirror” Apple’s second-generation
iPad . Yet the two-day mediated talks between the CEOs in
late May ended in an impasse, with both sides refusing to
back down from their arguments. California jury ruled in
August 2012 that Samsung would have to pay Apple more
than $1 billion in damages for patent violations of Apple
products, particularly its iPhone. The judge eventually
reduced the payout to $600 million. Later, another jury
ruled that Samsung would have to pay Apple $290 million
of the amount overruled by the judge in the 2012 case.
The WarnerMedia Deal
One of the largest media deals of all time went
through this summer, creating WarnerMedia. AT&T’s $85.4bn.
acquisition of Time Warner started almost two years earlier.
Randall Stephenson, CEO of AT&T and Jeff Bewkes, his
counterpart at Time Warner met for lunch and discussed the
paradigm shifts in their industry.
The ultimately negotiated a merger, a vertical one to be precise,
where two companies merge that produce separate services along
the value chain. Here, content creation was combined with
distribution. Time Warner – with franchises such as Lord of the
Rings and Harry Potter – would deliver the content for AT&T’s
large customer base.
US Trade Wars With China
US President Donald Trump and Chinese President Xi Jinping
held a crucial negotiation at a post G20 summit in Buenos Aires,
on November 30.
According to the White House, it was a "highly successful
meeting". The two parties merely agreed to halt new trade tariffs
for 90 days, with the stipulation "If at the end of this period of
time, the parties are unable to reach an agreement, the 10 percent
tariffs will be raised to 25 percent."
China agreed to buy agricultural, industrial and energy products to
fight the surplus. Also, China plead to control Fentanyl, an opioid
that is responsible for a rise in drug addiction in the US.
Starbucks and Kraft Foods
A three-year dispute between Starbucks and Kraft
Foods over the distribution of Starbucks packaged
coffee in grocery stores was resolved with arbitration
ruling that Starbucks had breached its agreement with
Kraft. The coffeemaker was ordered to pay the food
giant $2.75 billion.
Negotiation Skills and Role
Distribution:
A good negotiating team has members with diverse skills
Technical Knowledge
Relationship Skills
Patience
Observational Skills
Behavior Analyzing Skills
Having people with these qualities is a definite
advantage during the process of negotiation.
Depending on their skills, the members are assigned
certain roles and responsibilities in the negotiation
process
Unity within the team is the most important attribute
the team should understand the subject
Decide which information is needed and which is not
in the process
Took some points that provide help to other side try to avoid them
prepared with full range of knowledge and expertise
knowing the other side very well
Team leader discus eith other team members such as behavior
analysts, and take their feedback
It is good way to solve internal disputes
Flow Chart of Negotiation
The Negotiation Process
Pre Negotiation
Negotiation
Post Negotiation
Preparation
Relationship building
Pre Negotiation
Information gathering
Prediction
Looking for the possibility
Bidding
Negotiation
Closing the deal
Implementing the
agreement
Post Negotiation
Follow up
ISSUES IN NEGOTIATION
The biggest challenge to negotiation is when individuals are not
ready to understand the second party at all. There are individuals
who only think about their interests and tend to ignore the interest
and needs of the other.
Lack of time is also a major challenge to effective negotiation. One
should never be in a hurry. You need time to convince others.
Going unprepared for a negotiation is unacceptable. Don’t
underestimate the second party. One should do his home work
carefully.
Lack of patience also leads to a bad negotiation. Every individual
has the right to express his views and one should not interfere in his
speech. You might not agree to him but at least listen to him first.
ISSUES IN NEGOTIATION
Criticism, sarcasm, derogatory remarks are the biggest threats
to an effective negotiation. Never ever say anything which might
hurt others.
Avoid last minute changes as it result in confusions and
misunderstandings. The two parties must be very clear on what
they expect from each other, and must stick to it. Don’t change
statements every now and then. Once a conclusion is reached or a
deal is cracked, it’s always better to sign an agreement in presence
of both the parties.
Being too rigid is one of the biggest challenges to an effective
negotiation. Be a little flexible.
Lack of confidence is again one of the major threats to
negotiation
RELEVANCE OF NEG0TIATION IN BUSINESS
Why is negotiation important
In the deal-based economy of today’s world, there is a
growing need for companies to collaborate with each other.
As a consequence of the varying needs, wants, aims,
opinions, and beliefs of the parties brought together,
conflicts and disagreements are inevitable. Yet, individuals
fail to realize the importance of understanding as well as
prioritizing the application of negotiation skills to the
successful operation of their businesses.
Having individuals with extraordinary negotiation skills can
contribute to the organization’s success because:
Good negotiation skills help build
relationships because the aim is to faster goodwill
despite difference in interests.
Good negotiation skills deliver quality solutions that
also last longer, instead of short-term solutions that fail
to satisfy either of the parties completely. This is
because it enables you to make concessions such that
they may be of little importance to you but it gives the
other party something that means a lot to them.
Good negotiation skills also help in avoiding future
conflicts and problem by leaving both parties equally
satisfied with no barriers to communication for the
future. Hence, they are willing to work together again in
the future.
Factors affecting the negotiation
The negotiation skills vary from human to human depending on their
psychology. It’s the internal factor which affects the negotiation very much
Listening skill: The mode and interest of the listening skills
among the negotiating people makes the negotiation
successful. Because it reflects the interest of the parties.
Throughout the whole process of negotiation, the
individual parties listen carefully to each other very
carefully in order to make it successful.
• Posture and gesture: The posture and the gesture and the
body movement also have a vital role in negotiation. It
enhances the interest in negotiation.
Décor of the room: The confined place or the
environment of negotiation affects the whole process
entirely. The decoration of that environment shows the
approach of the parties.
Mode of communication and patience: The parties are
involved in negotiation makes it successful through
mode of communication. The entire negotiation are not
bounded by the time period, so lots of patience
required for driving the process towards successful.
Be Brief: Don't go on and on, says Billikopf. He also
suggests avoiding words such as "we disagree," a
phrase that throws a person to the defensive.
POOR
NEGOTATIO
N SKILLS
How to improve negotiation skills
Whether or not people are aware of it, they spend a
significant time of their day using their negotiation skills
either in formal transactions or informal routine interactions.
Therefore, taking the following measures can help you
improve negotiation skills and successfully achieve your
objectives:
Prepare in advance. Instead of adopting a one-size-fits-all
approach, it is better to think about the deal you want to
make in advance and make amendments to your approach
according to the particular situation. Negotiation is often
believed to be a competition over attainment of a fixed
resource. Therefore, instead of negotiating by instinct, it is
always better to figure out and focus on the real need of the
opposing party in order to come up with a mutually
Improve all other skills that complement negotiation
skills. In order to have the ideal negotiation skills, one must
have excelled a few other skills drawn from a diverse range
of disciplines such as strategizing, planning,
communication, persuasion, teamwork and many others.
Improvement in these is ought to bring about improvement
in negotiation skills as well.
Training programs. Since negotiation requires face-to-face
interactions, reading books alone cannot bring about much
improvement. You must engage in some training programs
that allows you to take part in role plays as well as feedback
discussions to help you improve.
