1.10 selling & nego.skills-prof.rama devi

8/6/2019 1.10 Selling & Nego.skills-prof.rama Devi

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M.M.S (I SEMESTER)

SELLING & NEGOTIATION

SKILLS

PRESENTED BY

PROF. RAMA MANTHA


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INTRODUCTION

Selling always comes before negotiation. The simpledifference between them is timing. With selling youinform people what youve got, what its going to forthem and how much it costs. Negotiation follows whenprospective customers like what they see, but want tobargain about the prices. So negotiation begins when

the prospect wants to buy and you want to sell, but youstill have a few details to share regarding terms andconditions.

Negotiation is playing an ever increasing role in thecommercial world. So, its becoming increasinglyimportant now for sales people, to be both skillfulsalespeople and negotiators. They also need to matchconfidence and self esteem, for there are various

reasons why a sales person might be anxious to sell.

THE PROCESS:

The sales process if we examine is a typical interviewwith seller and buyer interacting with one another ,weget an insight into both parties needs.

The sales persons needs will be revealed by theiropening statement, presentation of product featuresand benefits and close of the sale.


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THE SALES SKILLS:

The following are few sales skills which are required toexcel in this field.

Ability to ListenAlong with speaking, a great salesperson knows when to stop talking and listen. They nevercut someone off while they are talking, because in doing so they would fail to hear a key

element in identifying what that person's needs might be.

Asks Great QuestionsSalespeople are naturally inquisitive and know that in order to isolate what the real need ordesire is in the buyer, they need to ask questions that will lead them to the answer. Theynaturally ask questions because they have a desire to help solve their problem.

Problem SolverAnother natural skill is the desire and ability to solve problems. Great salespeople are alwayssolving problems. The ability to hone in on what the buyer's problem is and offering

suggestions that will effectively solve the problem with respect to what products or servicesyou sell, generally results with a sale.

Well OrganizedI am not necessarily speaking of your personal surroundings, but more with your thoughts andmethods of planning. Sales people have a keen ability to break things down into smaller stepsand organize a plan of action. They know how to analyze what their goal is and in what orderthe steps need to be in in order to reach that goal.

Self-Starter and Self-FinisherA successful sales person moves forward on their own. They never need anyone to tell themwhen it is time to go to work because they know that if they do not work they will not earn.They are also very persistent to finish what they start. They achieve their goals, even if theyare small ones.

Positive Self ImageHaving the attitude that they can do just about anything that they put their mind to is usuallyvery common among sales people. They do not cower from meeting or talking to people ortrying something new. They rarely allow negatives that are either spoken to them or aboutthem to effect what they are trying to accomplish because they know who they are and whatthey are capable of doing.

Well Mannered and CourteousThe best sales people are very well mannered. You may not realize it, but good manners is away of showing respect for others. People are attracted to those that respect them and mutualrespect is fundamental in building lasting relationships with people..including buyers.


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Naturally PersuasiveAnother very common inherent skill with great salespeople is that they are very persuasive orknow how to get what they want. They focus on what they want and they are persistent tokeep chipping away until they get what they want. They almost never give up or give in.

Person of IntegrityA salesperson without integrity will have many struggles which will often include hopping from

job to job. Honesty in sales is so important and it is almost impossible for this skill to betaught. You or the person you are looking to hire is either a person of integrity or are not. Beas analytical as possible on the evaluation of this skill.

7 Sales Skills to Improve On

.

Sales Skill #1: Qualifying Fast to Avoid Wasting Sales

TimeDo you chase after your prospects until they tell you yes or no? Do you ever tell yourprospects "No", as in "No, I am not going to sell to you"? There are many things inselling that you do not and will not be able to control. The one thing that you do havecontrol over is your time and how you choose to use it.

To qualify fast you must have a set of criteria describing who you will and will not sellto. You want to sell to the prospects likely to buy your products, and drop the prospectsunlikely to buy (so that you can find more good prospects). Sounds simple, but too manysalespeople let sludge buildup in their pipeline, constricting the total revenue that flows

out.

KEY TIP: Develop a list of sales qualifying criteria that prospect's must meet in orderfor you to invest your sales time with them.

Sales Skill #2: Motivating Prospects

Qualifying goes beyond budget, authority, and need. You want to sell to prospects who*want* to buy from you. Finding prospects that need our products usually is not difficult.

Finding those who really want our products though can be very hard if we wait for themto come to us.

Products sold by professional salespeople are more complex and offer more value thancommodity products offered through stores, catalogs and brokers. Prospects generally donot know they need such products, until they first discover that they have a problem. Thisprocess can take seconds or years depending on the nature of the problem (and the


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prospect!). Prospects get motivated to work with you when you help them to discoverthat you solve their problem better than anyone does

else.

KEY TIP: Determine which problems that you eliminate or solve for your prospects.Plan and ask questions to uncover and agitate those problems.

Sales Skill #3: Selling to People Outside Your Comfort

Zone

Most salespeople who are "people persons", already think that they are good at this. Letme ask you a question. When you last lost a sale, how was your rapport with the key

person who decided against you?

You can't afford to look away and ignore people that you don't have natural rapport with.The good news is that people like people like themselves. All you have to do to gainrapport is stretch your behavior outside or your comfort zone until you become likeanother person.

KEY TIP: Match speech patterns with people to gain rapport outside of your typicalsports or weather conversation.

Sales Skill #4: Reaching Decision-Makers Through

Voicemail

There's two ways to make more sales. One is to close more of the prospects you docontact. The other is to get more prospects into the pipeline. When prospecting, you canlook at voicemail as either your friend or your enemy. With 70% of your prospectingcalls going to voicemail, it is time to make friends with it.

Although you will never get even close to getting every voicemail returned, you can get a

significant number of your messages returned when treat them as a one-on-onecommercials.

KEY TIP: Prepare 3-5 separate benefit-focused voicemail messages that you can leaveover a period of days or weeks for a single decision-maker before you give up on her.Each message should focus on a single unique customer-focused benefit.


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Sales Skill #5: Delivering "I Gotta Have That"

Presentations

Let's face it, a lot of business presentations are really boring. Salespeople talk about why

their product is great, why their company is great, and the history of their company.Prospects don't relate to this. That's why they look so bored.

Great presentations get the prospect's imagination involved. The best way to involve theimagination is through storytelling. Stories rich in descriptive detail get the prospectpicturing them using your product and evoke that "I Gotta Have That" reaction.

KEY TIP: Study 1-3 of your best customers and develop detailed customer successstories that will put emotional power into your presentations.

Sales Skill #6: Gaining Commitments Instead of Closing

Eliminate "Closing Cheese" from Your Vocabulary. You know what I am talking about:"Would you like that in gray or in black?" or "If I can show you how this will help youwill you buy today?". Lines like these are why salespeople are down on the bottom ofsociety's respect list somewhere near lawyers.

Learn the power of asking for incremental commitments from the beginning of your salescycle. It is not an easy shift to make. First you got to get the prospect to show you whatthey most want (Hint: See Skill #2 above). Then you can negotiate incremental

commitments in return for more of your time, information or resources.

KEY TIP: Practice asking for simple commitments once someone has expressed a clearwant, pain, or desire.

Sales Skill #7: Have More Fun

Sales is fun when you are in control and closing deals. Selling is miserable when you are

under pressure to close business.

Take the pressure off yourself to close and instead focus on qualifying and motivatingyour prospects.

KEY TIP: Shift the responsibility back to the prospect to solve his own problems, andthe pressure to make the sale will be gone. Focus on selling at your best only to qualifiedprospects and you'll close more and have fun doing it.


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Bonus Sales Tip

When you are giving a presentation, selling on the telephone or one-on-one in yourprospect's office, picture your prospect as having the words SO WHAT stamped on hisforehead. Imagine that for everything you say, the prospect is asking "so what, whyshould I care?".

Remember, prospects only care about how what you are selling can eliminate a problem

that they have or help make their business or life better. The answer to this question isalways what your product does for them (benefits), not what your product is (features).

COLD CALLS

Cold Calling Pressure Reductio-

Who likes cold calling?

Most salespeople don't like cold calling, and do as little of it as possible. There are anumber of reasons why most of us don't like it. One reason is the way we view coldcalling. People who don't like cold calling view each call as do or die. They think of coldcalling as a war in which they have to win most of the battles in order to win the war. Asales rep good at cold calling is considered a sales god. A sales rep who is poor at coldcalling is a sniveling wimp.

The reality about cold calling is much different. You don't have to win all nor even most

of the battles to win the war. Cold calling is the reconnaissance before any battle begins.Cold calling is not where the sale happens. Cold calling is simply advertising done bysales reps.

Yes, I said that you are doing advertising when you are cold calling.
http://www.web-stat.com/stats.shtml?bigegohttp://www.web-stat.com/stats.shtml?bigego


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Cold calling is a means of identifying potential prospects for your sales efforts. And thepurpose of advertising is to identify or attract potential prospects - in other words togenerate leads.

Think of cold calling this way. Every time you make a cold call, it is as if you grabbed

your prospect by the shirt, shoved a billboard ad for your product in their face, and said"Do you want to buy this?"

Obviously, real cold calling is more involved than pressing their nose up to your ad.Specifically, cold calling should be mostly about asking questions rather than a salespitch monologue.

Just like a newspaper ad or a billboard, all you are trying to do when cold calling is to getsomeone's attention. And if they don't want or need what you are offering right now,that's OK.

With your new view of cold calling as advertising in mind, you should focus your coldcalling goals a little differently. One of the surest ways to get frustrated in sales (and anulcer) is to take responsibility for things that are beyond your control as a sales rep. Youreally cannot control whether the person you are cold calling needs or wants yourproduct.

What you can control is how many cold calls you make, and the quality of yourtechniques while cold calling.

Set your cold calling targets and define your success criteria around the number of callsor dials that you will make. Judge the quality of your calls by how well you stick to a

cold calling formula that you have defined in advance.

If your cold calling goal is set as "To Make $300,000 in Sales Next Month", you are justsetting yourself up. This kind of cold calling goal might be useful if you are a tele*sales*person responsible for actually closing business by phone. But in professional business-to-business selling, cold calling is too far removed from the actual close to directlyinfluence such a goal.

Instead, you can backwards plan how many cold calling "advertisements" you need to runin order to make $300,000 in sales next month. Use your own or other sales reps activitynumbers to figure out how many sales will result *on average* if you make 1000 dials

when cold calling. Then you can determine the time period needed to make 1000 dialsworth of cold calling advertisements in order to make your sales goals.

Look at cold calling as one-to-one advertising and focus on the number of dials you haveto make and you'll find cold calling a lot easier to do.


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Negotiation Skills

Qualities of Negotiating Power

1. It is relative between the parties.2. It changes over time.

3. It is always limited.4. It can be either real or apparent.5. The exercise of negotiation power has both benefits and costs.6. It relates to the ability to punish or benefit.7. It is enhanced by legal support, personal knowledge, skill, resources and hard work.8. It is increased by the ability to endure uncertainty and by commitment.9. It is enhanced by a good negotiating relationship.10. It depends on the perceived BATNA.11. It exists to the extent which it is accepted.

Negotiation is usually considered as a compromise to settle an argument or issue tobenefit ourselves as much as possible. Communication is always the link that will be usedto negotiate the issue/argument whether it is face-to-face, on the telephone, or in writing.Remember, negotiation is not always between two people; it can involve severalmembers from two parties.

There are many reasons why you may want to negotiate and there are several ways toapproach it. We all have our own point of views. And these viewpoints form the basis ofour goals and objectives. Each time you communicate with a potential client, vendor oremployee, you exchange ideas and information. However, your goals are likely to differ.Negotiation, in essence, is the art of compromise. Negotiation skills are vital to thesuccess or failure of your interactions, and ultimately, your goals. Negotiating is one ofthe key tools you can use to accomplish your goals.


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The Seven Pillars of Negotiation Wisdom

1. Relationship

What impact will this negotiation have on our personal relationship with other negotiatorsor our constituents, the parties who stand to gain or lose depending on the negotiation'soutcome?

2. InterestsWhat are the reasons that drive our pursuit of particular objectives, and can anotherparty's ideas or resources help serve our interests better than what we bring to the table?3. BATNA

Our Best Alternative To a Negotiated Agreement (BATNA) may be derived fromresources we control or influence. We may have choices of parties with whom tonegotiate or may be better off relying on ourselves. BATNAs can change duringnegotiation each time we learn a new piece of information.4. Creativity

Are we to be governed by standard operating procedure, or can our interests be betterserved by thinking out of the box? If our ideas are the only ones worth taking seriously, itis hard to justify bringing additional parties into a negotiation-- the decision-makingprocess.5. Fairness

Do we feel as if we are being treated fairly? How do other parties feel? If a negotiatorfeels he or she is not being dealt with in a fair manner, he or she may agree for purposesof bringing the bargaining to a close, but may walk away without having bought into theagreement.6. Commitment

Negotiations can only be called successful if they lead to agreements the parties arecommitted to fulfill. Learn whether the people at the bargaining table have the capacity tokeep the promises they make.Communication

Information is the fundamental asset in negotiation. We communicate best by listening.We should keep asking ourselves whether the negotiation process is being used as asuccessful way of communicating information. By considering which of these deservesmore attention in a given negotiation before the negotiation process begins, we are likelyto do a better job. The recent past may have presented some shocks, but to be a goodnegotiator, you have to accept that things may not always go the way you expect. Keep


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the seven pillars in mind, and you should be able to respond wisely to thecircumstances you face.

Essentials of a Successful Negotiation

1. Know what you want

Think through exactly what you want. Be specific and have valid reasons for why youneed it. Knowing what you want, and why, will help you to be clearer and moreconfident.2. Know what they want

Before you start negotiating, it is important to have an idea of what the other party wouldlike the outcome to be, too. So think it through why do they need what you are

offering/asking for? And do your research on how can you make them feel like they havegot a good deal?3. Be Fair

If what you are asking for is fair and justifiable, e.g., you would like to earn as much assomeone you work equally as hard as, then you are much more likely to get what youwant.4. Believe you are worth it

You have to believe that you deserve your desired outcome. If you do not, the momentyour client or boss questions you, your argument will fall apart because you do not haveenough confidence in it. Believe it, trust yourself, and rehearse it.5. Listen Carefully

When your boss/client is talking to you during negotiations, do not use that time to planyour next line of attack. It is more important that you listen to them and see their point ofview. They will take you more seriously if you do, even if you disagree with them.6. Keep it Friendly

Negotiating is not about confrontation. It is about two parties reaching an amicable,mutually beneficial agreement. Keep that in mind when you are talking and, even if youdo not get what you want this time, view it as good practice for the future.7. Have an Alternative

When you are discussing specifically what you want, as well as what they want, work outwhat you would be prepared to walk away with if you are not successful.Five Basic Principles

1. Be hard on the problem and soft on the person.2. Focus on needs, not positions.3. Emphasize common ground.4. Be inventive about options.5. Make clear agreements.Where possible, prepare in advance. Consider what your needs are and what the otherperson's are. Consider outcomes that would address more of what you both want. Commityourself to a win-win approach, even if tactics used by the other person seem unfair. Be


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clear that your task will be to steer the negotiation in a positive direction. To do so youmay need to do some of the following:

Example 1-- Parent-Child ConflictIt is Friday, and John and his mother are arguing once again about the teenager's weekendcurfew. Mrs. Brown has grown increasingly distressed by her son's continuing resistanceto the 11 p.m. curfew she has set. John insists that this is unfair. Both become so angryand frustrated that they storm off to separate areas of the house to avoid each other andfurther conflict.Example 2-- Workplace Conflict

Mr. Steve has been late for work several times in recent weeks. He has failed to turn inseveral important project outlines on time without explanation or apology, annoying hisemployer. Until recently, Steves attendance and performance at work had beenconsistent, motivated and highly productive. Steves recent behavior has been so

uncharacteristic that his employer decides to confront him, demanding a meeting the nextday.Example 3-- Marital Conflict

Roberta and James have the "perfect" marriage, two children and a lovely home. Bothwork in professions that provide personal satisfaction as well as a comfortably secureincome. They have "made it." And they are miserable. Work and family roles have leftthem with little time to spend together and have increased their areas of disagreement.Roberta and James have become focused on meeting their own needs with little regardfor the needs of the other. Resentment, dissatisfaction and conflict are all they seem toshare any longer.The Goal of Negotiation-- "Everyone Wins"

People resolve disagreements in many ways. Some tend to deal with potential conflict bydenying it or trying to avoid it altogether. Instead of confronting and resolving problems,people may let their anger and resentment build while they remain silent. This approachcan result in constant personal stress which can lead to illness or poor general health. Ifdisagreements are not resolved, the possibility for more intense conflicts at some laterdate is increased. Problems seldom improve on their own. Conflict can also be motivatedby ego. Solutions are selfishly sought with little regard for the other person. The conflictbecomes a "win-lose" situation in which one person "wins" at someone else's expense.The one-sidedness of this "solution" increases the odds of more conflict. "Losers" willdefy, test, resist and retaliate against the "winners." Effective negotiation is a two-wayprocess that encourages both sides to actively participate in making decisions. It alsoprovides a way for people to learn to understand each other better and to grow in theirrelationships. Negotiation helps to create a healthy balance between "giving" and"getting." Everyone becomes a "winner" through negotiation.How can Everyone Win?

The key to effective negotiation is clear communication. Communication involves threeimportant skills-- understanding, listening and speaking. You cannot have one skill workwithout the others. For example, you cannot have good understanding without good


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listening and speaking. Negotiation is most effective when people are able to clearlyidentify and discuss their sources of disagreement and misunderstanding.

Speaking

Negotiation begins with a clear, concise explanation of the problem as each person seesit. Facts and feelings are presented in a rational manner from the individual's perspective,using "I" statements. Communication between people will go more smoothly whenstatements such as "I become very upset when you " are used rather than more aggressivestatements such as "You make me mad when you," which blames the other person andputs him or her in a defensive position. Shared concerns rather than individual issuesremain the focus of discussion throughout negotiation. The negotiation process will be

most effective when people take time to think through what they will say. When possible,plan ahead to meet at a time and place convenient to everyone. A quiet, neutral spotwhere there are few distractions or interruptions is perfect for open discussion.

Listening

Listening is an active process of concentrating all of one's attention on the other person.Encouraging the other person to share thoughts and feelings, giving feedback on what has been heard, and maintaining eye contact are skills that show you are interested inunderstanding what he or she has to say. Active listening assures the other person that heor she is heard, accepted and respected. The ability to listen actively supports open,ongoing negotiation.Thinking ahead or anticipating the course of the discussion are distractions thatinterferewith listening. Poor attention and listening can lead to misunderstandings,inappropriate solutions and continuing conflict.

Understanding

Before two sides can look for solutions, a common understanding should be reached. Iftwo people do not understand each other's problems and concerns, then the process ofnegotiation will either be broken off or will end with solutions that do not work. Activelistening encourages understanding. It is important to pay close attention to whatsomeone says as well as to how he or she behaves. Body language, including facialexpressions, hand gestures and degree of eye contact, can provide clues about the otherperson's thoughts and feelings.

Show Respect

Success rests in accepting the other person despite differences in values, beliefs,educational experiences, ethnic backgrounds or perspectives. Negotiation permits you toexamine a problem from all sides, and to promote understanding and interest in the otherperson without necessarily agreeing to his or her viewpoint. Taking time to listen and to


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ask questions makes it easier to learn more about someone's perspectives. Consideringdifferent perspectives will increase the range and variety of possible solutions. Genuineinterest in other people and in their contribution to finding solutions builds trust. Trust

provides a foundation for continuing a relationship. A foundation of trust also eases

future efforts to solve problems.

Brainstorming

It is one way to gather many creative ideas rapidly. This process allows everyone toopenly make suggestions without the fear of criticism. At this stage, every suggestion hasvalue and is accepted. After all suggestions have been shared, they are reviewed todetermine whether they might coincide or overlap with each other. Negotiation thenbecomes a matter of choosing a solution to which no one has an objection. Remember,personal goals should not take priority over shared goals.

Preserve the Relationship

In general, people will try to preserve valued relationships. Negotiation is anonadversarial approach to resolving conflict in those relationships. There are no "goodguys," "bad guys," or "winners/losers." Negotiation is based on equality. No one wieldsmore power or control than another. The individual's ideas, attitudes, values andobjectives are recognized and respected as legitimate. Solutions are mutually agreedupon.

When is Negotiation Successful?

Negotiation is most successful when both sides do the following:1. Recognize the value of a relationship and have a mutual desire to continue it.2. Participate actively in the process.3. Show consideration and acceptance of each other's perspectives, values, beliefs andgoals.4. Separate personality from the issue involved.5. Work together to develop a solution everyone can accept.

Face Negotiation Theory

Stella Ting-Toomey's face negotiation theory helps to explain cultural differences inresponse to conflict. The basic assumption is that all people negotiate face.1. Face is a metaphor for our public self-image.2. Face work refers to specific verbal and non-verbal messages that help to maintain andnrestore face loss, and to uphold and honor face gain.Our identity can always be called into question, which inevitably leads to conflict andvulnerability. Facework and corresponding styles of handling conflict vary from cultureto culture.

Cross-Cultural Communication Theory


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It assumes that persons of all cultures are continually negotiating "face," which is theirpublic self-image. This theory also contends that "facework" from cultures that arelowcontext or individualistic such as the United States is quite different from cultures thatare collectivistic such as Japan or Korea. Consequently, when face is manageddifferently, then communication and conflict styles will likewise vary. Face negotiation

theory analysis focuses on the type of culture, the type of face maintenance, and the typeof conflict management.

Summary

As life becomes more complex and the world more diverse, your ability to usenegotiation skills becomes more important. Negotiation requires time and patience. Bypracticing the negotiation strategies and skills suggested in this lesson, you can makeconflict resolution a regular part of your approach to managing relationships at home, atwork and in the community. Negotiation can serve not only to preserve relationships, butalso to continually strengthen and improve them.

Negotiation Questionnaire

1. Successful negotiators usually set very high goals.True False2. Most negotiation issues boil down to the price of the object or service to beperformed.True False3. The person doing the selling or persuading has the distinct advantage over the buyerin most negotiation situations.True False4. Concessions are normally viewed as a sign of weakness in the party making them.True False5. Ultimatums should be used only as a last resort.True False6. The personal needs of the negotiators are as important as the "objective" issues.True False7. Negotiations should be left to highly experienced personnel.True False8. It is always best to negotiate on your own "territory."True False9. There are certain items, such as merchandise in a one-price store, which cannot benegotiated.

True False10. As a negotiator, you can never go wrong by assuming the other party is out to get thebest possible deal for himself at your expense.True False11. In all negotiation situations, someone wins and someone loses.True False12. Deadlocks and impasses are sure-fire signs that one or both parties are being


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unreasonable.True False13. Negotiators often mean something different from what they say.True False14. It is always best to keep a negotiation on a rational, issue-oriented level.

True False15. Establishing the agenda of the negotiation is probably the most routine phase of thenegotiation process.True False16. The effective negotiator spends more time listening than talking during negotiations.True False17. Negotiators usually overdo their sensitivity to cues.True False18. The negotiator who asks a lot of questions is demonstrating that he or she hasnt donehis or her homework thoroughly.True False

19. In negotiations, the more I know about you than you know about me, the better I cancontrol the negotiation.True False20. You should develop a negotiation strategy and stick to it.True False21. When there is a lot of competitive negotiation taking place in an organization, theorganization always loses.True False22. Knowing what your options are is essential to effective negotiations.True False23. When a written document is necessary to finalize an agreement, it is best for you towrite it.True False24. I have a distinct advantage if I know your deadline and you dont know mine.True False25. Deadlocks are to be avoided at all costs.True False26. Managers demonstrate weakness when they negotiate with subordinates.True False27. It is best to keep the number of people to minimum in a major contract negotiation.True False28. In labor relations, negotiating activity should be confined to the bargaining table inorder to preserve confidentiality.True False29. Probably the best test of a successful negotiator is his skill in employing a widevariety of negotiation tactics.True False


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Answers

1. T, 2. F, 3. Either, 4. F, 5. T, 6. T, 7. F, 8. T,9. F, 10. F, 11. F, 12. F, 13. T, 14. T, 15. F,16. T, 17. F, 18. F, 19. T, 20. Either, 21. T,22. T, 23. T, 24. T, 25. F, 26. F, 27. Either, 28. F, 29. F

Give yourself one point for each response that matches those provided by professionalnegotiators. The higher your score, the more you reflect the mindset and behavioralpatterns of professional negotiators.

Case Study-- Conflict Management

Problem

We have a product team that does high quality work. Everyone in the team is competentand highly committed to the success of the company. Yet, some issues have developedover time and there are repeated conflicts among a few of the members. There has beenarguing and heated debate. I am afraid that the recurring conflicts will cause morale todrop, and subsequently result in decreased commitment and productivity.

Challenge

Can you get the team to manage conflict more effectively so that morale and productivityare not affected?


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TYPES OF NEGOTIATION IN ORGANIZATIONS

Depending upon the situation and time, the way the negotiations are to be conducted

differs. The skills of negotiations depends and differs widely from one situation to the

other. Basically the types can be divided into three broad categories.

Types Parties

Involved

Examples

Day-to-day/ Managerial

Negotiations

1. Different levels of

Management

2. In between

colleagues

3. Trade unions

4. Legal advisers

1. Negotiation for pay,

terms and working

conditions.

2. Description of the job

and fixation of

responsibility.

3. Increasing

productivity.

Commercial Negotiations

1. Management

2. Suppliers

3. Government

4. Customers

5. Trade unions

6. Legal advisors

7. Public

1. Striking a contract

with the customer.

2. Negotiations for the

price and quality of

goods to be

purchased.

3. Negotiations with

financial institutionsas regarding the

availability of

capital.

Legal Negotiations

1. Government

2. Management

3. Customers

1. Adhereing to the laws

of the local and

national government.

1. Day-to-day / Managerial Negotiations

Such types of negotiations are done within the organization and are related to the internal

problems in the organization. It is in regards to the working relationship between the

groups of employees. Usually, the manager needs to interact with the members at

different levels in the organization structure. For conducting the day-to-day business,

internally, the superior needs to allot job responsibilities, maintain a flow of information,

direct the record keeping and many more activities for smooth functioning. All this

requires entering into negotiations with the parties internal to the organization.


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2. Commercial Negotiations

Such types of negotiations are conducted with external parties. The driving forces behindsuch negotiations are usually financial gains. They are based on a give-and-take

relationship. Commercial negotiations successfully end up into contracts. It relates to

foregoing of one resource to get the other.

3. Legal Negotiations

These negotiations are usually formal and legally binding. Disputes over precedents can

become as significant as the main issue. They are also contractual in nature and relate to

gaining legal ground.

IS NEGOTIATION NECESSARY ?

Negotiation, at times can be a lengthy and cumbersome process. By asking whether it is

necessary, time may sometimes be saved and unnecessary compromise avoided. On

occasions, a request to negotiate may best be met by pointing out that the party making

the request has no standing in the matter. If a manager has the undoubted authority to act,

making a decision rather than negotiating about it may be the best tactic.

Alternatively, there are cases in which the best response to a request or a claim is to

concede it without argument. Why waste time negotiating if the other party has a goodcase and there are no adverse consequences in conceding ? Unnecessary negotiation,

followed, perhaps, by a grudging concession of the other partys claim, will lose all the

advantage that might be gained with a quick unexpected yes.

An alternative to a simple yes or no when a difference of view occurs is to skip

negotiation and proceed immediately to some form of third party intervention. An

alternative to a simple yes or no when a difference of view occurs, is to skip negotiation

and proceed immediately to some form of third party intervention. On the most formal

basis, this might imply a decision to take a dispute to court : informally, two managers

who quickly realize that they cannot reach agreement about a working problem may

jointly agree to stop wasting time in argument and refer the matter to a senior manager

for resolution.

The Negotiations Process

The Difference Between Integrative and Distributive Negotiation


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There are two types of negotiation: "integrative" and "distributive." Integrativenegotiations are those typically referred to as "win/win" negotiations: all sidesare looking for a solution that maximizes joint gain and allows everyone towalk away feeling like they won something. They involve looking at the issues being negotiated from multiple angles, considering multiple issues at once

(thus allowing for trade-offs), and honestly trying to "expand the pie" ratherthan divide it. Anyone who imagines that they might see or do business withtheir fellow negotiator in the future should be attempting to negotiate in thisway. Integrative negotiations foster trust and good working relationships, andleave allparties feeling good, not just one.

Distributive negotiations, on the other hand, are typically described as"win/lose" negotiations one party gets what they want, and the other partygives something up. Think of negotiating for your car you either get thatextra $1000, or the dealership does. If you feel you got a good deal (andsqueezed that salesman), you "won." If you walk away feeling like you paid

too much money, you "lost." This type of negotiating does not lead to goodlong-term relationships. The parties interests are often opposed (orseem to beopposed this may not prove to be the case once you start getting creative),and usually good feelings are not plentiful when the negotiation is over.

Integrative vs. Distributive Negotiations

Characteristic IntegrativeNegotiations

Distributive

Negotiations

Outcome Win / win Win / lose

Motivation Joint gain Individual gain

Interests Congruent Opposed

Relationship Long-term Short-term

Issues Multiple issues Single Issue

Heres a story (probably familiar to many of you!) that demonstrates thedifference between integrative and distributive negotiations: Two sisters werefighting over the last orange in the fruit bowl. They went back and forth, eachgirl insisting that she should get it and both refusing to give up. They wereabout to agree on cutting the orange in half when their aunt walked in andrealized what was going on. She turned to the girls and asked them each whythey wanted the orange. As it turns out, one wanted to eat the orange, and theother wanted the peel for an art project she was working on. Once they realizedthis, they were able to "split" the orange in such a way that both got exactlywhat they wanted. The girls were engaged in distributive negotiations (though


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it probably felt like bickering to them), while their aunt was suggesting anintegrative solution.

As you might have guessed by now, partnership negotiations should always beintegrative. The goal in any partnership should be maximizing all parties

abilities to advance their collective mission, and to enable both to better servethe community, deal effectively with their economic obligations and pressures,etc. One organization should not want to "win" at the expense of the other. Youwant joint gain, not just individual gain, and while your specific motivationsfor pursuing the partnership may be different, the spirit behind your interestsshould be congruent. Most importantly, you are entering into a long-termrelationship with your prospective partner(s), and you want this to be a goodrelationship. The only way to build trust and expand the pie (or the orange) in anegotiation situation is be integrative. You must do this from the beginning.Once you start down the "distributive path" it is hard to change directions, asyou establish a dynamic of competition and distrust. The moral of the story: be

integrative!

NEGOTIATION SKILLSWHAT NEGOTIATION IS AND WHY IT IS IMPORTANT

Negotiation: can be defined as a process of bargaining by which agreement isreached between 2 or more parties. We all negotiate every day in a wide range of workand social situations. It is important to know how to negotiate for a number of reasons:

Effect on ProfitsDuring the negotiation course, we will explore why negotiating skills are importantfor you to be successful in business and in life. The importance of negotiation to yourbusiness is vital and the impact of good or bad negotiating can be shown as follows:

COMPANY A COMPANY BSALES 10m 10mCOSTS 8m 8mPROFITS 2m 2m

Assume Company A has sales people and buyers who by improved negotiatingtechniques increase sales by 5% and reduce costs by 5%.

COMPANY A COMPANY BSALES 10.5m 10mCOSTS 7.6m 8mPROFITS 2.9m 2mBy achieving relatively modest improvements in buyers. and sellers. performance,the effect is an increase in profits of 0.9m. This represents a 45% increase over theprevious profit figure.


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Effect on Customers

Successful negotiations can lead to increased profits, but can also lead to greatercustomer satisfaction. For example, you are buying a second car and you see a caradvertised in the paper for 14,500. You decide to make an ambitious offer to see howthey react. You offer 11,000 and they accept your offer immediately. How do you feel?

Most people feel two things in quick succession:1. I could have done better2. There must be something wrong with the carThink of this next time you are negotiating for your business with a customer or supplier.Are you .being fair. by offering your best price first time? What impact has your actionhad on the way the other side feels?The objective of successful negotiation is not necessarily to charge the highest possibleprices for your products, or to pay the minimum price possible for your supplies, but tocreatively put together solutions to problems that ensure:

! The best possible outcome for your business.

! Clients and suppliers who are happy to do business with you.

! A reputation for being a tough negotiator while earning the respect of thosewith whom you negotiate.

STYLES OF NEGOTIATION.

ADVERSARIAL VERSUS CO-OPERATIVE BARGAINING

Our style of negotiation will be influenced by the style of the other party. If both sides areadversarial, there will be little trust between the two parties, however, if one side decidesto be co-operative, there is a danger the other side will use this apparent sign of weakness

to their advantage. Co-operative bargaining has the advantage of being a more efficientstyle of negotiation, however certain rules have to be followed by both parties, for it towork. Let us look at the 2 styles of bargaining and their features:

Features of adversarial bargaining

! Each side takes up a position and defends it! Opening bids are set at unrealistic levels; too high or too low, in order to giveroom for manoeuvre! Movement is small or non-existent until later on in the negotiation! Tactics are used to gain short term advantage! Too much emphasis is placed on trust. .This really is my best price!.

! Information is withheld, or misrepresented! The outcome is often win-lose, or lose-lose! The more aggressive negotiator usually does best! This style does not encourage long term, mutually beneficial relationships! Neither side asks enough questions, or explores alternatives in sufficient depth

Features of co-operative bargaining

! Each side recognises that the other has needs and feelings and accepts implicit


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rules! Objective measures are taken of what is fair and reasonable! Trust is not an issue as either side is willing to share information! This style is friendly, but not soft. There is a willingness to trade concessions! There is a clear, communicable strategy

! Bad behaviour is punished! This style involves creative problem solving! It encourages long term, mutually profitable relationships! Each side asks more questions and explores alternatives, rather than taking up fixedpositions! The usual outcome is win-win .The objective of negotiation should not be adead opponent.:Napoleon

PLANNING THE NEGOTIATIONIn any kind of negotiation the planning stage is probably the most important. Toooften in negotiations we go in badly prepared and end up giving concessions that

reduce the overall profitability of the final deal. The importance of planning is inhaving a very clear idea before entering into the negotiation.1. What are my objectives?2. What does the other side wish to achieve?3. What information will influence the final outcome of the negotiation?4. What concessions can I make?5. How am I going to achieve my objectives?6. What part will other people play in the negotiation?Generally, the more time that is spent in planning and preparing for the negotiation,the more beneficial will be the final outcome.

Objectives

Before entering into the negotiation, you need to have a clear idea of your objectivesand try to work out those of the other side. Ask yourself the following questions:1. What exactly do I wish to achieve from this negotiation?2. Which of my objectives:a. Must I achieve?b. Do I intend to achieve?c. Would I like to achieve?3. What options or alternatives would be acceptable to me?4. What are the other sides. objectives?5. How does the other side see the negotiation?

Information

It has often been said that information is power. In any negotiation, there will be 4types of information that is important to the final outcome.1. What information do I have that the other side has also?2. What information do I have that the other side does not have?3. What information do I need to have before negotiating with the other side?4. What information does the other side need before it can negotiate with me?


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This can be particularly important when negotiating with people who concentrateon price issues. What other things are important to this person? What pressures doeshe have on him to conclude the deal? How well is his company doing at the moment?How important is it that he deals with my company? etc. The early phases of negotiation

consist of both sides finding out more informationbefore talking about a specific deal or set of alternatives. For example, if you find outthe other side has a time deadline that only your company can meet, it may give youthe chance to negotiate on more favourable price. If you know that the other sidehas recently expanded their production capacity, you may be able to negotiate morefavourable terms in return for a commitment to buy certain volumes over an agreedtime period.By spending time as part of your preparation in listing what you already know andwhat you need to know, you will give yourself a better chance to negotiate well onyour company.s behalf.Concessions

Negotiating is a process of bargaining by which agreement is reached between twoor more parties. It is rare in negotiation for agreement to be reached immediately orfor each side to have identical objectives. More often than not, agreements have tobe worked out where concessions are given and received and this is the area wherethe profitability of the final outcome will be decided.When preparing for negotiation, it is advisable to write down a realistic assessmentof how you perceive the final outcome. Find out the limits of your authority withinthe negotiation and decide what you are willing and able to concede in order toarrive at an agreement, which satisfies all parties.Concessions have two elements; cost and value. It is possible during negotiations toconcede issues that have little cost to you but have great value to the other side. Thisis the best type of concession to make. Avoid, however, conceding on issues thathave a high cost to you irrespective of their value to the other side.8When preparing for negotiations, ask yourself the following questions:1. What is the best deal I could realistically achieve in this negotiation?2. What is the likely outcome of the negotiation?3. What is the limit of my authority? At which point should I walk away?4. What concessions are available to me? What is the cost of each concession andwhat value does each have to either side?Strategy

Planning your strategy is important in negotiation. Once you know your objectives,you need to work out how you are going to achieve them. It is also useful to try andsee the negotiation from the other side and try and work out what their strategy willbe.During the negotiation there will be opportunities to use various tactics and youneed to decide on which of these you feel comfortable with and recognise the tacticsbeing used by the other side. Ask yourself the following questions:1. How am I going to achieve my objectives in this negotiation?2. What is the strategy of the other side likely to be?


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3. What tactics should I use within the negotiation?4. What tactics are the other side likely to use?Tasks

If you go into negotiation with a colleague or colleagues, you need to decide duringthe preparation phase:

1. What role will each team member take in the negotiation?2. How can we work together in the most effective way?Some teams of negotiators appoint team leaders, note takers, observers andspecialists, each with their own clearly defined authority and roles to perform.Having a clear understanding of roles within the negotiation will make the teamapproach much more effective.9PREPARATION CHECKLISTQuestions to ask prior to entering into negotiations

Objectives

1. What exactly do I wish to achieve from this negotiation?

2. Which of my objectives:a. Would I like to achieve?b. Do I intend to achieve?c. Must I achieve?3. What options would be acceptable to me?4. What are the other sides. objectives?5. How does the other side see the negotiation?Information

1. What information do I need to know about this negotiation?2. What information does the other side need to find out?3. What information does each side have that will influence the outcome of thenegotiation?Concessions

1. What is the best deal I could realistically achieve in this negotiation?2. What is the likely outcome of the negotiation?3. What is the limit of my authority? At what point should I walk away?4. What concessions are available to me, what is the cost of each concession andwhat value does each concession have to either side?10Strategy

1. How am I going to achieve my objectives in this negotiation?2. What is the strategy of the other side likely to be?3. What tactics should I use within the negotiation?4. What tactics are the other side likely to use?Tasks (Team Negotiations Only)

1. What role should each team member take in the negotiation?2. How can we work together in the most effective way?11PREPARING FOR NEGOTIATIONS.LIKE, INTEND AND MUST POSITIONS


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The best deal, like:

1 7

2 8

3 9

4 10

5 11

6 12

The acceptable deal, intend:

1 7

2 8

3 9

4 10

5 11

6 12

The worst deal, must:1 7

2 8

3 9

4 10


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5 11

6 12

DEVELOPMENT EXERCISE 1. CASE STUDYSr. Luigi Franconi owns a fast food Pizza Parlour just outside of London. Last year hehad an audited turnover of 193,750, producing a net profit after tax of 36,750.The shop has been trading for seven years and is located in a good position,opposite a busy shopping mall and 800 metres away from its. nearest rival,McDonalds.Sr. Franconi wants to sell the business as a going concern and has advertised it at aprice of 175,000, inclusive of:! Stock, worth on average 5,000! Kitchen Fittings worth, according to Sr. Franconi 25,000 (These cost him35,000 when new 18 months ago.)

! Restaurant Fittings costing 19,000 3 years ago! The freehold valuation of the restaurant! The.goodwill. of the businessYou own 2 Pizza fast food restaurants in the area and you wish to build your businessthrough acquisition, so long as the businesses you acquire are the right price and in theright location.Your current restaurants are making good money and you believe you have the rightformula for success . strict financial controls, plus pizzas that your customers like.You have tried to buy other fast food restaurants but the deals fell through because theirowners would not agree your best price. You are looking at another restaurant in town inaddition to Sr. Franconi.s which seems to meet your requirements. One problem you have

is with finance. You cannot finance the deal yourself. You could just about finance thedeal yourself but this will probably cause you cashflow problems. A better alternativewould be to agree a deal with Sr. Franconi where you pay 50% of the money up front andpay the balance over 2, or preferably, 4 years.Before you have your meeting with Sr. Franconi you need to plan and prepare for thenegotiation which will ultimately take place. To help you in this process answer thefollowing questions below:

DEVELOPMENT EXERCISE 1. CASE STUDYQuestions

1. Assuming Sr. Franconi.s price seems to be relatively cheap for a profitable pizza

business in this location, what must you not do and why?2. Think of your objectives for the forthcoming negotiation. Describe your Like,Intend and Must positions.3. What information must you find out about Sr. Franconi.s business before youbegin to negotiate?4. What concessions are available to each side?5. What should your strategy be for the forthcoming meeting?


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DEVELOPMENT EXERCISE 1. CASE STUDYQuestions

1. Assuming Sr. Franconi.s price seems to be relatively cheap for a profitable pizzabusiness in this location, what must you not do and why?2. Think of your objectives for the forthcoming negotiation. Describe your Like,

Intend and Must positions.3. What information must you find out about Sr. Franconi.s business before youbegin to negotiate?4. What concessions are available to each side?5. What should your strategy be for the forthcoming meeting?

Suggested answers

1. Despite the asking price looking good, beware of agreeing to the asking price.A negotiator should and will always challenge an opening bid, howevertempting it may appear. Look at it from Sr. Franconi.s point of view. He musthave a reason for wanting to sell the business and is likely to have some leeway

on price.Some people fear annoying, or upsetting the other party by challenging theiropening bid. They worry it may cause deadlock. A skilled negotiator canchallenge the other side.s terms and conditions without antagonising the otherside. That is part of the skill of negotiating.2. There are no right and wrong answers to this question. If agreement is reachedand both parties are satisfied, then a win-win outcome is the result. However,the first step in the planning process is to identify the issues being negotiated.What are they?Issues are likely to include:

Overall asking price

Valuation of stock

Valuation of fixtures and fittings (Kitchen and restaurant)

Goodwill

Timing of the purchase

Payment terms

Non-competition clauseYourmustposition is probably where you would agree to pay the asking price, financedby yourself, accepting Sr. Franconi.s valuations. You may be willing to forget the non-competition clause and seek to close the deal within a month. Yourlikeposition could bean offer of 168,000, financed by paying 84,000 up front and the balance over 4 years at21,000 per year. This would include a non-competition clause whereby Sr. Franconi

agrees not to open up a similar restaurant locally within the 4-year period. Agreementcould be reached to speed up the timing of the deal, depending on the necessary legalrequirements being met. Yourintendposition, will be somewhere between the must andlike positions. It could be, say, an agreed price of 172,000, financed by paying 86,000up front and the balance over 2 years at 43,000 per year. There may be scope fora shorter non-competition clause of say 2 years and some flexibility on the timing of thedeal.3. Information would need to include:


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How long the business has been up for sale

The reasons for Sr. Franconi.s decision to sell what appears to be a profitablebusiness

The physical state of the premises, stock and fixtures

The costs of any necessary repairs

How valuations on stock and fixtures were calculated Any local development plans that could affect future revenue and profit

The quality and accuracy of the financial information on the business?

How quickly Sr. Franconi needs to complete the sale

What interest other potential purchasers have shown

Sr. Franconi.s attitude to part funding the purchase

4. Concessions relate to the key issues being negotiated. Likely concessions willinclude:

Price

Payment structure

Timing of purchase

Non-competition clause

5. Your strategy is your decision. If you are looking for Sr. Franconi.s help withfinancing the business it is probably best to approach the negotiation in a positive,\friendly way. Do your homework prior to your meeting and prepare your list ofquestions carefully. You may wish to visit, or have the restaurant visited by someone elseto get a feel for the quality of service and food and possibly feedback from othercustomers. Find out more about the location and future development plans. Prepare your

opening bid and the arguments you need to back it up.

HOW TO STRUCTURE NEGOTIATIONSPeople who are successful negotiators have a well thought out strategy before going intothe negotiation, are well prepared, self confident and structure the negotiation, so thatthey remain in control of the negotiating process.The recommended structure for negotiations is: ESTABLISH THE ISSUES BEING NEGOTIATED GATHER INFORMATION BUILD A SOLUTION

Stage 1. Establish the issues! Begin by agreeing an agenda for the negotiation. What needs to be discussedand agreed? Who will be involved and what will be their role? What timescalesare we working towards? What are the major issues that need to be agreed?! Many negotiators make the mistake of negotiating too quickly! Skilled negotiators spend 20% more of their time asking questions and lookingfor alternatives! Professional negotiators will want to gain your commitment on issues, such as


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price, early on in the negotiation! You should never commit yourself to anything until you have establishedeverything that is being negotiated! Negotiators will often bring up an issue at the end of the negotiation, when you arevulnerable and likely to agree to a . one sided . concession, in order to conclude the deal

! Skilled negotiators will often ask the other side for their . shopping list . beforebeginning the negotiation and refuse to accept any last minute additions to the list! Issues will include things like price, delivery schedule, payment terms, packaging,quality of product, length of contract etc.! At this stage issues are kept general and no concessions are made or agreementsreached

Stage 2. Gather information

This is a vital part of the negotiationThere are 4 kinds of information1. Information you have that you are willing to give to the other side

2. Information you have that you are unwilling to give to the other side3. Information the other side has that they are willing to give you4. Information the other side has that they are unwilling to give you! You need to decide, before the negotiation, how much you are willing to shareinformation and what your own information requirements are! This will set the climate for negotiation and will determine the amount of trustthat exists between both parties! Skilled negotiators are able to ask a range of open, closed and follow upquestions and are able to listen effectively! Skilled negotiators wait until they have all their information requirements,before making concessionsStage 3. Build a solution

! Having gathered information the next stage is to begin to put together a solution! Usually this will take the form of the selling side putting forward a proposal, oropening bid! The opening bid should be ambitious, but defensible! You should always challenge an opening bid and refuse to let an unacceptablebid on the table! There will then be a process of bargaining and concessions will be traded andmovement take place, until, hopefully, agreement is reached! Concessions should not be given away for free and you should be wary aboutconceding on issues for which you are not prepared

PERSONAL POWER AND HOW TO INCREASE IT


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One of the main differences between negotiators is how confident they feel whennegotiating. Typically, the more confident we feel, and the better we are prepared, themore successful will be the outcome of our negotiations. Personal power comes frommany sources. To build up and increase our confidence as negotiators we need to stepback and analyse the sources of our personal power and compare them with those of the

people with whom we are negotiating. Power is not absolute. In most negotiatingrelationships the power balance moves with time as the negotiation progresses.Here are some typical sources of power:

Information power

Information power comes from having knowledge that will influence the outcome ofthe negotiation. Planning and research can increase our information power, as can askingthe right questions before we reach the bargaining phase of the negotiation.Reward power

Reward power comes from having the ability to reward the other party to the negotiation.It could be the power a buyer has to give place an order for goods and services, or the

power a salesperson has to give good service and solve problemsCoercive powerCoercive power is the power to punish. This is seen most commonly in the buyersellerrelationship, but can be a feature of other types of negotiation.

Situation power

Situation power is the power that comes from being in the right place at the right time. Acustomer is desperate to place an order and you are the only source ofsupply in the shortterm. Having an effective network and keeping in touch with what is happening canincrease your situation power.Expertise power

Expertise power comes from having a particular skill which you can apply and whichcan influence the outcome of the negotiation. Improving negotiation skills helps youwin better deals. Other areas of expertise could also help the outcome of thenegotiation.

Referent power

Referent power comes from being consistent over time. If people see you as having aclear consistent strategy as a negotiator, you will increase your referent power.Having standards that you stick to and being consistent will help to increase yourreferent power. In the eighties, Margaret Thatcher wasn.t universally popular, butwas respected by many for being consistent in her views and behaviour. In the endshe failed because her approach was too rigid and she was unable to adapt tochanging circumstances.

DEVELOPMENT EXERCISE 2.PERSONAL POWER

Looking at the sources of power, above, write down where you feel you have strengths inyour negotiating relationships and write down your areas of weakness. Having done this,write down ways you can maximise your strengths and minimise


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when it is appropriate to be more or less assertive and we need to recognise whenthese times are.Responsiveness means the extent to which people are willing to respond to us andour questions. Some people are highly responsive and will give lots of informationabout themselves, their problems and needs. Others are unwilling or unable to

respond in this way and we see these people often as being negative or difficult.We are all different and some of us are naturally assertive and some of us are not.Salespeople tend to be quite responsive, but sometimes we lack assertion. Anexample of this is during negotiations.When customers put us under pressure to reduce prices or give discounts we find itdifficult and uncomfortable and worry about damaging the relationship with thebuyer.There are four basic styles of behaviour and these are determined by the way, inwhich people relate to one another.

ANALYTICAL DRIVER

AMIABLE EXPRESSIVE

DRIVER . .The Director.

Assertive, but not responsive..Task., rather than .people. oriented.Decisive and determined.Controlled emotions.Set on efficiency and effectiveness.

Likes control, often in a hurry.Firm, stable relationships.Stubborn, tough.Impatient.Inflexible, poor listener.EXPRESSIVE . .The Socialiser.

Assertive and responsive.Reactive, impulsive, decisions spontaneous, intuitive.

HighLow

High

low


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Placing more importance on relationships than tasks.Emotionally expressive, sometimes dramatic.Flexible agenda; short attention span, easily loved..AMIABLE . .The Supporter.

Not assertive but responsive.Dependent on others.Respectful, willing and agreeable.Emotionally expressive.Everyone.s friend; supportive; soft-hearted.Low risk taker, likes security.Group builder.Over sensitive.Not goal orientated.ANALYTICAL . .The Clinician.

Not assertive, not responsive.

Precise, orderly and business-like.Rational and co-operative.Self-controlled and serious.Motivated by logic and facts.Not quick to make decisions.Distrusts persuasive people.Like things in writing and detail.Security conscious.Critical, aloof, sceptical.Excellent problem solver.Likes rigid timetables.

HOW TO DEAL WITH BEHAVIOUR STYLESSome ideas for dealing with the different types

DRIVERS! Plan to ask questions about and discuss specifics, actions and results.! Use facts and logic.! When necessary, disagree with facts rather than opinions. Be assertive.! Keep it business-like, efficient and to the point.! Personal guarantees and testimonials are least effective . better to provideoptions and facts.! Do not invade personal space.EXPRESSIVES! Seek opinions in an area you wish to develop to achieve mutual understanding.! Discussion should be people as well as fact oriented.! Keep summarising . work out specifics on points of agreement.! Try short, fast moving experience stories.! Make sure to pin them down in a friendly way.! Remember to discuss the future as well as the present.! Look out for the .impulse buy..


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AMIABLES! Work, jointly, seek common ground.! Find out about personal interests and family.! Be patient and avoid going for what looks like an easy pushover.! Use personal assurance and specific guarantees and avoid options and

probabilities.! Take time to be agreeable.! Focus discussion on .how..! Demonstrate low risk solutions.! Don.t take advantage of their good nature.

ANALYTICALS! Take action rather than words to demonstrate helpfulness and willingness.! Stick to specifics . analyticals expect salesmen to overstate.! Their decisions are based on facts and logic and they avoid risk.! They can often be very co-operative, but established relationships take time.

! Consider telling them what the product won.t do . they will respect you for it,and they will have spotted the deficiencies anyway.! Discuss reasons and ask .why?. questions.! Become less responsive and less assertive yourself.DEVELOPMENT EXERCISE 3. BEHAVIOURAL STYLES1. Analyse each behavioural style and for each, answer the following questions:! How would you recognise each behavioural style?! How would you sell to them?2. You may refer back to your notes during the exercise

NEGOTIATING TACTICSMost successful negotiators recognise that the way people involved in negotiationsbehave does not always reflect their true feelings or intentions. We are going to lookat negotiating tactics that may be used by you or on you. Whether or not you chooseto use these tactics, it is vital to understand 3 things:! these tactics work! they can be being used on you, and can be used by you! once they are recognised as tactics, their effects are reduced, or eliminatedYou may feel that there is no need in your particular case to negotiate or resort to.tactics. in negotiation. This is a matter of personal choice.In general, tactics are used to gain a short-term advantage during the negotiationand are designed to lower your expectations of reaching a successful conclusion.There are many tactics available to negotiators. Here are some you may recognise.Pre-conditioning

This can begin before you even get together, or start your negotiations with theother party. Let us take a sales example:You telephone for the appointment and the other side says, aggressively:Don.t bother coming if you are going to tell me about price increases. You.llbe wasting your time and I will be forced to speak to your competitors.

When you do arrive you are kept waiting in reception for half an hour, without


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being told why. As you walk through the door into the other person.s office theyindicate for you to sit down, but don.t look up. Instead, they sit leafing through yourcompetitor.s brochure, in silence, ignoring your efforts to make conversation.You are given an uncomfortable low chair to sit in that happens to be directly in linewith the sun, shining into the office. At this stage, how confident do you feel?

The monkey on the backSome negotiators have the irritating habit of handing their problems to you so thatthey become your problems. This is the monkey on their back that they want you tocarry around for them.

A classic example is the person who says I have only got 10,000 in my budget. Thisis often used tactically to force a price reduction. Here is what you can do.When one side says I have only 10,000 in budget, look worried. Say something like:That is a problem. As you are no doubt aware, the cost of our systems

can be anything up to 20,000 and I really want to help you choosethe best system that meets your needs. Does that mean that if one

of our systems has everything you are looking for, but costs 20,000,you would rather I didn.t show it to you?

The monkey is now on the other person.s back and they have to make a choice. Ifthe objection is genuine and the budget figure is correct, you must try to look for analternative that meets your needs as well as theirs.If they genuinely can only spend 10,000 that is not a tactic but the truth. In dealingwith tactics the first decision you must make is whether it is a tactic or a genuinesituation. If it is genuine, you have a problem to solve, rather than a tactic toovercome.The use of higher authority

This can be a most effective way to reduce pressure in the negotiation byintroducing an unseen third party and can also be effective in bringing thenegotiation to a close. I need to have this agreed by my Board of Directors. If theyagree to the terms we have discussed, do we have a deal? Be careful to use thisdevice sparingly so that the other side does not begin to feel you have no decision .making authority yourself.One way of countering this tactic is to say before the bargaining begins If thisproposal meets your needs, is there any reason you would not give me your decisiontoday? If the other side still wishes to resort to higher authority appeal to their egoby saying Of course, they will go along with your recommendations, won.t they? Willyou be recommending this proposal?Nibbling

Negotiations can be a tiring process. As the point draws near when an agreement islikely, both sides exhibit a psychological need to reach agreement and get on withsomething else.You are very vulnerable as the other side reaches for their pen to sign the order formor contract to concede items that don.t significantly affect the final outcome. Oh, bythe way, this does include free delivery, doesn.t it? or Oh, by the way, the price ofthe car does include a full tank of petrol?30


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Nibbles work best when they are small and asked for at the right psychologicalmoment. Like peanuts, eat enough of them and they get fattening.Good negotiators will often keep back certain items on their .want list. to the verylast minute when the other party is vulnerable. Watch out for this.The good guy and the bad guy

You may have come across this tactic before or else seen it used in films or ontelevision. This is a tactic designed to soften you up in the negotiation.For example, you are negotiating the renewal of your service contract with theBuying Director and his Finance Director. You present your proposal and theBuying Director suddenly gets angry and walks out in disgust muttering to himselfabout how unfair you have been and how the .relationship. is well and truly over.You pick up your briefcase and are being shown the door when the Finance Directorsmiles at you sympathetically and saysI.m terribly sorry about that. He is under a lot of pressure. I would

like to help you renew your contract, but he really will not considerthe price you have suggested. Why don.t I go and talk to him for you

and see if we can agree a compromise? What is the bottom line on thecontract? If you give me your very best price, I will see what I can do.

The best way of dealing with this tactic is to recognise the game that is being playedand assess exactly what the quality of the relationship is. You may be able to saysomething like:Come off it, you are using good guy, bad guy. You.re a superb

negotiator, but let.s sit down and discuss the proposal realistically ...

If you don.t have this kind of relationship, stand firm and insist on dealing with thebad guy, or else bluff yourself and give a figure that is within your acceptable rangeof alternatives.One way of combining .good guy, bad guy. with .higher authority. is by saying thingslikeWell, I.d love to do a deal with you on that basis, but my manager refuses

to let me agree terms of this nature without referring back and he refuses

to talk to salespeople. Give me your best price and I will see what I can do ...

31Body language

It is important in negotiation to react verbally and visually when offers are made.You may have seen the more theatrical negotiators hang their heads in despair oraccuse you of being unfair and souring a perfectly good relationship when youpresent your proposal. Human nature is such that we can believe and accept theseoutbursts against us and our negotiating position becomes weaker as a result.Ensure the next time you are in a negotiation that you react to the other party.soffer. If you show no reaction, they may be tempted to ask for more and more andyou will lose the initiative in the negotiation. Also, it is almost certain that theiropening offer is higher than the figure for which they are prepared to settle, so it isimportant that you clearly signal your unwillingness to accept the opening position.If you reach the point below which you will not go, it is important that you showthis with your body language. News readers, when they have finished reading thenews, have a habit of picking up their script and tidying up their papers. This tells


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the world that they have finished their task and are preparing to leave.Similarly, when you make your final offer, it can be very powerful to collect yourpapers together and indicate with your body that it really is your final offer. Put yourpen away, sit back in your chair and remain silent. Look concerned and keep quiet.If your voice says final offer but your body is saying let.s keep talking, the other party

will disregard what you say and keep negotiating.The use of silenceDuring the negotiation, you may make a proposal and find the other party remainssilent. This can be very difficult to handle and often signals .disapproval. to theinexperienced negotiator. Just as nature abhors a vacuum, so silence induces theneed in people to talk.If you have a proposal to make, make it and ask the other side how he, or she feelsabout it. Having asked the question, sit back and wait for the answer. Whatever youdo, don.t change your offer as this could seriously weaken your position.The vice

A common technique used by negotiators when presented with a proposal is to say

You.ll have to do better than that. This can be a very powerful statement, especiallywhen used with broken record.The most powerful way of dealing with this is to ask them to be more specific.Whatever you do, don.t weaken your negotiating position in response to the vice bygiving anything away, too easily. This will only encourage repeat behaviour.32The power of legitimacy

People believe what they see in writing. We all assume that if a thing is printed orwritten down, it is non-negotiable. This is what can make price lists so powerful. Ifyou have to present a customer with a price increase or you wish to encourage anearly order to beat a price increase, show something in writing such as an officememo from your boss announcing the increase. This will have a far greater impactthan just saying your prices are about to go up.When presented with a price tag in a shop, ask to speak to the manager and makehim an offer. You could be surprised at the results.The low key approach

Don.t appear too enthusiastic during negotiations. Over-enthusiasm duringnegotiations can encourage skilled negotiators to review their strategy and demandmore.If you are in a negotiation and the other side is not responding to your proposal,recognise this could be a tactic and avoid giving concessions just to cheer them up.Salespeople like to be liked and will often give money away in a negotiation, if theother side appears unhappy.For example, if you are buying a car avoid saying to the seller things like:This is exactly what I.m looking for. I really like the alloy wheels.

Develop a low-key approach. Say things like:Well, it may not be exactly what I.m looking for

but I may be interested if the price is right

33MOVEMENT AND CONCESSIONS


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! Deal with price objections and defend your price, but don.tover argue your case! Close down your body language! Focus on price and benefit differences! Begin the bargaining phase

THE CLOSING STAGESThe closing stages of any negotiation are vital to the overall success of the final deal.There will come a time when both parties can sense an outcome is possible, andeach negotiator needs to be careful not to be too eager to close or else the otherparty will be tempted to hold back for further concessions.Once a likely outcome is seen, either party may define outstanding issues, comparearguments and objections, review the position to date and agree a deadline foragreement. If one side avoids making these decisions, the other must probe to fineout the reason and deal with it effectively. Negotiators must be careful at this stageto identify tactical delay which deliberately attempts to force further concessions.

The best solution to aim for is one where both parties feel they have done welldespite having to concede on certain issues. This is often called a win-win solution.Once either side feels they have arrived at the final deal, it is important to signal thisto the other party.Body language can say as much about what you are thinking as speech. If you havemade your final offer, look as if it is your final offer. Simply gathering up yourpapers, looking at the other side directly in the eye and saying That is my final offercan do this, and silence can be a powerful tool in convincing them you mean whatyou say.Be wary of .splitting the difference.. If you offer to split the difference, you have, ineffect, given the other side a concession that is one-sided. You have said you areprepared to move without asking for commitment in return.The final consideration is when you have done the deal and both parties are inagreement. Record the details and agree with the other parties involved that yourinterpretation of events matches theirs. That way there will be no unexpectedcomeback in the inevitable post-negotiation period when either side reviews howwell or badly he has done. Again, this will be minimised if the solution you havearrived at benefits both parties.The closing stages need to be approached with caution. It has been shown that themajority of concessions are given or traded in the last 5% of the time allocated fornegotiation. That means, if you negotiate for 1 hour the last 3 minutes are when youare most vulnerable.38THE 40 MOST COMMON MISTAKES IN NEGOTIATION1. Failing to prepare effectively for negotiation.2. Underestimating your own power.3. Assuming the other party knows your weaknesses and strengths.4. Being intimidated by the status of the person with whom you are negotiating.5. Concentrating on your problems rather than those of the other party.6. Forgetting the other side has things to gain from agreement as well as


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yourself.7. Making assumptions about what the other side wants.8. Having low aspirations for yourself.9. Giving too much credence to time deadlines set by the other side.10. Assuming the other side is aware of the short and long-term

benefits of reaching agreement.11. Being intimidated by rules set by the other side.12. Misunderstanding tactics used by the other side.13. Talking too much.14. Failing to listen effectively.15. Believing everything the other side says about you, your service,your competition etc.16. Being forced into discussing price too early in the negotiation.17. Revealing your .hand. too early.18. Aiming too low with your opening bid.19. Accepting the first offer.

3920. Giving away concessions for nothing.21. Conceding an important issues too quickly.22. Making concessions too easily and raising the other sides. expectations.23. Feeling guilty about asking for a concession.24. Making concessions before knowing all the other sides. demands.25. Failing to make concessions conditional on final agreement being reached.26. Making concessions of equal size to those on offer.27. Paying too much attention to .price. rather than .value..28. Discussing issues for which you are not prepared.29. Being inflexible.30. Losing sight of the overall agreement when deadlock is reachedover minor issues.31. Responding to a high demand with a counter offer instead ofchallenging the validity of the high demand.32. Assuming deadlock means agreement is not possible.33. Feeling deadlock is only unpleasant for you and not the other party.34. Trying to be liked during the final stages.35. Bluffing without having a strategy ready should your bluff be called.36. Taking things personally.37. Offering to .split the difference..38. Being intimidated by This is my final offer!39. Not preparing .Head Office. for the possibility you may need to walk away.40. Carrying out a .post-mortem. with the other side.40DEVELOPMENT EXERCISE 4.ENVIRONMENTAL PRODUCTS LTD.A role playing exercise for a team meeting

To carry out the role-play, break the team into 2 groups and hand eachgroup a copy of one of the role-play briefs.


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! Separate the teams and allow 40 minutes preparation time.! Refer the teams to the preparation checklist, earlier in this book.! When they have prepared, pair off individual group members and allow them 40minutes to come to some sort of agreement! Their objectives are to reach agreement if possible, based on the information in

their briefs! After 40 minutes, bring the whole group back together and review their results! Carry out a discussion on the styles of negotiations used and the positive andnegative effect of their behaviour on the eventual outcome! Encourage the team to produce an action plan for use in their futurenegotiations, in order to develop their skills further.41ENVIRONMENTAL PRODUCTS LTD.Commercial Director.s Brief

! You are the Commercial Director for Environmental Products Ltd, a waste papercompany. You buy waste paper and convert it into recycled paper products,

which you sell to major retailers throughout Europe.! You are aware that the owners of The Yorkshire Gazette, a Leeds basednewspaper, are looking for a buyer for their waste newsprint and you know thequantities are likely to be substantial. You estimate they can probably supply youwith around 15 to 20 tonnes of waste paper per week. You need this businessbecause you have recently invested heavily in new plant and machinery, andhave a good deal of excess capacity.! You have contracts with several other Newspaper Publishers, who have as a byproductof their production process, part-rolls of newsprint. This paper is veryhigh quality and much sought after by companies like your own. Your companyneeds regular supplies of this paper and you are given a performance-relatedbonus based on the tonnage you are able to buy, so this could be an importantcontract for you personally, as well as your company.! The average market price for this kind of product is currently 49 per tonne.You would expect to negotiate a price of between 45 and 54 per tonne,depending on the quality of the product and the regularity of supply.! Your transport costs are quite high. You have the capability of collecting thewaste paper in 5 or 12 tonne loads; however, it costs you 3 per tonne less tocollect 12 tonne loads, so you would seek to

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