manhattan elite prep notice negotiation decision chapter 3.3 5.4

Negotiation and Decision Making 13

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3.3 Negotiation Scenarios Normal Situations In a distributive negotiation which starts with a fair offer, the discrepancies between various points are smaller and the bargaining zone is narrower. There could be many scenarios where each point lies on the spectrum. The chart below demonstrates what could typically happen in a situation where sellers may have more power over buyers based on market demand.

Resistance Point

(Seller)

→

Initial Offer

(Buyer)

→

Asking Price

(Seller)

→

Target Price

(Buyer)

→

Resistance Point

(Buyer)

→

Target Price

(Seller)

ß-------------------------Bargaining Zone – Seller (Acceptable Outcome)------------------------------à ß-------Bargaining Zone – Seller (Acceptable Outcome)------à If the Buyer is Hard Bargainer Buyer can afford a higher price but start with a very low offer, even below the seller’s resistance point. The buyer has a greater bargaining zone than the seller. Initial Offer

(Buyer)

→

Resistance Point

(Seller)

→

Asking Price

(Seller)

→

Target Price

(Buyer)

→

Target Price

(Seller)

→

Resistance Point

(Buyer)

ß-------Bargaining Zone – Seller (Acceptable Outcome)------à ß-------------------------Bargaining Zone – Buyer (Acceptable Outcome)------------------------------à

If the Seller is Hard Bargainer Seller can accept a lower price but start with a very high offer, even above the buyer’s resistance point. The seller has a greater bargaining zone than the buyer. Resistance

Point (Seller)

→

Initial Offer (Buyer)

→

Target Price

(Seller)

→

Target Price

(Buyer)

→

Resistance Point

(Buyer)

→

Asking Price (Seller)

ß-------------------------Bargaining Zone – Seller (Acceptable Outcome)------------------------------à ß-------Bargaining Zone – Buyer (Acceptable Outcome)------à



3.4 Key Strategies Many of the strategies, including the following, in distributive bargaining scenarios involve a calculated method of sharing information. If the buyer/seller can influence the information sent (or the opposition’s perception of the information), that party will benefit. This can also be called persuasion.

3.4.1 Communicating and Assessing Information The concept of communication within a negotiation can be complicated. There are certain facts and contingencies that both parties want to know, but cannot be permitted to know. Additionally, some facts can be contrived to assist in persuading the other party. Communicating with the goal of persuasion and secrecy is a strategically difficult thing to do. Information to Keep Secret

- Emotional vulnerabilities - Information about a strategic position, resistance points, and target outcome.

Alternatively, you will want to discover this information relative to the competing party

- Push for the lowest (or highest) settlement by making offers that are somewhat unreasonable. You can determine the buyer/sellers range to some degree of accuracy.

Information to Share

This is where the true complexities arise: - What factual information to share, and - What information to contrive

- The goal of the contrivances is to influence the other party’s position and understanding of the situation

How much the other party knows about your bargaining zone and the effects of the negotiation upon you or your business is a major factor in how well you will do in the negotiation. Sound communication strategies set you in the right direction for a winning result. However, you need to be able to form sound judgment by correctly assessing all the information exchanged during the communication process. You must be able to:

(1) Assess the possible outcomes and the values the other party places on those outcomes (2) Assess the costs of delayed or terminated negotiation



Indirect Assessment The process of indirect assessment attempts to discover what information the other party used to set their target and resistance points thereby estimating their actual resistance point. It can be done by research and consultation. The trouble with that method is that you are relying on interpretations. Sometimes, you are relying on many disparate interpretations and the result can be an inferred resistance point that is wildly different from reality. Direct Assessment Direct Assessment can happen when one party gives detailed and accurate information about their resistance point and how they arrived at that point. This could happen because one party wants a quick and easy settlement, or if an outcome above their resistance point is particularly problematic. That sort of information is usually not as easy to get directly and those scenarios do not happen as often as we would like. Sometimes, direct information can be gained in covert and unethical ways that we do not recommend.



3.4.2 Influencing Perceptions Influencing the Other Party’s Perception of Your Bargaining Zone Information Presentation At the beginning of the negotiation process, it is best to give away as little information as possible. Answer their questions with more questions to avoid giving too much information. Pay attention to your body language. The other party could notice a fidget and infer that a particular question made you nervous, thereby making a conclusion about your position. In a team negotiation situation, all communication can be through one particular person. This leaves little room for slips by a member of the team to reveal too much information. When using a representative in part of the process, you can use a technique where you do not give the representative enough information to be able to answer the other party’s questions. There representative cannot leak information nor can they provide data or make decisions. This may cause tension by delaying the process. A final technique is to bring so many issues to the table that the other party becomes overwhelmed and cannot distinguish which issues are of actual importance. Present facts selectively to strengthen your position. One of the related methods is to present only the positive facts related to your position, rather than all the facts that may reflect on some of your weaknesses. You can also form an argument based on the facts you collect, which supports why the other party’s proposal would not be fair or viable. Importantly, it is of no consequence whether or not the other party agrees with you. These methods will help you control how the other party perceives you and your position and what outcomes you value most or least. Another way of influencing the other party’s perception is to manage your own emotional reaction to a proposal or a statement that the other party has made. Emotional management can either be in the form of controlling your true emotional reactions, or to even provide a grossly exaggerated or fake reaction. Yelling, anger, or obvious disappointment will tell the other party that something is particularly important. Boredom will show that something is unimportant. Also, if you carefully and systematically go through a proposal or details surrounding a proposal, the other party may think that that particular element is very important. If you are casual, you can display unimportance or lack of interest.



Influencing the Other Party’s Perception of Their Own Bargaining Zone You can influence the opposition’s perception of certain elements in their own bargaining zone such as objectives, costs, and the desirability of an outcome. One way to do it is to make their suggested outcome less attractive or make the cost involved seem much higher. Another approach is not to disclose certain information positively impacting their bargaining zone if you have no obligation to do so. A Word of Caution Beware: In implementing some of the above strategies, it is easy to venture into unethical behavior. Carefully selecting and presenting facts is standard practice in distributive bargaining, but fabricating facts or “acting” in the negotiation room can be seen as dishonest and create an entirely negative negotiation atmosphere. If one is overzealous in his/her tactical approach, the other party may discover the tactics being used and use them in kind.



3.4.3 Influencing the Resistance Point It is central to your strategy to locate the other’s resistance point and the possible range between that point and your own

- There are many factors that influence the resistance point:

- The combination of the value and costs of an outcome for either party

- The effects of the elements of the bargaining mix, and

- The negotiation itself.

- In attempt to influence the other party’s resistance point, you should consider

o The effects of a lengthy negotiation or an aborted negotiation o How much they value a particular outcome o Convincing them that their product is not worth what they are asking thereby

lowering their resistance point or your product is worth much more than what they are willing to pay thereby increasing their resistance point

o Convincing them that in order to make the negotiation proceed with an

overlap/positive range between two parties, they need to change their resistance point. You may need to modify yours as well.

In sum, let us look at how the following factors can affect the bargaining process. Delay or Abortion of Negotiations If party A knows that party B needs a quick settlement, A will be able to push B into a situation that is favorable to A. Party A needs the negotiation to end as quickly as possible, otherwise they will not be able to maintain an advantage with their resistance point. Alternatively, if party B can convince party A that a long negotiation will be costly, they can influence party A to lower their resistance point. Existence of BATNA If party B knows that their alternative(s) is satisfactory, they will be able to maintain a high resistance point. If party B has an idea that party A does not have a desirable alternative, they will be able to hold onto their high resistance point ever more strongly.



Settlement Possibility If party A can convince party B that party B’s position will not yield a desirable outcome, party B may not be able to hold on to their high resistance point. The resistance point is directly related to the target outcome. If a particular perceived outcome is less desirable to party A, party A’s resistance point may change. If party A place a particularly high value on a certain outcome, party B will have a difficult time getting party A to lower their resistance point. If party A’s resistance point is outside the range of party B’s, party B may adjust their resistance point to achieve a positive bargaining scenario and avoid a stalemate. Meantime, if you increase the cost of not reaching a settlement, you may influence the other party to adjust their position to reach a settlement faster. Beware of this technique because conflict can escalate between two parties. Involvement of Other Parties You can create pressure on the other party by threatening to find an ally in another party against the competing party. Scheduling You can schedule negotiations at a time when the other party will not be able to effectively negotiate such as early in the morning or immediately after they arrive after a long trip. Also, you can schedule negotiation at the very end of a long meeting where there is not enough time to effectively negotiate.



3.4.4 Controlling Relative Positions The initial position the bargainer takes may change or stay the same throughout the process. It might change because of new information released from the other party or observations made throughout the process. The dynamic nature of a “position” holds for the other party as well. Opening Offer The constraints that exist concerning the opening offer are similar to the ones that exist concerning tactical and strategic decisions that we discussed earlier. Those include how high or low the offer should be and how close to the resistance point they should be. As more information becomes available, it will be easier to make the opening offer without too much risk. There are pros and cons associated with both.

- It is possible to get a better settlement with a very aggressive opening offer but you risk “putting off” the other party.

- If you make a less aggressive offer, you are being careful and the negotiations are likely

to continue, but your eventual settlement may not be very satisfactory. Typically, a good opening offer is one that provides room for the party who is making the offer. If the offer is very high and you are the seller, you likely will not settle at that number but it provides an upward limit. Any number under that number may be reached. Opening Stance Your stance can be thought of as your attitude. You can be congenial and moderate, or you can be extreme and argumentative, fighting at every chance you have. You must consider how your stance may be countered when deciding on it. Typically, the best way to deal with an aggressive negotiator is to reciprocate the aggressive style Should you make the opening offer? Consider the following:

§ Will the other party walk away if your opening offer is not what they expected? § Are you confident that you can “anchor” (set a benchmark in) the negotiation? § Is market information easy to collect or not?

§ Are issues easy to value precisely?

§ Is the other party better prepared than you?

§ Did you develop all the evidence and arguments to support your opening offer? The main

goal is to get closer to the opposition’s end of the bargaining zone.



3.4.5 Managing Concessions Concessions After the initial offer is made and then a counter offer is made, both sides will usually begin to make concessions. Concessions are important to the bargaining process for many reasons.

- They are symbolic in that their presence and magnitude convey a certain attitude by the concession maker

- The character and quality of the concession can expedite the process. If concessions are

not made, the process can stalemate or a party may withdraw The combination of the offer, the attitude and the concessions form a package that shows the other party your negotiating style. They also determine the length and quality of the negotiation. Not making any concessions shows that you are firm and possibly unnecessarily too firm. You are showing that you do not respect the other party’s position and are not willing to effectively negotiate. This can sometimes work but will usually backfire. Making concessions requires care and thought. Too large a concession can indicate weakness and too small may be akin to not making one at all. Reciprocating a concession also requires care: to not make one at all would be tantamount to ending the negotiation. Your must also be of a similar magnitude and importance to the first party. Some concession techniques include making connections between different concessions and packaging various concessions. Concession Patterns Understanding concession patterns is important in trying to glean information about another party’s position. If they at first made a large concession and their subsequent concessions are becoming smaller and smaller, you may think that they are reaching their desired settlement or resistance points. As a party gets closer to those points, there is less room to maneuver meaning each concession will be of a smaller and smaller magnitude. The pattern of the concessions you make can show the other party what you have to work with and vice versa. Making Concessions Making concessions can be tricky business. Concession making requires skill and finesse to make the right ones at the right times. Research – Know what items you can give up easily but will be important to the other side. Timing – Don’t give up concessions too quickly. You should wait until you are deeper into the negotiation. Being too quick with a concession can be a sign of weakness that is easily exploitable.



Reciprocity – Never give a concession without asking for one in return. The other side should be able to give you something of equal or greater value. If you don’t ask, they will continue to expect concessions from you without giving anything back Start Small – Making large concessions early in the negotiation can be a sign of a few things. First, it shows that you have a lot of room to come down. Second it shows that you started too high and tried to take advantage of the other side Decrease each time – Each concession you make should be smaller than the one prior to it. This will show the opposite of the above – that your initial position was credible and you have little room left for maneuvering Don’t give up too much – Sometimes a great negotiator will ask you for many small concessions. At the end of the process you have given away everything you possibly could have. Avoid the issue by asking them what else they are interested when they start asking for many different concessions. Set up a Structure – This can help negotiations for people who do not have a strong sense of business ethics and for negotiating with people from other cultures. Make it clear that if you concede an item, you expect the same in return Don’t Say No – Instead, make the concession work for you by knowing what you will get from them Know Your Bottom Line – Don’t give something away if it doesn’t make sense to do so.



3.4.6 Managing Commitments and Final Offer Commitments Some negotiators use commitments in one or more ways. Making a commitment occurs at the positioning stage and states that if a certain goal is not met, future action will be taken. For all intents and purposes, this is a threat. For example, a labor union will state that if a certain salary and benefits package is not produced by the management, the labor union will organize a strike. When using a commitment, you are obligating yourself to a course of action and an initial position. It will be very difficult to change your position and to not follow through on the commitment will be damaging to future negotiations. If you choose to establish a commitment, be sure that you make it clear that your commitment is not a bluff. Establishing commitments requires precision. Some negotiation theorists describe a commitment as having three properties: Finality, Specificity, and Consequence. Those properties necessitate the close-ended nature of a commitment. There are many ways to make a commitment more effective. Some of the following methods may be extreme and irrelevant to the everyday business negotiation scenarios that will be faced in one’s career.

- Making the commitment public - Finding allies – forming committees - Creating a written statement - Reinforcing the commitment with preparations

Keeping the Other Party from Making a Commitment If a commitment can work in one party’s favor, it can also work in the other’s favor. It is important for a negotiator to pay attention to the other party to keep that party from forming a committed position. Some ways to keep the other party from committing are:

- Not giving them enough time to form a sound commitment - To ignore the commitment statement or not take it seriously

Abandoning a Committed Position If you are planning a committed position, you should also plan a way to get out of it. If you have a written statement, you can include clauses that make the commitment valid under certain conditions. Or if certain conditions change, you or the other party can “rethink” an earlier



position. This can work in your favor for getting out of a position, or for causing the other party to abandon theirs. Some other ways include:

- One can also state his/her commitment in general terms so that there is more “wiggle room” in the commitment for you to get out of it.

- Make a new proposal that concerns the committed position while ignoring your previous

proposal. Some authors have called this “letting the issue die silently”. Final Offer When you are approaching the end of the negotiation or the desired end you have a few options:

- You can state “this is my final offer” - You can cease conceding anything else, signaling that you cannot or will not give any

more to the other party Neither of the above two options is the best decision. The first may be too abrupt and unbelievable, though it is important to show that you have made your final offer. The second can be misinterpreted easily. If the other party continues to try to make concessions, unaware of the fact that you have made your final offer, they may resent your firmness. It is possible to make your final offer substantial enough to signal that you want to reach a settlement. It should also indicate that you have very little if anything more to give. We have had the experience in trying to get deals where a salesperson says “I spoke with my manager and…” The salesperson is trying to indicate that they got you a special deal and it is probably the final one.



3.5 Hardball Tactics

3.5.1 Identify Hardball Negotiators In your career, you may come across hardball negotiators whose goal is to make you play by their own rules and pressure you into a deal. Hardball negotiators often use underhanded tactics and play head games to get the deal that they want. You can identify those negotiators somewhat easily: - They are unwilling to compromise. - They aggressively pursue win-lose outcomes. - They are very rigid in their thinking.

Hardball tactics in negotiation are designed to put so much pressure on a party that they are convinced to do something that under normal circumstances they would not do. These tactics in many cases do not work because they are overly aggressive and can motivate retaliation but they can sometimes work when used against an unprepared or inexperienced negotiator. Since hardball tactics are not recognized as legitimate in business negotiation, we do not recommend their use although they are important to examine. It is somewhat realistic that someone will eventually try to high- or low-ball you. This tactic starts with the negotiator making an unreasonable offer, either too high or too low. If you do this, the negotiations could end immediately. In some cases, a weak negotiator, after being high/low-balled will re-evaluate his position in a way that is favorable to the hardball negotiator. You may come across a negotiator who will use intimidation as a bargaining tactic – It will usually involve the use of anger to make you feel fearful of them. Intimidation tactics can also involve a negotiator attacking your character to make you feel guilty. There are many other hardball tactics, some more thrilling and dramatic than others. It is not necessary to make a detailed list. When there is extreme behavior being exhibited, you should be aware that you are dealing with a hardball negotiator. You have a variety of options for what to do in these scenarios:



§ Highball/Lowball – Related to Opening Bids o Aimed to push the opposition party to reassess his bargaining zone and move

resistance point in the desired direction. § Bogey – Related to Issues Being Negotiated

o Identify an issue that is important to the opposition but of trivial value to you o Present this issue as quite important to you first o Make concessions on this issue then o In return ask for major concessions on a different issue that is truly important to

you

§ Nibble – Related to Issues Being Negotiated o Ask to include a clause that has not been discussed previously before closing the

deal o The item is not significant enough to re-start or halt the process o May lead to negative impressions for future negotiations with relevant parties

§ Chicken/ Commitment – Related to Posturing o Combine a serious bluff with a high-stakes threat to pressure the other party to

cave in (chicken out)

§ Intimidation/ Aggressive Behavior – Related to Posturing o Employ extreme emotions such as anger and fear o Question the opposition’s trustworthiness to create guilt o Present an unnecessarily larger group in a meeting or larger documents to frame

the opposition’s mentality in an effort to change his resistance point

§ 3rd Party Commitment/ Ambiguous Authority – Related to Posturing o Highlight the need of receiving approval from a higher authority or agreement

from another party o Use their response (true or not) as a way to control the negotiation

§ Phony Facts/ Lying – Related to Posturing

o Present untrue facts o Lead to immediate loss of credibility if proven lying intentionally

§ Good Cop/ Bad Cop – Related to Team Negotiation

o The bad guy takes a primary role in negotiation when the negotiation is not in the wanted direction

o The good guy takes the lead in an effort to close the deal sooner



3.5.2 Hardball-Countering Tactics If you encounter hardball negotiators you will need to alter your approach to counter their tactics. You must cast aside your value and just respond tactically.

1. Stick to your resistance point – don’t be intimidated into a deal that is bad for your business

2. Assess all of the risks before you reach a deal. Question yourself about the consequences and implications of the deal. Ask yourself if you really want to be a part of the deal.

3. Don’t become competitive. Hardballers like to become competitive about small issues. You don’t want to get caught up in unimportant details.

4. Watch out for those negotiators who strive to win without necessarily reaching a successful deal. Success for them is a “win.” For them to win, you must loose.

As stated earlier, you must adjust your approach when negotiating with a hardballer. Much of the technique involves not acknowledging their approach and treating the situation as if it was a normal negotiation.

- Do not fight with them. Acknowledge their approach. - Avoid becoming emotional and walking away from the deal.

Out of all the possible approaches to dealing with a hardballer, the only way to come out successful is to actually negotiate with them. 1. Don’t go head to head. Instead, defuse the conflicts. Going head to head with a hardballer will almost always give you a loss. Avoid the conflict they are trying to start by stepping aside. Ask them questions about what they are looking for. Again, treat them like they are a normal negotiator and do not engage in their tactics. It also will not help to confront them about their tactics. 2. Understand their interest. Similar to other negotiations, ask a lot of open ended questions to find out what they value and what items are most important to them. Letting them talk about themselves and their business can develop trust and give you information about how the deal could end up. - Make sure to avoid trying to prove them wrong - Make sure to avoid “you” statements that can put them on the defensive - Listen actively by asking questions that reiterates information about them



3. Deal with hardball tactics.

§ Nibble – Related to Issues Being Negotiated o Ask to include a clause that has not been discussed previously before closing the

deal o The item is not significant enough to re-start or halt the process o May lead to negative impressions for future negotiations with relevant parties

How to deal with it? - Do not agree to the concession. Do not respond with a “yes” or “no” answer.

- Instead, ask “if I could do that for you, would you please do this for me?” Ask for

something that will offset your concession to a similar degree. - Or say “This is entirely unexpected as we both have invested a lot of time and effort

to get this far. We may have to reassess the entire negotiation if time allows. Or we have to revise it at a later day to incorporate new changes.”

- In any case, always prepare for those last-minute requests by planning a few counter-

nibbles and arranging them in order of importance in advance.

§ Bogey – Related to Issues Being Negotiated o Identify an issue that is important to the opposition but of trivial value to you o Present this issue as quite important to you first o Make concessions on this issue then o In return ask for major concessions on a different issue that is truly important to

you

How to deal with it? - Do not respond with a “yes” or “no” answer. - Always test to see if it is real. - Ask the opposition to list out all the major issues in order of importance. - Reframe the deal by introducing other options to address the same concern.

§ Intimidation/ Aggressive Behavior – Related to Posturing

o Employ extreme emotions such as anger and fear o Question the opposition’s trustworthiness to create guilt o Present an unnecessarily larger group in a meeting or larger documents to frame

the opposition’s mentality in an effort to change his resistance point

How to deal with it? - Look confused. Do not show that you have been intimidated.



- Respond this way: This is not we have expected or experienced. Other parties have

been happy with similar proposals. Can you let me know what thresholds you are comparing us to?

- Suggest a later time to reconvene with the opposition in order to show you more

supporting facts

- Indicate that you are not in a rush to finalize the deal. You are here as long as it takes.

- Always check the opposition’s track record to see how frequently similar tactics have

been employed

- Arm yourself with a long list of your past successful proposals for similar situations 4. Close the hardball deal. Closing the deal can be the most difficult part of any negotiation – especially when dealing with a hardballer. You will have to make them feel like a winner, and make sure they look good to their boss or company if you want to walk away with a deal that works for your business. - Show them why it works. Give them data and examples from the past. - Get them involved – ask them for their opinion and input to improve the deal - Make them give you data to take to your boss. Have them explain why the deal works for

both of you. - Don’t box yourself into anything until the deal is complete. Do not give the hardballer

ammunition for the end of the deal.

To some extent, it may seem like you have to play games to deal with the hardballer. You must make them look good by recognizing the strong points of their ideas. Find out what their values are so you can work with them to keep them feeling like they are winning.



Chapter 4 Integrative Negotiation Distributive negotiations involve more win-lose situations because there is only a certain amount of something to be had – both sides cannot have the same amount. It can also be called as “Fixed Resource” negotiations. Integrative negotiations can be identified as “Expanded Resource” negotiations. They deal with situations where it is possible to problem solve in such a way that both sides can get more of something than previously imagined. Both sides have to opportunity to win simultaneously. This is called “Enlarging the Pie”. Some experts believe that there are necessary conditions for a successful integrative negotiation.

1. The terms of the deal are relatively broad. 2. The discussions are about scarce resources or unique situations. 3. It is better for both parties to negotiate than to not negotiate.

In particular non-distributive negotiations require:

1. An open exchange of knowledge 2. Understanding and Empathy with the Desires and Goals of the Other Party(s) 3. Stressing Agreement and NOT discrepancies 4. Seeking Resolution satisfying the goals of both (all) parties

Remember that an integrative negotiation is a process of mutual problem solving and not a sparring match. To maximize mutual benefit, both sides must

1. Strive to understand each other 2. Demonstrate strong willingness to mutually solve problems 3. Be flexible and focus on “enlarging the pie” as supposed to “dividing the pie” 4. Aim for win-win outcomes



4.1 Outline Problems and Underlying Interests In this step, two parties identify their problem, defining it together, in a way that encompasses the agendas of both groups.

Steps in the Process Keep in Mind

This requires more than locating the dilemma of one party. It requires locating the dilemma faced by both parties.

Be sure that the dilemma is stated in a way that promotes mutual concerns. It is best to state it in the 3rd person (he, she, it, they) rather than in the 2nd

person (you). Be sure not to state the dilemma in a complicated manner. Simplicity is key. REMEMBER: The reason parties negotiate is that they in effect need the other to arrive at a resolution. Be sure not to move the process along too quickly. These things take time. It’s the foundation of your process. If there is necessary, consider bringing in a thoughtful mutually inclusive negotiator to orchestrate the process and move the negotiation forward step by step effectively. Make sure you consider all of the needs and alterations that the other party may encounter during the negotiation. Be as honest as possible in this process.

↓ Then the dilemma must be stated in a way in which the desires of both parties are represented and respected.

↓ Restate the problem as an objective. Let it be known clearly what you seek out of your negotiation. Focus on issues, not personalities. Separate defining problems from searching for solutions.

There are several different types of interests that may be present in a negotiation. • Fundamental Interests – Economic and Financial Issues • Strategic Interests – Impact on relationship with competitors, customers and suppliers, etc. • Relationship Interests – The value each party attributes to mutual relationships • Process Interests – Preference for certain ways of negotiation, communication and

execution • Ethic Interests – A particular set of principles each party adheres to in business and in life



4.2 Create Possibilities for Resolution This is in some ways a careful and thoughtful brainstorming process undertaken with the intention of producing a variety of refined options from which to select a solution to the identified dilemma.

Steps in the Process Keep in Mind

In creating solutions, it is crucial to be creative and thorough to include all possibilities.

How might both groups achieve their desired ends? Is there a limited supply of something? Can we increase the availability of resources?

Do not limit them to two alternatives - one desired by one party and the other by the second party. Be as inclusive as possible.

↓ Define priorities. What is most important for each party?

What is most important to each party respectively? What is least important to each party respectively? Can I separate parts of the problem from the whole?

↓ In creating solutions, it is useful to consider whether disagreement in financial compensation might turn one party away entirely. Also consider if other forms of compensation might promote greater willingness to compromise.

What objectives does each party have respectively? What could my party give up or how might it compensate the other?

↓

In creating solutions, it is useful to consider ways in which the parties might compromise.

What concrete or essential musts does each group have? How can these be satisfied?



4.3 Assess Possibilities and Choose the Best Resolutions This is the step in which we select the solution to the problem.

Steps in the Process

Keep in Mind

Through the previously created listing of possible solutions and choose those that are well-liked by either party. Eliminate other options.

Be sure to analyze options on the basis of previously created lists of priorities and objectives for each group. Be prepared to offer concrete reasons for particular inclination. More than: “I don’t know, it does seem better.” At the same time, remain conscious of the fact and try your best to quantify or specify it. Some preferences may be hard to explain, yet key to a viable resolution. Be open to working on a solution in small groups. Allow more open discussion in which no one feels particularly pinned down.

↓ Then consider which of the existing possibilities is most feasible, most satisfactory, most likely to be agreed to by those that will actually put them into practice. Evaluate the remaining options against relevant benchmarks. It may be helpful to have certain historical or contemporary cases in which a similar resolution has worked.

↓ Remember previously defined priorities and objectives for each group.

↓

Take breaks.

↓ Consider which group seems to be taking the larger risks. Seek to minimize or compensate for these extra risks.

↓ Consider timetable options.

↓ Once a clear agreement is reached, do not announce it until all details etc. are fully confirmed in writing.



4.4 The End Result of Integrative Negotiation The integrative negotiation process is certainly a difficult one. It requires listening to the needs and wants of the other party, difficult choices, open and honest discussion, and coming to trust the other group. Yet, the reward comes when each party finds satisfaction, when risks are offset by compensation, when both groups reach a conclusion that would have originally appeared impossible.



4.5 Common Myths In order to become more successful negotiators in an integrative negotiation, we must do away with some common negotiating myths and negative traits. Competitiveness A major goal of negotiations is to make both sides feel as though they got something positive out of the deal. Achieve this through cooperativeness and not competitiveness. Bargaining A bargaining agreement will not last because there is always a loser. Integrative negotiations are not supposed to create a loser but two winners. They can also foster long-term business relationships. Compromise A compromise entails that both sides lost out on something they originally wanted. That does not need to be the case in an integrative negotiation. You can compromise on one item but gain on another while making the entire resolution package create a better result for both parties. Tactics and Trickery In engaging in integrative negotiations, you should stay away from using tactics unless necessary as a countering method. Tactics, if apparent or noticed, can cause bad blood and distrust. - Being flexible, rather than rigid, is key to a successful negotiation

- Integrative negotiations can be defined in a number of ways, but it all boils down to

effecting change in a relationship to create a win-win outcome for both sides.



Chapter 5 General Tips

5.1 Important Steps to a Good Deal

5.1.1 Understanding/Problem Solving Prior to engaging in a negotiation, it is important to get to know the scenario and “the playing field”. The scenario is composed of various elements Time – The pressure created by time can cause negotiators to make mistakes. Therefore, if you know how to use your time wisely and plan well, you can achieve a better outcome from you negotiation. Information – Having more information or access to more information can create the leverage you need for a successful negotiation. Information allows you to create more opportunities and alternatives. Power - Power is in many ways purely the perception of the other side. You must appear to have power even if you really don’t Passion - Passion will be the final factor that puts you ahead of your opponent. The more passion you have, the greater your ability will be to get the deal There are certain facts that you must know about the other side to engage in a mutually successful negotiation. - Their goals and objectives broadly - What they want out of this particular negotiation - Pressures on them - Who makes the final decision - Their possible bargaining zone Please check with our Pre-Negotiation Assessment Chart to be sure that you cover all the elements.

The above will necessitate research on your part. You must have ample information available before you try and successful negotiate. There are many tools available. - Internet - Publications - Vendors - Employees



- Customers - Public information (financial reports etc.)

Not only know what you are negotiating about, but know who you are negotiating with. Without proper research before hand you will not be successful in your negotiations. By having information, you will be able to test them on their level of honesty. You can ask questions about their situation and if you know the answer and are being lied to, you will be able to assess their negotiation style rather quickly.

5.1.2 Planning Some authors recommend outlining some possible outcomes - Best Possible Outcome

o This is the best possible, but not necessarily realistic outcome - Worst Possible Outcome

o The worst and least acceptable outcome - Expected Outcome

o A likely and somewhat acceptable outcome - Resistance Point (Walk-away Point) - BATNA (Best Alternative to a Negotiated Agreement)

5.1.3 Building Communication - Share information: Hiding all of the details creates a negative environment - Active Listening: Show that you want to know about their position and what are their needs

and wants of the negotiation - Acknowledge their Needs: Show them that your business can help them and give them what

they want. If you don’t they will turn to someone else. - Ask questions so you can discover their needs and decide whether or not you can meet them.

5.1.4 Controlling the Negotiation The more control you have over certain aspects of the negotiation, the more likely you will be to gain an advantage. Here are some ways to gain control

1. Speak First – In many instances, if you speak first you will control the tone and tempo of the rest of the negotiation

2. Ask Questions – By asking questions you will control the content of the negotiation. By asking questions, you are also finding ways to come to an agreement

3. Don’t Argue – The key to negotiations is sharing information and not being combative. 4. Prepare to meet the other person’s needs – fully understand the other side’s position,

motivations and needs and be ready to meet them 5. Listen – The more you understand of the questions you ask, the more control you will

have on the outcome of the negotiation



5.1.5 Solving Their Problem When you are researching, you will have to find out ways to solve the other side’s problem as well as your own. Those include their values and the outcomes that they are looking for. Also discover some negatives in their business past. 1. All of those bits of information require asking them open-ended questions in the negotiation process. Ask things like “how will this help you” and “tell me more about that”. Instead of getting an answer and moving on, keep asking to make sure you fully understand. That technique will also create a positive environment and show that you want to listen to their problems and needs. 2. In real life, often times there are no absolute distributive or integrative negotiations. Rather, they are a combination with varying degrees of each type. So you may always be able to find some ways to “enlarge the pie”: - Gather as much information as possible - Identify items of value - Do not become competitive or force compromise. Compromising detracts from both sides - Focus on the desired outcome for both sides

5.1.6 Let the Other Person Win Identify Common Issues – Increase communication by showing how you are similar to the other person. It will increase trust and build a relationship Maintain the Relationship – When something negative comes up, associate it with the terms of the deal and not the other person. Show how the deal helps them – Be ready to prove that your deal will help their business. Be able to show them and not just tell them.

5.1.7 How to Derive Those Numbers Many high-ranking business professionals quantify information and develop precise formulas to determine outcomes. If the other side does this, pay attention to the rationale and the formulas they have developed. Know how the other side reached their conclusions. Their method is likely to stay fixed, but the outcomes and numbers are not necessarily going to stay the same because they are more easily changed. Rules to follow when trying to get at the final numbers: - Know the guidelines, the goals and who is involved with the deal



- Strive for communication – Ask questions about items you understand - Question numbers and assumptions – do not accept everything they give you - Establish your uniqueness – Show why your product is better than the cheaper product and

how it will help the other’s bottom line and business overall - Focus on risks and benefits – Do not threaten or put pressure on the other side, but remind

them of the risks of going with a competitor tactfully and through questioning rather than direct statements

5.1.8 Achieving Results Several methods help to achieve the results you desire AND maintain or improve your relationship with the other party. Find Objective Methods of Determining the Benefits of Solutions. This will allow both parties to trust and value the terms to be agreed upon. Concentrate on What You Want to Achieve, Not Where You Stand on an Issue. This is a means of opening your mind to other options and modes of achievement. These would be less likely to automatically preclude the success of the other party. Focus on Issues, Not Personality. Avoid personal attacks. Your interest is in improving a relationship and achieving your desired results, not frustrating or offending the other party.



5.2 How to Say No without Saying No Sometimes in negotiation you will need to establish that your side is not pleased with something. The ways of doing so vary according to cultural contexts or your degree of dissatisfaction with a particular element of their proposal. With a line, motion, or phrase indicating your disapproval, you alert the other party to the fact that something is wrong. Sometimes you will do so more directly, other times more delicately. Gentle I need your help on this. This will be difficult for us. Do you have any flexibility on it? Can we work together on this? Harsh I am a bit disappointed with that. We are not on the same page. We have a problem. We are miles apart. In response to a disapproving response, you will need to respond with a question likewise gently or harshly. Gentle How can we rework this? What can you work with? What will make it work with your budget? Harsh This is a giant setback. We have never done that before. Sometimes you can respond wordlessly by shaking your head, furling your brow or just remaining silent.



5.3 Common Negotiating Mistakes There are many possible mistakes that can end up killing your deal and wasting your time. To become a successful negotiator, you must learn to recognize those possible mistakes and eliminate them from you negotiation procedure. Too Fast – Many business people engage in a negotiation with the goal of ending it as quickly as possible. Cutting to the chase, as some will call it, is not necessarily in your best interest. If you reach your bottom line too quickly you may have failed to explore all of you alternatives. Difference Between Acceptable and Unacceptable – You must know clearly and precisely what deals are acceptable and what is unacceptable. If you don’t, you could get pulled into a deal that is bad for your business. Different Perspectives – You must understand that the other side probably does not look at the deal in the same way you do – a good outcome for you may not be a good one for them. Different Ways of Proving Them Wrong – There are many ways to prove someone wrong. If you are insensitive to how to get your message across to the other people, you may invite dislike and unwillingness to cooperate. Lack of Internal Coordination – You have to make sure that all of your people are on the same page so that whoever is running the negotiation will not have his/her authority undermined. That will also undermine your legitimacy and effectiveness. Know When to Stop – Your timing must be precise on everything. Asking for last minute concessions can be aggravating to the other side and may disrupt the deal going through. Also take note of how to properly make concessions and when to ask for them from the other side



5.4 Getting Better at Negotiation Mastering the following keys to the puzzle of negotiation will certainly improve your skills, whether you are on the road to expertise or just beginning. • Establishing clear understanding of the other party. Understand not only what they think but

why they think so. Understand and test your understanding. • Increase possibilities, rather than limit them • Pursue and analyze multiple solutions, before selecting one • Make sure that your team members are on the same page at each step of the negotiation • Put ideas and agreements in writing at each stage • Don’t give in to everything the other party wants at once. This way you leave yourself

leverage. • Be aware of common tricks. Don’t take them too seriously. However, you should be

prepared to identify and counter those tactics effectively. Avoid proactively using underhanded or manipulative tactics. The best negotiators are or at least appear to be upfront and honest. Know your limitations

• Don’t lower yourself. Even if the other party argues, shouts, and screams, don’t do so yourself.

• Don’t make discussion about personal victory. Instead, focus on proposals.

To further improve your negotiation skills, begin by recognizing the following key points: 1) Never go into a negotiation with a preset notion that you have to seal the deal. You need to at least appear to have flexibility with other options. When you have options, you have the real power. Develop viable options or appear to have options readily available. 2) Good negotiation skills are built not in single sitting, at a single place and time, but rather through a multiplicity of encounters in various places under various circumstances. You must build upon each encounter, learn from your mistakes and successes, and through such a process improve. This is also important to recognize as corporate leader. One must value experience and help to further it through education, both in the form of practice and training. 3) Just as expertise is important so is warming up your skills. Even an expert negotiator should engage in role play before a sitting. Prepare well and be flexible to the ideas of others. 4) The best negotiation works to create a solution in which all parties gain. If you focus too much on your own goals or on compromise, you have already risked the possibility of creating a positive result for all. 5) The best negotiators listen. If it helps try to listen two or three times as much as you speak yourself. Listening and the understanding that comes from good listening allow a negotiator to develop deeper understanding of the bargaining zone of the other party and conduct a more effective and respectful negotiation.

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