NEGOTIATIONS�

Kanika Sharma

Astt.Prof. in Commerce

WHAT IS NEGOTIATION?�

• Negotiation is a process by which two or more people (or groups) resolve an issue or arrive at a better outcome through compromise. Negotiation is a way to avoid arguing and come to an agreement with which both parties feel satisfied
• A series of discussions or a collaborative process that aims to find a solution between two or more parties during a complex or complicated conflict. Negotiations are used in a professional sense when businesses want to resolve a conflict peacefully or reach an agreement related to business without causing initial (or further) discourse.

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TYPES OF NEGOTIATION

• Types
• Distributive

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• Integrative

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DISTRIBUTIVE NEGOTIATION:

• Distributive negotiation also sometimes called “hard bargaining,” distributive negotiation is when both parties take an extreme position and one side’s win is believed to be the other side’s loss (a win-lose solution). This operates on a “fixed pie” principle, in which there is only a set amount of value in the negotiation, and one side will walk away with the better deal. Examples include haggling prices in real estate or at a car dealership.

INTEGRATIVE NEGOTIATION:

• Parties engaging in integrative negotiation don’t believe in a fixed pie, instead asserting that both sides can create value or mutual gains by offering trade-offs and reframing the problem so that everyone can walk away with a win-win solution.

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STAGES OF NEGOTIATION�

The five stages of negotiation used in most fields of business are:

• Preparation and planning
• Definition of ground rules
• Clarification and justification
• Bargaining and problem-solving
• Closure and implementation

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��� PREPARATION AND PLANNING IN NEGOTIATION

• To illustrate, the negotiation process and stages of negotiation, an example scenario between a labor union and a large corporation will be analyzed. If a corporation did not fully represent its employees or take action in their best interests, for example, then a labor union would rightfully not be pleased about the treatment of its members. The union may choose to strike, which could lead to negotiations between the two parties with the intention of ensuring that strikes do not continue to happen. During the preparation and planning stage of negotiation, the labor union and the large corporation would gather evidence of their actions, determine a meeting time and location, and recognize the value of negotiation to prevent further conflict as well as the interests of each party.

DEFINITION OF GROUND RULES IN NEGOTIATION:

• If applicable to a sale, each party should determine the price being sought during negotiation. For instance, a company may need to determine the bottom line (lowest point willing to be paid by another party, such as a minimum of $1 million to work for) or provide an opening offer (starting negotiation price) before the meeting takes place

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CLARIFICATION AND JUSTIFICATION

• During the clarification step, both sides continue the discussion that they began when exchanging information by justifying and bolstering their claims. If one side disagrees with something the other side is saying, they should discuss that disagreement in calm terms to reach a point of understanding.

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BARGAINING AND PROBLEM-SOLVING

• . After the initial first offer, each negotiating party should propose different counter-offers for the problem, all the while making and managing their concessions. During the bargaining process, keep your emotions in check; the best negotiators use strong verbal communication skills (active listening and calm feedback; in face-to-face negotiation, this also includes body language). The goal of this step is to emerge with a win-win outcome—a positive course of action

CONCLUDE AND IMPLEMENT

• Once an acceptable solution has been agreed upon, both sides should thank each other for the discussion, no matter the outcome of the negotiation; successful negotiations are all about creating and maintaining good long-term relationships. Then they should outline the expectations of each party and ensure that the compromise will be implemented effectively. This step often includes a written contract and a follow-up to confirm the implementation is going smoothly

� HANDLING CULTURAL DIFFERENCES IN INTERNATIONAL NEGOTIATIONS:

• Do your homework about your supplier’s culture. 
• Show respect for cultural differences
• Be aware of how others may perceive your culture. 
• Find ways to bridge the culture gap. 

CULTURAL DIFFERENCES IN CROSS CULTURAL NEGOTIATIONS

• International business negotiation is about more than just how foreigners close deals.
• It involves looking at all factors that can influence the proceedings.
• By way of highlighting this, a few brief examples of topics covered in cross cultural negotiation training shall be covered.

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CULTURAL DIFFERENCES IN CROSS CULTURAL NEGOTIATIONS�

• Eye Contact
• Personal Space & Touch
• Time
• Meeting & Greeting
• Gift-Giving
• The Basis of the Relationship
• Information at Negotiations
• Negotiation Styles

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INTERNATIONAL NEGOTIATIONS STRATEGIES/PRINCIPLES�

• The INTERNATIONAL NEGOTIATIONS STRATEGIES provided by the ICC (International Chamber of Commerce)  are based on the idea that the best deals are struck between negotiating partners that not only want or need to collaborate, but also respect and trust one another

�INTERNATIONAL NEGOTIATIONS STRATEGIES/PRINCIPLES

1. PREPARE CAREFULLY 

• Engage the right people within your organization, define your objectives clearly, and review any history of dealings with your counterpart.
• Learn all you can about your negotiating partners and the reality of the commercial context in which they operate. Image their likely interests, priorities, limitations and scope of authority.
• Be ready to explore with your counterparty the various legal rules available to govern your deal.

2. TAKE CULTURAL DIFFERENCES INTO ACCOUNT

• Educate yourself on the local business practices of your negotiating partner.
• Be sensitive to your own culturally-rooted habits and assumptions about how to conduct business.
• Develop a practice that encourages you continually to question your assumptions and probe for assumptions your negotiating partner may be making about you.
• Keep in mind the value of being able to deal well with a difference.

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INTERNATIONAL NEGOTIATIONS STRATEGIES/PRINCIPLES

3. ALLOCATE APPROPRIATE HUMAN AND TECHNICAL RESOURCES TO A NEGOTIATION

• Anticipate the people you’ll need to have in the room or on standby to support negotiations, such as people with decision-making authority on issues at hand, specialized technical experts, translators, legal drafters, tax advisors, and local counsel.
• Aim to maintain consistency on the negotiating team –avoid presenting a revolving cast of characters.

4. AIM TO DEVELOP AN OPEN AND RELIABLE WORKING RELATIONSHIP WITH YOUR NEGOTIATING PARTNER

• Deals are often on-going commitments that evolve over time as circumstances change. A good working relationship between the parties will make it easier to address both sides’ future needs efficiently and effectively.
• Acting on transparency and the genuine desire to understand and find solutions can help focus discussions on substance.
• Negotiation partners need not be friends to create a productive working environment.

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INTERNATIONAL NEGOTIATIONS STRATEGIES/PRINCIPLES

5. BEHAVE WITH INTEGRITY

• You don’t need to reveal everything, but everything you say should be true.
• Lying or misleading imperils the deal, the working relationship at hand and your reputation in the trading community, and may ultimately lead to legal sanctions.
• Your willingness to bring your values and integrity to the table is a signal to your negotiating partner of how seriously you are approaching the negotiation.

6. MANAGE YOUR EMOTIONS

• Act rather than react – modeling that you are acting independently of a counterparty’s provocation is powerful.
• A counterparty that views you as reasonable may ask for help, allowing you to collaborate on a solution, rather than hiding information out of pride or fear, which may lead to an unrealizable agreement or no agreement at all.

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INTERNATIONAL NEGOTIATIONS STRATEGIES/PRINCIPLES

• 7. BE FLEXIBLE
• Be open to thinking creatively with your negotiating partner about how your interests may complement each other and be satisfied without diminishing value for either party.
• Only a mutually beneficial deal will be sustainable over time — if one party receives the disproportionate benefit, the other party may be unable to implement the agreement.
• Understanding the difficulties your negotiating partner may be facing is an important element in building a realistic, durable deal.
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• 8. MAKE REALISTIC COMMITMENTS
• Agree to only those things you genuinely intend to undertake, as you would expect your negotiating partner to do.
• Clarify your negotiating partner’s scope of authority: people may overstate their authority and make commitments they can’t make or keep.
• Know your alternatives, and know when to leave the table because you can find a more suitable deal elsewhere.

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INTERNATIONAL NEGOTIATIONS STRATEGIES/PRINCIPLES

9. CONFIRM THE AGREEMENT TO ENSURE A COMMON UNDERSTANDING

• Review carefully what was agreed with your negotiating partner at the end of a negotiating session, resolving any details on which your views diverge.

10. BE READY FOR THE CASE WHERE NEGOTIATIONS DO NOT SUCCEED

• Negotiations may not reach the conclusion for a variety of reasons, either within or beyond the control of the parties.
• Anticipate such situations, prepare and be ready to discuss alternative options with your negotiating partner.

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ELEMENTS IN NEGOTIATION�

• Communication: All negotiating parties must be willing and able to communicate, make effective choices, and be prepared for any potential flaws in the plan. Communication is crucial in collaboration so that all parties may work together as effectively as possible and support one another.
• Relationships: All negotiating parties should form deep and professional relationships with other involved parties to achieve communication and commitment more easily. Relationships may also help with decisions between two or more parties in the future, such as making work output more effective.
• Alternatives: All negotiating parties should recognize alternative actions that can be taken to avoid further conflict. In some cases, adding another party to the negotiation as a mediator or collaborative partner may be the best choice to avoid conflict or add input to a decision.

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ELEMENTS IN NEGOTIATION

• Legitimacy: All negotiating parties should decide a final outcome that is feasible, legitimate, and optimistic about improvement, whether it be in a productive sense or a professional/relational sense. Negotiating parties must uphold their parts of the negotiation or agreement for the outcome to be considered legitimate.
• Commitment: All negotiating parties should be committed to discussing possible outcomes and reaching the final and desired goal of the negotiation. Involved parties should aim to be committed to success in their work and collaborative efforts.

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ELEMENTS IN NEGOTIATION

• Options: All negotiating parties should be aware of and consider all possible options during discussion. While an end goal may need to be reached, parties who have a closed-minded approach to negotiation may not realize other options or possible growth opportunities.
• Interest: All negotiating parties should be interested in collaboration, growth, and potential opportunities that will benefit all parties somehow. When many talents and specializations collaborate to reach a goal or create something unique, each party maintains an interest in developing themselves and others.

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THANK YOU