In this paper, based on a negotiation scenario, The Consultant case, we will show how to position ourselves during the several stages of a negotiation process. It intends to be a contextualized guide on the negotiators roles and behaviors leveraging their objectives on a path to establish a common goal. So, we will exemplify it combining some scenes from the film Pretty Woman in order to show the best practices in the negotiation process. In the same way, we decided to ask professional negotiators to understand which are major items they give more importance in their international deals.
1. The Consultant
the Negotiation Process
Students Beatriz Peste Santana
Nuno Ferreira
Ricardo Marques
Professor Pascal Brassier
Course Negotiation Skills
Master in International Management
Year 2012/2013
2. “Let us never negotiate out of fear. But let us never fear to negotiate.”
John F. Kennedy
2
3. Index
Introduction 4
1 – Preparation ……………………………..……………………………………. 5
1.1 – Background checking 5
1.2 – Systematic preparation 5
1.3 – The negotiators profile 6
1.4 – SWOT Analysis 6
7
1.5 – The Quintilien’s Hexameter
1.6 – Steps of organizational buying process 8
1.7 – Preparing possible outcomes 8
2 – Relationship 8
3 – Opening 9
4 – Arguments 9
4.1 – Best Possible Agreement vs Minimum Possible Agreement 10
4.2 – Wrap Up: defining the Zone of Possible Agreement 10
4.2.1 – Win-Win Approach applied to The Consultant case 11
5 – Completion 12
6 – Transaction 12
7 – Serve 12
Conclusion 13
Bibliography 14
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4. Introduction
One major part of a successful business is negotiation. As such, the art of negotiating is an
essential skill of the modern business pro. But negotiating isn’t always so easy, as it is generally
a trait that has to be developed rather than an inherited trait.
Negotiation is a method by which people settle differences. It is a process by which compromise
or agreement is reached while avoiding argument. In any disagreement, individuals
understandably aim to achieve the best possible outcome for their position (or perhaps an
organization they represent). However, the principles of fairness, seeking mutual benefit and
maintaining a relationship are the keys to a successful outcome.
Specific forms of negotiation are used in many situations: international affairs, the legal system,
government, industrial disputes or domestic relationships as examples. However, general
negotiation skills can be learned and applied in a wide range of activities. Negotiation skills can
be of great benefit in resolving any differences that arise between you and others.
Negotiation is a tool. Just a hammer is useful for driving nails but not for driving golf balls,
negotiation is useful for resolving some but not all disputes. It is useless if parties have nothing
in common to motivate settling their differences. It is unlikely to settle differences in belief, as
the history of theological disputes testifies. It is even less likely to change Man´s natures,
however much idealists see negotiation as a panacea for conflict.
In this paper, based on a negotiation scenario, The Consultant case, we will show how to
position ourselves during the several stages of a negotiation process. It intends to be a
contextualized guide on the negotiators roles and behaviors leveraging their objectives on a
path to establish a common goal. So, we will exemplify it combining some scenes from the film
Pretty Woman in order to show the best practices in the negotiation process. In the same way,
we decided to ask professional negotiators to understand which are major items they give more
importance in their international deals.
4
5. The Consultant is a non-real case that was created by Michael Wheeler at Harvard Law School.
Despite being a fictional story, we decided to follow the PROACT framework in order to reach a
solution for it. The PROACT process is a standardized schematic guideline of a negotiation
process. It gathers seven crucial steps that both parts should cover in order to succeed:
Preparation, Relationship, Opening, Arguments, Completion and Transaction.
1 – PREPARATION
Generally agreed as the most important phase of the negotiation process, the first PROACT
step, preparation, is highly important because it will set the success or failure of both parts. The
Riverton Public Schools and the Northeast Computer Services may prepare their positions and
define what they hope to achieve with the negotiation. Clinical and objective analyses are vital
when they are preparing to negotiate, and they must gather as much information as they can.
The negotiators should learn about the other side and their strengths and weaknesses. So, the
more they know beforehand, the better prepared they will be when the negotiations start. To
keep always the information updated can be a key factor for their success, as shown in the
preparation of Eduard Lewis team to the acquisition of Morse Industries, a shipbuilder company
owned by James Morse, in the Pretty Woman film.
1.1 – Background checking
The Consultant case presents us a typical negotiation process. So, it is important to set a
background checking in order to collect the necessary information about both parts (table 1).
Table 1 – Background checking
Riverton Public Schools Northeast Computer Services
- Based in Riverton, Wyoming, it belongs to - Based in Hebron, Connecticut, Northeast
the Department of Public Works, which Computer Services can help the businesses
gathers the police, the library and the other increase productivity providing new desktops,
schools. Each department is responsible for laptops or upgrade existing systems to
reprogramming its own system and training its improve performance and efficiency. When
personnel. considering a centralized file server for your
business, Business servers offer many
- This is the second attempt to solve the benefits over simple networking.
computerizing existing problem between the
public works department. The first one failed - Recognized as the best player in their
due to bugs in software, so they decided to market, this company is mainly used to deal
develop specific software for each corporate clients and doesn’t have any kind of
department. public sector customer.
- The budget is up to $50.000. - Price range from $85.000 up.
- Negotiator: Antoine Smith. - Negotiator: William J. Brown.
1.2- Systematic preparation
Before every negotiation situation, the players should always do a systematic basic preparation.
This means not only do their homework but also their partner’s homework. This includes
knowing each others’ markets, needs, limitations and procedures. This helps determining the
other part’s profile and anticipate several scenarios and situations. Further on we will explore
this, when analyzing both Antoine Smith’s, Riverton Public School negotiator, and William J.
Brown, Northeast Computer Services negotiator.
We gathered the opinion of long established professionals of various sectors regarding
negotiation skills, asking which their favorite sources of information and documentation are
when they are preparing a negotiation. For instance, Makram Salloum – Sales Director in CNS
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6. (United Arab Emirates) says that “a negotiation is complex set up of many stages and they are
all important. Nevertheless I would highlight the importance of the preparation in terms of
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actually knowing all you can know about the other party before the engagement.”
Dario Félix Rodrigues, former Communication Manager of Schering AG pharmaceutical
company and nowadays researcher and invited Professor at Instituto Superior Politécnico
believe that “the power of choice is obviously the web, whether to get information about outside
2
interests, whether for information about our own alternatives (BATNA or MAAN)” .
1.3 – The negotiators profile
To establish an analysis to whom are we negotiating with is useful to the find out how the
negotiation can succeed (table 2). To read their Curriculum, please see the Attachment 1 and 2.
Table 2 – The negotiators profile
Antoine Smith William J. Brown
Administrative employee, Antoine Smith’s Accountable for functions including web site
responsibilities include hiring, training and design, user experience, taxonomy and on-
directing individuals who are performing entry site search; web content publishing, which
level, public work positions. has produced and maintains over 1 million
product SKU across 9 separate web sites
This is a management position, with hands-on servicing B2C & B2B customers; web
responsibility and accountability. Maintaining analytics; 4 transactional mobile sites; email
safety in the school is also a key marketing, which deploys over 1 billion
responsibility. permission marketing & transactional
messages annually; profile segmentation &
targeting.
One of the most successful affiliate marketing
programs on the Web, supported by a multiple
recipient of Affiliate Marketer of the Year.
Smith’s profile as a negotiator: rational, calm, Brown’s profile as a negotiator: flexible, smart
able to handle local school issues. Knows his and experienced. Has vast experience in the
staff and school reality. Aims at solving his private sector but interested in expanding and
problem and getting recognized by it. therefore looking good in the company – he
wants to win the client.
Source: Linkedin
1.4 - SWOT Analysis
Similarly, we can proceed to a SWOT analysis based on the information given on both parts.
Let’s have a look at their strengths, weaknesses, opportunities and threats at table 3 and 4.
1 th
SALLOUM, Makram, interview, 20 October 2012
2 st
RODRIGUES, Dário Félix, interview, 1 November 2012
6
7. Table 3 – RPS Riverton Public Schools SWOT Analysis
Helpful Harmful
to achieving the objective to achieving the objective
STRENGHTS WEAKNESSES
Internal
Factors Market Know - How trough shopping around Low budget
Inexperienced negotiator
RPS Gain reputation in the Public Sector Time constraints
within control Repeat past mistakes
OPPORTUNITIES THREATS
External
Factors Opportunity to become a case study for other Not solving the current problem
Government institutions Keep spending public money on a solution
Environment To have the best solution in the market To invest on a worst but cheaper solution
outside control To have the deployment services of the best that will eventually affect the school
company in the market performance
Table 4 – NCS Northeast Computer Services SWOT Analysis
Helpful Harmful
to achieving the objective to achieving the objective
STRENGHTS WEAKNESSES
Internal
Factors Reputation Expensive price for the solution
Market leader
NCS High know-how on their solutions Inexperienced dealing in the public sector
within control
OPPORTUNITIES THREATS
External
Factors Diversifying the go to market approach by The possibility of not winning the deal may
starting a public sector vertical inside the be a setback on entering the public sector
Environment company
outside control Low price competition
Increase of market reputation
1.5 - Quintilien’s Hexameter
Another framework we can
establish in the preparation
phase of The Consultant case is
the Quintilien Hexameter.
This is regarded as an
information-gathering process. It
consists on a formula for getting
the complete background on the
negotiation process.
To be considered complete, it
must answer a checklist of six
questions, each of which
comprises an interrogative
word: Who, What, When, Why,
How, and Where.
Figure 1 – The Quintilien’s
Hexameter approach to The
Consultant case
7
8. 1.6 - Steps of
Problem Need
organizational buying
process
These steps can be Performance Potencial
applied on both situations, evaluation suppliers
and not only on Smith’s
perspective as the client.
Both perspectives can be Order Proposals
organized through these routine
simple stages of Evaluation
organizing buying/hiring
process.
Figure 2 – The main steps of organizational buying process
1.7 - Preparing possible outcomes:
Finally, in order to finish the preparation process, it’s required to define goals, limits and
alternatives on both sides, as well as organize and anticipate the alternative approaches from
the other part.
Considering a negotiation scenario, there are many items to be discussed and it is essential to
create a set of acceptable alternative situations for both parts. We may analyze negotiable
points and arrange a lot of different perspectives. Doing this, you are trying to understand and
anticipate the others’ objectives, interests and needs, as well as alternatives, reputation,
negotiating style and authority degree to set the deal (table 5).
Table 5 –Possible Outcomes
Riverton Public Schools Northeast Computer Services
To assure the problem is solved and the To get their first client in the public
Goal software is correctly installed sector
$50.000 $85.000
Limit
Pay more, but demand other services Lower the selling price, but demand
Alternatives such as maintenance, training and exclusivity.
hardware in the deal.
Lower the selling price, offering no
Pay $50.000 and allow NCS to use the complementary services (maintenance,
school’s premises for corporate events. training and hardware).
Breakdown the services, i.e., have less Lower the selling price and decrease
employees involved, increase the the warrantee time.
expected time for complete the task.
Lower the selling price and increase
Pay the same but allow longer deadline for the delivery deadline.
the task delivery.
Accept progressive payment but
Pay progressively through time. keeping the selling price.
2 – RELATIONSHIP
In every negotiation process, there are three key steps which no one can avoid. First of all, is to
consult (figure 3). Nowadays we come from transactional to a relational work. Consequently,
create relationship has the purpose of engaging people with much synergy. This second
PROACT step implies the first interactions between Mr. Smith and Mr. Brown, the mutual
discovery of needs and some socialization. Probably they want to establish a long-lasting and
authentic partnership, so they may be kind. For instance, we selected a scene from the Pretty
Woman film to show how the negotiation process can start.
9. Both Smith and Brown must remember that “Negotiation is the art of letting them have your
3
way”. Even if this deal does not go forward, it doesn’t necessarily mean that these two entities
grow apart. To maintain a healthy and positive relationship with the negotiation partner will
soften the hard part and may open doors to future partnerships.
3 - OPENING
After time for normal introductions, courtesies and small
talk, Mr. Brown and Mr. Smith are opening the
negotiation process. Now, they should begin by
discussing the agenda for the negotiation and agree on
the main items to be discussed.
Opening is the stage of disclosure the information and
diagnose. Brown and Smith expose their limits
strategically.
Figure 3 – The 3 C Framework
At this point, the negotiators have already spoken and know each other’s limitations. Yet, they
are willing to meet in person in order to find common ground and build a solution. Thus, they are
approaching the phase of confrontation (figure 3). In the same way, we can watch a new scene
of the opening step between James Morse, his grandson David and Edward Lewis in their
negotiations.
4- ARGUMENTS
When the time to arguments comes, both parts must develop their Value Message. That is to
say that Smith and Brown should bring something unique to the negotiation in order to convince
each other. This stage is where the work is in fact developed, minding several points of view,
proposals and counter proposals. According to Makram Salloum, Sales Director of CNS in
Dubai and experienced negotiator in corporate deals “Put a clear focus on what you REALLY
want. Many people enter negotiation only to find they did not have a clear desired outcome
defined in their own mind. Write down your desired outcome as concisely as possible and use
4
this outcome as the center point of your preparation” . So, let’s see the initial proposal set for
The Consultant case (table 6).
Table 6 –Initial approach
Riverton Public Schools Northeast Computer Services
Buying/Selling
$50.000 $85.000
price
The whole amount when the task is 50% up front, 50% when task is
Limit finished finished
Delivery
6 weeks 6 weeks
deadline
installing the adapted software for the installing the school needs
Services school needs
As we can, there are points where both negotiators agree, but there other ones where they
haven’t a different perspective.
3
VARÈ, Daniele, The Laughing Diplomat, Doran & Doubleday Company, 1938
3 th
SALLOUM, Makram, interview, 20 October 2012
4
SALLOUM, Makram, idem
9
10. 4.1 - Best Possible Agreement vs Minimum Possible Agreement
For every objective established, Riverton Public Schools and Northeast Computer Services may
prepare a scale of success. This scale should gather the minimum possible agreement
acceptable and the best possible agreement, and everything between. Similarly, maneuver
space is formed in order to create opportunities and exchange concessions. We may remember
4
Kissinger’s definition of negotiation: exchanging concessions.
As a result, here are the initial proposals for each player and what would the Best Alternative To
a Negotiated Agreement (BATNA) be for each one (table 7).
Table 7 –Defining and developing BATNA
Riverton Public Schools Northeast Computer Services
$50.000 - $70.000 (through progressive $85.000 - $65.000
Buying/Selling
payment plan) ($50.000 up front and $35.000 until 3
price years
$50.000 up front and the rest until 3 to 5 50% up front, and the rest until 3
Payment
years years
Delivery
6 weeks, can be extended to 8 6 weeks minimum, 12 weeks
deadline maximum
Installing the adapted software for the Installing the adapted software plus
Services
school, including complementary training the school’s personnel and
services such as training personnel on three year warrantee
the new software, maintenance and
warrantee of program functioning during
the payment period of time
4.2 – Wrap Up: defining the Zone of Possible Agreement
Next, we come to a time when a Zone of Possible Agreement (ZOPA) can be settled, based on
all alternatives given by both negotiators. Before settling it, there are several scenarios and
models that could happen. These are known as the win-lose models, and if applied to the case,
this is how they could be.
In The Consultant Case, the strategy will be settled around buying cheap and selling expensive.
That is to say, there are three different ways to reach this goal. The first one
is about what one wins and the other loses. The second happens when the distributive
negotiation leads to a zero sum game between both parts. And the third one involves slight
changes: if both concessions in some particular details, probably they will reach their goals
(table 8).
a) Win-Lose model
Riverton Public School and Northeast Computer Services try to maximize their
negotiation outcome. The result will be a zero-sum game: only one part will benefit from
the deal, because they consider the other part as a competitor and not a partner. Their
interests are opposite.
b) Lose – Lose model
They don’t reach an agreement at all. Both walk out with nothing because they were not
able to establish common ground solution, the ZOPA. Smith did not dare to go over his
budget, nor Brown to compromise to a much cheaper sale and look bad to other clients
of his firm.
10
11. c) Win-Win model
Table 8 –Distributive and Integrative This approach done y by Fischer and Ury
5
Negotiation stats that demands and concessions are
made equally on behalf of both parts. Smith
Brown and Brown want to reach an agreement. They
must be flexible and open to suggestions,
Lose Win
alternatives and concessions. Both must be
on board with this standard and able to search
Smith loses Brown wins for mutual interest points. For instance, Brown
Brown loses Smith loses is searching for enter in the public sector and
Lose
Smith wants to a reputable partner. It is a
= =
great opportunity to fix a new strategic alliance
No deal Brown sets the with added values from both parts.
Smith
conditions
However, as Dário Félix Rodrigues
Smith wins Smith wins remembers, no matter how model is being
Brown loses Brown wins followed "«Negotiation Jujitsu» can be very
useful in front of a bargainer that mainly
Win
= =
asserts positions or attacks your ideas. Then
Smith Both establish the key will be to look behind position to
determines the pleasant terms in
conditions the deal
identify interests and invite criticism and
6
advice”. The Negotiation Jujitsu is not
properly a model but, in fact, a useful style of
negotiating.
4.2.1 – Win-Win Approach applied to The Consultant case
We believe these two parties managed to find a ZOPA and finished off with a win-win situation.
They managed to reach developed cooperation, despite differences and constraints. This
means that interests, rather than positions, were considered, and multiple options with mutual
benefits were set, with objective criteria.
Table 8 –Zone Of Possible Agreement for The Consultant Case
5
FISCHER, Roger, URY, William, and PATTON, Bruce, Getting to YES: Negotiating Agreement Without
Giving In. New York: Viking/Penguin, 1979
6 st
RODRIGUES, Dário Félix, interview, 1 November 2012
11
12. 5- COMPLETION
According to the PROACT process, now is time to complete the negotiations. Furthermore, the
3 C Framework says that after the confrontation comes the conclusion. In the same way we can
watch a final scene taken from the Pretty Woman film, which shows how the Arguments &
Complete resulted in a deal between Lewis and Morse. As shown in the movie, this stage is
where all the details are settled and the practical aspect is put in motion. Once the general
agreement is done, similarly Smith and Brown may use handle brakes to define and do
necessary adjustments to the deal. Normally, at this stage, this is the time to include the
specialist.
5.1 – Price Surgery
One of the techniques used to settle the necessary adjustments to the final budget is Price
Surgery. It consists on adjusting the complementary services included in The Consultant deal,
such as training personnel on the new software, maintenance and warrantee of program
functioning during the payment period of time. The Price Surgery doesn’t have anything to do
with discounts. This must be seen as the last instrument to close the deal.
After concluding these details, Mr. Smith and Mr. Brown have the possibility to say they
concluded the negotiations (Table 9).
Table 9 – Final agreement
$70.000 (through progressive payment plan)
Buying/Selling
price
$50.000 up front and the rest until 3 years
Payment
Delivery
6 weeks
deadline
Installing the adapted software plus training the school’s personnel and three year
Services warrantee. Similarly, the NCS can use the RPS to their public events.
6 – TRANSACTION
The commitment itself, between Riverton Public Services and Northeast Computer Services. At
this point, the deal is broken down into items, which are listed and made official, through
documentation. It is about legal procedures and assigning responsibilities on both parts. Both
Smith and Brown should inform their companies of the settlement and enter this new input
officially, bearing in mind all bureaucracy needed.
7– SERVE
The operational follow up happens after the deal materializes. This implies the elaboration
of an action plan, not only for the 6 weeks settled as the job deadline, but also for training
and warrantee. Through this time frame, key dates can be settled by both parts to evaluate
the job progression: this way determining if it should go forward, needs adj ustments or in
the worst case scenario, i.e., needs to be aborted. Also, it is important to schedule training
events for the school’s personnel, once the software is set and in full operational status. All
details must live up to the agreement, in order to best fulfill each part’s expectations and
ensure positive cooperation.
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13. Conclusion
Whether it's with an employer, family member or business associate, we all negotiate for things
each day, like higher salary, better service, or the resolution of a dispute. Although most people
would probably define good negotiators as people who get the best deal for their side, the word
negotiate actually means to discuss with the goal of finding terms of agreement. That is
because a deal that is to the advantage of one party and the detriment of the other sows seeds
of disagreement, resentment and retaliation, which can backfire on the negotiator.
This case study shows that common needs can be satisfied and we should try to leverage a
possible mutual understanding. This means a clear focus on maintaining the relationship, not
allowing the disagreement to damage the interpersonal relationship, not blaming the others for
the problem and aiming to confront the problem, not the people. This can involve actively
supporting the other individuals while confronting the problem. Remember: separate the people
from the problem.
Negotiation is about finding an agreeable solution to a problem, not an excuse to undermine
others, therefore, to avoid negotiation breaking down into argument; it is helpful to consciously
separate the issues under dispute from the people involved. One valuable approach is to
continue to express positive regard for an individual, even when disagreeing with what he/she is
saying.
This case also shows us to focus on interests, not positions, rather than focusing on the other
side’s stated position, consider the underlying interests they might have. What are their needs,
desires and fears? These might not always be obvious from what they say. When negotiating,
individuals often appear to be holding on to one or two points from which they will not
move. Understanding the emotional needs of others is an essential part of understanding their
overall perspective and underlying interests. In addition to understanding others’ emotional
needs, understanding of your own emotional needs are equally important. It can be helpful to
discuss how everyone involved feels during negotiation.
Another key point is that decisions should not be forced upon others. This is a negotiation. Both
Smith and Brown will feel much more committed to a decision if they feel it is something they
have helped to create and that their ideas and suggestions have been taken into account. It is
crucial to generate to offer a variety of options that offer gains to both sides before making
decisions. Rather than looking for one single way to resolve differences, it is worthwhile
considering a number of options that could provide a resolution and then to work together to
decide which is most suitable for both sides. Techniques such as brainstorming could be used
to generate different potential solutions. Good negotiators will spend time finding a number of
ways of meeting the interests of both sides rather than meeting self-interest alone and then
discussing the possible solutions.
To sum up, negotiations are not like sports. In sports, both sides want the same thing - to win -
so there is always a winner and a loser. The goal of negotiating is to see both sides win - that
everyone gets some of the things they want, but not necessarily everything. By identifying
what's important to both sides, you can usually get the things you most want, and concede to
the other side their top priorities. A good negotiation can turn a hostile, destructive environment
into one of cooperation. That, in turn, improves the productivity of an organization, and the
likelihood of its long-term financial health.
Negotiation is a process, not an event. Mastering all the steps in the process, allied with a good
common sense, will certainly help us to succeed in very business and almost in every aspect of
life itself. With all of this in mind, it´s our job to keep improving our negotiation skills. In the end
it´s all about people and relationships and how we can have the capability to manage them in a
successful way.
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14. Bibliography
BOOKS
FISCHER, Roger, URY, William, and PATTON, Bruce, Getting to YES: Negotiating
Agreement Without Giving In. New York: Viking/Penguin, 1979
VARÈ, Daniele, The Laughing Diplomat, Doran & Doubleday Company, 1938
FILMS
PRETTY WOMAN, directed by Garry Marshall, United States of America, 1990
INTERVIEWS
th
SALLOUM, Makram, interview, 20 October 2012
st
RODRIGUES, Dário Félix, interview, 1 November 2012
WEBSITES
th
Linkedin, http://www.linkedin.com, consulted at 24 October 2012
th
Negotiation, http://www.negotiation.com, consulted at 20 October 2012
Program On Negotiation, Harvard Business School, http://www.pon.org, consulted at
th
28 October 2012
th nd
Vimeo, http://www.vimeo.com, consulted everyday from 15 October to 2 November
2012
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