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Students to Start-Ups Entrepreneurial Skills Series Chapter 03 Negotiation
Negotiation My father said: "You must never try to make all the money that's in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you won't have many deals.”  J. Paul Getty
Negotiation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Negotiation – What is it? ‘ The process by which we search for the terms to obtain what we want from somebody who wants something from us’ Gavin Kennedy Confer with others to reach a compromise or agreement. Concise Oxford Dictionary To negotiate is to trade something we have for something we want. Anon ‘ Negotiation is an explicit voluntary traded exchange between people who want something from each other’ Gavin Kennedy
Debunking Negotiation Myths ,[object Object],[object Object],[object Object],[object Object],[object Object]
Human Needs Manfred A. Max-Neef 1991.  Human scale development: conception, application and further reflections.  New York: Apex.
Negotiation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Three Views of Conflict ,[object Object],[object Object],[object Object],[object Object],[object Object]
Conflict and Group Performance Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc.
Conflict-Handling Styles Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. Uncooperative Cooperative Cooperativeness Assertiveness Unassertive Assertive Forcing Resolving conflicts by satisfying one’s own needs at the expense of another’s Avoiding Resolving conflicts by withdrawing from or suppressing them Collaborating Rewarding conflict by seeking an advantageous solution for all parties Compromising Resolving conflict by each party giving up something of value Accommodating Resolving conflicts by placing another’s needs and concerns above your own
5 Levels of Communication Chris Spies, 2002
The Four Ears of Listening Undine Kayser, 2003
Active Listening Techniques (1) Centre for Conflict Resolution, Cape Town, South Africa, 1999
Active Listening Techniques (2) Centre for Conflict Resolution, Cape Town, South Africa, 1999
Active Listening Techniques (3) Centre for Conflict Resolution, Cape Town, South Africa, 1999
Active Listening Techniques (4) Centre for Conflict Resolution, Cape Town, South Africa, 1999
When to Negotiate ? ,[object Object],[object Object],[object Object],[object Object],[object Object]
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],34 Characteristics of an Effective Negotiator Art & Science of Negotiation - RAIFFA
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],34 Characteristics of an Effective Negotiator Art & Science of Negotiation - RAIFFA
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],34 Characteristics of an Effective Negotiator Art & Science of Negotiation - RAIFFA
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],34 Characteristics of an Effective Negotiator Art & Science of Negotiation - RAIFFA
[object Object],[object Object],[object Object],[object Object],[object Object],34 Characteristics of an Effective Negotiator Art & Science of Negotiation - RAIFFA
Negotiation Key Concepts ,[object Object],[object Object],[object Object],[object Object]
Know your BATNA! ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Reservation Price ,[object Object],[object Object],[object Object],[object Object]
ZOPA ,[object Object],[object Object],[object Object],ZOPA $275k $250k Seller’s Reservation Price Buyer’s Reservation Price
Value Creation through Trades ,[object Object],[object Object],[object Object],[object Object],[object Object]
Summary of Negotiation concept ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
The Zone of Agreement Seller’s surplus Buyer’s surplus Zone of agreement s x b Seller’s reservation price (seller wants s or more) Seller wants to move x to the right Final Contract Buyer’s reservation price (buyer wants b or less) buyer wants to move x to the left Money ($)
Negotiating is about  WHY , not  WHAT The purpose of negotiating is seeing if you can get your  interests  met through and agreement, versus an alternative. Positions are  WHAT  we want Interests are  WHY  we want something Negotiate the  WHY ….not the  WHAT
Negotiating Behaviour ,[object Object],[object Object],7
RED   Behaviour ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],People behave in this manner when they fear exploitation by the other party, but by behaving this way to protect themselves, they provoke the behaviour they are trying to avoid. 8
BLUE  Behaviour ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Kennedy talks of a ‘behavioural dilemma’, do you cooperate ( blue ) or defect ( red )? Can you trust the other person? And to what extent?  Trusting someone involves risk, on the one hand being too trusting is naïve and on the other, not trusting at all can create deceitful behaviour. The answer is to merge  blue  and  red  behaviour into  purple . 9
PURPLE  Behaviour ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],To the  red  behaviourist the message is loud and clear, ‘You will get nothing from me unless and until I get something from you’. 10
Formulating a Negotiation Strategy ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Starting Point ,[object Object],[object Object],[object Object],[object Object]
Principled Negotiation :The Method ,[object Object],[object Object],[object Object],[object Object],Modified from material obtained from the Harvard Negotiation Project
Separate the  people  from the  problem ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Modified from material obtained from the Harvard Negotiation Project
Problem ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],SOFT HARD Positional Which game should you play “ Getting to Yes” - Professor R. Fisher & W. Ury
Focus on  Interests  not  Positions ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Modified from material obtained from the Harvard Negotiation Project
Invent Options for Mutual Gain ,[object Object],[object Object],[object Object],[object Object],[object Object],Modified from material obtained from the Harvard Negotiation Project
Insist on using Objective Criteria ,[object Object],[object Object],[object Object],Modified from material obtained from the Harvard Negotiation Project
Negotiation Styles Source:  Rollin & Christine Glaser ACCOMODATE Build friendly relationship Characteristics: Promote harmony Avoid substantive differences Give into pressure to save relationship Place relationship above fairness of  the outcomes CONCERN FOR RELATIONSHIP CONCERN FOR SUBSTANCE LOW HIGH COLLABORATE Problem solved creatively, aiming for win-win Characteristics: Search for common interests Problem-solving behaviours Recognising both parties’ needs Synergistic solutions Win-win becomes the main purpose of the negotiator HIGH AVOID Take whatever you can get/Inaction Characteristics: Feeling of powerlessness Indifference to the result Resignation, surrender Take what the other party is willing to concede Withdraw & remove = behaviour of negotiator DEFEAT Be a winner at any cost/Competitive Characteristics: Win-Lose competition Pressure/Intimidation Adversarial relationships Defeating the other becomes a goal for the negotiator COMPROMISE Split the difference Characteristics: Meeting half way Look for trade offs Accept half-way measures Aims to reduce conflict rather than problem solve synergistically
The Four Phases of Negotiation PLAN DEBATE PROPOSE BARGAIN 11
Step One - Prepare ,[object Object],[object Object],[object Object],[object Object]
Step Two - Debate ,[object Object],[object Object],[object Object],[object Object],[object Object],...BUT
Step Three - Propose ,[object Object],[object Object],[object Object],[object Object],[object Object],AND
Step Four - Bargain ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Classic Bargaining Tactics ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Classic Bargaining Tactics ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Classic Bargaining Tactics ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Classic Bargaining Tactics ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Classic Bargaining Tactics ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Step Five - Agree ,[object Object],[object Object],[object Object],[object Object]
Think about your influencing style Inspirational Logical Personal Forceful
7 Deadly Sins of Negotiating ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
An Unconditionally Constructive Strategy ,[object Object],"Getting Together" Fisher RATIONALITY Even if they are acting emotionally, balance emotions with reason UNDERSTANDING Even if they misunderstand us, try to understand them COMMUNICATION Even if they are not listening, consult them before deciding on matters that affect them RELIABILITY Even if they are trying to deceive us, neither trust them nor deceive them: be reliable NON-COERCIVE  MODES OF INFLUENCES Even if they are trying to coerce us, neither yield to that coercion nor try to coerce them, be open to persuasion and try to persuade them ACCEPTANCE Even if they reject us and our concerns as unworthy of their consideration, accept them as worthy of consideration, care about them and be open to learning from them
Three Approaches To Resolving Disputes MOVING FROM A DISTRESSED TO AN EFFECTIVE RESOLUTION SYSTEM Distressed System "Dispute Resolution" Goldberg Green Sander Power Rights Interests
Three Approaches To Resolving Disputes Effective System Goldberg MOVING FROM A DISTRESSED TO AN EFFECTIVE RESOLUTION SYSTEM Power Rights Interests
Salary Negotiation:  Best Practices ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Salary Best Results ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Salary: Things to Avoid ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],$$$
Tip #1  Negotiating is not Compromising It is  joint problem solving Our goal is to efficiently reach a satisfying agreement for both parties, and to conclude on a positive note. Fisher and Ury define negotiations as “Back and forth communication to reach agreement where some  interests  are shared and some  interests  are opposed. “ Getting to Yes”
Tip #2 People Skills Make the Difference ,[object Object],[object Object],[object Object]
Tip #2A: Listening is the most powerful negotiating skill ,[object Object],[object Object],[object Object]
Listening is your most powerful negotiating tool ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Listening is your most powerful negotiating tool If that is the case, why are we such bad listeners? We listen to reply, argue, rebut, make our point, or win. We do not typically listen to understand. As Covey said, “Seek first to understand, then be understood
Tip #3: Have a game plan before beginning to negotiate Few people plan before beginning to negotiate If you cannot walk away from the negotiation at any time, you will lose. Knowing your options outside of the negotiation is a direct function of preparation. Without a plan you risk agreeing to something worse than what you may have done on your own.
Negotiation Check List 42 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Avoid Good Practice
Questions
To be continued in the next chapter……… THANK YOU kurniawan_260305@yahoo.com
Communication Stumbling Blocks (1) Centre for Conflict Resolution, Cape Town, South Africa, 1999
Communication Stumbling Blocks (2) Centre for Conflict Resolution, Cape Town, South Africa, 1999
Communication Stumbling Blocks (3) Centre for Conflict Resolution, Cape Town, South Africa, 1999
Communication Stumbling Blocks (4) Centre for Conflict Resolution, Cape Town, South Africa, 1999

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Negotiation

  • 1. Students to Start-Ups Entrepreneurial Skills Series Chapter 03 Negotiation
  • 2. Negotiation My father said: "You must never try to make all the money that's in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you won't have many deals.” J. Paul Getty
  • 3.
  • 4. Negotiation – What is it? ‘ The process by which we search for the terms to obtain what we want from somebody who wants something from us’ Gavin Kennedy Confer with others to reach a compromise or agreement. Concise Oxford Dictionary To negotiate is to trade something we have for something we want. Anon ‘ Negotiation is an explicit voluntary traded exchange between people who want something from each other’ Gavin Kennedy
  • 5.
  • 6. Human Needs Manfred A. Max-Neef 1991. Human scale development: conception, application and further reflections. New York: Apex.
  • 7.
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  • 9. Conflict and Group Performance Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc.
  • 10. Conflict-Handling Styles Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc. Uncooperative Cooperative Cooperativeness Assertiveness Unassertive Assertive Forcing Resolving conflicts by satisfying one’s own needs at the expense of another’s Avoiding Resolving conflicts by withdrawing from or suppressing them Collaborating Rewarding conflict by seeking an advantageous solution for all parties Compromising Resolving conflict by each party giving up something of value Accommodating Resolving conflicts by placing another’s needs and concerns above your own
  • 11. 5 Levels of Communication Chris Spies, 2002
  • 12. The Four Ears of Listening Undine Kayser, 2003
  • 13. Active Listening Techniques (1) Centre for Conflict Resolution, Cape Town, South Africa, 1999
  • 14. Active Listening Techniques (2) Centre for Conflict Resolution, Cape Town, South Africa, 1999
  • 15. Active Listening Techniques (3) Centre for Conflict Resolution, Cape Town, South Africa, 1999
  • 16. Active Listening Techniques (4) Centre for Conflict Resolution, Cape Town, South Africa, 1999
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  • 29. The Zone of Agreement Seller’s surplus Buyer’s surplus Zone of agreement s x b Seller’s reservation price (seller wants s or more) Seller wants to move x to the right Final Contract Buyer’s reservation price (buyer wants b or less) buyer wants to move x to the left Money ($)
  • 30. Negotiating is about WHY , not WHAT The purpose of negotiating is seeing if you can get your interests met through and agreement, versus an alternative. Positions are WHAT we want Interests are WHY we want something Negotiate the WHY ….not the WHAT
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  • 43. Negotiation Styles Source: Rollin & Christine Glaser ACCOMODATE Build friendly relationship Characteristics: Promote harmony Avoid substantive differences Give into pressure to save relationship Place relationship above fairness of the outcomes CONCERN FOR RELATIONSHIP CONCERN FOR SUBSTANCE LOW HIGH COLLABORATE Problem solved creatively, aiming for win-win Characteristics: Search for common interests Problem-solving behaviours Recognising both parties’ needs Synergistic solutions Win-win becomes the main purpose of the negotiator HIGH AVOID Take whatever you can get/Inaction Characteristics: Feeling of powerlessness Indifference to the result Resignation, surrender Take what the other party is willing to concede Withdraw & remove = behaviour of negotiator DEFEAT Be a winner at any cost/Competitive Characteristics: Win-Lose competition Pressure/Intimidation Adversarial relationships Defeating the other becomes a goal for the negotiator COMPROMISE Split the difference Characteristics: Meeting half way Look for trade offs Accept half-way measures Aims to reduce conflict rather than problem solve synergistically
  • 44. The Four Phases of Negotiation PLAN DEBATE PROPOSE BARGAIN 11
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  • 55. Think about your influencing style Inspirational Logical Personal Forceful
  • 56.
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  • 58. Three Approaches To Resolving Disputes MOVING FROM A DISTRESSED TO AN EFFECTIVE RESOLUTION SYSTEM Distressed System "Dispute Resolution" Goldberg Green Sander Power Rights Interests
  • 59. Three Approaches To Resolving Disputes Effective System Goldberg MOVING FROM A DISTRESSED TO AN EFFECTIVE RESOLUTION SYSTEM Power Rights Interests
  • 60.
  • 61.
  • 62.
  • 63. Tip #1 Negotiating is not Compromising It is joint problem solving Our goal is to efficiently reach a satisfying agreement for both parties, and to conclude on a positive note. Fisher and Ury define negotiations as “Back and forth communication to reach agreement where some interests are shared and some interests are opposed. “ Getting to Yes”
  • 64.
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  • 67. Listening is your most powerful negotiating tool If that is the case, why are we such bad listeners? We listen to reply, argue, rebut, make our point, or win. We do not typically listen to understand. As Covey said, “Seek first to understand, then be understood
  • 68. Tip #3: Have a game plan before beginning to negotiate Few people plan before beginning to negotiate If you cannot walk away from the negotiation at any time, you will lose. Knowing your options outside of the negotiation is a direct function of preparation. Without a plan you risk agreeing to something worse than what you may have done on your own.
  • 69.
  • 71. To be continued in the next chapter……… THANK YOU kurniawan_260305@yahoo.com
  • 72. Communication Stumbling Blocks (1) Centre for Conflict Resolution, Cape Town, South Africa, 1999
  • 73. Communication Stumbling Blocks (2) Centre for Conflict Resolution, Cape Town, South Africa, 1999
  • 74. Communication Stumbling Blocks (3) Centre for Conflict Resolution, Cape Town, South Africa, 1999
  • 75. Communication Stumbling Blocks (4) Centre for Conflict Resolution, Cape Town, South Africa, 1999