Negotiate from the point of advantage

1. THE ART AND THE SKILLS OF
By Engr. John Ibebunjo

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. Negotiation
• Much business-to-business selling involves negotiating skills
• The two parties need to reach agreement
– Price
– Others term of sale
• Sales person need to win without making deep concessions that will
hurt profitability
• There are 2 exchange in marketing
– Routinized exchange : administered program of pricing and
distribution
– Negotiated exchange : price and others term are set via bargaining
behavior

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. Debunking Negotiation
Myths
 Myth 1: There must be a winner & a
loser
 Myth 2: Appears to involve conflict
 Myth 3: Negotiation is not an option
 Myth 4: Only cheap, petty people
haggle
 Myth 5: A good negotiator is
manipulative

6. Negotiation
• The most frequently negotiated :
– Price
– Contract completion time
– Quality of goods and service offered
– Purchase volume
– Responsibility for financing
– Risk taking
– Promotion and title
– Product safety

7. Conflict-Handling Styles
Uncooperative Cooperative
Cooperativeness
Assertiveness
UnassertiveAssertive
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
Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada, Inc.

8. When to Negotiate ?
• Based on Lee and Dobler :
– When many factors bear not only on price, but also
on quality and service
– When business risks cannot be accurately
predetermined
– When a long period of time is required to produce the
items purchased
– When production is interrupted frequently because of
numerous change orders

9. 1. Preparation and planning skill
2. Knowledge of the subject
3. Ability to think clearly and rapidly under pressure and
uncertainty
4. Ability to express thoughts verbally
5. Listening skill
6. Judgement and general intelligence
7. Integrity
8. Ability to persuade others
Art & Science of Negotiation - RAIFFA
34 Characteristics of an Effective
Negotiator

10. 9. Patience
10. Decisiveness
11. Ability to win respect and confidence of opponent
12. General problem-solving and analytical skills
13. Self-control, especially of emotions and their visibility
14. Insight into others’ feelings
15. Persistence and determination
16. Ability to perceive and exploit available power to achieve
objective
Art & Science of Negotiation - RAIFFA
34 Characteristics of an Effective
Negotiator

11. 17. Insight into hidden needs and reactions of own and
opponent’s organization
18. Ability to lead and control members of own team or group
19. Previous negotiating experience
20. Personal sense of security
21. Open-mindedness (tolerance of other viewpoints)
22. Competitiveness (desire to compete and win)
23. Skill in communicating and co-ordinating various objectives
within own organisation
Art & Science of Negotiation - RAIFFA
34 Characteristics of an Effective Negotiator

12. 24. Debating ability (skill in parrying questions and answers
across the table)
25. Willingness to risk being disliked
26. Ability to act out skilfully a variety of negotiating roles or
postures
27. Status or rank in organisation
28. Tolerance to ambiguity and uncertainty
29. Skill in communicating by signs, gestures and silence (non-
verbal language)
Art & Science of Negotiation - RAIFFA
34 Characteristics of an Effective Negotiator

13. 30. Compromising temperament
31. Attractive personality and sense of humour (degree to which
people enjoy being with the person)
32. Trusting temperament
33. Willingness to take somewhat above-average business or
career risks
34. Willingness to employ force, threat or bluff
Art & Science of Negotiation - RAIFFA
34 Characteristics of an Effective Negotiator

14. Negotiation Key Concepts
• BATNA
• Reservation Price
• ZOPA
• Value Creation through Trades

15. Know your BATNA!
• Best Alternative To a Negotiated Agreement
(BATNA)
• Typical example: negotiate or go to court
• Improving your situation
– Improve your BATNA
– Identify the other side’s BATNA
– Weaken the other party’s BATNA

16. Reservation Price
• The least favorable point at which one will
accept a deal
• The “walk-away”
• Example: you are looking for larger office space.
You set your BATNA at N2000/SqF and your
Reservation Price at N3000/SF
• If owner won’t budge from N2000, you walk
away and take advantage of your BATNA

17. ZOPA
• Zone of Possible Agreement (ZOPA)
• The difference between the Seller’s Reservation
Price and the Buyer’s Reservation Price
• What happens if positions below are reversed?
ZOPA
N275kN250k
Seller’s
Reservation Price
Buyer’s
Reservation Price

18. Value Creation through Trades
• Trade things you value less to the other
party
• Examples:
– For a supplier the greater value may be not
price but an extended delivery time
– For a customer, extended warranty versus
price
– For an employee, working at home versus
salary

19. Summary of Negotiation concept
• Zone of agreement exists
– Simultaneously overlapping acceptable outcomes for the parties
• Reservation price
– Seller’s
• The minimum seller will accept
• Below s is worse than not reaching agreement
• x > s , seller surplus
– Buyer’s
• The maximum buyer will pay
• x above b is worse than no agreement
• x < b , buyer surplus
– If s < b / than a zone of agreement exist = bargaining

20. 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 (N)

21. Negotiating is about WHY, not WHAT
The purpose of negotiating is seeing
if you can get your interests met
through an agreement, versus an
alternative.
Positions are WHAT we want
Interests are WHY we want
something
Negotiate the WHY….not the WHAT

22. Negotiating Behaviour
Gavin Kennedy (The New Negotiating Edge) describes 3
types of behaviour that we can display and encounter when
in a negotiating situation
RED BLUE PURPLE
7

23. RED Behaviour
• Manipulation
• Aggressive
• Intimidation
• Exploitation
• Always seeking the best for you
• No concern for person you are negotiating with
• Taking
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

24. BLUE Behaviour
• Win win approach
• Cooperation
• Trusting
• Pacifying
• Relational
• Giving
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

25. PURPLE Behaviour
• Give me some of what I want (red)
• I’ll give you some of what you want (blue)
• Deal with people as they are not how you think they are
• Good intentions
• Two way exchange
• Purple behaviour incites purple behaviour
• Tit for tat strategies
• Open
• People know where they stand
• Determination to solve problems by both sets of criteria of the merits
of the case and/or the terms of a negotiated exchange
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

26. Formulating a Negotiation Strategy
• Strategic plan
– Commitment to an overall approach that has a good
chance of achieving the negotiator’s objectives
• Soft : avoid conflict, make concessions; often end up
exploited and feeling bitter
• Hard : sees any situation as a contest of wills. Exhausts
people and resources and harms relationships
• Other strategies are between hard and soft, but each
involves a trade off
• Making good tactical decisions

27. Starting Point
• A successful negotiation must have a
basic framework
– The alternative to negotiation
– The minimum threshold for a negotiated deal
– How flexible a party is willing to be, and what
tradeoffs it is willing to make

28. Principled Negotiation :The Method
• Separate the people From the problem
• Focus on interests, Not positions
• Invent options For mutual gain
• Use objective criteria
Modified from material obtained from the Harvard Negotiation Project

29. Separate the people from the problem
Relationship Issues:
 Emotion/reason
 Understanding
 Communication
 Reliability
 Coercion/persuasion
 Acceptance/respect
Substantive Issues:
 Money
 Terms
 Conditions
 Concessions
 Promises
 Dates/numbers
Modified from material obtained from the Harvard Negotiation Project

30. Problem
• Participants are friends
• The goal is agreement
• Make concessions to cultivate the
relationship
• Be soft on the people and the problem
• Trust others
• Change your position easily
• Make offers
• Disclose your bottom line
• Accept one-sided losses to reach
agreement
• Search for the single answer: the one they
will accept
• Insist on agreement
• Try to avoid a contest of wills
• Yield to pressure
• Participants are adversaries
• The goal is victory
• Demand concessions as a condition of the
relationship
• Be hard on the problem and the people
• Distrust others
• Dig in to your position
• Make threats
• Mislead as to your bottom line
• Demand one-sided gains as the price of
agreement
• Search for the single answer: the one you
will accept
• Insist on your position
• Try to win a contest of wills
• Apply pressure
SOFT HARD
Positional Which game should you play
“Getting to Yes” - Professor R. Fisher & W. Ury

31. Focus on Interests not Positions
Interests = desires and concerns that underlie positions
• Prepare for negotiation:
– Clarify interests
– Understand the interests of the other side
• Focus the negotiation discussion on:
– Interests – not positions
Modified from material obtained from the Harvard Negotiation Project

32. Invent Options for Mutual Gain
To invent creative options:
• Separate inventing from judging.
• Broaden the options on the table, rather than look for a
single answer.
• Search for mutual gains.
• Invent ways to make their decision easy.
Modified from material obtained from the Harvard Negotiation Project

33. Insist on using Objective Criteria
• Frame each issue as a joint search for objective
criteria
• Reason and be open to reason as to which
standards are most appropriate and how they
should be applied
• Never yield to pressure, only to principle.
Modified from material obtained from the Harvard Negotiation Project

34. Negotiation Styles
ACCOMODATE
Build friendly relationship
Characteristics:
Promote harmony
Avoid substantive differences
Give into pressure to save relationship
Place relationship above fairness of
the outcomes
CONCERNFORRELATIONSHIP
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
Source: Rollin & Christine Glaser

35. The Four Phases of Negotiation
PLAN
DEBATE
PROPOSE
BARGAIN
11

36. Step One - Prepare
• Research
• LIST your objectives and their objectives
• Those you INTEND to get
• Those you MUST get

37. Step Two - Debate
• Listen carefully
• Ask questions
• Clarify
• Summarise
• Don’t argue, interrupt or assume
...BUT

38. Step Three - Propose
• Make proposals
• State conditions
• Express concerns
• Search for common interests
• Use positive body language
AND

39. Step Four - Bargain
• Key words are IF and THEN
• Start making concession:
– Every concession should have a condition
(IF you … THEN I will … )
– Conserve your concessions - don’t give everything away too
soon
– You don’t have to share every piece of information with the
opposing side!
– Don’t be afraid to say no

40. Classic Bargaining Tactics
• Acting Crazy
• Big Pot
• Get a Prestigious Ally
• The Well is Dry
• Limited Authority
• Whipsaw / Auction
• Divide and Conquer
• Get Lost / Stall for Time
• We Noodle
• Be Patient
• Let’s Split the Difference
• Trial Balloon
• Surprises

41. Classic Bargaining Tactics
• Acting Crazy
– Put on good show
– Visibly demonstrating your emotional commitment to your position
– Increase credibility
– Give opponent a justification to settle on your terms
• Big Pot
– Leave your self a lot of room to negotiate
– Make high demand at the beginning
– After making concessions, you’ll still end up with a larger payoff
• Get a Prestigious Ally
– Try to get opponent to accept less

42. Classic Bargaining Tactics
• The Well is Dry
– Take a stand and tell the opponent you have no more concessions to
make
• Limited Authority
– Negotiate in good faith
– If you ready to sign the deal, say I have to check with my boss
• Whipsaw / Auction
– Several competitors know you are negotiating in the same time
– Schedule competitors with you for the same time and keep them all
waiting to see you

43. Classic Bargaining Tactics
• Divide and Conquer
– Negotiation with opponent team
– Sell one member to help you sell the other members of the team
• Get Lost / Stall for Time
– Leave the negotiation completely for a while
– Come back when things are getting better and try to renegotiate
– Time period can be long or short
• We Noodle
– Give no emotional or verbal response
– Don’t response to his or her force or pressure
• Be Patient
– If you can afford to outwait
– You will probably win big

44. Classic Bargaining Tactics
• Let’s Split the Difference
– The person who first suggest this has the least to lose
• Trial Balloon
– Release your possible / contemplated decision through a so-called
reliable source before the decision is actually made
– To test reactions to your decisions
• Surprises
– Keep the opponent off balance by
• Drastic
• Dramatic
• Sudden shift
– Never be predictable
• Keep the opponent from anticipating your move

45. Step Five - Agree
• Usually final concession :
“IF you do that, THEN we have a deal!”
• Gain commitment
• Record and agree results
• Leave satisfied

46. Think about your influencing style
Inspirational
Logical
Personal
Forceful

47. 7 Deadly Sins of Negotiating
• Pride - Be prepared to compromise
• Gluttony - Don’t bite off more than you can chew
• Anger - Handle objections calmly
• Covetousness - Prioritise needs/wants
• Envy - Know competitors strengths & weaknesses…
AND your own
• Sloth - Do your homework
• Lust - Don’t look desperate to settle

48. An Unconditionally Constructive Strategy
Do only those things that are both good for the relationship and good for us
- whether or not they reciprocate
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
"Getting Together" Fisher

49. Three Approaches To Resolving Disputes
MOVING FROM A DISTRESSED TO AN EFFECTIVE RESOLUTION
SYSTEM
Distressed System
Power
Rights
Interests
"Dispute Resolution" Goldberg Green Sander

50. Effective System
Power
Rights
Interests
Goldberg
MOVING FROM A DISTRESSED TO AN EFFECTIVE RESOLUTION
SYSTEM
Three Approaches To Resolving Disputes

51. Salary Negotiation: Best Practices
• Know what want-prioritize and logroll
• Conduct research to understand your worth
• how it compares
• what you will do if don’t get what you want
• Know with whom to negotiate and what can
be negotiated
• Find the minimum, midpoint and maximum salary
grades for the position
• Think total compensation
• Consider enlarging the shadow of the future

52. Salary Best Results
• Wait until you have an offer to negotiate
– allow employer to initiate discussion
– be prepared to discuss salary at any time
• Preserve the relationship
– no ultimatums; appear accommodating; be concerned with their
interests
– ask questions when encountering resistance
• Consider long term effects of your plan
• Practice
• Watch for signals
• Get offer in writing

53. Salary: Things to Avoid
• Personal needs or self-serving perks
• Gamesmanship: one more thing or hard squeeze
• Multi-company leveraging
• Appearance of desperation
• Lying, exaggeration or misleading
• Quick decisions or countering too soon
$$$

54. 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”

55. Tip #2 People Skills Make the Difference
•What is your “preferred
style” of communicating?
•What is the “style” of the
other person with whom
you will be negotiating?
•Are these styles
compatible, or are they
opposites?

56. Tip #2A: Listening is the most powerful negotiating skill
• It begins with effective communication…understanding
your preferred method and learning the method of the
other party.
• Communicate with them in a way that will be most
effective with their style
• This helps to eliminate the possibility of
misunderstanding, as we communicate in many ways

57. Listening is your most powerful negotiating tool
But before you can listen, you
have to be skilled at asking
questions:
Three critical questioning skills
1. Know where your questions
are going
2. Ask for permission to ask
questions
3. State why you want to ask
questions
Purpose-Process-Payoff

58. 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

59. 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.

60. Negotiation Check List
Good Practice Avoid
 Actively listen
 Question for clarification
 Summarising
 Test commitment
 Seeking & giving information
 Encourage two way conversation
 State and plan your proposal – then summarise
 Use the ‘if you ….then we’ll’ principle
×Interrupting
×Attacking
×Blaming
×Talking too much
×Sarcasm
×Threats
×Taking it personally
×Closed body language
42

61. Till we meet again………

62. Questions