NEGOTIATION SKILLS

Dr. Shaymaa Elsawaby

Lecture 2
 Need for Negotiation

This is because conflicts may lead to

argument and resentment which
may result in one or all of the
involved parties feeling unhappy.

Hence, negotiation helps everyone

involved to seek a common ground
of agreement between the
disagreements and also meet their
individual objectives.
 Basic Principles of Negotiation
There are a few common basic principles that apply to all types of negotiations
and in all situations. Some of the basic principles of negotiation are as follows:
 Basic Principles of Negotiation
There are a few common basic principles that apply to all types of negotiations
and in all situations. Some of the basic principles of negotiation are as follows:
 Basic Principles of Negotiation
There are a few common basic principles that apply to all types of negotiations
and in all situations. Some of the basic principles of negotiation are as follows:
 The Art of Negotiation
Negotiation is an art; you can get
better and better with it.
If you feel that you don’t have an
innate talent for negotiations, don’t be
disappointed because these skills can
be honed and developed with the
proper training and practice.
People who always speak good things
may feel that they are good
negotiators, but that is not always the
case. Negotiation is all about
understanding what you want and
what the other person wants, and then
coming up with a win-win scenario.
The Art of Negotiation
Negotiation happens everywhere – it’s
omnipresent. You may have to negotiate over
anything – right from the deadlines of a
project to which person will do what chores
at home.
In the real world, it is sometimes difficult to
ascertain whether your negotiation is good or
bad. You may think that you are a good
negotiator, but in reality, it may be just the
opposite.
Even before you negotiate, you will have to
know what can be negotiated and what
cannot be negotiated.
 Benefits of Negotiation
The following are some of the benefits of negotiations:

Good negotiations It helps to reach Good

They help you to
help you to gain a ‘Win-Win’ negotiations
identify and understand
better control in Solution, which also help to
you’re as well as the
business as well as is mutually improve
other parties’ interests
personal situations. beneficial to all interpersonal
and also understand the
the parties relationships.
differences between
both. involved in a
negotiation.
 Benefits of Negotiation
The following are some of the benefits of negotiations:

They help to Negotiations help to

It is one of the Negotiations
develop and reach an agreement in
easiest and help to reduces
maintain an overall cases where a dead-
quickest ways to stress and
harmonious and end may be reached if
solve conflicts frustration
thriving a consensus is not
and among two
interpersonal established between
disagreements. conflicting
environment. two differing needs,
individuals.
wants or opinions.
 FEATURES OF NEGOTIATION
5

 Minimum two parties

 Predetermined goals
 Expecting an outcome
 Resolution and Consensus
 Parties willing to modify their positions
 Parties should understand the purpose of negotiation
 Why do we NEGOTIATE ?
6

🞑 To reach an agreement
🞑 To beat the opposition
🞑 To compromise
🞑 To settle an argument
🞑 To make a point
 Types of Negotiation Strategies
There are two main types of negotiation strategies which
are as follows:

Let’s look at each in detail.

 Distributive Negotiation
• ‘Distributive Negotiation’ is also known
as ‘Positional’ or ‘Competitive’ or ‘Fixed
Pie’ or ‘Win-Lose’ Negotiation.

• It is a type or style of negotiation in

which the parties compete for the
distribution of a fixed amount of value.

• The involved parties in a ‘distributive

negotiation’ have a ‘win-lose’ attitude
towards reaching the goal and is based
on an attempt to divide up a fixed pie or
amount of resources for oneself.

• ‘Distributive Negotiation’ involves

holding on to a fixed idea, or position, of
what you want and arguing for it and it
alone, regardless of any underlying
interests.
 Distributive Negotiation

• ‘Distributive Negotiation’ is also known

as ‘Positional’ or ‘Competitive’ or ‘Fixed
Pie’ or ‘Win-Lose’ Negotiation. It is a
type or style of negotiation in which the
parties compete for the distribution of a
fixed amount of value. • The main focus in such a type of negotiation
• strategy is on achieving immediate goals, with
The involved parties in a ‘distributive
little
negotiation’ have a ‘win-lose’ or no regard for building future
attitude
towards reaching the goal andrelationships.
is based
on an attempt to divide •up Generally,
a fixed pie noor new creative solution is reached in
such negotiations as the parties spend least
amount of resources for oneself.
• possible time and energy in resolving the
‘Distributive Negotiation’ involves
conflict.
holding on to a fixed idea, or position, of
what you want and arguing• The for itoutcome
and it of the negotiation is reached by
presentation of fixed solutions and a decision or
alone, regardless of any underlying
interests. choice is made quickly.
 1st Type: Distributive
8

 Parties compete over the distribution of a fixed sum of value.

The key question in a distributed negotiation is, “Who will
claim the most value?” A gain by one side is made at the
expanse of other.

 The Seller’s goal is to negotiate as high a price as possible;

the Buyer’s goal is to negotiate as low a price as possible.

 Thus, the deal is confined: there are not much opportunities

for creativity or for enlarging the scope of the negotiation.
 Distributive NEGOTIATIONS
➢Usually distributive bargaining approach works
well with products which do have a fixed price.

➢For example, if you go to the supermarket and

buy some products, you won't be able to
bargain because they have a fixed price. Either
you can buy the product or leave it.
Integrative Negotiation

• ‘Integrative Negotiation’ is also known as

‘Interest-based’ or ‘Cooperative’ or ‘Win-
Win’ Negotiation.
• It is a type or style of negotiation in which
the parties cooperate to achieve a
satisfactory result for both.
• The involved parties in an ‘integrative
negotiation’ have a ‘win-win’ attitude
towards reaching the goal and attempt to
strive not just for their own outcomes, but
for favorable outcomes for both sides.
• ‘Integrative Negotiation’ involves reaching
an agreement keeping into consideration
both the parties’ interests which includes
the needs, desires, concerns, and fears
important to each side.
 2nd Type: Integrative
 In Integrative Negotiation, parties cooperate to achieve
9 maximize benefits by integrating their interests into an
agreement. This is also known as a win-win negotiation.

 The key questions is: “How can the resource best be

utilized?”

 Integrative negotiations tend to occur in following situations:

🞑 – Structuring of complex long-term Strategic Relationships or
other collaborations.
🞑 – When the deal involves many financial and non- financial
terms.
 In an integrative negotiation, there are many items and issues
to be negotiated and the goal of each side is to “create” as
much value as possible for itself and the
 INTEGRATIVE NEGOTIATIONS
➢A furniture vendor says the lowest price they will offer
a company for five chairs is $3,000, but the customer
says the highest they will pay is $2,800.

➢The client convinces the vendor to lower the price to

$2,900, and both parties compromise by giving up their
original price to make a deal.
 Integrative Negotiation
➢ The main focus in such a• type‘Integrative Negotiation’ is
of negotiation also known
strategy is on
developing mutually beneficialasagreements
‘Interest-based’ or ‘Cooperative’
based or
on the interests
‘Win-Win’ or ‘Non-zero Sum’
of the disputants. Negotiation. It is a type or style of
➢ Generally, new creative solutions
negotiation in which
are reached inthe
suchparties
negotiations
as the parties spend maximum cooperate to achieve
possible time a satisfactory
and energy in
result for both. The involved parties in
resolving the conflict. an ‘integrative negotiation’ have a ‘win-
➢ The outcome of the negotiation win’ attitude towards reaching
is reached the goal
by collaboration
and attemptsolution
between the parties to find a “win-win" to strive not just fordispute.
to their their
own outcomes, but for favorable
outcomes for both sides.
• ‘Integrative Negotiation’ involves
reaching an agreement keeping into
consideration both the parties’ interests
which includes the needs, desires,
concerns, and fears important to each
side.
 Distributive vs. Integrative Negotiation
The given table shows the comparison between Distributive Negotiation and
Integrative Negotiation.

Distributive Negotiation Integrative Negotiation

It involves discussion of only one issue at a It involves discussion of several issues at a time.
time.
Involved parties have a ‘Win-Lose’ attitude Involved parties have a ‘Win-Win’ attitude
towards reaching the negotiation outcome. towards reaching the negotiation outcome.
Each party wants to use the negotiation to Each party wants to use the negotiation to
maximize its own share of ‘fixed pie’. ‘expand its own share of the pie’ by creating
and claiming value.
It is an approach usually used in one-time It is an approach usually used in a continuing
relationship between two people. relationship between two people.
The involved parties keep their respective The involved parties share their respective
interests hidden. interests with the other party.
Each party expresses a strong position for each Each party expresses and try to come up with
issue. as many options as possible per issue to
maximize mutual gains.
 Distributive vs. Integrative Negotiation
The given table shows the comparison between Distributive Negotiation and
Integrative Negotiation.

Distributive Negotiation Integrative Negotiation

The involved parties keep information hidden. The involved parties share information with
each other and try to get to the root cause of
the ‘why’ of the existence of the issue.

The involved parties are adversaries. The involved parties are joint problem-solvers.

The aim of such negotiation is ‘winning’. The aim of such negotiation is ‘making a wise
decision’.
The main focus of involved parties is on their The main focus of involved parties is on their
‘stance or position’. ‘goals and objectives’.
The involved parties use pressure to get what The involved parties do not use pressure but
they want. strive to get what they want through principles.
 Stages of the Negotiation Process
The following are the stages of any negotiation process:

Let us look at each in detail.

 Meeting
1

Meeting:

• The first stage of the negotiation process is the

negotiation meeting.

• The meeting can be in an informal or formal setting.

• When there are two parties meeting, the venue,

date and time are decided first.

• The meeting begins with introductions.

 Inquiry
2

Inquiry:

• The second stage of the negotiation process is

the stage of inquiry.

• During the inquiry stage, both parties exchange

information and discuss their concerns.

• The main objective of this stage is to ascertain

the strengths and weaknesses, needs, wants,
desires and issues.
 Bargaining
3

Bargaining:

• The third stage of the negotiation process is that of

bargaining.

• During the bargaining stage, both parties make offers

and tradeoffs.

• At this stage, both the parties consider all the

possible options available to find a middle path
between their differences.
 Closure
4

Closure:

• This stage occurs after both

parties have looked at all the
options closely.

• During the closure stage,

both parties restate their
positions and confirm their
tradeoffs they are willing to
negotiate.
 Acceptance
5

Acceptance:

• The final stage of the negotiation

process is acceptance.

• During the acceptance stage, both

parties would either decide to suspend
negotiations or they may reach an
agreement.
Real Life Example

Let us now look at a

real life example to
understand the stages
of the negotiation
process.
Real Life Example

You have seen in the

introduction scenario
how Peter Looney, a
Project Manager at
Globus Inc. failed to
negotiate well with the
Maxwell client due to
which Peter’s team
had to suffer and also
his company had to
incur a loss in the
Project.
Real Life Example

Yes, all this happened

because Peter had not
initially negotiated
well with the client
about the deadlines
and the scope of work.
Real Life Example
Stage 1: Meeting
Stage 5:
Acceptance

Stage 4:
Closure

Stage 3:
To negotiate well with the client, the first
Bargaining
thing that Peter should do is to prepare
well for the meeting.
Stage 2: Peter could go through the Project Plans of
Inquiry similar projects that Globus had handled in
the past, talk to and seek guidance from
Stage 1: his superiors and put all the data and
Meeting information that he gets related to the
project at one place.
Real Life Example
Stage 1: Meeting
Stage 5:
Acceptance

Stage 4:
Closure

Stage 3:
To negotiate well with the client, the first
Bargaining
thing that Peter should do is to prepare
wellalso
Peter should for the
makemeeting.
a list ofPeter could
all the go that
queries
Stage 2: he has tothrough the Project
clear with Plansthings
the client, of similar
that he can
Inquiry projects that Globus had the
handled
agree to and cannot agree to with clientinetc.
the
past, talk to and seek guidance from his
Stage 1: superiors
Also, at the meetingand putshould
Peter all the come
data and
across to the
Meeting client as ainformation thatand
cool, confident he gets related toperson.
professional the
project at one place.
Real Life Example
Stage 2: Inquiry
Stage 5:
Acceptance

Stage 4:
Closure

Stage 3:
Bargaining

Stage 2:
Inquiry
During the inquiry stage, Peter should
exchange information with the client and
Stage 1: discuss their concerns, scope of work,
Meeting deadlines, future enhancements etc.
Real Life Example
Stage 2: Inquiry
Stage 5:
Acceptance

Stage 4:
Closure

Stage 3:
Bargaining

Stage 2:
Inquiry At this stage, Peter should find out the client’s
Duringhow,
requirements, the inquiry
which stage, Peter can
and when should
he fulfil
exchange information
these requirements and anywith the client
other termsand
and
Stage 1: conditionsdiscuss their
that may concerns,
not scopetoofGlobus.
be agreeable work,
Meeting deadlines, future enhancements etc.
Real Life Example
Stage 3: Bargaining
Stage 5:
Acceptance

Stage 4:
Closure

Stage 3:
Bargaining

Stage 2:
Inquiry
At this stage, Peter should now agree to
terms that are completely acceptable and
Stage 1: offer options and tradeoffs for things that
Meeting are unacceptable as is stated by the client.
Real Life Example
Stage 3: Bargaining
Stage 5:
Acceptance

Stage 4:
Closure

Stage 3:
Bargaining

Stage 2: Peter should make sure that he ascertains

Inquiry his position and takes a should
stand nowin agreeing
At this stage, Peter agree to to
only possible
terms thatand acceptable
are completely deadlines,
acceptable and
Stage 1: current offer
scope,
optionsterms regarding
and tradeoffs for thingsfuture
that
Meeting are unacceptable as is stated by the client.
enhancements etc.
Real Life Example
Stage 4: Closure
Stage 5:
Acceptance

Stage 4:
Closure

Stage 3:
Bargaining

Stage 2: At this stage, it is important that

Inquiry
both the client and Peter restate
their positions and confirm their
Stage 1: tradeoffs they are willing to
Meeting
negotiate.
Real Life Example
Stage 4: Closure
Stage 5:
Acceptance

Stage 4:
Closure

Stage 3:
Bargaining
So, agreement should be achieved on the agreed
Stage 2: deadlines, current scope, terms regarding future
Inquiry enhancements etc.
It shouldAtbethis stage,upon
agreed it is important thatparties
by both the both the that
clientand
the discussed andagreed
Peter restate their positions
upon terms would now andbe
Stage 1: confirm
drafted into theirand
a legal tradeoffs
bindingthey are willing
contract to
between
Meeting negotiate.
the two parties.
Real Life Example
Stage 5: Acceptance
Stage 5:
Acceptance

Stage 4:
Closure

Stage 3:
Bargaining

Stage 2:
Inquiry At this final stage of the negotiation
process, Peter should make sure that both
the parties agree to signoff the deal and
Stage 1:
Meeting reach an agreement on the terms of the
Project.
 Negotiation Outcomes
The given image shows the various options of possible outcomes with respect to
the parties involved in a negotiation.

YOU
WIN LOSE
WIN

We Both Win I Win,

You Lose
ME

I Lose,
LOSE

We Both
You Win Lose