Negotiation Course
Topic 1 – Should I negotiate?
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It is one of the essential questions to be asked while preparing your negotiation strategy.
It is a close-ended question – yes or no.
The answer is based on the perception of the person. It might be important to someone who enjoys it or
useless to a person who considers it as time-wasting.
You must consider also the risks to benefit ratio of the negotiation.
Topic 2 – Is it Position-based or Interest-based negotiation?
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In position-based negotiation we have defined positions i.e loser and the winner.
In interest-based negotiation we search for the underlying reason behind the desire of both sides. This
creates a Win/Win situation.
No matter we know the underlying interest or not we return to positional bargaining even after discovering
a higher way.
Topic 3 – Is it a Dispute Resolution or Deal-Making?
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Deal-making is forward looking, interest-based and problem solving.
Dispute Resolution is backward looking, position-based and adversarial, but we can still use interest-based
thinking.
To resolve a dispute, 6 processes can happen- avoidance, negotiation, mediation, arbitration, litigation and
power.
Alternative Dispute Resolution is against the litigation process through arbitration, mediation and
negotiation.
The third party resolutions are – litigation, arbitration and mediation.
Deal making only uses negotiation, arbitration and mediation processes.
Topic 4 – Analysing a Negotiation
A. What questions should I ask to complete an analysis?
 You must have a framework to think about the negotiation.
1. My overall goal is to sell the car for at least 6000 and keep it till 3 weeks before giving it to her.
2. I must have at least 4000 to finance the truck’s order. I must also make a reasonable profit on the sell. I must
also keep the car for 3 weeks before giving it to her as the truck would not have arrived yet.
3. BATNA with Pooja is to sell the car at 4000 to my friend who will let me keep the car for 3 weeks.
4. Lowest price is 4500.
5. Most likely price is 5000.
6. My stretch goal is 6000.
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Having a large stretch goal leads to more chances of success in negotiations.
But it should not be that large to lose credibility.
Zone of Potential Agreement is the area where the deal can take place.
Whenever, there is a standoff between the positions in a negotiation, we must take a look at the
interests and synergize to accomplish them.
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Topic 5 – Your BATNA in a Dispute Resolution Negotiation
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BATNA is the alternative if the negotiation fails.
Usually litigation or arbitration are the alternatives.
If you cannot negotiate the settlement of a dispute either directly or with the help of a mediator, your
BATNA might be litigation.
A decision tree is very useful to do a BATNA analysis.
Win
Continue
Lose
Settle
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Here, if we win we would receive 4.6 Million dollars minus 400,000 dollars in expenses of litigation.
If we lose we would pay 400,000 dollars without receiving anything.
Since the chance is 50-50, we would average of the win and lose sum which averages to 1.9M.
Thus, logically we must accept the settlement offer.
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BATNA Analysis is also useful in deal-making.
Topic 6 – Cross-Cultural Negotiation
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It is a hurdle as there will be differences in the negotiation style (surface culture)and the belief system (deep
culture).
Culture can influence negotiation.
Be sensitive to culture, but not stereotype.
1. Negotiating goal: Contract or relationship?
Negotiators from different cultures may tend to view the purpose of a negotiation differently. For deal
makers from some cultures, the goal of a business negotiation, first and foremost, is a signed contract
between the parties. Other cultures tend to consider that the goal of a negotiation is not a signed contract
but rather the creation of a relationship between the two sides. It is therefore important to determine how
your counterparts view the purpose of your negotiation. If relationship negotiators sit on the other side of
the table, merely convincing them of your ability to deliver on a low-cost contract may not be enough to
land you the deal. You may also have to persuade them, from the very first meeting, that your two
organizations have the potential to build a rewarding relationship over the long term. On the other hand, if
the other side is basically a contract deal maker, trying to build a relationship may be a waste of time and
energy.
2. Negotiating attitude: Win-Lose or Win-Win?
Because of differences in culture, personality, or both, business persons appear to approach deal making
with one of two basic attitudes: that a negotiation is either a process in which both can gain (win-win) or a
struggle in which, of necessity, one side wins and the other side loses (win-lose). Win-win negotiators see
deal making as a collaborative, problem-solving process; win-lose negotiators view it as confrontational.
3. Personal style: Informal or formal?
Personal style concerns the way a negotiator talks to others, uses titles, dresses, speaks, and interacts with
other persons. Culture strongly influences the personal style of negotiators. A negotiator with a formal style
insists on addressing counterparts by their titles, avoids personal anecdotes, and refrains from questions
touching on the private or family life of members of the other negotiating team. A negotiator with an
informal style tries to start the discussion on a first-name basis, quickly seeks to develop a personal, friendly
relationship with the other team, and may take off his jacket and roll up his sleeves when deal making begins
in earnest. Each culture has its own formalities with their own special meanings. They are another means of
communication among the persons sharing that culture, another form of adhesive that binds them together
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as a community. As a general rule, it is always safer to adopt a formal posture and move to an informal
stance, if the situation warrants it, than to assume an informal style too quickly.
4. Communication: Direct or indirect?
Methods of communication vary among cultures. Some emphasize direct and simple methods of
communication; others rely heavily on indirect and complex methods. The latter may use circumlocutions,
figurative forms of speech, facial expressions, gestures and other kinds of body language. In a culture that
values directness, such as the American or the Israeli, you can expect to receive a clear and definite response
to your proposals and questions. In cultures that rely on indirect communication, such as the Japanese,
reaction to your proposals may be gained by interpreting seemingly vague comments, gestures, and other
signs.
5. Sensitivity to time: High or low?
Discussions of national negotiating styles invariably treat a particular culture’s attitudes toward time.
6. Emotionalism: High or low?
Accounts of negotiating behavior in other cultures almost always point to a particular group’s tendency to
act emotionally.Nonetheless, various cultures have different rules as to the appropriateness and form of
displaying emotions, and these rules are brought to the negotiating table as well. Deal makers should seek to
learn them.
7. Form of agreement: General or specific?
Whether a negotiator’s goal is a contract or a relationship, the negotiated transaction in almost all cases will
be encapsulated in some sort of written agreement. Cultural factors influence the form of the written
agreement that the parties make. it is claimed, that the essence of the deal is the relationship between the
parties. If unexpected circumstances arise, the parties should look primarily to their relationship, not the
contract, to solve the problem. In a situation of unequal bargaining power, the stronger party always seeks a
detailed agreement to “lock up the deal” in all its possible dimensions, while the weaker party prefers a
general agreement to give it room to “wiggle out” of adverse circumstances that are bound to occur.
According to this view, it is context, not culture that determines this negotiating trait.
8. Building an agreement: Bottom up or top down?
Related to the form of the agreement is the question of whether negotiating a business deal is an inductive
or a deductive process. Does it start from an agreement on general principles and proceed to specific items,
or does it begin with an agreement on specifics, such as price, delivery date, and product quality, the sum
total of which becomes the contract? Different cultures tend to emphasize one approach over the other. A
further difference in negotiating style is seen in the dichotomy between the “building-down” approach and
the “building-up approach.” In the building down approach, the negotiator begins by presenting the
maximum deal if the other side accepts all the stated conditions. In the building-up approach, one side
begins by proposing a minimum deal that can be broadened and increased as the other party accepts
additional conditions.
9. Team organization: One leader or group consensus?
In any negotiation, it is important to know how the other side is organized, who has the authority to make
commitments, and how decisions are made. Culture is one important factor that affects how executives
organize themselves to negotiate a deal. Some cultures emphasize the individual while others stress the
group. These values may influence the organization of each side in a negotiation. One extreme is the
negotiating team with a supreme leader who has complete authority to decide all matters. Similarly, the
one-leader team is usually prepared to make commitments more quickly than a negotiating team organized
on the basis of consensus. As a result, the consensus type of organization usually takes more time to
negotiate a deal.
10. Risk taking: High or low? In deal making, the negotiators’ cultures can affect the willingness of one side
to take risks– to divulge information, try new approaches, and tolerate uncertainties in a proposed course of
action. Research supports the conclusion that certain cultures are more risk averse than others.
Steps:
1 Don’t rush the negotiating process. A negotiation that is moving too fast for one of the parties only heightens that
person’s perception of the risks in the proposed deal.
2 Devote attention to proposing rules and mechanisms that will reduce the apparent risks in the deal for the other
side.
3 Make sure that your counterpart has sufficient information about you, your company, and the proposed deal.
4 Focus your efforts on building a relationship and fostering trust between the parties.
5 Consider restructuring the deal so that the deal proceeds step by step in a series of increments, rather than all at
once.
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There are some problems that arise when you adapt to the other negotiation culture.
It could be that both sides have adapted each other’s style.
You cannot understand the local culture fully.
Therefore, moderate adaptation is better than major adaption.
This could be done by understanding the key and main aspects of the other culture and be aware of taboos.
Success of negotiation between two cultures is related more to respect than to style.
To practice this, you can do role reversal, where you act like another person from different culture.
Topic 7 – How Should I handle Ethical Issues?
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A) Law Based Ethical Standards
B) General Ethical Standards
Legal principles of ethical standards are law based ethical standards.
There are three standards in law based ethics:
1) Fraud: False representation of material fact that is relied on by other side
2)Fiduciary Duty: A high duty of trust and loyalty
3) Unconscionability: Violates principle of good conscience.
Bluffing is not Fraud!
Breach of Fiduciary Duty has been included in the legislation of many countries.
Courts focus on two criteria to define unconscionability:
Absence of choice
Unreasonable terms
Main categories of General Ethical Standards are:
1)Organizational Standards
2)Mentor: Someone you admire
3)Personal Standards:
 Gut Test: Thinking the negotiation is unethical.
 Newspaper Test: Imagining the impact of the ethics in negotiation would be printed on a newspaper
 Family Test: Imagining what your family would think about your actions
 Golden Rule: Treating others as you want to be treated.
A company can use organizational standards to do the right things.
Standards of fairness could also lead to economic losses.
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Good reputation of being a fair person could also have some benefits too.
Hence, before entering into negotiations, select one or more general ethical standards to use for guidance
when ethical issues arise.
Topic 8 – Should I use an agent to negotiate for you?
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The list to consider this is the following:
There is a secret agent which can also represent other side.
The first question to be asked to an agent while negotiating is about this/her authority to make the deal.
There are three types of authority of the agent:
 Express: where he has the authority to negotiate this deal
 Implied: when he is hired for a particular position in the company where he can negotiate some
deals
 Apparent: Pseudo-authorized agent, where he/she indicates he/she holds an authority but in reality
does not have an any authority.
The question must be asked to the principal, at the beginning of every negotiation.
Topic 9 – Getting to know the other side and Using Power in Negotiaitions
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There is a difficulty to know the other side as the other side might be from another culture.
Try to spend time to know the other side before a negotiation.
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Information represents the main source of power in negotiations.
To gain information it is important to ask a lot of questions.
A good negotiator asks a lot of questions, clarifies everything and determines the interest of the other side.
The most important information on the other side is to gain the knowledge of their BATNA.
Your BATNA gives you power and the BATNA of other side gives them the power. If your BATNA is strong you
want the other side to know about it. This could have a leverage on the other side to agree to many of your
terms.
First step is to find the BATNA of the other side.
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We can strengthen our BATNA by talking to other parties.
In coalition bargaining, it is impossible to form a BATNA, as the BATNA could be infinite to form coalitions.
Here the main power comes from trust.
Topic 10 - Introduction to Psychological Tools; Mythical Fixed Pie Assumption
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Decision making is divided into two types:
Descriptive-usually do make a decision
Prescriptive-should make decision
Heuristics are the rule of thumbs to already simplify and filter things
They are standards set by heuristics might be sometimes unfair but it can be good if they take based on good
standards.
Phycological and Behavioural Facts in a negotiation:
We tend to think of other side as a competitor to us and negotiation as a race, so we try to get ahead of
them in the race by devaluing their proposals.
By felling into this trap, we might lose an opportunity to accept a great proposal.
We try to latch on the value as a base to a random question if no other value is given, even the though the
desired value has nothing to do our chosen value.
In negotiation, anchoring tells you to anchor to the price given by the other side, so that you can throw a
high price. It can be used when you are fairly confident about a value.
Conventional wisdom says, the other side should first throw the price. It can be used in dealing with an
object of an uncertain value.
When neither side is ready to offer, we can do information exchange. In information exchange you bring
facts to the table regarding the object,a dn agree upon the value.
Because of overconfidence we take more narrow ranges at uncertain times.
Overconfidence can be a problem when you are taking a decision. You may be overconfident when you are
implementing.
We want to be correct hence we look for confirming evidence of it. But we must look at disconfirming
evidence to see that whole picture.
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When we are confronted by a positive choice we tend to be risk averse.
When we are confronted by a negative choice we tend to be risk seeking.
The way a choice is framed, it can be interpreted into a positive or negative choice.
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This can bias our decision, since we don’t look at the contrary evidence.
Unique things are memorable.
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In negotiations, you must avoid to make competitive deals that are insensible.
By looking from other’s perspective we may prevent ourselves from becoming a part of escalation.
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It is important for exchanging issues.
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Options look different in respect to the earlier options.
Topic 11 – Close: Create a contract
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Negotiation is conducted under the shadow of law.
A contract is an agreement that is enforceable by law.
Before making a contract in another country we must know that will the contract be enforceable.
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Business perspective- Obtaining a contract is the primary goal of a business entity.
Personal Perspective- In the world you as the writer control the script and produce the play.
Key Principle- Freedom of contract: the law gives you freedom to create your responsibilities and duties.
There are two variables to determine the source of contract law.
First Variable is type of legal system.
The legal world is dividedinto two parts
Common Law: Court looks at prior decisions to come to a decision (Contract is long)
Civil Law: Court looks at a code that is related to your principle in the contract (Contract is short)
The second variable is the type of contract.
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A Contract only takes place when both the sides have agreed to accept the offer with their conditions.
A counter offer kills the previous offer.
When you have reached to an agreement, you can create a contract through framework agreements.
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The challenge is that after you fill the framework agreement, you move from being a negotiating to being a
part of a binding contract.
When using framework agreements as negotiating tool, you can write it on the contract.
For a deal to be binding each side need to give something. In civil law countries it is not necessary, in common
law countries is necessary.
A binding contract would only be formed when both sides are giving up something.
To come to a conclusion that the agreement is legal or not, it depends on agreements to agreements.
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If your afgreement is not enforceable, it is decided by the parol evidence rule if it is enforceable by law or not.
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Example of Parol Evidence rule in a contract:
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Oral agreements are enforcible.
It is advisable to write the contract, because it is enforceable irrespective of the medium used.
Even if you put the contract in the writing, known as the express contract, there are a number of contract
terms that are implied by law.
Implied terms are applied to the contracts irrespective of what they express.
Sometimes there is a cash of business objectives with legal objectives.
Law focused people want to create a legally perfect contract to prevent losses, while business engaged people
want to create a contract that meets their goals.
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Lawyers view the contract from eyes of a judge.
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Detailed contracts would have procedures for simple problem-solving work.
Alternative:
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We must a contract where we can solve problems in business terms rather than unnecessary legalities.
But this alternative may not make sense everywhere,.
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One time transactions must have most of the legalities.
For long-term relationship, you must build trust to minimize the legal terms, thus using the Lean Contracting.
Visualization is a contact format to visualize by drawing the condition.
This is another way of simplifying legalities and even minimizes the resources to create the contract.
Topic 12 – Life Goal Analysis
When you are preparing for a serious negotiation, try to take a big-picture perspective called a life
goals analysis. A life goals analysis is especially recommended for dispute-resolution negotiations, but
is also useful when preparing for deal-making negotiations.
To complete this analysis, ask yourself: How does this dispute (or deal) relate to my goals in life?
When preparing your list of life goals, consider the following possibilities:
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Family goals. Do you want to spend more time with your family? How will you spend that
time?
Leisure goals. What do you enjoy doing when you aren’t at work?
Retirement goals. When do you plan to retire and what will you do during retirement?
Financial goals. What are your financial plans and how will you achieve them?
Business and career goals. Do you have any plans to start a business or move to a new job?
Relationship goals. Do you anticipate any changes in your personal relationships?
Service goals. Any plans to increase your community service?
Topic 13 – ADR
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First step is dispute prevention.
At the core lies the preventive law.
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We need to find out the reason why people might be suing us.
Apologizing can also be a preventive measure.
Example:
Mediation-E.g Mini Trial
It is a settlement case, where they negotiate a settlement by hearing both the perspectives
of both the parties.
Telecredit vs TRW
Attorneys along with their executives explained both the sides of their stories.
Technicalities were cleared by an intellectual person on board. Once all the questions
were answered and conclusions reached, the settlement would be negotiated by the
executives.
Arbitration- E.g. Rent A Judge
You hire a retired judge to hear a case.
This would be private, cheap and quick.
ADR are now also involved in deal making.
Arbitration has also been used to randomly pick prices by a third party submitted by both
sides.
ADR TOOLS1. Corporate pledge- It is a pledge that you can adopt as a matter of corporate policy.
2. Screens- List of questions and their answers determine to use binding adr process
or non-binding process.
3. Contract Clauses- You follow the adr processes based on the mentions of contract
clauses.
4. Online Dispute Resolution- It is less effective as you are not able to build trust.
Topic 14- Arbitration
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There is an opening statement.
Surprise- Oath
Arbitrator, if a lawyer must conduct things with common sense in arbitration and should be
experienced.
Yes, parties must be represented by lawyers as they know how to find out proofs and have to the
point questions for the witnesses.
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Somewhat litigation was there.
I would decide the case through a lowered liability on the owner.
Arbitration is less expensive than litigation.
Arbitration takes less time.
The decision is not reviewable for acts of error of fact or law and are final.
International arbitrations are preferred for cross-border disputes.
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Topic 15-Mediation
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There are three types of mediation:
 Problem Solving:
 Facilitative- Facilitate conversation Discussion
 Evaluative- Asked to give an evaluation
 Transformative: Transform the relationship of both the parties
 Answers:
 It has a third party. It has lawyers. It has coccus.
 It is facilitative. It is like a mini-trial.
 I would rate the mediator at 8/10 as she brought them to the solution, active listening,
suggesting options and highlighted the other requirements of the liable company, except for
the 10% discount for two years.
 Mediators are open-minded, informal.
 Lawyers call it mediocrity.
Topic 16-Review and Evaluation
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We must have an implementation mindset to prevent a clash between negotiators and implementation team.
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We can make a negotiation diary which could help us identify for areas of improvement?
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Topic 17-Negotiation Exercises
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Topic 18- Negotiation Debrief: Planning for Negotiation
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