NEGOTIATION
Sarah Crawley
DEFINITION
To discuss with a view to mutual settlement (Collins English
Dictionary)
Two or more parties
Conflict of interest
Willingness to negotiate
Need to seek agreement
Better outcome through influence and persuasion
Parties seeking to satisfy tangible and intangible outcomes.
NEGOTIATION GOALS (LEWICKI ET AL 2003)
Goals of both parties must be linked to create a base for
negotiation
Boundaries must be set by both parties
Goals must be measurable so achievement can be
identified.
DRIVERS OF CHANGE IN PURCHASING
Technological advances
Quality and customer focus
Globalisation
Insourcing and outsourcing
Strategic cost management
Supplier relationship development and network management
Value chain and added value focus.
PESTLE
Political Economic
Socio-cultural
Technological
Legislative and regulatory
Environmental and Ecological.
SWOT
Strengths (internal)
Weaknesses (internal)
Opportunities (external)
Threats (external)
How should a SWOT analysis be used to assist negotiation?
IMPACT ON NEGOTIATION
Fluctuating prices
Time preferences
Dynamics in exchanges
Relative interests of each party
Risk aversion factors
Bargaining power
Constraints of macro-environment and organisational policies and procedures.
NEGOTIATION
Pre-contract
Contract agreement
Contractual and relationship review
EFFECTIVE INFLUENCING
Factors to consider when choosing your approach:
knowledge of the other party
required outcome(s)
skill in using different tactics
COLLABORATIVE APPROACH
Agreement is reached by:
expanding the pie
logrolling
non-specific compensation
bridging
cost cutting.
TWO TYPES OF NEGOTIATION
1] Distributive negotiations
2] Integrative negotiations
DISTRIBUTIVE NEGOTIATIONS
Often referred to as ‘fixed pie’.
Usually involves people who have never had a
previous interactive relationship nor are they likely
to do so again in the future.
Example: purchasing houses or cars
Ours and their interest are usually self serving
INTEGRATIVE NEGOTIATION
The process usually involves making value for value
concessions in conjunction with creative problem
solving
Form a long term relationship for mutual gain
Often described as a ‘win - win’ scenario
FACTORS IMPACTING ON MEETING CLIMATE
Balance of power
Culture and reputation
Expectations
Size of the deal and significance of outcome
Timing
Location and environment
Team dynamics
Relational or ‘one-off’ situation.
COMMUNICATION TECHNIQUES
Open questions to gain information
Leading questions to anticipate answers
Un-emotive or cool questions
Planned questions
Window questions to gain insight
Directive questions to get specific information
Gauging questions to test reaction
What techniques have you found useful?
POWER BASES (LEWICKI ET AL 1997]
Negotiators can gain power from any social variable in the
situation, including:
cultural differences
ideologies and beliefs
institutional norms
relationships
language and semantics.
INFLUENCING STYLES AND TACTICS
Using expert knowledge
Applying logic and reason
Selling the benefits
Personal appeal!
Coalition
Manoeuvring
Coercing.
NEGOTIATION STRATEGIES
Collaborate
Compete
Accommodate
Avoid Compromise.
Based on Ruble and Thomas 1976.
5 MAIN PERSUASION METHODS
Compromise
Bargaining
Logic
Threat
Emotion.
NEGOTIATION TACTICS
Distributive meetings:
find out the other party’s resistance points
managing others’ perceptions of you
controlling others’ impressions of your position
exaggerate your ‘fear of failure’
may play good cop/bad cop.
INITIAL STAGES
Plan thoroughly
Organise the issues
Focus on mutual principles and concerns
Be aware that the first offer is often above
expectations
Focus on long term goals and consequences
MIDDLE STAGES
Revise strategies
Consider other options
Increase power by getting the other side to commit first
Add credibility by getting agreements in writing
To get through dead ends – set it aside temporarily
When asked for a concession – ask for a trade off
ENDING STAGES
Counter a persistent negotiator by with drawing an
offer
Do not expect verbal promises to be adhered to
Congratulate the other side!
OBSTACLES TO NEGOTIATION
Sometimes people fail to negotiate because they
fail to see that they are in a negotiating position
Or they may recognise the need for bargaining but
negotiate poorly because they do not understand
fully the process and lack good negotiation skills
THEREFORE
Parties must be aware of their alternatives to a
negotiated settlement
Weaker parties must feel assured that they will not
be overpowered in a negotiation
Parties must trust that their needs and interests will
be fairly considered in the negotiation process.
PREPARATION FOR NEGOTIATIONS
Purpose
 What you want to get out of the negotiation
 What you think the other person wants
 What you and the other person have that can be traded
for the purpose of negotiation.
 What do you each have that the other wants?
 What are you each comfortable giving away?
 If you don’t reach agreement with the other person, what
alternatives do you have?
 Are these good or bad?
 How much does it matter if you don’t reach agreement?
 Does failure to reach agreement cut you out of future
opportunities?
 What alternatives the other person might have?
What is the history of the relationship?
 Could or should this history impact the negotiation?
 Will there be any hidden issues that may influence the
negotiation?
 How will you handle these?
 What outcome will people be expecting from the
negotiation?
 What has the outcome been in the past, and what
precedents have been set?
 What are the consequences for you of winning or losing
this negotiation?
 What are the consequences for the other person?
 Who has what power in the relationship?
 Who controls resources?
 Who stands to lose the most if agreement isn’t reached?
 What power does the other person have to deliver what
you hope for?
POST-NEGOTIATION PHASE
Evaluate outcome achieved against aims and objectives
Review outcome achieved Analyse individual and team
performance
Compose a ‘lessons learnt’ document to inform the future
Enable authorised others to access the results of your evaluation for
their own purposes.