Boland1
AUTONOMOUS
GROUP
LEARNING
Dr. Bob Boland
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AGL 20 – NEGOTIATION
DRAFT FOR TESTING 12.1212
DAILY WORK PACK - PART I
(Not retained)
UNIT I OF IV
Copyright: RGAB 2012/1
No copies of without written permission.
S3 ASSIGNMENT 1.0 - INTRODUCTION
(30 minutes)
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1.1
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The program provides members with the opportunity to use negotiation techniques and
skills so that they become more complete managers.
SPECIFIC OBJECTIVES
The specific learning objectives are to:
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To analyze and practice the negotiation process to achieve goals
To evaluate the impact of culture on negotiation.
To practice international negotiation communication skills.
To develop skills in achieving negotiation strategy.
To motivate further study in the future.
1.0 - INTRODUCTION
• The syllabus of the program includes: negotiation
strategy and planning, pre-negotiation, initiating,
negotiating prices, closing, and undertaking renegotiation.
• It deals with BATNA (best alternative), verbal and
body language in different cultures, environment, and
other negotiation factors including: miscommunication, instability and change, government
impact, licencing, external shareholders, ideological
and cultural differences, management of conversation
etc.
S2 ABBREVIATIONS
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IND
SG
CSG
MG
ASS
PL
L
D
LRT
CAI
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INDIVIDUAL
S MALL GROUP
COMBINED SMALL GROUP
MAIN GROUP
ACCOUNTING STEP BY STEP
PROGRAM LEARNING
LECTURE
DISCUSSION
LEARNING RECALL TAPE
COMPUTER ASSISTED INSTRUCTION
S5 1.2 AUTOMATED GROUP
LEARNING (AGL)
• The AGL method is designed to achieve rapid
individual learning using special materials and
the stimulus of group activity without a formal
instructor.
• The groups use the materials to find the
answers to all problems and questions.
S6 1.3 GROUP ARRANGEMENTS
• The work will be done:
• IND -
Individually, or
• SG -
Small Groups which will change daily, or
• CSG - Combined Small Groups (two small groups
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together),
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• MG - Main Group (for short taped lectures on key learning
points with visual aids).
S7 1.4 SG - SMALL GROUPS
• Group names provided on the flip charts.
• Please note the name of your SG and names of the
other members.
S8 1.5 LEARNING MATERIALS
• (a) Retained by members
Textbook
Harvard – Notes
Notebook - for recording every key point
Daily Course Diary
Learning Recall Tape
Articles (2)
• (b) Used by not retained by members:
Daily work packs including: introduction, lectures,
cases, exercises and key learning points
S9 1.5 LEARNING MATERIALS
(continued)
• Use your notebook. Do not mark the Daily
Workpack which must be handed back at the
end of each day.
• You receive all the materials in your SG.
• Don't look ahead in the workpack until you are
specifically asked to do so!
S10
1.6 METHOD
• Try to complete every task in the time allowed.
• A pattern of learning methods will be used
including:
– Case analysis
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Lectures
Quizzes
Learning patterns
Homework reading
Learning Recall Tape (LRT)
CAI
S11 1.7 LEARNING PATTERNS - REVIEW
1. Objectives
Language
Practice
Analysis
Intuition
Concepts
Batna
KSA
CONFIDENCE
S12 1.7 LEARNING PATTERNS - REVIEW
2. Learning
Continuous activity
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IND SG CSG MG
S14 1.8 INSTRUCTIONS (15 minutes)
• Assemble in SG's to introduce yourself, indicate
your past experience in finance and what you
hope to contribute to and gain from the course.
• Complete the registration sheet in the Daily
Course Diary.
• NOTE: Please check that you have a full set of
learning materials now.
S15 ASSIGNMENT 2.0 - QUIZ
(45 minutes)
• 2.1 INSTRUCTIONS SMALL GROUP WORK
• Assemble in SG
• Answer the quiz of 80 questions; mark your answers a,
b, c, or d with a clear "x" on the special form provided in
the course diary
• Work as quickly as possible but don't guess - leave
blanks. Hand in your answer sheet to the Organizer
• Reassemble in MG when the bell rings
ASSIGNMENT 4.0 - LECTURE ON THE
NEGOTIATION PROCESS
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4.1 METHOD
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4.2 OBJECTIVES
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Read aloud, listen and respond verbally to any questions.
The key negotiation objective is to achieve win-win goals for both parties which
establish trust for both a short and long term relationship.
The six P’s of effective negotiation are : Parties, Process, Power, Product, Problem
and Prognosis (outcome).
The negotiation process includes: pre-negotiation planning, initiating first moves,
reactions, concessions, creating value, resolving disputes, finding agreement, and
closing the negotiation, In 2012 we must also plan for re-negotiation later as new
issues appear..
4.3 INFRASTRUCTURE
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Before proceeding to negotiation assess the current status of the parties, establish
BATNA and agree upon infrastructure.
The current status is assessed using SWOT – Strengths, Weaknesses, Opportunities
and Threats, to develop a negotiation strategy.
The negotiation environment may involve such complex factors as: power,
instability, change, government control and policy, foreign exchange , political
and legal change, external stockholders and parties, ideological and cultural
differences.
The negotiation setting includes: levels of conflict, underlying potential
negotiations, relationships before and during negotiation, desired outcomes,
stockholder impacts, relative bargaining power, dependence and finally the
negotiation style.
4.4 PLANNING & BATNA
• ATNA is the concept of : Best AlternaTive. BATNA with No Agreement.
BATNA! It is available when negotiation fails. We either close the deal
or walk away.
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• BATNA both involves many factors : cash, culture, deadlines, interests,
knowledge, and both party experience. We must assess our outset
BATNA estimate the opposing BATNA.
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• Negotiation begins with pre-negotiation planning where each party,
starting with a different viewpoint, sets its minimum hopes to achieve.
There is a continuing need for clarification, comprehension and credibility,
in order to plan for creation of mutual value.
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• As negotiation continues the parties reach convergence of views, as
discussions, lead to concessions, counter proposals and commitment and
the final stage of conclusion.
4.5 GETTING INTO NEGOTIATION
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For efficient and effective negotiation: avoid conflict, controversy and criticism of
the other party; develop attitude of: communication, collaboration and
cooperation; seek goals of: continuity, coherence, consensus, commitment and
compensation.
In different economic, social and cultural environments, introduce options with
an open mind for a cooperative relationship. Smooth negotiations leave the
impression that ideas have indeed come from both sides.
The goal is mutually beneficial agreement by both parties, leading to reliable long
run results and repeat business. Focus on the common interests of both parties,
and then refocus, on the needs of each party.
Whether the objective is securing an order, appointment of a new agent, a joint
venture, purchase or sale etc. etc., the key aim is to create a shared investment in
a common future relationship, as a negotiated agreement which is DPS - doable,
profitable and sustainable.
4.6
INITIATING
• The initial offer should be confident with flexibility to enable the
negotiator to learn the other party objectives and reformulate to meet
specific needs. The initial phase is the opportunity to create trust and
exchange strategic information, and is not the time to make concessions.
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• Making the first moved is critical, because first impressions may be
difficult, but not impossible, to change. An initial first competitive offer
should meet the context of the location, culture, language and setting, for
a surrounding discussion. It must be defended with valid arguments.
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• In general, do not make concessions immediately. They may not be
valued. Ask questions and listen actively with patience. Anticipate typical
objections with prepared replies in advance, before meeting the other
party. Listening not talking is the key to success.
4.6
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INITIATING
The crucial initial phase is helped by: knowledge of the market, assessment of the competition
and understanding the other party’s needs. Thus an opening offer may shape the negotiation
outcome, because a good outset impression is critical.
In competitive markets, a higher initial offer may be lowered. In traditional less competitive
markets, offers on the high side with concessions may be more acceptable.
For the buyer, in this initial phase, he keeps his goals in mind and is ready to say no; he may refer to
competition; he may seek concessions or a better offer; or he may ask whether the proposal really
achieves his needs.
For the seller, this initial offer helps to investigates buyer goals, key objectives, and values.
Proposals of tangible and non-tangible benefits are critically important, and can ensure that the
offer is DPS - do-able, profitable and sustainable.
For both parties this initial stage is the time to reflect cooperation.
4.7 PRICE NEGOTIATION
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Price may or may not be the critical factor! Price determines the total revenue and
profitability of the business by considering: objectives, cost, competition,
customer and government regulations.
Price negotiations may follow a cost or market approach. The cost approach is
computed as relevant costs and markup to determine the price. The market
approach examines price setting from the customer’s viewpoint.Additional factors:
transport, customs and currency risk are relevant.
Effective pricing requires an action plan to meet buyer wants, and ability to pay,
and his objections to the initially quoted price. This requires response to
objections, and counter proposals.
Need to highlight the business and product attributes, maintain flexibility and
differentiate from the competition. To achieve closing, the factors of reliability,
reputation and financial stability may be critical.
4.8 THE NEW NEGOTIATION WORLD
OF THE INTERNET
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Internet negotiation is the new world of 2012! National and international business negotiation may
be completely restructured by internet unlimited resources and availability.
Potential of Internet? More power and unlimited information to buyers and sellers … and
criminals!!! Greater opportunities for suppliers and exporters world wide.
Internet negotiations are competitive, impersonal, and adversarial with frequent business failures.
Greater competition, price pressure, high client turnover and unpredictable market conditions.
Problem? Can we believe internet data? High potential for crime and corruption!
Internet is best for negotiating repeat business and confirming orders, initiating trade leads, testing
markets, clarifying data, offering after sales service, shipping ands delivery data, communication
with existing customers, checking competition, and …preparing for reliable face to face negotiation
for SIGNIFICANT CONTRACTS (coconuts not peanuts).
Effective “negotiation requires: security, trust, audit and continual re-verification to avoid crime
and corruption! See the video “INSIDE JOB” for the potential of internet fraud! (20 trillion dollars
US in 2009).
4.9 OVERALL
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The six P’s of effective negotiation are : Parties, Process, Power, Product, Problem
and Prognosis (outcome).
The key objective is achieving a long term relationship of trust for mutual benefit
and a “win-win” outcome.
BATNA is the alternative for a failed negotiation.
Much depends upon the negotiation: environment, process and the setting,
which can be managed!! Internet is changing everything.
Success in business success negotiation may well depend upon many factors:
Knowing our product, our customer and our competition.
Effective business decision making.
4.9 OVERALL
• Finding our market niche with quality products.
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• Creating diversity and finding expanding markets.
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• Network contacts; trust and honesty; control of cash,
outcomes and risk; diffusing tension; customer loyalty.
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• Creativity in our skills of negotiation … so many things to
learn … now !
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• Study Exhibit A - The Effective Negotiator and Exhibit B –
Negotiation Mistakes
EXHIBIT A - THE EFFECTIVE
NEGOTIATOR
• Are you an effective negotiator? Test yourself
now 20 questions. Total 100 points? Your
score for each 0 (poor) -5 (good).
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• Test yourself now and again at the end of the
AGL and one month later.
EXHIBIT B – NEGOTIATION MISTAKES
• Neglecting the other side’s problem
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• Example: If you don’t understand the deal from the other side’s
perspective, you can’t solve his problem or yours.
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• Your gain isn’t necessarily your opponent’s loss.
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• Searching too hard for common ground
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• Neglecting BATNA
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• Example: A company hoped to sell a struggling division for $7 million.
• It had two fiercely competitive bidders, speculating each might pay an
inflated price to trump the other. The division’s was sold for $45 million.
EXHIBIT B – NEGOTIATION MISTAKES
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Failing to correct for skewed vision
Solving the wrong negotiation problem
Need to understand the problem from the other side’s perspective.
Failing to create and claim value for the long term
If you want to change someone’s mind, first learn where his mind is.
Letting price bulldoze other Interests
Forgetting the: relationship, social contract, process and
interests of all the other players.
Letting positions drive out our Interests
4.10 LEARNING PATTERNS - REVIEW
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NEGOTIATION
Parties
Process
Power
Product
Problems
Prognosis
(outcome)
4.11 INSTRUCTIONS (10 MINUTES)
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Reassemble in SG
Study the lecture carefully
Record key points in your notebook
See the Glossary. Discuss outstanding questions
When the bell rings, carry on with the case study which follows
ASSIGNMENT 5.0 CASE STUDY –
MULTINET (120 MINUTES)
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Adapted case purchased from Harvard Pond Clearing House
51. INSTRUCTIONS
SG: Read the case and study it carefully. Identify the key problems. Answer all the
questions on the SG flip chart provided (20 minutes).
NEW SG - one side only Arnold or Boyd. READ ONLY YOUR PNE
CONFIDENTIAL NOTE. Plan your pre-negotiation strategy (20 minutes).
Break into 1:1. and negotiate an agreement (30 minutes).
CSG - for debriefing discussion questions (20 minutes)
MG - for the lecture on the case and discuss the ideas in the Guide (20 minutes).
MG - List learning points on the flip chart (10 minutes).
AGL 20 - NEGOTIATION
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DAILY WORK PACK - PART I
(Not retained)
UNIT II OF IV
ASSIGNMENT 7.0 - STUDY CULTURE
(45 MINUTES)
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7.1 INSTRUCTIONS - INDIVIDUAL AND SG WORK
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(a)
Re-assemble in SG
(b)
Study the lecture and discuss in SG.
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Record significant points on the flip chart.
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Review the glossary and text or any difficulties with new words
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Record significant points in your notebook
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Reassemble in MG when the bell rings
ASSIGNMENT 8.0 - LECTURE –
CULTURE (15 MINUTES)
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Read aloud, listen and respond verbally to any questions.
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8.2 FOUR KEY CULTURAL FACTORS
• In negotiation communication, four cultural factors are
important: cultural spoken language, cultural body
language, cultural timing and cultural attitudes.
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• In translation many complex meanings are lost. The spoken
word has so many different cultural interpretations, based
on volume, tone, speed etc. Refusal may be concealed
because it is impolite e.g. in Japanese: “difficult: or “need
to study that” … may actually mean “No!!! Definitely not!!”
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• Body language also has so many different cultural meanings
e.g. a New York heavy handshake may make Asians feel
very uncomfortable.
8.2 FOUR KEY CULTURAL FACTORS
• Even colours make a difference. Red in China signifies joy but a
white present signifies calamity. ”Punctuality” can mean on time or
only an hour late.
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• Contract language may cause hidden cultural undisclosed (loss of
face) confusion. Sometimes binding contracts with unfair terms may
be “culturally accepted” for later re-negotiation e.g. in Australia a
contract is binding … but not in Asia.
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• All the stakeholders (shareholders, unions, employees, customers,
suppliers,
• chambers of commerce etc.) may have different cultures, personal
values, agendas and the powers to influence a negotiation.
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8.3 CROSS BORDER CULTURES
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Across cultural borders, negotiating styles vary so much. Thus the selection of
negotiators affects the values of: truth, honesty, trust, time, risk and group
versus individual emphasis..
Cross cultural negotiations need cultural knowledge, traditions, etiquette and
acceptable processes. Required protocols may include: dress, behavior
greetings, formalities, touching, eye contact, emotion, silence, eating, body
language, and punctuality etc.
And above all we need to know the key players well, so that informal
influences may be activated, and so that the form of agreement structure
includes relevant authority, which makes it possible to really commit and really
take the cultural risk of compliance or non-compliance.
8.4 SELECTING A NEGOTIATION
STYLE
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• Need to know your personal style and the style of the other
party. Need to adjust our style to match and ensure smooth
negotiation.
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• Need to recognize many different styles including: dodgers,
dreamers, hagglers, competitors and creative problem
solvers. The latter can best meet the needs of both
parties, even when combined with a little competitive or
dreamer style.
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• Need to select the style to meet: time, task, relationships
and cultural values.
8.5 CULTURAL PRE-NEGOTIATION
PLANNING
The actual negotiation interaction between the two parties, is only one
phase of negotiation.
• The key element is planning and pre-negotiation preparation ,
which must never be neglected.
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• Parties all have relative particular cultural strengths and
weaknesses, and thus must work hard to achieve goals. Preparation
is always the best investment!
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• Pre-negotiation planning requires us to define cultural issues, know
the other side, know the competition and to know the negotiation
limits, often defined by our BATNA, which is the standard against
which our negotiated agreement can be evaluated
8.6 OVERALL
• Cultural understanding, cultural negotiation style and prenegotiation planning are essential for efficient (doing things
right) and effective (doing the right things) negotiation, to
overcome cultural difficulties.
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• Study and absorb Exhibit A – Deeper Cultural Characteristics
and Exhibit B Instinctive Negotiator Reactions
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• Be sure to absorb the list of cultural trend challenges in the
Diary … tonight..
EXHIBIT A - DEEPER CULTURAL
CHARACTERISTICS
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Relationships – is the deal or the relationship more important?
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Note:
Non verbal: eye contact, pupil contraction or dilation, facial expression, odor,
color, hand gestures, body movement, proximity and use of space –
communicating subconsciously all the time.
Verbal: always make the effort to greet and briefly chat in the other party’s
language
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Communication – direct with high context, or indirect with low context?
Time – Culture monochromic (time counts) or polychromic (time irrelevant)
Space – prefer much space or be comfortable with less?
Culture – verbal or non verbal?
EXHIBIT B: INSTINCTIVE NEGOTIATOR
REACTIONS
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Some realities to absorb now:
Negotiations fail by distortions of perception, and negative
behaviour.
Pressure leads to misinterpretation of agreement.
Initial distortions can be corrected.
Never ask about the other party’s thoughts. Ask how we
can present the convincing facts.
Perception depends upon: stimulus, attention, recognition,
translation and behaviour.
EXHIBIT B: INSTINCTIVE NEGOTIATOR
REACTIONS
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All negotiations are different.
Frames may be helpful to reduce disputes.
The target point is the first offer quoted.
Convince the other party to have modest
reactions,
Too much data may present a dilemma of
honesty.
EXHIBIT B: INSTINCTIVE NEGOTIATOR
REACTIONS
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Conflict is not helpful for sustainable relationships.
Multiparty negotiations present more issues,
personal priorities and need for a new process.
The three stages of multi party negotiations are …?
Ideo-syncratic (rational) deals are harder in big
organizations, so never concede on substantial
relationship issues.
Reward and punishment should not
become a repeated tactic
EXHIBIT B: INSTINCTIVE NEGOTIATOR
REACTIONS
• An occasional bluff is still ethical.
• Judge tactics by the ethical long term results.
• Unitarian - equal power for all. Not pluralistic,
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idealistic or seductive.
• Words only signal a position they do not predict
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• The zero-sum game is “distributive” (only one
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side wins).
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EXHIBIT B: INSTINCTIVE NEGOTIATOR
REACTIONS
• Long standing influence is relative to
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bargaining power.
• Reactive strategies encourage more flexibility
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and creativity.
• The endowment (superior give away) effect is
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less, with a strictly objective reaction and
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viewpoint.
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8.7 LEARNING PATTERNS - REVIEW
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CULTURE
TRADITIONS
• PROTOCOLS
STYLE
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COMMUNICATION
• BODY LANGUAGE RISK VALUES
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HIDDEN EMOTIONS
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8.8 INSTRUCTIONS (10 MINUTES)
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Reassemble in SG
Study the lecture carefully
Record key points in your notebook
Discuss outstanding questions
When the bell rings, carry on with the case study which
follows
Assignment 9.0
RICHMOND HOUSE (120 minutes)
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Adapted case purchased from Harvard Pond Clearing House
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9.1 INSTRUCTIONS ON THE CASE
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SG: Read the case and study it carefully. Identify the key problems. Answer all the
questions on the SG flip chart provided (20 minutes).
NEW SG - one side only. Plan your pre- negotiation strategy (20 minutes).
Break into 2:2 and negotiate an agreement (30 minutes).
CSG - for debriefing discussion questions (20 minutes)
MG - for the lecture on the case and discuss the ideas in the Guide (20 minutes).
MG - List learning points on the flip chart (10 minutes).
ASSIGNMENT 11.0 - SUMMARY
LECTURE FOR PART 1 (IN DIARY
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NOTE OF APPRECIATION
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Thank you for working so hard today.
Important homework tonight.
We hope the AGL experience is "efficient" (doing things right) and
"effective" (doing the right things) and that it is rewarding for you.
From tomorrow ... it's downhill all the way ...
DAILY WORK PACK - PART II
(Not retained)
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UNIT III OF IV
Cases purchased and to be handed out by the Organizer:
Harvard Pond Copyright:
Multimode, Fish Pond, GE International
HBS & Thunderbird Copyright:
Quick Drying Paint Licensing Negotiation
ASSIGNMENT 1.0 REVIEW AND
SHORT QUIZ (45 MINUTES)
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1.1
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Assemble in new SG
INSTRUCTIONS
Discuss outstanding questions from Part I
Answer questions 40-50 in the Guide
Then do the special speed communication test (Exhibit A).
Then quickly resolve the cases (Exhibit B) on the flip chart.
Reassemble in MG when the bell rings
EXHIBIT A - Assignment 1. 1
• SPECIAL SPEED COMMUNICATION TEST
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• Take a clean sheet of paper. You must
complete this test in less than TWO MINUTES.
Now begin the test – the Workpack.
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ASSIGNMENT 2.0 STUDY COMMUNICATION (75 MINUTES)
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2.1 INSTRUCTIONS
Re-assemble in new SG
Study the lecture and discuss in SG.
Record significant points on the flip chart.
Review the glossary for any difficulties with new words
Record significant points in your notebook
Reassemble in MG when the bell rings
ASSIGNMENT 3.0 - LECTURE COMMUNICATION (30 MINUTES)
• 3.1 SKILLS
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• To negotiate we must communicate at both a rational and an
emotional level. This is very complex when the parties belong to
different cultures, even when speaking in “the same” language
…which is never the same!
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• Cross cultural communication leads to abnormal perceptual bias
e.g. attaching various meanings to the same message, due to
irrational commitment, faulty standards and even assuming zerosum game.
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• Overcome such problems by: listening, questioning, delay, reversing
roles, and thus insuring a clearer … not perfect understandin
3.1 SKILLS
• Use both passive listening (acknowledging the sender) and also
active listening (asking relevant questions, to get valuable
information). Questions may be open-ended or probing conditional
questions, depending on the need.
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• “Reversing party roles” is a useful technique for critically examining
key aspects of the negotiation, and better understanding the other
party. The keys are: restating, rephrasing, reframing and
summarizing.
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• Nonverbal communication is critically important. Even when not
speaking we communicate with facial expression, use of time and
space, touching objects, artifacts
3.1 SKILLS
• Thus we are continually sending messages to the other
party. Need to control our own body language to send the
right messages!!
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• Finally at a verbal level with different languages, perhaps
better need to communicate with qualified interpreters e.g.
• Shell Oil case of English negotiation in Algeria, where the
Algerians chatted informally in Arabic without realizing
that the Shell European passively understood everything
He later became chairman of Shell International!
3.2 POWER IN COMMUNICATION
• Think of power in terms of: personal power,
negotiating power and using power
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• Power comes from preparing well, negotiation
know-how, with ever improving
communication skills and above all … learning
from past mistakes.
3.2 POWER IN COMMUNICATION
• After each negotiation ask:
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Outcome OK? No? Why?
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Preparation OK?
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Understanding needs of other party?
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Who talked the most?
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Who asked the most questions?
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Who explored new options and expanded range of issues?
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Made too many concessions?
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Time well managed?
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Too emotional?
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What to do differently next time?
3.2 POWER IN COMMUNICATION
• Communication with confidence from good preparation can achieve
superior outcomes, because it provides power for negotiation
leverage. Better be over than under-prepared.
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• Need to apply a variety of strategies and tactics while the parties
are still very sensitive in making decisions. Variety gives power
leverage.
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• Successful power management with communicating, human and
decision making skills, can achieve long lasting outcomes. The
target is Win- win for mutual benefit.
3.3 COMMUNICATION AND THE GENDER
DIVIDE – WSM?
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Do men get a better deal from negotiation than women? It all depends? Chance
favours the prepared mind. Perhaps women prepare better? WSM?
In 2012 men negotiators must be increasingly interactive with women in more senior
positions. Overcoming the gender divide is a mutual problem.
Women may do as well as men or even better, with their natural ability to listen,
read non verbal signs, consult others and adopt cooperative moves.
Women overcome misunderstanding by discovering personal underlying interests to
establish trust credibility and social harmony.
Perhaps WSM – women are superior to men ... but in some cultures they are
not yet accepted for negotiation. Not yet… but in the future … with internet and the
web?
3.4 COMMUNICATION BETWEEN SMALL WITH
LARGE ENTERPRISES
• Being big is no good if the big foundation is weak. Hence in 2012 large
firms form alliances with so many smaller outside suppliers to get with
more favourable agreements.
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• Small companies benefit from the relationship opportunities of
subcontracting and even outsourcing with major enterprises. Thus links
with international companies give prestige and a trust symbol for new
international trade opportunities, especially with the internet.
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• Need for a key strategy to avoid pitfalls and negotiate more effectively
with a large enterprise. Best achieved when we get to know well the
specific managers in the major enterprise, who have the power and
authority to decide..
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3.5 OVERALL
• Communication must follow a structure (Exhibit A) with
verbal, body and emotional techniques. Watch the other
party … and watch yourself too!
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• Communication on price may be the most challenging
(Exhibit B)
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• The key negotiation objective is to achieve goals with a
win-win decision, which creates trust for both short term
and long term cooperative relationships.
EXHIBIT A - COMMUNICATION - IN
THE STAGES OF NEGOTIATION
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Opening phase:
Make first offer, offer rejected, what problems?
Exchange of information:
Some information given, more provided, negotiation, to confirm understanding,
confirmation received
Concessions:
Counter offer on new information, concessions, offer partly accepted, more
concessions, new offer, acceptance received , final agreement proposed.
Note: Never skip the first key exchange session!
EXHIBIT B - COMMUNICATION - PRICE
ALTERNATTIVES
To meet price objections, some suppliers artificially inflate other
price quotations, to enable them to appear to give price
concessions in the opening of the negotiation without taking any
financial risk.
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• The danger is that it immediately directs the discussion to pricing
issues at the expense of other important components of the
marketing mix. Tangible and intangible factors may be more
important than price.
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• Generally, such initial price concessions are followed by more
demands from the buyer that can further reduce the profitability of
the transaction.
EXHIBIT B - COMMUNICATION - PRICE
ALTERNATTIVES
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Buyer may press for concessions on:
• Quantity discounts
• Discounts for repeat orders
• Improved packaging and labelling (for the
same price)
• Tighter delivery deadlines, to increase
production and transportation costs
• Free training of staff on the import regulations.
• Free after-sales servicing
EXHIBIT B - COMMUNICATION - PRICE
ALTERNATTIVES
• Supply of free parts to replace those damaged
from normal wear and tear
• Free training of staff on maintenance and use
of equipment
• Market exclusivity Higher commission rates
• Better credit and payment terms
• A long-term agency agreement
3.6 LEARNING PATTERNS - REVIEW
Communication
Rational Emotional
Verbal Body
Subconscious
Skills Power
Mis-communication
WSM?
3.7 INSTRUCTIONS (10 MINUTES)
• Reassemble in SG
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• Study the lecture carefully and record key points in your
notebook
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• Discuss outstanding questions
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• When the bell rings continue with the case study which
follows.
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ASSIGNMENT 4.0 CASE - QUICK
DRYING (90 PLUS MINUTES)
Adapted case purchased from Harvard HBS Clearing House
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4.1 INSTRUCTIONS
CSG - Study the story of the case. (Exhibit S) Discuss and record answer to the
questions (Exhibit B) on the flip chart. Get a picture of what has happened.
Don't miss the obvious things. Determine the key issues.(10 minutes)
SG - Choose Sam or Carlos
SG - Preparation of the same role (10 minutes)
Pairs - Negotiation 1:1 (30 minutes)
CSG - De-briefing discussion (15 minutes)
MG – Lecture discussion with the Guide. (20) minutes)
Listing of 10 learning points on the flip chart. (5 minutes)
AGL 20 NEGOTIATION
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UNIT IV OF IV
ASSIGNMENT 6.0 - BILL BROWN
(30 MINUTES)
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6.1 INSTRUCTIONS
Reassemble in SG
Do the case below. Then do questions 50-60 in the Guide. Check answers.
Choose five cases to be quickly resolved (Exhibit A).
Discuss and record learning points on the flip chart..
When the bell rings, stop for lunch!
ASSIGNMENT 7.0 STUDY - STRATEGY
(30 MINUTES)
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7.1 INSTRUCTIONS
Re-assemble in new SG
Study the lecture and discuss in SG.
Record significant points on the flip chart.
Review the glossary for any difficulties with new words
Record significant points in your notebook
Reassemble in MG when the bell rings
ASSIGNMENT 8.0 - LECTURE –
STRATEGY
• 8.1 DEVELOPING STRATEGY
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• Prepare a strategy based on your own company goals, but directly
related to the other party goals, position, strength, presence and
the competition.
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• Try to provide a mix of competitive and cooperatively strategies for
each negotiation to balance of strengths and weaknesses, short and
long term goals.
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• A competitive strategy makes high initial demands and shows
firmness and inflexibility. Never makes concessions easily. The
other party must concede.. A competitive (selfish) strategy is often
used in a deadlock with lack of trust. Fails to created harmony. Win
lose. Zero sum game! Not Win win!
8.1 - DEVELOPING STRATEGY
• By contrast seek cooperative strategies to produce win-win mutually
satisfying deals. Work together with trust to share information and
understanding and thus find creative solutions.
• There are always seven alternatives to every issue!!! Find them before
deciding. Enlarges outcomes to inspire both parties.
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• A cooperative strategy is tough when the other party seeks to maximize its
own interests. But prepare alternative strategies in advance, so that
other party does not treat your cooperation as weakness
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• Aspects of strategy include: setting the initial position, trading
concessions, supporting arguments, schedules, instructions etc. all to
achieve more than BATNA.
8.2 CLOSING THE NEGOTIATION
• Closing needs special skills and techniques with judgment of
knowing when to respond to the other party, and achieve
agreement that both parties can implement, smoothly in the short
and long term.
• Must always be realistic and practical. No dreams please!
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• Good negotiations based on trust and fair play, can lead to repeat
business and new referrals from others. It is expensive to find new
partners, so retain existing partners with win- win results.
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• With closing techniques, achieve agreement that both parties can
implement. smoothly short and long term.
8.3 RENEGOTIATION
• Nothing in business is definite. In 2012 with such dynamic economic
and political changes , it is too difficult to negotiate “static”
agreements that last for ever, without need for change.
• So accept re-negotiation willingly as norm for long lasting
relationships, always based on trust and creative alternatives!
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• Renegotiation may be rational (price offer) or emotional (style). It
is complex with different cultures. Accept difficult implementation
and renegotiation as normal in the changing business creative
world of 2012 …and even more - Expect it!
8.3 RENEGOTIATION
• Renegotiation can prove to be profitable in the long run,
despite temporary disadvantages. Contracts alone are now
no longer enough!
• Personal relationships PLUS mutual trust, are the keys to
building a solid long term foundation for resolving future
problems! Both parties must keep in mind the long term
benefits!
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• Strange as it may seem, experienced negotiators keep
negotiating even after reaching agreement, to ensure that
they satisfy customer needs and work together to resolve
new problems as they may arise.
8.3 RENEGOTIATION
• Re-negotiation is much less time consuming
and expensive than costly litigation, where
only the lawyers seem to be the ones that
always make money!
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• Experienced managers know that it is not a
contract that keeps business cooperation
going, but the strength of the relationship.
8.3 RENEGOTIATION
• In cross cultural communication, when not speaking,
concentrate carefully on your: appearance, facial
expression, use of time and space and touch … all of which
are sending messages from you to the other party!!!
• So control your own body language and send the right
messages.
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• Overall, control your buyer-seller relationship (Exhibit A)
and know your competitors (Exhibit B) with outstanding
cultural communication – KSA knowledge, skills and
attitudes! !
8.3 RENEGOTIATION
• Use passive listening – acknowledgement. Active
listening - relevant questions. to get valuable
information.
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• Use open-ended questions and probing conditional
questions, to get the relevant data to really understand
the position and constraints of the other party.
• Seek understanding with restating, rephrasing,
reframing and summarizing.
8.4 CULTURAL COMMUNICATION
• Communication always involves perceptual cultural bias
(attached meaning) and errors (irrational commitment).
• Overcome these problems by: powerful listening,
questioning, reversing roles and making the effort for a
clearer understanding.
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• Be skillful in using open-ended and probing conditional
questions, to get relevant data, and really understand the
position and constraints of the other party.
• Understanding comes with restating, rephrasing, reframing
and summarizing, with both verbal and body language.
8.5 OVERALL
• The key negotiation objective is to achieve
goals with a win-win decision, which creates
trust for both short term and long term
cooperative relationships.
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• Study Exhibit A Control of buyer- seller
relationship and Exhibit B Know your
competitors.
EXHIBIT A - CONTROL OF BUYER v
SELLER RELATIONSHIP
Price too high – quality and benefits?
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Competitor price lower – reliability & standards
Counter offer with discount wanted – offer only if something given in
return (e.g. transport)
This price is my last offer – avoid accepting, check quantities, repeat
orders, pay for storage, publicity, after sales services.
Product OK but price no! – agree to discuss costing, promote
benefits, reliability, timely delivery, unique design etc.,
Initial price accepted - why so interested, check costing, check
competition, contact other buyers, review price strategy
Accept the doubtful order only for only one period.
EXHIBIT B - KNOW YOUR
COMPETITORS
• Which are the three key competitors?
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• What is their performance in terms of sales, growth, market share
and profitability?
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• Are they satisfied with current performance?
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• What is new about their marketing strategy?
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• What new changes in product, price promotion and distribution?
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• Current and future prospects?
8.6 LEARNING PATTERNS
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STRATEGY
COMPETITION
COOPERATION
ALTERNATIVES
CONFIDENCE
CONTROL
BATNA
… MAKE IT GO BOTH WAYS
8.7 INSTRUCTIONS (10 MINUTES)
• Reassemble in SG
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• Study the lecture carefully and record key points in
your notebook
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• Discuss outstanding questions
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• When the bell rings continue with the case study which
follows.
ASSIGNMENT 9.0 CASE - THE GREAT
COMMUICATIONS (120 minutes)
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(Adapted case purchased from Harvard POND Clearing House)
9.1 INSTRUCTIONS
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SG - Study the story of the case. Record on the flip chart. Get a
picture of what has happened. Don't miss the obvious things.
Determine the key issues (20 minutes)
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10. 0 LECTURE ON THE CASE (IN GUIDE)
SG – Then choose GC or MSC
NEW SG – Pre-negotiation (20 minutes)
Pairs - Negotiation 1: 1 (20 minutes)
CSG - Debriefing (20 minutes)
CSG – Lecture discussion with case solution in the Guide. (20 minutes)
Listing of 10 learning points on the flip chart. (20 minutes)
11.0 - QUIZ (45 MINUTES)
11.1 INSTRUCTIONS
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Reassemble in SG
Do the quiz of 80 questions on the answer sheet in the diary
Check your answer with the organizer and resolve outstanding questions
Complete the first feedback form in the course diary and give it to the
organizer.
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• Reassemble in MG when the bell rings
FINAL NOTE
• 12.0 ASSIGNMENT - SUMMARY LECTURE FOR PART II (IN
DIARY)
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• This ends our AGL program; one of a six part series:
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• AGL 1 - Finance for Non-Financial Managers
• AGL 2 - Cost Control
• AGL 3 - Planning and Budgetary Control
• AGL 4 - Capital Investment Analysis
• AGL 10 - Management of Working Capital
• AGL 20 - Negotiation
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FINAL NOTE
• We hope it has inspired you to develop your skills by
practical application.
• You are now ready to study the whole course text book
which is excellent:
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• Practical Solutions to Global Business Negotiations
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(Cellich & Jain)
FINAL NOTE
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Thank you for your interest and hard work. Keep the glossary handy as a daily
reference for finance and other negotiations.
We hope that you have much enjoyed the AGL experience and that it motivates
you to read widely in negotiation and to continue your studies in the future. We
suggest The Economist (weekly) the WSJ (Wall Street Journal) every morning - as
good as an MBA!!!
Be sure to reinforce your learning, by completing the all the activities set out in
the Diary and with the LRT (Learning Recall Tape) routine, as explained by the
organizer.
In the month following completion of the program. Please send us the Final
Feedback Summary on day 28. We trust that you have found AGL to be both
"efficient" (doing things right) and "effective" (doing the right things).
Thank you for being a member of the program. RGAB
drbobboland@hotmail.com www.crelearning.com