UNIT 1

Negotiation – Definition, Meaning, Scope, Elements of Negotiation [Preparation,

DEFINITION
• In the words of Bill Scott," a negotiation is a form of meeting between two parties:
OUR PARTIES & OTHER PARTIES".
• According to J.A. Wall, "negotiation is a process in which two or more parties
exchange goods or services and attempt to agree on the exchange rate for them."
• Winston's Advanced Dictionary," the discussions & bargaining that goes on between
parties before a contract is settled or deal is agreed upon".

MEANING
Negotiation is a strategic discussion between two parties to resolve an issue that both find
acceptable. Negotiations occur between buyers and sellers, employers and prospective
employees, or the governments of two or more countries.

NATURE/ SCOPE
Negotiation is the process of bargaining, where two parties, trying to reach an agreement on
mutually accepted terms to acquire each other’s wants. Example: Customer trying to negotiate
with buyer over a price of a product and Negotiation for salary between employee & employer.
It requires involvement of two parties
Negotiation by its very nature requires the involvement of at least two parties. These parties
typically have different interests, needs, or goals, which they aim to achieve through the
negotiation process. The involvement of two parties creates a dynamic where each side seeks
to influence the other to achieve their desired outcome. Effective negotiation requires an
understanding of the interests, needs, and goals of both parties, as well as the ability to
communicate and persuade.
Requires flexibility
Flexibility is a crucial aspect of negotiation. It involves being open to different possibilities,
alternatives, and creative solutions. A flexible approach allows negotiators to adapt to changing
circumstances, new information, or unexpected obstacles. By being flexible, negotiators can
build trust, create opportunities for mutual benefit, and increase the chances of reaching a
successful agreement. Rigidity, on the other hand, can lead to impasse and conflict.
A process not an event
Negotiation is a process that involves a series of interactions, communications, and decisions.
It is not a one-time event, but rather a dynamic and iterative process that unfolds over time.
Effective negotiation requires patience, persistence, and a willingness to engage in ongoing
communication and problem-solving. By viewing negotiation as a process, parties can focus
on building relationships, creating value, and finding mutually beneficial solutions.
Needs effective communication
Effective communication is the foundation of successful negotiation. It involves actively
listening to the other party, clearly articulating one's own interests and needs, and responding
thoughtfully to questions and concerns. Effective communication helps to build trust, prevent
misunderstandings, and create a collaborative atmosphere. Negotiators must be able to
communicate effectively in order to exchange information, persuade, and reach a mutually
acceptable agreement.
Continuous process (i.e. between buyer & seller, employer & employee for wages, working
hours etc)
Negotiation is an ongoing process that occurs in various contexts, including business,
employment, and personal relationships. In many cases, negotiation is a continuous process
that involves regular communication and problem-solving. By recognizing negotiation as a
continuous process, parties can foster long-term relationships, build trust, and create value.
Win-win situation for parties involved
Effective negotiation aims to create a win-win situation for all parties involved. By focusing
on creating a win-win situation, negotiators can foster long-term relationships, build reputation,
and increase the chances of successful future negotiations.
PROCESS OF NEGOTIATION

OFFER: First proposal made by one party to another in the negotiation stage.
COUNTER OFFER: Offer made by second party to first party, or proposing their offer against
first party offer.
CONCESSION: Increase or decrease made in the offer or change in the idea.
COMPROMISE: Sacrifice made by both or one party.
AGREEMENT: Point where both parties agree, which is beneficial to both.
TYPES OF NEGOTIATION
Distributive Negotiation
Distributive negotiation involves a fixed pie, where one party's gain is the other party's loss.
It's a competitive approach, often used in sales, purchasing, and labour disputes.
Integrative Negotiation
Integrative negotiation involves finding mutually beneficial solutions that create value for both
parties. It's a collaborative approach, often used in business partnerships, joint ventures, and
conflict resolution.
Interest-Based Negotiation
Interest-based negotiation focuses on understanding the underlying interests, needs, and
concerns of each party. It's a problem-solving approach, often used in labour disputes, business
conflicts, and international diplomacy.
Multi-Party Negotiation
Multi-party negotiation involves negotiating with multiple parties, often with competing
interests. It's a complex approach, often used in international diplomacy, business partnerships,
and community development projects.
Crisis Negotiation
Crisis negotiation involves negotiating in high-pressure, high-stakes situations, often involving
conflict, hostage situations, or emergency response.
Virtual Negotiation
Virtual negotiation involves negotiating remotely, often using technology such as video
conferencing, email, or instant messaging. It requires effective communication, trust-building,
and adaptability.
ELEMENTS OF NEGOTIATION
1. PREPARATION
Defining Goals and Objectives
• Identifying your key interests and needs
• Determining your walk-away point (the point at which you would rather end the
negotiation than accept a particular offer)
• Establishing your target outcome
• Considering the long-term implications of the negotiation
Gathering Information about the Other Party
• Needs, interests, and goals
• Current situation and challenges
• Cultural and personal background
• Key stakeholders and decision-makers
Analyzing the situation involves assessing the
• Current state of the relationship
• Power dynamics and leverage
• Time constraints and deadlines
• Potential risks and obstacles
• Opportunities for creative solutions
• Identifying potential issues can help you prepare for common obstacles and develop
strategies to overcome them.
Developing a negotiation strategy involves deciding on
• Your overall approach (competitive, collaborative, or a combination)
• Your communication style and tone
• The order in which you'll discuss issues
• The concessions you're willing to make
• The tactics you'll use to persuade the other party
Anticipating the other party's needs and concerns involves putting yourself in their shoes
and considering
• Their goals and objectives
• Their fears and anxieties
• Their limitations and constraints
• Their potential objections and concerns
Preparing Alternative Solutions and Options
• Multiple proposals or offers
• Different pricing or packaging options
• Creative solutions that meet the other party's needs
• Contingency plans for potential obstacles or objections
2. DISCUSSION
Discussion is the initial stage of negotiation where parties engage in open communication to:
Establish a Rapport and Build Trust
Establishing a rapport and building trust involves creating a positive and respectful atmosphere,
where parties feel comfortable sharing information and working together. This can be achieved
by:
• Using active listening skills
• Showing genuine interest in the other party's needs and concerns
• Being transparent and honest
• Finding common ground or shared interests
• Using positive body language and tone of voice
Share Information and Perspectives
Sharing information and perspectives involves exchanging data, opinions, and experiences to
gain a deeper understanding of each other's needs and concerns. This can include:
• Providing background information on the issue or problem
• Sharing data, statistics, or expert opinions
• Discussing past experiences or successes
• Explaining one's own needs, goals, and limitations
• Asking open-ended questions to gather more information
Identify Common Goals and Interests
Identifying common goals and interests involves finding areas of agreement and shared
objectives. This can help build momentum and create a sense of collaboration. Common goals
and interests might include
• Shared values or principles
• Mutual benefits or advantages
• Common enemies or challenges
• Overlapping goals or objectives
• Shared resources or expertise
Discuss Expectations and Objectives
Discussing expectations and objectives involves clarifying what each party hopes to achieve
through the negotiation. This can help prevent misunderstandings and ensure that both parties
are working towards the same outcome. Expectations and objectives might include:
• Specific outcomes or results
• Timelines or deadlines
• Budgets or resource constraints
• Quality standards or performance metrics
• Future plans or expectations
Explore Potential Areas of Agreement and Disagreement
Exploring potential areas of agreement and disagreement involves identifying areas where the
parties may have differing opinions or interests. This can help parties anticipate and prepare
for potential conflicts, and find creative solutions to overcome them. Areas of agreement and
disagreement might include:
o Key issues or concerns
o Priorities or trade-offs
o Assumptions or biases
o Limitations or constraints
o Potential risks or opportunities
3. CLARIFICATION
Clarification involves ensuring that both parties have a clear understanding of each other's
needs, concerns, and expectations. It includes:
Asking Questions to Seek Clarification
Asking questions is a crucial aspect of clarification. It involves seeking more information to
ensure that both parties have a clear understanding of each other's needs, concerns, and
expectations. Types of questions to ask include:
- Open-ended questions to gather more information
- Closed-ended questions to confirm specific details
- Probing questions to seek additional clarification
- Reflective questions to ensure understanding
Providing Explanations and Justifications
Providing explanations and justifications involves sharing additional information to help the
other party understand one's needs, concerns, and expectations. This can include:
- Explaining the reasoning behind a particular request or proposal
- Providing data or evidence to support a claim
- Offering examples or anecdotes to illustrate a point
- Clarifying any misunderstandings or miscommunications
Confirming Understanding and Agreement
Confirming understanding and agreement involves verifying that both parties have a shared
understanding of the discussion and any agreements reached. This can be done by:
- Summarizing the key points discussed
- Confirming the terms of an agreement
- Ensuring that both parties are committed to the agreement
- Documenting the agreement in writing
Identifying and Addressing Potential Misunderstandings
Identifying and addressing potential misunderstandings involves anticipating and addressing
any areas of confusion or miscommunication. This can be done by:
- Asking clarifying questions
- Providing additional information or explanations
- Seeking feedback from the other party
- Addressing any concerns or issues raised by the other party
Ensuring Both Parties are on the Same Page
Ensuring both parties are on the same page involves verifying that both parties have a shared
understanding of the discussion, agreements, and next steps. This can be done by:
 - Reviewing the key points discussed
- Confirming the agreements reached
- Ensuring that both parties understand their roles and responsibilities
4. NEGOTIATION FOR WIN-WIN OUTCOME
Negotiation for a win-win outcome involves working together to find a mutually beneficial
solution. It requires:
Focusing on Interests Rather Than Positions
Focusing on interests rather than positions involves understanding the underlying needs,
desires, and concerns that drive each party's position. This requires:
- Asking open-ended questions to understand the other party's interests
- Sharing your own interests and needs
- Identifying common interests and goals
- Separating the people from the problem
Seeking Creative Solutions That Satisfy Both Parties' Needs
Seeking creative solutions involves thinking outside the box to find innovative solutions that
meet both parties' needs. This requires:
- Brainstorming and generating multiple options
- Evaluating and refining options
- Considering unconventional or non-traditional solutions
- Being open to new ideas and perspectives
Making Concessions and Finding Trade-Offs
Making concessions and finding trade-offs involves being flexible and willing to compromise.
This requires:
- Identifying areas where concessions can be made
- Evaluating the costs and benefits of concessions
- Finding trade-offs that satisfy both parties' needs
- Being transparent and open about concessions and trade-offs
Using Objective Criteria to Guide the Negotiation
Using objective criteria involves relying on facts, data, and expert opinions to guide the
negotiation. This requires:
- Gathering and sharing relevant data and information
- Using expert opinions and industry standards
- Focusing on objective criteria rather than emotions or personal biases
- Being transparent and open about the use of objective criteria
5. AGREEMENT
Summarizing the Terms and Conditions of the Agreement
- The scope of the agreement
 - The responsibilities of each party
- The timelines and deadlines
- The payment terms and conditions
- Any warranties or guarantees.
Ensuring Both Parties Understand and Accept the Agreement
- Confirming that both parties have a clear understanding of the terms and
conditions
- Addressing any questions or concerns
- Ensuring that both parties are comfortable with the agreement
- Obtaining explicit acceptance of the agreement
Addressing Any Remaining Concerns or Issues
- Identifying any outstanding concerns or issues
- Discussing and resolving these concerns
- Making any necessary adjustments to the agreement
- Ensuring that both parties are satisfied with the resolution
Finalizing the Agreement and Confirming the Terms
- Confirming the terms and conditions of the agreement
- Ensuring that both parties understand their obligations
- Establishing a clear plan for implementation
- Confirming the timelines and deadlines
Documenting the Agreement in a Written Contract or Agreement
- Putting the agreement in writing
- Ensuring that the document is clear and concise
- Including all the necessary terms and conditions
- Having both parties sign the document
6. IMPLEMENTATION AND COURSE CORRECTION
Implementation involves putting the agreement into action. It requires:
Monitoring Progress and Performance
- Tracking key performance indicators
- Regularly reviewing progress against milestones and deadlines
- Identifying any deviations or variances from the plan
- Gathering feedback from stakeholders and parties involved
Making Adjustments and Corrections as Needed
- Identifying areas where adjustments are needed
- Evaluating options and developing a plan for adjustments
- Implementing the adjustments and monitoring their effectiveness
- Communicating changes to stakeholders and parties involved
Ensuring Both Parties Are Meeting Their Obligations
- Regularly reviewing the agreement and ensuring compliance
- Monitoring performance and progress against milestones and deadlines
- Addressing any issues or concerns related to non-compliance
- Encouraging open communication and collaboration between parties
Reviewing And Revising the Agreement as Necessary
- Regularly reviewing the agreement to ensure it remains relevant and effective
- Identifying areas where revisions are needed
- Collaborating with parties involved to develop revisions
- Documenting and communicating changes to stakeholders and parties involved
DIFFERENCE BETWEEN NEGOTIATION AND OTHER SOCIAL INTERACTIONS
While both involve interacting with others, "negotiation" is a focused process where
individuals with potentially conflicting interests aim to reach a mutually agreeable outcome,
often involving compromise, whereas "social interaction" is a broader term encompassing any
kind of interaction with others, including casual conversation, building relationships, and
simply exchanging pleasantries, with the primary goal of maintaining social connections rather
than achieving a specific agreement.
1. Purpose: Negotiation is goal-oriented, while social interaction is focused on relationship-
building.
2. Tone: Negotiation can be formal and serious, while social interaction is often informal and
light hearted.
3. Communication style: Negotiation requires strategic communication, while social
interaction emphasizes rapport-building and mutual understanding.
4. Outcome: Negotiation aims to reach a specific agreement or outcome, while social
interaction may not have a specific outcome in mind.
5. Focus on conflict: Negotiation directly addresses conflicting needs and viewpoints, while
social interaction seeks to avoid unnecessary conflict and maintain social cohesion.
FOUR STAGES OF NEGOTIATION
Stage 1: Preparation (Pre-Negotiation)
1. Define goals and objectives: Clearly outline what you want to achieve.
2. Gather information: Research the other party's needs, interests, and limitations.
3. Develop a negotiation strategy: Choose your approach, such as competitive or collaborative.
4. Establish a walk-away point: Determine your minimum acceptable outcome.
5. Anticipate questions and concerns: Prepare responses to potential questions and concerns.
Stage 2: Opening (Initial Negotiation)
1. Establish a positive tone: Build rapport and set a constructive atmosphere.
2. Present your opening position: Clearly state your initial offer or proposal.
3. Listen actively: Pay attention to the other party's response and concerns.
4. Begin to build trust: Demonstrate your credibility and reliability.
5. Set the agenda: Establish the topics to be discussed and the negotiation process.
Stage 3: Bargaining (Give-and-Take Negotiation)
1. Exchange offers and counteroffers: Engage in a give-and-take process to find a mutually
acceptable solution.
2. Use persuasion and influence: Employ tactics like anchoring, concession management, and
creative packaging.
3. Address concerns and objections: Listen to the other party's concerns and address them
constructively.
4. Seek creative solutions: Explore alternative options and compromises.
5. Make concessions strategically: Yield on certain points to achieve a better overall outcome.
Stage 4: Closing (Final Agreement)
1. Summarize agreements: Review and confirm the terms of the agreement.
2. Address any remaining issues: Resolve any outstanding concerns or objections.
3. Finalize the agreement: Sign a contract, shake hands, or confirm the deal in writing.
4. Maintain relationships: Ensure a positive ongoing relationship, if desired.
5. Review and evaluate: Assess the negotiation outcome and identify areas for improvement.
GOAL SETTING: IDENTIFYING GOALS, OPTION AND CRITERIA OF SUCCESS
Identify Your Goals
• Understand your needs: Consider your values, boundaries, and non-negotiables
• Research the other party: Understand their interests and priorities
• Set clear objectives: Define your immediate and long-term goals
• Prioritize your goals: Determine what's most important to you
Set SMART goals
• Be specific: Make sure your goals are clear and well-defined
• Be measurable: Establish realistic targets that can be measured
• Be achievable: Set goals that you're committed to and can work towards
• Be relevant: Ensure your goals align with your broader organizational goals
• Be time-bound: Set a time frame for achieving your goals
Communicate your goals
• Clearly articulate your goals to all involved parties
• Be prepared to adapt your goals as needed
Monitor your progress
• Evaluate your progress and performance
• Be ready to improvise and think on your feet
Identifying Options
Identifying options involves generating potential solutions or alternatives that can help achieve
your goals.
1. Brainstorming: Generating a list of potential options without evaluating them.
2. Researching: Gathering information and data to inform your options.
3. Evaluating options: Assessing the pros and cons of each option.
Identifying Criteria for Success
Identifying criteria for success involves determining how you will measure the success of the
negotiation.
1. Defining success metrics: Establishing clear metrics to measure success.
2. Setting benchmarks: Establishing benchmarks or targets for each metric.
3. Evaluating progress: Regularly evaluating progress against the success metrics.
BATNA (Best Alternative to a Negotiated Agreement)
BATNA refers to the best alternative option available to a party if the negotiation fails to
produce a satisfactory agreement. It serves as a benchmark for evaluating potential agreements
and helps parties determine their walk-away point.
1. Identifying alternatives: Consider all possible alternatives, including walking away from the
negotiation.
2. Evaluating alternatives: Assess the pros and cons of each alternative and determine which
one is the most desirable.
3. Determining the walk-away point: Establish a clear threshold for accepting or rejecting an
agreement based on the BATNA.
Why is BATNA important?
• It gives you power to walk away from a deal that's not good for you
• It helps you determine how much you need from the other party
• It helps you decide if you should accept an offer
Pros
• Provides a backup plan if negotiations fail
• Grounds negotiations in a sound, factual basis
• Makes agreement more likely, as a strong BATNA is more likely to be acceptable to all
parties
Cons
• Calculating BATNAs can be an expensive and complicated process.
• Negotiators may still miscalculate the cost or benefits of some alternatives.
• There is still a risk of making a disadvantageous choice.
ZOPA (Zone of Positive Agreement)
ZOPA refers to the range of possible agreements that are mutually beneficial to both parties. It
represents the overlap between the two parties' reservation prices (the minimum or maximum
value they are willing to accept).
1. Identifying the reservation price: Determine the minimum or maximum value you are willing
to accept.
2. Assessing the other party's reservation price: Estimate the other party's minimum or
maximum value based on their interests, needs, and limitations.
3. Finding the overlap: Identify the range of possible agreements that fall within both parties'
reservation prices.
NEGOTIATION SCENARIOS
1. Win-Win
- Both parties achieve their goals and interests.
- The agreement is mutually beneficial, and both parties are satisfied.
- This scenario is often the most desirable outcome, as it fosters long-term relationships and
cooperation.
2. Win-Lose
- One party achieves their goals and interests, while the other party does not.
- The agreement is favorable to one party but unfavorable to the other.
- This scenario can lead to resentment and conflict in the long run.
3. Lose-Win
- One party does not achieve their goals and interests, while the other party does.
- The agreement is unfavorable to one party but favorable to the other.
- This scenario is often the result of a power imbalance or ineffective negotiation.
4. Lose-Lose
- Neither party achieves their goals and interests.
- The agreement is unfavorable to both parties, and neither party is satisfied.
- This scenario can lead to conflict, resentment, and a breakdown in relationships.