basics of negotiation shish mba sams ibm varanasi india
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Basics of Negotiation
BCN 4712
Leading & Managing ConstructionOperations
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Overview
Importance of negotiating skills Types of negotiation
Four Key Concepts
Preparation
Negotiation Tactics
Barriers to Agreement Mental Errors
Building Organizational Skills
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Importance of Negotiating
Skills
Personal Homes, cars, everything you buy Your job, salary, working conditions Your spouse and kids!
Professional Clients Design teams Subcontractors Suppliers Employees
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Negotiation, Harvard Business School Press, 2003.
Getting to Yes: Negotiating Agreement WithoutGiving In, Roger Fisher and William Ury & BrucePatton, 2nd Edition, Houghton Mifflin, 1991
Getting Past No: Negotiating with Difficult People,
William Ury, Bantam Books, 1991
References on Negotiation
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Distributive Negotiation
Win-lose, zero sum, constant sumA dollar more to one side is a dollar less
to the other
Carpet sale where buyer and seller haveno relationship
Wage negotiations between businessowners and union employees
Cards are played close to your vest
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Integrative Negotiation
Both sides work to increase the value ofthe solution
Goals are to: Create as much value for yourself and the
other side
Claim value for yourself
Open about information andcircumstances
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Positional Negotiating
When negotiators bargain overpositions they tend to lock themselvesinto those positions.
Modified from material obtained from the Harvard Negotiation Project.
Copyright 2000 by the Presidents and Fellows of Harvard College. All rights reserved.
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Positional Negotiating
The more you clarify your position anddefend it against attack, the morecommitted you become to it.
Modified from material obtained from the Harvard Negotiation Project.
Copyright 2000 by the Presidents and Fellows of Harvard College. All rights reserved.
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Positional Negotiating
The more you try to convince the otherside of the impossibility of changingyour opening position, the more difficult
it is to do so.
Modified from material obtained from the Harvard Negotiation Project.
Copyright 2000 by the Presidents and Fellows of Harvard College. All rights reserved.
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Positional Negotiating
The result is frequently an agreementthat is far less satisfactory to each sidethan what it could have been.
Modified from material obtained from the Harvard Negotiation Project.
Copyright 2000 by the Presidents and Fellows of Harvard College. All rights reserved.
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12/1/2005
Positional Negotiation
Pros
Easy to understand
Simple communication
Can be quick andefficient
Very operational
Requires littlepreparation
Universally understood
Often expected
Cons
Rewards stubbornnessand deception
Discourages explorationof interests and options
Promotes arbitraryoutcomes
Takes longer in complexsituations
Modified from material obtained from the Harvard Negotiation Project.
Copyright 2000 by the Presidents and Fellows of Harvard College. All rights reserved.
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Principled Negotiation:
The Method Separate thepeople
From theproblem
Focus on interests,
Notpositions
Invent options
For mutual gain
Use objective criteria
Modified from material obtained from the Harvard Negotiation Project.
Copyright 2000 by the Presidents and Fellows of Harvard College. All rights reserved.
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Separate thepeople
from theproblem
Relationship Issues: Emotion/reason
Understanding Communication
Reliability Coercion/persuasion
Acceptance/respect
Substantive Issues: Money
Terms Conditions
Concessions Promises
Dates/numbers
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Focus on Interests
not Positions
Interests = desires and concerns thatunderlie positions
Prepare for negotiation: Clarify interests
Understand the interests of the other side
Focus the negotiation discussion on:
Interests not positions
Modified from material obtained from the Harvard Negotiation Project.
Copyright 2000 by the Presidents and Fellows of Harvard College. All rights reserved.
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Invent Options
for Mutual Gain
To invent creative options: Separate inventing from judging.
Broaden the options on the table,rather than look for a single answer.
Search for mutual gains.
Invent ways to make their decisioneasy.
Modified from material obtained from the Harvard Negotiation Project.
Copyright 2000 by the Presidents and Fellows of Harvard College. All rights reserved.
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Insist on using
Objective Criteria
Frame each issue as a joint search forobjective criteria.
Reason and be open to reason as towhich standards are most appropriate
and how they should be applied. Never yield to pressure, only to
principle.
Modified from material obtained from the Harvard Negotiation Project.
Copyright 2000 by the Presidents and Fellows of Harvard College. All rights reserved.
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Starting Point
A successful negotiation must have abasic framework
The alternative to negotiation
The minimum threshold for a negotiateddeal
How flexible a party is willing to be, andwhat tradeoffs it is willing to make
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Four Key Concepts
BATNA Reservation Price
ZOPAValue Creation through Trades
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Know your BATNA!
Best Alternative to a Negotiated Agreement(BATNA)
Typical example: negotiate or go to court
Example of Louis XI in 1475 (p. 16)
Improving your situation
Improve your BATNA Identify the other sides BATNA
Weaken the other partys BATNA
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ZOPA Zone of Possible Agreement (ZOPA)
The difference between the SellersReservation Price and the Buyers
Reservation Price What happens if positions below are
reversed?ZOPA
$275k$250k
BuyersReservation Price
SellersReservation Price
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Value Creation through Trades
Trade things you value less to the otherparty
Examples: For a supplier the greater value may be not
price but an extended delivery time
For a customer, extended warranty versusprice
For an employee, working at home versussalary
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Preparing for a Negotiation
BATNA: yours and theirs, know them Identify value creation opportunities
Determine negotiation authority levels Understand the people and their culture
Prepare for flexibility Show fairness in your position
Alter the process in your favor
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Nine Steps to a Deal1. Know what would be good outcomes
2. Identify value creation opportunities
3. Identify BATNA and RPs
4. Shore up your BATNA5. Anticipate the authority issue
6. Learn all you can about the other side
7. Prepare for flexibility
8. Gather external standards and criteria for fairness
9. Alter the process in your favor
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Getting Off to a Good Start
Express respect for the other side Frame the task positively, as a joint
endeavor
Emphasize openness to the other sidesinterests and concerns
Start by breaking bread
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For Win-Lose Negotiations Anchoring: an attempt to establish a
reference point around which negotiationswill make adjustments The first offer is often important
Studies show that outcomes correlate to the firstoffer
Counteranchoring: what you do if the other
side sets the anchor Be prepared for Concessionary Moves: avoid
the impulse to make them, may indicateweakness or additional flexibility
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Closing the deal
Signal the end before you get thereAllow flexibility if you anticipate going
beyond the final round
Discourage the other side from seekingfurther concessions
Write down the terms