Content

1. Negotiation Skills - Introduction

2. Introduction to the company –Cipla Ltd.

3. Planning and How to Negotiate?

4. Comprehensive Negotiation

5. Win-Win Negotiation

6. Coming to an Agreement in Negotiation

7. Case - Problem and Solution

8. Conclusion

1. Negotiation Skills

Introduction

Negotiation is something that we do all the time and is not only used for business

purposes. For example, we use it in our social lives perhaps for deciding a time

to meet, or where to go on a rainy day.

Negotiation is usually considered as a compromise to settle an argument or issue

to benefit ourselves as much as possible.

Communication is always the link that will be used to negotiate the

issue/argument whether it is face-to-face, on the telephone or in writing.

Remember, negotiation is not always between two people: it can involve several

members from two parties.

There are many reasons why you may want to negotiate and there are several

ways to approach it. The following is a few things that you may want to consider.

Why Negotiate?

If your reason for negotiation is seen as ‘beating’ the opposition, it is known as

‘Distributive negotiation’. This way, you must be prepared to use persuasive

tactics and you may not end up with maximum benefit. This is because your

agreement is not being directed to a certain compromise and both parties are

looking for a different outcome.

Should you feel your negotiation is much more ‘friendly’ with both parties aiming

to reach agreement, it is known as ‘Integrative negotiation’. This way usually

brings an outcome where you will both benefit highly.

Negotiation, in a business context, can be used for selling, purchasing, staff (e.g.

contracts), borrowing (e.g. loans) and transactions, along with anything else that

you feel are applicable for your business.

2. Introduction to company – Cipla limited

History

Khwaja Abdul Hamied, the founder of Cipla, was born on October 31, 1898. The

fire of nationalism was kindled in him when he was 15 as he witnessed a wanton

act of colonial highhandedness. The fire was to blaze within him right through his

life.

In college, he found Chemistry fascinating. He set sail for Europe in 1924 and got admission in Berlin University as a research student of "The Technology of Barium Compounds". He earned his doctorate three years later.

In October 1927, during the long voyage from Europe to India, he drew up great plans for the future. He wrote: "No modern industry could have been possible without the help of such centres of research work where men are engaged in compelling nature to yield her secrets to the ruthless search of an investigating chemist." His plan found many supporters but no financiers. However, Dr Hamied was determined to being "a small wheel, no matter how small, than be a cog in a big wheel."

Cipla is born

In 1935, he set up The Chemical, Industrial & Pharmaceutical Laboratories, which came to be popularly known as Cipla. He gave the company all his patent and proprietary formulas for several drugs and medicines, without charging any royalty. On August 17, 1935, Cipla was registered as a public limited company with an authorised capital of Rs 6 lakhs.

The search for suitable premises ended at 289, Bellasis Road (the present corporate office) where a small bungalow with a few rooms was taken on lease for 20 years for Rs 350 a month.

Cipla was officially opened on September 22, 1937 when the first products were ready for the market. The Sunday Standard wrote: "The birth of Cipla which was launched into the world by Dr K A Hamied will be a red letter day in the annals of Bombay Industries. The first city in India can now boast of a concern, which will supersede all existing firms in the magnitude of its operations. India has lagged behind in the march of science but she is now awakening from her lethargy. The new company has mapped out an ambitious programme and with intelligent direction and skillful production bids fair to establish a great reputation in the East. "

Mahatma Gandhi Visit to Cipla (July 4th 1939)

July 4, 1939 was a red-letter day for Cipla, when the Father of the Nation,

Mahatma Gandhi, honoured the factory with a visit. He was "delighted to visit this

Indian enterprise", he noted later. From the time Cipla came to the aid of the

nation gasping for essential medicines during the Second World War, the

company has been among the leaders in the pharmaceutical industry in India.

On October 31, 1939, the books showed an all time high loss of Rs 67,935. That

was the last time the company ever recorded a deficit.

In 1942, Dr Hamied's blueprint for a technical industrial research institute was accepted by the government and led to the birth of the Council of Scientific and Industrial Research (CSIR), which is today the apex research body in the country.

In 1944, the company bought the premises at Bombay Central and decided to put up a "first class modern pharmaceutical works and laboratory." It was also decided to acquire land and buildings at Vikhroli. With severe import restrictions hampering production, the company decided to commence manufacturing the basic chemicals required for pharmaceuticals.

In 1946, Cipla's product for hypertension,Serpinoid , was exported to the American Roland Corporation, to the tune of Rs 8 lakhs . Five years later, the company entered into an agreement with a Swiss firm for manufacturing foromycene.

Dr Yusuf Hamied, the founder's son, returned with a doctorate in chemistry from Cambridge and joined Cipla as an officer in charge of research and development in 1960.

In 1961, the Vikhroli factory started manufacturing diosgenin. This heralded the manufacture of several steroids and hormones derived from diosgenin.

The founder passes awayThe whole of Cipla was plunged into gloom on June 23, 1972 when Dr K A Hamied passed away.The Free Press Journal mourned the death of a "true nationalist, scientist and great soul…. The best homage we can pay to him is to contribute our best in the cause of self-reliance and the prosperity of our country in our fields of endeavour."

3. Planning and How to Negotiate?

Pre-Negotiation

Before you decide to negotiate, it is a good idea to prepare. What is it exactly that

you want to negotiate? Set out your objectives (e.g. I want more time to pay off

the loan). You have to take into account how it will benefit the other party by

offering some sort of reward or incentive (explained later).

What is involved (money, sales, time, conditions, discounts, terms, etc)? Know

your extremes: how much extra can you afford to give to settle an agreement?

Although you are not aiming to give out the maximum, it is worth knowing so that

you will not go out of your limits.

Know what your opposition is trying to achieve by their negotiation. This is useful

information that could be used to your benefit and may well be used to reach a

final agreement.

Consider what is valuable to your business, not the costs. You may end up losing

something in the negotiation that is more valuable to your business than money.

It could be a reliable client or your company reputation.

Negotiating

It is important that you approach the other party directly to make an appointment

to negotiate should it be in person, writing or by phone (not through a phone

operator, receptionist, assistant etc) as this will allow you to set the agenda in

advance, and improve the prospects of the other party preparing sufficiently

enough to make a decision on the day. Try to be fairly open about your reason

for contact or they may lose interest instantly and not follow up on the

appointment. Save all your comments for the actual appointment- don’t give

away anything that will give them a chance to prepare too thoroughly: it’s not

war, but it is business!

So, it’s time to negotiate and you’ve prepared well. What else must you have?

Two things: confidence and power. Your power will come from your ability to

influence. For example, you may be the buyer (but not always a strong position),

or have something that the other party wants, or you may be able to give an

intention to penalize if the other party fails to meet the agreement (as is the way

with construction). As briefly mentioned above, you may be able to give a reward

or an incentive. For example, you may be selling kitchen knives and as part of

the package you are giving a knife sharpener and a storage unit away free as an

incentive.

It is always important that you keep the negotiation in your control: this can mean

within your price range, your delivery time or your profit margin. If you fail to do

so, you will end up on the wrong side of the agreement, and with nothing more

out of the deal other than maintaining trading relationships.

When negotiating, aim as high as you feel necessary in order to gain the best

deal for yourself. The other party may bring this down but it is a good tactic, as it

is always easier to play down than to gain.

Make sure that you remain flexible throughout the negotiation in case the

opposition decides to change the direction of the agreement (they may want

different incentives or even change their objectives). This is where your

preparation comes to good use: knowing your limits and the other party’s needs.

If you’re a quick thinker then you’ve got an advantage. You’ll need to turn it

around quickly if things start to go against you without putting your objectives at

risk.

Confidence comes from knowing your business, your product, what its worth, and

being able to communicate this well to the other party: these people are almost

impossible to get the better of, as some of you will know only too well.

4. Comprehensive Negotiation

When is compromising negotiating?

Is bipartisan compromise possible in Washington?

So much is touted lately about bringing Washington together and acting in a bi-

partisan manner. It is interestng that many view this as a novel idea. It is, in

reality, what the Congress was challenged to do since first formed.

Compromise, in a negotiation, is the process by which each party gives a little to

get a little. It is the process of merging interests to yield a balanced outcome

meeting the needs, not necessarily the wants, of the parties to the agreement.

We are a very diverse nation, a federation of states in fact. This diversity is what

makes America great. Our system was designed to enable the diverse interests

to get along side by side and in harmony. Today that harmony seems ot be

constantly challenged.

In Washington, unfortunately, the effect of our lawmakers working together is

typically the creation of a bill loaded with all the necessary extra provisions to

attract votes seemingly with disregard for how the earmarks will be paid.

That is not negotiating. That is not compromising. That is simply buying votes to

assure passage.

One wonders what has happened in Washington over the last forty to fifty years

that has seen our lawmakers seeking to do right by their country change to

fighting to get their fair share for their constituencies, advocates and, yes, special

interest supporters.

I may be naive being outside the beltway but I have not sensed true compromise

when it comes to garnering votes for a bill in a long time. What I have repeatedly

seen is the purchase of votes that violate the interest of the Country for the

interests of a select few in the form of earmarks. Earmarks are riders to the bill

that promises something to a small group in exchange for support of the major

bill. It typically has nothing to do with the actual bill. It is, pure and simple, a

payoff.

What ever has happened to principles. honor or integrity? Since when did the

lawmakers of America, and that includes both of the Parties, become

Machiavellian advocates of the end justifying the means. When those in the

Congress cast dispersions upon the CEOs of America they should, once in a

while, reflect on their own questionable behavior. It smells the same! They have

been and continue to spend beyond their means.

Many of our good representatives are not negotiating in good faith. They can't

cover to costs of their promises...unless we, The People, bail them out.

5. Win-Win Negotiation

Finding a fair compromise

Do you feel that someone is continually taking advantage of you? Do you seem

to have to fight your corner aggressively, or ally with others, to win the resources

you need? Or do you struggle to get what you want from people whose help you

need, but over whom you have little direct authority? If so, you may need to

brush up your win-win negotiation skills.

Effective negotiation helps you to resolve situations where what you want

conflicts with what someone else wants. The aim of win-win negotiation is to find

a solution that is acceptable to both parties, and leaves both parties feeling that

they've won, in some way, after the event.

There are different styles of negotiation, depending on circumstances.

Where you do not expect to deal with people ever again and you do not need

their goodwill, then it may be appropriate to "play hardball", seeking to win a

negotiation while the other person loses out. Many people go through this when

they buy or sell a house – this is why house-buying can be such a confrontational

and unpleasant experience.

Similarly, where there is a great deal at stake in a negotiation, then it may be

appropriate to prepare in detail and legitimate "gamesmanship" to gain

advantage. Anyone who has been involved with large sales negotiations will be

familiar with this.

Neither of these approaches is usually much good for resolving disputes with

people with whom you have an ongoing relationship: If one person plays

hardball, then this disadvantages the other person – this may, quite fairly, lead to

reprisal later. Similarly, using tricks and manipulation during a negotiation can

undermine trust and damage teamwork. While a manipulative person may not

get caught out if negotiation is infrequent, this is not the case when people work

together routinely. Here, honesty and openness are almost always the best

policies.

Preparing for a successful negotiationDepending on the scale of the disagreement, some preparation may be

appropriate for conducting a successful negotiation.

For small disagreements, excessive preparation can be counter-productive

because it takes time that is better used elsewhere. It can also be seen as

manipulative because, just as it strengthens your position, it can weaken the

other person's.

However, if you need to resolve a major disagreement, then make sure you

prepare thoroughly. Using our free worksheet, think through the following points

before you start negotiating:

● Goals: what do you want to get out of the negotiation? What do you think

the other person wants?

● Trades: What do you and the other person have that you can trade? What

do you each have that the other wants? What are you each comfortable

giving away?

● Alternatives: 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 do not reach agreement? Does failure to reach an

agreement cut you out of future opportunities? And what alternatives

might the other person have?

● Relationships: 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?

● Expected outcomes: what outcome will people be expecting from this

negotiation? What has the outcome been in the past, and what

precedents have been set?

● The consequences: what are the consequences for you of winning or

losing this negotiation? What are the consequences for the other person?

● Power: 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?

● Possible solutions: based on all of the considerations, what possible

compromises might there be?

6. Coming to an Agreement in Negotiation

Coming to an Agreement

Once you have come to a final agreement, it is important that you have it down in

writing along with both parties’ signature: this is not always possible or practical.

Before it is signed, or formally ordered, it is wise not to say anything about the

terms agreed because your next sentence could break the agreement: the best

sales-people never over sell – well, not until they have to!

If it is a sale/purchase that you are making, then officially, it isn’t a sale until

you/they have actually ordered the product/service. Usually, this will be an Order

Form with a purchase order number. In most other negotiations, one party

sending a letter and fax to the other in which the agreement is outlined (to a

sufficient degree) will form a legal basis.

If the other party then amends the conditions in the agreement in writing to you,

those amended terms then become part of the agreement, UNLESS you

disagree in writing, and so on…

Negotiating successfully

The negotiation itself is a careful exploration of your position and the other

person's position, with the goal of finding a mutually acceptable compromise that

gives you both as much of what you want as possible. People's positions are

rarely as fundamentally opposed as they may initially appear – the other person

may have very different goals from the ones you expect!

In an ideal situation, you will find that the other person wants what you are

prepared to trade, and that you are prepared to give what the other person

wants.

If this is not the case and one person must give way, then it is fair for this person

to try to negotiate some form of compensation for doing so – the scale of this

compensation will often depend on the many of the factors we discussed above.

Ultimately, both sides should feel comfortable with the final solution if the

agreement is to be considered win-win.

Only consider win-lose negotiation if you don't need to have an ongoing

relationship with the other party as, having lost, they are unlikely to want to work

with you again. Equally, you should expect that if they need to fulfill some part of

a deal in which you have "won," they may be uncooperative and legalistic about

the way they do this.

7. Case

Problem

There are Two Multinational competitors Cipla limited. and JJ & Company. Both

of them produce various products. The major product for Cipla limited is a Bio-

medical syrup that is made out of Black Melons. They dry Black Melon peels to

make the syrup. Out of 100 Black Melons they make 100 ml of syrup. The major

product for JJ & Co. are Biomedical Tablets that is also made out of Black

Melons. They also dry Black Melon seeds to make the tablets. Out of 100 Black

Melons they make 100 tables. Black Melon syrup or Black Melon tables are the

only way to cure a particular viral fever.

The country is suddenly facing an epidemic due to this viral fever and is badly

spreading. There is a huge shortage of Black Melons. There is only one farmer in

the whole country had cultivated Black Melons that season and he has only 100

Black Melons. The Ministry of health calls out to both Cipla limited and JJ & Co.

and ask them to immediately produce 100 ml syrup or 100 tablets from Black

Melons to cure everyone from the epidemic.

Both Cipla limited and JJ & Co. need all the 100 Black Melons to produce their

medicine for the cure, even 99 Black Melons will not serve the purpose. The

CEO's decided to meet and negotiate their stands. They cannot loose this project

because this is a Ministry requirement and if they win they will get all support

from Ministry in the future.

Consider myself as the CEO's of any one of the company. How would you

Negotiate?

Solution

If I would have been the CEO of one of the Company Say as if in the case The

CEO of Cipla limited & the Competitor of the Raw material is the DJ Company.

Well as far as the Product Produced here is Medicine that cures a Viral Fever &

no other substitute is available to cure the Fever except the Tablets or Syrup

extracted from the Black Melons. So as a Corporate Citizen I show due

Corporate Responsibility apart from Growing the company in Uni-Dimensional

i.e., making more Profits.

Hence I negotiate with the DJ Company CEO like this:

I: Mr. Dj & Co CEO this is the time we need to act in a prompt manner as we

need to serve the people with our products & no other alternative is available to

address the Viral Fever. So I got an brilliant idea which would serve both of our

company needs aswell as the needs of customers ultimately even more we can

reduce or cut down the cost per unit of the good produced if we do work

mutually.

We do bid for the same raw material ie the Black Melon but you do need the

seeds for producing tablets where as we need the Peel for the Syrup.

So we mutually buy the Black melon from the Farmer & make the Dry After that

we can Share over the Raw material we need i.e., the Seeds & the peel.

By doing so we can cut our costs a lot in purchase & even initial process of

Production ultimately produce the Goods required with out any incomfort . More

over we do become Socially Responsible by engaging ourselves in this task.

I do feel that the idea i have given works good if not let me know your ideas

which might be more interesting than my owns. lets hope for the best & let both

of us take part in this Good Social Event apart from making our Profits cutting

down the Costs.

8. Conclusion

We use negotiation in everything we do but you have to be sure that it is done in

the best way possible to achieve maximum benefit. The most important part is

planning: preparing well will give you an advantage when negotiating.

Only use the knowledge and experience you need to achieve your objective:

having the business owner negotiating the supply of pencils is over-kill, and

leaves you little room to power-bargain with the same supply company when you

want them to supply you with, say, colour photo-copiers.

Have confidence and be sure that you can keep control at all times. Aim highly,

but don’t underestimate the opposition. They too may have just read the same

advice. If you’re selling something, be persuasive and offer some incentive to

keep the customer interested.

Don’t close an agreement until you are happy. This could be difficult if you have

been put in a ‘corner’ but this would perhaps be an effect of poor preparation.