Negotiation Stages Introduction PDF

Preview

Summary

Not Applicable...

Description

Negotiation Stages Introduction    

There are five collaborative stages of the negotiation process: Prepare, Information Exchange, Bargain, Conclude, Execute. There is no shortcut to negotiation preparation. Building trust in negotiations is key. Communication skills are critical during bargaining. Negotiation is a method by which people settle differences. It is a process by which compromise or agreement is reached while avoiding argument and dispute. ... However, general negotiation skills can be learned and applied in a wide range of activities.

What is an example of negotiation? Negotiation often takes place in these business situations: Company A and Company B want to merge but must agree on price, financing, and management changes. John Doe wants a job with Company XYZ but must negotiate his salary and benefits. Company A wants to purchase supplies from Company B on certain payment terms. There are broadly two types of negotiation namely distributive negotiation and integrative negotiation. In distributive negotiation, the parties area only looking for their gain. It leads to a win-lose kind of outcome.

What are the 3 phases of negotiation? The three phases of a negotiation are:   

• Phase One – Exchanging Information. • Phase Two – Bargaining. • Phase Three – Closing.

7 principles for effective negotiations       

Know what are you trying to accomplish. ... Develop a game plan before negotiations start. ... Study and understand your counterpart. ... Work towards a win-win. ... Avoid negotiating with yourself. ... React strongly to an untrustworthy party at the negotiating table. ... Remember that it takes two parties to negotiate or renegotiate a deal. What is negotiation simple words? A negotiation is a strategic discussion that resolves an issue in a way that both parties find acceptable. In a negotiation, each party tries to persuade the other to agree with his or her point of view. By negotiating, all involved parties try to avoid arguing but agree to reach some form of compromise.

What is a win/win negotiation? A win-win negotiation is a careful exploration of both your own position, and that of your opposite number, in order to find a mutually acceptable outcome that gives you both as much of what you want as possible. If you both walk away happy with what you've gained from the deal, then that's a win-win!

Negotiation Skills Negotiations are formal discussions between people who have different aims or intentions, especially in business or politics, during which they try to reach an agreement. They try to reach a common ground eliminating their differences. Negotiation in business has become one of the most important skills and abilities. While negotiation will happen between two parties for reaching an agreement, it is said that the most effective negotiator will be both competing as well as collaborating. An effective negotiator is one who creates value for the other while claiming value for the self. There must be meaningful give and take that should happen in negotiation. Negotiation should always be win-win, where agreements are created by taking care of the interests of both the sides. Negotiation requires interpersonal skills, communication skills as well as problem solving skills.

Types of negotiation There are broadly two types of negotiation namely distributive negotiation and integrative negotiation. In distributive negotiation, the parties area only looking for their gain. It leads to a win-lose kind of outcome. In distributive negotiation, negotiation is carried out more as an one time

transaction, not keeping in mind any kind of long term relationship. While in integrative negotiation, the negotiators look for long term relationships and they try to ensure value for both sides. It leads to a win-win outcome.

Approach for negotiation Negotiation can always be sensitive and should be carries out in a planned manner keeping in mind the end goals to be achieved. We should take care to ensure that negotiation does not get into an argumentative situation. The negotiations process is made up of five stages: 1. Preparation and planning 2. Definition of ground rules 3. Clarification and justification 4. Bargaining and problem solving and 5. Closure and implementation In order to achieve the desired outcomes from negotiation, it will be extremely important to do the initial homework. We must identify what we are looking at achieving from the negotiation. What are our best alternatives to a negotiated agreement (BATNA). It is also important for us to understand about the expectations of the other party and more information about their BATNA. It is important to lay down the procedures for carrying out the negotiation, such as who will be part of negotiation, where the negotiation will happen and some basic ground rules to be followed.

Then the actual information and offers must be exchanged between the parties. Arguments and confrontations must be avoided in the process. At this stage the required bargaining should be done keeping good faith. Negotiation should always be done as a win-win outcome for both sides. Once agreement is reached, the same should be implemented.

Skills in Negotiation An effective negotiator will be using some of the below skills during the process of negotiation. 1. Active listening 2. Asking good questions 3. Communication skills (Specially verbal communication) 4. Decision making ability 5. Emotional control 6. Interpersonal skills 7. Preparing BATNA (Best alternative to a negotiated agreement, your alternatives) 8. Problem solving 9. Smart trade-off development 10.

Ethics and collaboration

Conclusion Negotiation skill is one of the most important skills. It is through effective negotiation we are able to eliminate differences and we arrive at common agreements. While we can adopt a structured approach for negotiation, but negotiation is an art which one can master only with time and experience.

Characteristics of Negotiation There are certain characteristics of the negotiation process. These are: 1. There is a minimum of two parties present in any negotiation. 2. Both parties have pre-determined goals that they wish to achieve. 3. There is a clash of pre-determined goals, that is, some of the predetermined goals are not shared by both the parties. 4. There is an expectation of outcome by both parties in any negotiation. 5. Both parties believe the outcome of the negotiation to be satisfactory. 6. Both parties are willing to compromise, that is, modify their position. 7. The incompatibility of goals may make the modification of positions difficult. 8. The parties understand the purpose of negotiation

Steps of the Negotiation Process The negotiation process can essentially be understood as a fourstage process. The four stages of the negotiation process are preparation, opening, bargaining, and closure.

Stage 1: Preparation Preparation is instrumental to the success of the negotiation process. Being well-prepared generates confidence and gives an edge to the negotiator. Preparation involves the following activities:

1. Gathering Information: One needs to learn as much as one can about the problem and ascertain what information is needed from the other side. Understanding clearly the issues involved are also needed. 2. Leverage Evaluation: Evaluation of one’s leverage and the other party’s leverage at the outset is important because there may be a number of things one can do to improve one’s leverage or diminish the leverage of the other side. 3. Understand the people involved: It is important to know the people with whom the negotiation is to take place. An understanding of their objectives, roles and the issues likely to be raised by them will facilitate better handling of the situation during the negotiation process. 4. Rapport: It is helpful to establish a rapport with the opponent during the early stages, that is, before the bargaining process begins is helpful. This was, one can determine early on how cooperative the opponent is going to be. 5. Know your objectives: Clarity of objectives is absolutely essential. It needs to be decided in advance how much you are willing to concede to the opponent and what your priorities are. All arguments and justifications should be ready. 6. Type of negotiation: Anticipate the type of negotiation expected, that is, ascertain whether it will be highly competitive, cooperative or something unusual; whether the negotiation will be face to face, by fax, through a mediator, or in some other manner. 7. Plan: Decide on the negotiation approach and plan accordingly.

Stage 2: Opening Phase Here the two sides come face to face. Each party tries to make an impression on the other side and influence their thinking at the first opportunity. Psychologically, this phase is important because it sets the tone for the negotiation to a large extent. It involves both negotiating parties presenting their cases to each other.

Stage 3: Bargaining Phase The bargaining phase involves coming closer to the objective you intended to achieve when you started the negotiation. In this phase, the basic strategy is to convince the other side of the appropriateness of your demands and then persuading the other party to concede to those demands. For this, one needs to be

logical in one’s approach and frame clearly-thought-out and planned arguments.

Stage 4: Closure Phase The closing phase of a negotiation represents the opportunity to capitalize on all of the work done in the earlier phases. The research that has been done in the preparation phase, combined with all of the information that has been gained is useful in the closing phase. It also involves the sealing of the agreement in which both parties formalize the agreement in a written contract or letter of intent. Reviewing the negotiation is as important as the negotiation process itself. It teaches lessons on how to achieve a better outcome. Therefore, one should take the time to review each element and find out what went well and what needs to be improved. As political, legal, economic, and cultural norms vary from nation to nation, various ethical issues rise with them. A normal practice may be ethical in one country but unethical in another. Multinational managers need to be sensitive to these varying differences and able to choose an ethical action accordingly. In an international business, the most important ethical issues involve employment practices, human rights, environmental norms, corruption, and the moral obligation of international corporations.

Employment Practices and Ethics Ethical issues may be related to employment practices in many nations. The conditions in a host country may be much inferior to those in a multinational’s home nation. Many may suggest that pay and work conditions need to be similar across nations, but no one actually cares about the quantum of this divergence. 12-hour workdays, minimal pay, and indifference in protecting workers from toxic chemicals are common in some developing nations. Is it fine for a multinational to fall prey to the same practice when they chose such developing nations as their host countries? The answers to these questions may seem to be easy, but in practice, they really create huge dilemmas.

Human Rights Basic human rights are still denied in many nations. Freedom of speech, association, assembly, movement, freedom from political repression, etc. are not universally accepted. South Africa during the days of white rule and apartheid is an example. It lasted till 1994. The system practiced denial of basic political rights to the majority non-white

population of South Africa, segregation between whites and nonwhites was prevalent, some occupations were exclusively reserved for whites, etc. Despite the odious nature of this system, Western businesses operated in South Africa. This unequal consideration depending on ethnicity was questioned right from 1980s. It is still a major ethical issue in international business.

Environmental Pollution When environmental regulation in the host nation is much inferior to those in the home nation, ethical issues may arise. Many nations have firm regulations regarding the emission of pollutants, the dumping and use of toxic materials, and so on. Developing nations may not be so strict, and according to critics, it results in much increased levels of pollution from the operations of multinationals in host nations. Is it fine for multinational firms to pollute the developing host nations? It does not seem to be ethical. What is the appropriate and morally correct thing to do in such circumstances? Should MNCs be allowed to pollute the host countries for their economic advantage, or the MNCs should make sure that foreign subsidiaries follow the same standards as set in their home countries? These issues are not old; they are still very much contemporary.

Corruption Corruption is an issue in every society in history, and it continues to be so even today. Corrupt government officials are everywhere. International businesses often seem to gain and have gained financial and business advantages by bribing those officials, which is clearly unethical.

Moral Obligations Some of the modern philosophers argue that the power of MNCs brings with it the social responsibility to give resources back to the societies. The idea of Social Responsibility arises due to the philosophy that business people should consider the social consequences of their actions. They should also care that decisions should have both meaningful and ethical economic and social consequences. Social responsibility can be supported because it is the correct and appropriate way for a business to behave. Businesses, particularly the large and very successful ones, need to recognize their social and moral obligations and give resources and donations back to the societies....