BATNA

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Negotiations SkillsBy

Prof. Rumana Shaikh

Basics of NegotiationsBasics of NegotiationsWe all negotiate, all the time at home, with

fiends, at office, in public.These negotiations can be about anything.Negotiation is the most effective way of

resolving conflicts and securing agreements.A two way discussion to agree terms.Conferring for the purpose of mutual

agreement.Establishing consensus amongst two or more

parties.

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Negotiations Is..Negotiations Is..A dialogue between two or more parties,

with an intent of coming to a mutually agreed solution, because each party has something the other wants.

A communication process between two or more people in which they consider alternatives to arrive at mutually agreeable solutions or mutually satisfactory objectives.

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Balancing outcomes and Balancing outcomes and relationshipsrelationshipsDistributive negotiationsIntegrative negotiationsMultiphase and multiparty

negotiations

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Distributive NegotiationsDistributive NegotiationsA negotiations in which the parties

compete over a fixed sum of value.Key question is “who will claim the

maximum value”?A gain by one party is at the expense

of the other.Win-lose situation.

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Distributive bargaining Distributive bargaining basicsbasicsPlay your cards close to your

chest The opposite is equally trueThe only information we should

ever reveal are those alternative options

Be realistic

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Integrative ApproachIntegrative ApproachA negotiation in which the parties

cooperate to achieve the maximum benefits by integrating their interest into an agreement.

These deals are about creating value and claiming it.

Win-win situation.

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Integrative Negotiations Integrative Negotiations BasicsBasicsMultiple issuesSharingProblem solvingBridge Building

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The real win-win conceptThe real win-win conceptThe true meaning of a win-win settlement is

a negotiated agreement where the agreement reached cannot be improved further by any discussions.

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What does not constitute a win-win What does not constitute a win-win deal?deal?

One size fits all win-win approachCompromiseThe relationshipTake our time

04/09/23The Art of Negotiating Advesh Consultancy Services 10

Winning strategyWinning strategyAsk smart questionsPlay fairPresent multiple offersThird party assistance

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Multiphase and Multiparty Multiphase and Multiparty negotiationsnegotiationsOne person or one team of people sitting

across the table from another.Business and professional negotiations

commonly involve more than two parties. Coalitions can form among the parties.There are two types of coalitions 1. A natural

coalition 2. single – Issue coalition.The challenge of multiparty negotiation is

managing coalitions, breaking them apart or keeping them together depending on your own interest.

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Multiparty negotiations Multiparty negotiations managementmanagementNon - Agreement ConsequencesDecision MakingFirst agreement objective

1.Managing the processAppoint a chair personFilling in the information frame1. Scouts

2. Ambassadors

3. Coordinators

4. Guards

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Mind your step1. Intolerance2. Keep emotions in check3. PreparationPositive discussion strategies1. Delphi Technique2. Brain storming 3. Nominal group techniques4. Use of agenda

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Multiphase negotiations Multiphase negotiations Building trust with Japanese"It will take 'two years of eating

andDrinking' before you will get an

order".

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If they don't call and you have to call them."If they haven't said anything positive, such

as 'we are interested”."Expect nothing, and then you will not be

disappointed. Walk away, and get on with your life.

If they come back to you, think of it as a surprise bonus" - words of wisdom particularly useful for smaller companies.

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BATNABATNA

Best

Alternative

To a

Negotiated

Agreement

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WHAT IS BATNA?WHAT IS BATNA?How do the proposals match your

realistic alternative if you cannot come to a deal?

The more attractive your BATNA is compared with the proposals you receive, the more POWER you have; the less attractive your BATNA is compared to the deal on offer, the less power you have.

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BATNABATNARetain the existing supplierGo to another supplierStrike/LockoutNot an immediate requirement

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DEVELOPING BATNADEVELOPING BATNA

List what you would do if you fail to reach an agreement

Convert the most promising options into practical choices.

Select the single best option; that is your BATNA

Compare your BATNA to all proposals If an offer is better than your BATNA,consider

improving or accepting it If an offer is worse than your BATNA, consider

rejecting it If they will not improve their offer consider

exercising your BATNA

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BATNABATNA

Know your BATNA

Work with all the BATNAs

Be ready to walk

Strong and Weak BATNA’s

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Improving your positionImproving your positionImprove your BATNA

Identify other side’s BATNA

Weaken the other Party’s BATNA

Not all BATNA’s are simple

When you have no alternatives22

BATNA Exercise 1BATNA Exercise 1You have a good motor cycle which

is 4 years old. It gives good mileage. However you want to replace it with a new one.

You have Rs 30000 cash in hand You want the balance to be arranged thru loan

You have 12% interest in your mind.The financier is asking for 15%What is your BATNA?

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BATNA EXERCISE 2BATNA EXERCISE 2You are attending an interview for

change of job. You are in salary negotiation stage. You are concerned about your child’s education. Currently you are on a transferable job.You are demanding 30% increase. The new company is offering the same salary.

What is your BATNA?24

BATNABATNA

Developed by

Roger Fisher and

William Ury

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RESERVATION PRICERESERVATION PRICE

Reservation Price is

the least favourable point at which

one will accept a deal

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ZOPA ZOPA ZONE OF POSSIBLE ZONE OF POSSIBLE AGREEMENTAGREEMENT

ZOPA is the area or range in which a deal that satisfies both parties can take place.

It is the set of agreements that potentially satisfy both parties.

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EXAMPLEEXAMPLEYou as a buyer has set a

reservation price of Rs. 275,000 for the purchase of the commercial warehouse, that is as high as you are willing to go. Unknown to you the seller has set a Reservation price of 250,000. That is the least he will accept for the property….What will be your ZOPA???

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Value creation through Value creation through Trades..Trades..Negotiating Parties can Improve

their positions by creating the values at their Disposal.

It is usually the form of each party getting something it wants in return of something it values much less.

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What is conflict?What is conflict?

Culture and conflict.◦Conflict is likely to be high when:

Persons from short-term cultures work with persons from long-term cultures.

Persons from individualistic cultures work with persons from collectivistic cultures.

Persons from high power distance cultures work with persons from low power distance cultures.

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An Individualism - Collectivism . . . Cultural Dialogue: Ms. Anderson: Hassan was looking at your paper. Abdullah: He was? Ms. Anderson: Yes. He copied some of your answers. Abdullah: Perhaps he didn’t know the answers. Ms. Anderson: I’m sure he didn’t. Abdullah: Then it’s lucky he was sitting next to me.

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How can the conflict be How can the conflict be managed successfully?managed successfully?Conflict resolution.

◦A situation in which the underlying

reasons for a given destructive conflict

are eliminated.

◦Effective resolution begins with a

diagnosis of the stage to which conflict

has developed and recognition of the

cause(s) of the conflict.

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The conflict management The conflict management gridgrid

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(1,1) Avoidance.

◦Unassertive and uncooperative.

◦Downplaying disagreement.

◦Failing to participate in the situation

and/or staying neutral at all costs.

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(1,9) Accommodation or

smoothing.

◦Unassertive and cooperative.

◦Letting the other’s wishes rule.

◦Smoothing over differences to

maintain superficial harmony.

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(5,5) Compromise.◦Moderate assertiveness and

moderate cooperativeness.◦Working toward partial satisfaction

of everyone’s concerns.◦Seeking acceptable rather than

optimal solutions so that no one totally wins or loses.

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(9,1) Competition and authoritative command.◦ Assertive and uncooperative.

◦ Working against the wishes of the other party.

◦ Fighting to dominate in win/lose competition.

◦ Forcing things to a favorable conclusion through the exercise of authority.

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(9,9) Collaboration and problem solving.◦Assertive and cooperative.

◦Seeking the satisfaction of everyone’s concerns by working through differences.

◦Finding and solving problems so everyone gains as a result.

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Telephone and Email Negotiating Telephone and Email Negotiating TipsTipsGood and bad aspects of

telephoneSome telephone trapsa)There is no Face to Faceb)You never know who is listeningc)Interruptions are deadlyd)You cant examine documentse)There is a tendency to expect

Resolution39

Learning to master the Telephonea)Learn to Listenb)Ask the purpose of the callc)Always use a checklist or agendad)Don’t hold Telephone Negotiations

where interruptions may occur.e)Have all the materials available on the

Phone.f) Confirm the conversation with the

follow up letter.

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Email Rules of Thumba)Grammar and Punctuations

makes impression.b) Nonverbal expressions can be

misinterpreted, so be careful.c)Follow – up is important and

courteous

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STAGES OF NEGOTIATIONSTAGES OF NEGOTIATIONPhase 1: Preparation

Phase 2: Interacting

Phase 3: Agreement

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Negotiation ProcessNegotiation Process

Opening

Closing

Bargaining

Preparation

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PREPARATIONPREPARATION

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Understanding one’s own position

and interests of the other party or parties

the issues at stake, and

alternative solutions.

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PREPARATIONPREPARATION1. Consider What a good outcome would

be for you and the other side.

2. Identify potential value creation opportunities

3. Identify your BATNA and Reservation Price and do the same for the other side.

4. Shore up your BATNA46


5. Anticipate the Authority Issue6. Learn All you can About the

Other Side7. Prepare for Flexibility in the

Process8. Gather External Standards and

Criteria Relevant to Fairness9. Alter the process in your favour

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CRITICAL ELEMENTS/DIMENSIONS CRITICAL ELEMENTS/DIMENSIONS OF NEGOTIATIONOF NEGOTIATIONKnowledge or information

Time or Deadline Pressure

Strength or Power

All the above are inter-twined

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INFORMATIONINFORMATIONMore information you have, the better

you will be able to negotiateInformation and facts help you to

generate alternatives, strategies and convince the other party

Information about the other party, market information, trends, technologies

Published Standards, guidelines, data equip you to put your points effectively

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TIMETIMETime plays a critical role in

NegotiationPareto’s Law 80/2080% of results are generally

agreed upon in the last 20% of the time

Time / Deadline pressure weakens you / builds tension

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POWER / STRENGTHPOWER / STRENGTH

The ability to influence / control the group and the events

Besides the authority of your position, knowledge is your strength

The balance of power keeps shifting from one side to the other during the negotiation process

Negotiation will end when -The balance of power shifts totally to one side – a Win-Lose situation

When the balance of power is shared equally – a Win-Win situation

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INTERACTINGINTERACTING

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INTERACTINGINTERACTINGGetting the other side to the

TableGetting off to a good startPower of AnchoringUsing Concessionary movesTactics for Distributive

negotiationGeneral Tactics

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Getting the other side to the Getting the other side to the TableTable

Offer incentives

Put a price for on the status-quo

Mobilise Support

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Getting off to a good startGetting off to a good start

Express respect for the other side’s experience and expertise

Frame the task positively, as a joint endeavour

Emphasise your openness to the other side’s interests and concerns.

Start with the agenda

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Getting off to a good startGetting off to a good startSome tipsSome tips“Breaking Bread” Have coffee,

snacks or light drinks available.

Use small talk to dispel tension

If the other side is very formal, don’t speak casually. If the other side is decidedly informal, speak in a more casual way.

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ACCOMMODATE

Build friendly relationship

Characteristics:

Promote harmony

Avoid substantive differences

Give into pressure to save relationship

Place relationship above fairness of

the outcomes

COLLABORATE

Problem solved creatively, aiming for win-win

Characteristics:

Search for common interests

Problem-solving behaviours

Recognising both parties’ needs

Synergistic solutions

Win-win becomes the main purpose of the negotiator

AVOIDTake whatever you can get/Inaction

Characteristics:

Feeling of powerlessness

Indifference to the result

Resignation, surrender

Take what the other party is willing to concede

Withdraw & remove = behaviour of negotiator

DEFEAT

Be a winner at any cost/Competitive

Characteristics:

Win-Lose competition

Pressure/Intimidation

Adversarial relationships

Defeating the other becomes a goal for the negotiator

COMPROMISE

Split the difference

Characteristics:

Meeting half way

Look for trade offs

Accept half-way measures

Aims to reduce conflict rather than problem solve synergistically

LOW

HIGH

CO

NC

ER

N F

OR

RELA

TIO

NS

HIP

CONCERN FOR SUBSTANCE HIGH

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Distributive NegotiationsDistributive NegotiationsWin-Lose NegotiationsAnchoring is an attempt to

establish a reference point around which negotiations will make adjustments.

When should you anchorCounter anchoringBe prepared for concessionary

moves

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Integrative NegotiationsIntegrative Negotiations Slower and more explorative opening Don’t start with numbers. Making a good start is critical Ask open ended questions Probe the other side’s

willingness to trade off one thing for the other. Inquire about the other party’s underlying

interests Listen closely Be an active listener Express empathy Work to create a two-way exchange of

information Continue relationship building efforts Refrain from personal attacks. Maintain a sense of humour

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The Art of ListeningThe Art of Listening

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NONVERBAL NONVERBAL BEHAVIOURBEHAVIOUR

What is going on

in the inside

shows

on the outside

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Face and HeadFace and HeadBroken Eye Contact(Hide)Looking pat you(Bored)Piercing(Angry)Steady(Honest)Head Turned slightly(Evaluating you)Tilted Head(Uncertain about what you

said)Nodding(In agreement)Smiling(Confident)

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Arms and HandsArms and HandsArms folded tightly(not receptive)Arm over the back of the chair(need

for dominance or negative reaction)Open palms(Positive)Hands clasped behind head(Need for

dominance)Steeling of the fingers(Need to control

negotiation)Hand wringling(Nervousness)Self touching(General nervousness)

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LegsLegsCrossing your legs has a

devastating effectOut of 2000 videotaped sales

meetings, not one sale was made by people who had their legs crossed

Source How to Read a Person like a Book by Gerard I. Nirenberg and Henry H. Calero

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Dominance/PowerDominance/PowerMaking piercing eye contactPutting hands behind head or

neckPlacing hands on hipsStanding while counterpart is

seatedSteepling

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Submission/NervousnessSubmission/NervousnessFidgettingMaking minimum eye contactTouching hands to face , hair etcUsing briefcase to “guard” bodyClearing throat

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Disagreement/AngerDisagreement/AngerGetting redPointing a fingerSquintingTurning body awayCrossing arms or legs

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Boredom and Lack of Boredom and Lack of InterestInterestFailing to make eye contactPlaying with objectsStaring blanklyPicking at clothesLooking at watch/door

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Uncertainty/IndecisionUncertainty/IndecisionCleaning glassesLooking puzzledPutting fingers to mouthBiting lipTilting head

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Suspicion/DishonestySuspicion/DishonestyTouching nose while speakingCovering mouthAvoiding eye contactCrossing arms/legsMoving body away

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EvaluationEvaluationNoddingMaintaining good eye contactTilting head slightlyStroking chinTouching index finger to lips

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Confidence, Cooperation and Confidence, Cooperation and HonestyHonestyLeaning forwardKeeping arms and palms openMaintaining great eye contactPlacing feet flat on floorSitting with legs uncrossedSmiling

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Challenges & ObstaclesChallenges & Obstacles

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TACTICS REGARDING PRICETACTICS REGARDING PRICE

Should I ever state my acceptable range?

Should I ever tell the other side my bottom line?

Suppose that the other side opens with an incredibly unreasonable number, should I counter with an equally unreasonable number, or decline to counter at all?

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TACTICS REGARDING TACTICS REGARDING PROCESSPROCESSIs it acceptable to make two

moves at a time?Is it smart or fair to bluff?In a complex deal, is it better to

reach agreement issue by issue or wait until the end?

Is it better to deal with difficult or easy issues first?

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TACTICS REGARDING PEOPLETACTICS REGARDING PEOPLECollaborative negotiator vs. positional

hard bargainer?How should I react if the other side

seeks to change something in its offer after a deal has been reached?

What should I do when the negotiator on the other side has a temper tantrum?

I don’t believe in what the other side says.

Is it essential to negotiate face to face?How should I react when the other side

challenges my credentials, status or authority to make a deal?

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CLOSURECLOSURE

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ClosingClosing

Be Prepared to Concede

Begin with those of Low Priority and seek High Priority Items

Never Concede on More than possible by your Brief

Use your Concessions Wisely

Don’t just give these away expect and receive something in return

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Being Confident Being Prepared Being Willing to Walk Away

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Convince Collaborate Create

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Documents

BATNA