Negotiation and Bargaining - Essay Example

Highlights
• what? What do you need to know to negotiate
• why? To develop Options and Alternatives
• who? By The Negotiating Team
• when? When common Objective is determined
• where? The Negotiation Settings
• how? BATNA or ZOPA

Purpose

• Increase both the skill and confidence of everyone who attends the class.
• Define the boundary conditions for any successful negotiation
• Applying three levels of listening that are key to resolving core issues
• Anchor a negotiation within the zone of an agreement to provide participants with the essential skills to reach a mutually satisfying outcome


Objectives
• Develop negotiation skills and abilities
• Understand and be able to analyze behaviors, tactics, and strategies, evaluate options and apply appropriate tactics
• Develop a negotiation plan
• Understand The Power of Credible Criteria
• Understand Fairness: Fact & Perception
• Shift From Positions to Interests – Rigidity to Flexibility
• Successfully execute and modify as needed the negotiation plan
• Gain confidence as a negotiator
• Develop the ability to avoid common mistakes made by negotiators
• Leading to successfully closing the deal

Roles

• Identify Collaborative vs. Aggressive Styles
• Use the Collaborative Negotiating Model
• Handle the "Hard" Negotiator
• Analyze Interests, Rights & Power
• Create Options from Interests
• Evaluate Priority Problems
• Use the Impact of Objective Criteria
• Use Approaches to the Zero-Sum Game
• Explore Trust, Threats & Competition
• Understand the Bargaining Zone
• Avoid Making Common Mistakes
• Understand Post-Settlement Settlements
• Make and Implement Agreements

Actions
• Communication Techniques
• Active Listening
• Body Language
• Cross-cultural Communications

Rules
• Collaborate
• Use The Power of Credible Criteria
• Be Fair: Fact & Perception
• Shift From Positions to Interests

Tools
• Communication
• The 3 Levels of Listening
• Hearing the words
• Listening to the meaning
• Listening to non-verbal messages (body language etc)
• Seeking and sharing information
• Enhancing understanding
• Clarifying issues
• Validating emotions
• Problem-solving
• Identifying and/or reframing issues
• identifying concerns and/or interests
• Brainstorming options/solutions
• Applying standards
• Crafting agreements

Input/Output

• It is important to take the input of all participants at the end of Class but it should be time-bound
• This helps them to gain insight into the process
• This makes them feel important to the Negotiation Practice
• Contributions make Negotiations more widely accepted

Examples

A good Negotiation is one that results in a Win.-Win situation and a bad Negotiation is a Win-Loose situation

 Exercises One

Assume that two brothers, Alex and Will, open a car wash service in their neighborhood where a car will be washed and waxed by hand for a price of $10. Assume that there are 24 cars interested in the service, resulting in total revenues of $240.

Productivity Rates: Number of Minutes to Wash and Wax One Car

Wash Wax

Alex

15 min

30 min

Will

20 min

20 min

If both wash and wax 12 cars each Alex will finish the job in 9 hours and Will in 8 hours. This makes their hourly wage rate $ 13.33 and $ 15 respectively.

If Alex Washes all cars he can finish in 6 hours and will earn $80

If Will Waxes all cars he will finish in 8 hours and will earn $ 120

Because of specialization they will earn revenue of $ 240 and get wages of $ 200 thereby making a profit of $ 40 on the venture.

If they enter into a partnership how should they divide the profit of $ 40?

Facts

1. Will works more hours but Will fishes his work in less time so Will demands greater share as his specialization earns more in less time

2. Will needs the work as with specialization he can earn more so for making Alex agree to the partnership he must let Will have a larger share of profit to get his own higher earnings

3. By specialization the productivity is increased as thereby saving 3 hours of work so the brother making more contribution is entitled to a higher share of profit

4. Work out the best negotiation possible to ensure a partnership.

Exercise Two

One seller has 100,000 pheasant eggs for sale. Three buyers want the eggs. But one wants the shells, one the whites and one the yolks.

The seller attempts to hold an auction for the eggs, sometimes the buyers collude, reveal their information, and gain an advantage over the seller.

The seller has 100,000 Pheasant Eggs that must be sold today. The buyers want 100,000 eggs, 60,000 eggs, and 40,000 eggs respectively. What the seller doesn’t know is that the first party wants only the egg yolks, the second only the egg whites, and the third only the eggshells. If this information is not revealed in the negotiation, then the eggs are divided among the parties in some way, the seller earns around $0.62 per egg, and the other parts are wasted. If this information is shared in the negotiation, then all buyers can get all the egg parts they need, and the seller can earn up to $1.00 per egg

Arrange the class in groups of four, one seller and three buyers, and give time to negotiate.

As groups return each seller should report the negotiated agreement.

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