Principled Negotiation and Separating People from the Problem - Essay Example

? PRINCIPLED NEGOTIATION Lecturer’s Affiliation: Submitted: Introduction Principled negotiation is an interactive form of negotiating price and conditions of goods and services and housing (Fisher and Ury, 1983). This interactive negotiation creates a relationship between two people who exchange information that leads to achieving shared goals. Both parties participating in principled negotiations benefit almost equally. In contrast to interactive negotiations, traditional bargaining involves using malicious means to emerge as the winner in the trade. Partners in this form of trade hide important facts to derive more value than the other party. People that buy and sell goods in different places participate in traditional bargaining because of limited chances of interaction in future. One party in this trade emerges the winner while the other has been violated. Negotiations make a difference in the market because two parties engage in sharing facts and solving problems. These negotiations can lead to shared interests between buyer and seller and inspire discussions on how to improve or maintain end-user satisfaction. The reason why principled negotiations are not based on positions is because both parties want to reach an agreement that will fulfill their interests (Hutchison et al., 2010). Negotiations are flexible in understanding each other’s interests before taking a position. Principled negotiations of a landlord and a potential tenant involve educating each other. The tenant will share his interests and reveal his source of funding for the rent while the landlord will provide information concerning appropriate rent, insurance, security, maintenance and motivations for leasing the premise. There are seven negotiating steps that a landlord and tenant follow for successful outcomes: meeting, discuss financial matters, discuss lease duration, disclose rent price, review rent, discuss repairs and maintenance and discuss insurance. Separating People from the Problem A tenant and a landlord are the people in question while rent pricing is the problems. A tenant will be cooperative and assertive while discussing rent and other alternatives and being soft and kind to the landlord and vice versa (Iroham, 2011). The landlord will collect information about the tenant’s values, cultural background and business venture to understand his interests and objectives in renting the commercial premise. The tenant will try to understand the situation from the landlord’s perspective of the amount of rent and other alternatives by listening carefully before responding. Each party in the principled negotiation understands their shared interests and personal goals that have to be achieved through the agreement of tenancy leasing. Communication in this stage is essential because it builds trust and respect. Focusing on interests and not positions The tenant’s short-term goal for this agreement is to secure a commercial premise. The underlying factors that motivate the tenant to lease the property is satisfying the demands of his customers, making a profit and achieving his objectives of expanding his business and improving his living standards (Kurtzberg, 2005). The tenant will try to voice his interests to make the landlord understand the reasons behind his participation in the agreement. His position on rent is not the important issue because he needs the underlying factors to continuously pay rent and develop further. The landlord does not focus his position on price of leasing the commercial building, but shares his interests on making profit, meeting the demands of the tenant and improving his living standards. Identifying options for mutual gains The purpose of principled negotiations in a business agreement is to achieve mutual options for both parties. The landlord and the tenant in this case must focus on inventing new interests rather than limiting their options by making hasty decisions. Brainstorming is the next step that requires both parties to do an extensive research using the legal and economic system to understand and explore their rights (Levy and Schuck, 2005). The last step in identifying mutual options is looking for both tenant and landlord’s shared interests. The tenant has demands and needs that the landlord will supply while the tenant will satisfy the landlord by paying for the commercial premise and its maintenance. Shared interests also include making profits, which means that the tenant will not only sell his goods and achieve his goals, but also aid the landlord in making profits and expanding his real estate business to new regions. The landlord will ensure that the building is in good condition for trade while the tenant will maintain his constant supply of rent every month until the set period to dislodge. Objective Measures A long-term principled negotiation can lead to disruption or fixed decisions. Objective measures help to stabilize the situation by proposing objectives towards reaching a reasonable rent price (Morris, 1990). An objective criterion is allowing the landlord to propose reasonable rent in relation to the profit and cost of building the premise. Another objective criterion is calculating the rent using market-based rates method. This method surveys and analyzes the market value of commercial buildings around the area and sets in accordance to other landlords. Best Alternative to a Negotiated Agreement (BATNA) The BATN is prepared through extensive research on current markets, asking other tenants about rent price and seeking legal advice about the policies enacted to protect the interests of the tenant (Sam, 1996). The tenant must find other alternative ways to decide the agreement on rent. The landlord should price each term (monthly or after six month) differently to capture the interest of the tenant. Another way to determine rent is demanding the landlord of the business premise to disclose the value added tax (VAT) of the commercial building. This VAT is also charged on rent and is recoverable. Other alternatives include pricing rent on the basis of adjusting risks in the real estate market. From the landlords’ perspective, his interests stem from his values, aspirations and objectives in making profit, expanding his business and improving his living standards and that of his tenant. The rent price is based on the above factors but also but also the alternative options and tenant’s interests. The tenant wants to lease the commercial building to achieve his objectives of making profit, business opportunity and expanding his business to new markets. These are some of the shared and personal interests connected to negotiating the rent price. A fixed-pie assumption is when one party has unchallenged power, which leads to refusal to integrative negotiation (Smutko, 1994). When the tenant is dependent on the landlord, the landlord will hold unchallenged power making the negotiation a one-time event, which is a fixed-pie situation. Conclusion To conclude the principled negotiations, the tenant should agree to pay the stipulated rent during the agreed term and pay a damage deposit in advance that will cater for his lease violations, property damage and non-payment of rent. The landlord on the other hand should allocate a reasonable rent price, provide parking for the tenant’s clients, cater for maintenance and alert the tenant with a month’s notice before rent increment or eviction. Bibliography: Fisher, R. & Ury, W., 1983. Getting to Yes 2nd Edition, Westminster: Penguin Books. Hutchison, N. E., Adair, A. S., & Park, K., 2010.The Value of Rental Deposits.Journal of Property Investment & Finance, 28(4), pp.250-pp.262. Iroham, C., 2011. An Exposition on Principle’s Influence in Real Estate Negotiation.International Journal of Marketing Studies. 3(2), pp.3-pp.7 Kurtzberg, T. C., Dunn-Jensen, L. M., & Matsibekke, C. L., 2005. Multi-party E-negotiations: Agents, Alliances and Negotiation Success. International Journal of Conflict Management, 16(3), pp. 245-pp.264. Levy, D. & Schuck, E., 2005. The Influence of Clients on Valuations: the Clients' Perspective. Journal of Property Investment and Finance, 23(2),pp.182-pp.201. Morris, N. D., 1990. Seven Steps to Principled Negotiation.Real Estate Review, 20(2), pp.51-pp.55. Sam, K., 1996. Facilitator’s Guide to Participatory Decision-Making, Philadelphia: New Society Press. Smutko, S., 1994. Collaborative Watershed Planning in North Carolina.Journal of Resources Economics.2, pp.1-pp.8. Read More