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Definition of negotiation and skills

Negotiation

After studying this article you should be able to:
Define the meaning of term "negotiation".
Distinguish between distributive and integrative negotiation.
Discus the different steps of planning negotiation process.
Explain and list the negotiation strategies.
Explain how we can develop effective negotiation skills.
Be acquainted with Salary Negotiation and Job Offer.
Definition of negotiation
Definition of negotiation

Definition of negotiation

Negotiation is a process in which two or more parties who have different preference must make a joint decision and come to an agreement.

Negotiation is a process which takes place when two or more interdependent parties who have different needs and goals, work together to find a mutually acceptable & beneficial outcome.
  • This often involves both parties making concessions.
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.
as possi09 Negotiation may be:
  • between two parties (bilateral); or
  • among several parties (multilateral).
Each of the parties who participate in negotiation may be a principal or an agent for a human principal or for a legal entity such as a corporation.

Negotiation may be straightforward and quick, if the wishes of all parties are satisfied by the first proposal put by one of them.

Why do negotiations fail?

There are many reasons cause the failing of negotiation; we can summarize these reasons as follows:
  • Getting too emotional.
  • Focus on personalities, not issues.
  • Not trying to understand the other person (too focused on our own needs).
  • Wanting to win at all costs.
  • Regarding negotiation as confrontational.

The eight stage negotiation process

Prepare: Know what you want. Understand them. Do your research ahead of time to so that you know your opponent and you know what you want from the negotiation.
Open: Put your case. Hear theirs. Let the other side know what you want and let them tell you what they want.
Argue: Support your case. Expose theirs. Back-up your case with evidence and uncover defects in their argument.
Explore: Seek understanding and possibility. Search for common ground and agreeable outcomes.
Signal: Indicate your readiness to work together. Show that you are ready to reach an agreement.
Package: Assemble potential trades. Put together different acceptable options for both parties.
Close: Reach final agreement. Come to an agreement and finalize the negotiation.
Sustain: Make sure what is agreed happens. Ensure that their side, and yours, follows through with the negotiated agreement.

Negotiation Strategies

There are a number of outcomes that could occur as a result of negotiations. Depending on how you address the negotiations, you will reach one of the following outcomes:

Win-Win.
Both parties achieve their goals and are satisfied with the outcome. For example, both you and the investor are happy with the terms of the negotiation contract.

Win-Lose.
One party achieves the goal at the expense of the other party. For example, the investor is happy with the terms of the contract, but you believe the investor will have too much control of your business.

Lose-Lose.
BIHOVI woda Both parties are dissatisfied with the terms of the negotiated contract. For example, you feel that the investor is demanding too high a return, and the investor feels that your valuation of your goodwill is exaggerated. The two of you cannot agree on these points, but they are the only items that are preventing you from signing the deal, so you leave them in and close the deal.

As you want to build a long, prosperous relationship with the investor, you should aim for a win-win agreement so that both parties feel that their needs have been met.

Developing Effective Negotiation Skills

  • Research the individual with whom you'll be negotiating.
  • Begin with a positive overture.
  • Address problems, not personalities.
  • Pay little attention to initial offers.
  • Emphasize win-win solutions.
  • Create an open and trusting climate.
  • If needed, be open to accepting third-party assistance.

The 5 Key Characteristics of Successful Negotiators

  1. An appreciation & understanding of the 'Big Picture' as well as the ability to plumb the detail.
  2. The ability to generate creative options.
  3. Treating others with dignity & respect at all times - occupying the 'high moral ground'.
  4. Devoting time to structured preparation.
  5. Know and understand your own negotiation strengths & weaknesses.
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