Basics of NegotiationBy: Carlo Senica

Dealing with Differences

Negotiation is a process by which people deal with their differences.

To negotiate is to seek a mutual agreement through dialogue.

Outcome will be either win-win or win-lose.

It can be a formal or a non-formal affair.

Types of Negotiation

Characteristics DISTRIBUTIVE INTEGRATIVE

Outcome Win - Lose Win - Win

Motivation Individual gain Joint gain

Interests Opposed Congruent

Relationship Short-term Long-term

Issues involved Single Multiple

Ability to make trade-offs Not flexible Flexible

Solution Not creative Creative

Four Key Concepts in Negotiation

1. BATNA or Best Alternative To a Negotiated Agreement

2. Reservation Price or “Walk Away Price”

3. ZOPA or Zone Of Possible Agreement

4. Value Creation Through Trades

B A T N A

Your BATNA is your preferred course of action in the absence of a deal.

It is critical to know your BATNA before entering into any negotiation.

It determines the point at which you can say NO to an unfavorable proposal.

Reservation Price

The least favorable point at which you would accept a deal.

Should be derived from your BATNA, but not necessarily the same thing.

Z O P A

ZOPA is a range in which a deal can take place.

Each party’s reservation price determines the end of the ZOPA. ZOPA exists between the parties’ reservation price.

Value Creation Through Trades

The idea that negotiating parties can improve their positions by trading the values at their disposal.

It occurs in the context of win-win negotiation.

Each party gets something what it wants in return of something it values much less.

Steps in Negotiation

1. Determine satisfactory outcomes

2. Identify opportunities to create value

3. Identify your BATNA and reservation price

4. Improve your BATNA

5. Assess who has authority

6. Study the other side

7. Prepare for flexibility in the process

8. Gather objective criteria to establish fairness

9. Alter the process in your favor

Barriers to Agreement

1. Lack of trust

2. Potential saboteurs of a good deal

3. Differences in gender

4. Diferences in culture

5. Difficulties in communication

6. Die-hard bargainers