Understanding Negotiation Process

What is Negotiation?

• Negotiation is a process aiming to reach an agreement between two or more parties with varying goals and positions.
• The goal of negotiation is to find a compromise or solution that is mutually beneficial.
• A court trial is not a negotiation as it involves a third party (the court) and focuses on convincing the third party rather than reaching an agreement.
• A fight is not a negotiation as it involves tension and emotional conflict with the goal of winning at all costs, rather than finding a solution that benefits both parties.

When to Negotiate?

• Negotiate when you wish to reach a compromise and find a mutually beneficial solution.
• Consider negotiation when the status quo is not optimal and you believe a better agreement can be reached through negotiation.
• Avoid negotiation if you are not interested in reaching an agreement, if the status quo is optimal, or if other parties' expectations are illegal or morally unacceptable.
• Do not negotiate if you have reached your capacity limit. Instead, consider increasing your price or limiting your undertakings.
• Be cautious about negotiating if it involves a high risk. Explore alternative solutions in situations with high risk.
• Avoid negotiating if you are certain that the other party is not flexible, such as haggling with a supermarket assistant who is not authorized to change prices.

When to Postpone Negotiation

• Postpone if you are under time constraint to avoid making poor decisions due to limited time.
• When you are not prepared for the negotiation, postpone to allow time for preparation to identify key questions, answers, and possibilities for success.
• Postpone if waiting strengthens your position, as time can shift the balance of power in your favor.
• If you believe other parties are operating on false information, postpone the negotiation to clarify misunderstandings before proceeding.

Exit Criteria for Negotiation

• Exit if a compromise has been reached, and the terms of the agreement are beneficial to both parties.
• Exit if the compromise offers a worse situation than the status quo.
• Exit if the negotiation would lead you to exceed your capacity limits.
• Exit if it becomes clear that an agreement is impossible to reach.
• Exit if you need a new round of negotiation to address further issues or concerns.
• Exit if you discover that the person you are meeting is not the decision-maker in the negotiations.

Case Study - Interior Designer Agency (IDA) and Furniture Company (F)

• A furniture company (F) recommended an Interior Designer Agency (IDA) to a Client (C).
• IDA won the bid for a project but was required to organize an open tender for the furniture.
• F failed to win the tender due to a lack of competitive pricing and low rankings in quality and value for money assessments.
• F attempted to influence the Client through bribery, which failed, damaging the relationship between F and the Client.
• IDA avoided a negotiation with F.

Moral of the Case Study

• Avoiding negotiation led to a negative impact on the relationship between IDA and F.
• F lost a valuable client due to their actions.
• Negotiation could have salvaged the relationship and potentially maintained the business opportunity.

Constituents of Negotiation

• Negotiation involves three key elements:
  • Content: The subject of the negotiation.
  • Process: How the negotiation progresses.
  • Relationship: The relationship between the parties and how the negotiation affects it.
  • A successful negotiation involves achievement in all three areas.

References

• Fischer, R., Ury, W., Patton, B. Getting to Yes - Negotiating Agreement Without Giving In. (1994) Penguin Books.
• Fisher, R., Brown, S. Getting Together: Building Relationships as We Negotiate. Penguin Books New York
• Ury, W. Getting past no. Bantam Books 1991 New York
• Gosselin, Tom. Practical Negotiating: Tools, Tactics, & Techniques. John Wiley & Sons.Inc (2007)
• Fisher, Roger, Ury, William, Patton, Bruce. Getting to Yes: Negotiating an Agreement Without Giving In. Houghton Mifflin Company (1991)

This quiz explores the fundamentals of negotiation, detailing when to engage in negotiation and when to avoid it. Learn about the differences between negotiation, court trials, and conflicts to enhance your negotiation skills. Test your knowledge on achieving mutually beneficial agreements.