NPT Lecture 4 2024 Autumn ESzK PDF

Negotiation and Presentation Techniques Lecture 4 – Negotiation I. – What is negotiation? 1 Previously on the NPT… Negotiation I. What is a negotiation? When to negotiate? When not to? Enter and exit points Success criteria...

Negotiation and Presentation Techniques Lecture 4 – Negotiation I. – What is negotiation? 1 Previously on the NPT… Negotiation I. What is a negotiation? When to negotiate? When not to? Enter and exit points Success criteria 3 WHAT IS A NEGOTIATION? We negotiate in different situations in different circumstances with diverse goals and with different partners about very different topics. Selling-buying something What to see in the movies? Discussion of a business cooperation Divorce Law-court trial (?) Piece negotiation Oral exam..... 4  4 WHAT IS COMMON IN THESE EXAMPLES? The goal is always to reach an agreement. Exception: law court trial Why? The positions change dynamically. 5  5 DEFINITION Negotiation: Unregulated and flexible process aiming at reaching an agreement between two or more parties. Who are the parties in the previous examples? What possible agreements can you think of? What does flexibility mean in these cases? Negotiation Techniques (NT): aim at finding general correlations typical to most negotiations. The tools of NT help us examine different types of negotiation, explore governing rules, and help us to be more successful negotiators. Why is the law-court trial different? 6  7 The law-court trial is not a business negotiation! Third party (the court) gets involved because the parties could not agree. Goal: not an agreement but rather to convince the third party! THE (BUSINESS) NEGOTIATION Two or more participants (persons, groups, organizations). Goal: finding a compromise. 7  8 A fight is NOT a NEGOTIATION! Get rid of tension, attack the other, emotional. Goal: pursuing our interest at all cost, beat the other party, bullying, make the other party ridiculous, etc.. THE (BUSINESS) NEGOTIATION Confront interests, reaching win-win, maintaining or establishing good relationship Goal: realistic mutually beneficial agreement. 8  9 A rational debate is NOT a NEGOTIATION! Finding the argumentation truth through proofs and refutations. Goal: find a conclusion that all parties may agree with. THE (BUSINESS) NEGOTIATION Serving interests, flexible route to find an agreement. GOAL: agreement. 9  9 HOW DO NEGOTIATION TECHNIQUES HELP US? William Ury (Harvard University): William Ury, author of "Getting to Yes”: https://www.ted.com/talks/william_ury_the_walk_from_no_to _yes?language=en An old man dies somewhere in the middle east leaving 17 camels to his sons: Half of the camels will go to the eldest. One third – the middle boy inherits. 1/9 of the camels should go to the youngest. Unfortunately, 17 is a prime. Cannot be divided either by 2, 3 or 9. 10  1 The boys decide to consult an old 0 wise woman. She has one camel that she can lend the boys. The total number of camels will be 18: ▫ 18/2=9 – for the eldest. ▫ 18/3=6 – for the middle. ▫ 18/9=2 – for the smallest. SOLUTION 9+6+2=17 --> they need 17 camels They return 1 camel to the lady. 11  https://medium.com/@advisorsbloc/why-negotiatio n-skills-are-essential-for-success-in-9fd12b8b23e6 12  1 1 WHY DO WE NEGOTIATE? It takes effort and energy to negotiate. Negotiations always have some risk. We must have good reason to enter a negotiation. We enter a negotiation if: we are not fully satisfied with our present situation (broadly construed), and we envision an agreement that will improve it. 13  1 WHEN IS IT WORTH TO 3 NEGOTIATE? If the expected agreement promises more value than our status quo or other solutions reached with different means. = ENTRANCE CRITERIA The negotiation is successful if it guarantees more more value than our status quo or other solutions reached with different means. = SUCCESS CRITERIA The negotiation is not successful if it establishes an agreement with less value than our status quo or other solutions reached with different means. You are wrong if you are not open to negotiation with the hope of guaranteeing a more valuable situation than the status quo. 14  1 3 WHAT DOES SUCCESS MEAN IN A NEGOTIATION? The outcome of a negotiation is successful for us if we reached the most favorable solution under the given circumstances. The assessment may contain subjective elements, too. Success therefore cannot be measured 100 % objectively. Examples: We believe that we purchased something for the lowest possible price because we have not learnt about the latest price cuts – we happily agree. We managed to have our salary increased to a level 10% higher than the average. 15  1 5 WHEN SHOULD WE SAY NO TO NEGOTIATON? If you are not interested in an agreement, you may lose and gain nothing. – E.g.: someone wants to buy your limited edition bicycle that you have no intention to sell, especially because the offered price is way below the value you find reasonable, moreover, you will not be able to go to work without your bike. If the status quo is optimal. – E.g.: we are happy with the agreement that we reached with the firewood supplier. If the other parties expectations are illegal, unjust, morally unacceptable. – E.g.: blackmail, fraud, corruption. 16  1 5 WHEN SHOULD WE SAY NO TO NEGOTIATION? If you have reached your capacity limit, do not negotiate! Increase your price, instead! – E.g.: you have multiple requests for holding trainings. This is a situation when you can ask for more money and limit your undertakings. If the negotiation is too risky. Try to find another solution in this case! - E.g.: rewriting a midterm can also be considered a kind of negotiation. But: if you run the risk of lowering your existing grade, than you take a huge risk. If we are certain that the other party is not flexible. – E.g.: you do not start bargaining in a supermarket, since the assistant is not in the position to decrease the price. 17  1 7 WHEN SHOULD WE SAY NO TO NEGOTIATION? When to postpone (1): If you are under time constraint: time constraint increases the risk of making mistakes, agreeing contrary to your interests. -E.g.: you have to find a flat as soon as possible. You don’t have time to evaluate the market, see the prices, selections, etc. If you are not prepared for the negotiation: the possibilities, the important questions, the best answers you will find out only after the negotiation! - E.g.: an employee „attacks” his boss for wage increase in the elevator. 18  1 7 WHEN SHOULD WE SAY NO TO NEGOTIATION? When to postpone (2)? If waiting strengthens your position: -E.g.: if we wait to buy a Christmas tree until the last minute, when the sellers offer the remaining trees for sale. Half hour before the market closes, there is a greater chance of negotiating the price of the products, because then the seller is no longer target the profit but of overselling the stock. If the others are in a further false beliefs: interrupt the negotiation if you see signs of others are acting in a false belief. -E.g.: you went to negotiate with an authorization to agree on a schedule for an investment with your partner, but he thinks you will bargain for labor wages. 19  1 7 EXIT CRITERIA If we reached a compromise. If the compromise would lead you to a worse situation than your status quo. If the negotiation would lead you over your capacity limits. If it is clearly impossible to reach an agreement. If you need a new negotiation round. If it becomes clear that the person you are meeting is not the one who is in charge of the given deal. 20  1 9 CASE STUDY It would have been a better choice to negotiate There are occasions when we refuse to enter a negotiation and feel sorry about it afterwards. Usually, we can still go back to the negotiating table. However, sometimes we lose the opportunity to negotiate. 21 INTERIOR FURNITURE DESIGNER COMPANY (F) AGENCY (ID) vs. CLIENT 22  2 1 THE SITUATION (1): A furniture company (F) recommended an Interior Designer Agency (IDA) to a Client (C). The project was the interior design and furnishing a new office buliding. In exchange, F asked IDA to use his furnitures in his proposal. IDA contacted the Client. The C changed his mind and organized a tender for choosing the interior designer. The interior designer will be asked to do the furnishing, as well. IDA wanted to win this bid, therefore, he offer a price way below the market average. If he wins the project, he will lose money, unless he can overprice the furniture. This was exactly, IDA had in mind. 23  2 3 THE SITUATION (2) IDA won the bid. IDA prepared the design. The C changed his mind once again, and decided to have a tender for the furnishing, as well. It has been decided that IDA has to organize an open tender in order to choose the right furniture company for the office building. IDA had to learn that F has absolutely no chance to win this tender, because… ▫ his offer was not the cheapest. ▫ he ranked only No. 3 in the quality ranking. ▫ In the value for money assessment F was not among the 3 best. Summary: IDA was not able to argue for choosing F. IDA had to decide to exclude F from the short list. 24  2 5 THE SITUATION (3): F learnt about the outcome of the competition – but not from IDA. F tried to influence the C by asking a common friend to try to bribe the management of the C. He did not succeed. The relationship between the C and F suffered from the failed corruption initiative. The C chose the furniture company, obviously not F. IDA learnt that F is furious about the story. IDA tried to contact F, but F did not want to speak with IDA. IDA was thinking about initiating a negotiation, but rejected this idea later. 25  2 6 Negotiation would have been the right choice! THE RELATIONSHIP BETWEEN THE FURNITURE COMPANY AND THE INTERIOR DESIGNER AGENCY WAS DESTROYED! THE FURNITURE COMPANY LOST AN IMPORTANT CLIENT. 26  2 7 MORAL Avoiding the negotiation did not only result in losing a business opportunity: it had a negative impact on the relationship between the parties, too. 27 CONSTITUENTS OF A NEGOTIATION Content: the subject of the negotiation. Process: how the negotiation goes on. Relationship: relationship between the parties, how the negotiation affects it. A negotiation is considered successful if it is altogether successful. 28 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 (2007): Practical Negotiating: Tools, Tactics, & Techniques. John Wiley & Sons. Inc. Fisher, Roger – William Ury – Bruce Patton (1991): Getting to Yes: Negotiating an Agreement Without Giving In. Houghton Mifflin Company. 29 Thank you for your kind attention! Krisztina Ecsediné Szabó, PhD: [email protected]