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CHAPTER VI

NEGOTIATION

Francisco Javier Lemus Gallego, José Mª Salinero Aroca, Guillermo Varela Arjona and Cándida Sevilla Solano.

1. INTRODUCTION

One of the definitions of “negotiation” is “the management or resolution of a matter, especially diplomatically”. The negotiations are processes through which two or more parts try to limit or end a conflict among them. Therefore, a successful negotiation is that where the parts subscribe to a commitment. A negotiation does not imply the use of force, the parts should make concessions, communicate and persuade to reach this commitment.

Let us make a list with different social situations in which we should negotiate, identifying the person with which we negotiate:

situation

person

   
   
   
   

One of the areas where negotiation is more evident is in the managerial field. In the context of dynamic and competitive markets, many managers negotiate with clients, suppliers, competing companies, the authorities and other institutions. The profitability of the business and the viability of the company depend in the long term on these negotiations.

The study about negotiation has evolved. In the beginnings, this study followed two tendencies: one of them focused on specific areas of negotiation like diplomacy, labour or commercial negotiations, always according to experts. The other tendency referred to a generic study of negotiation on giving advice to win the negotiation. At the beginning of the 70’s, negotiation began to be considered as an integrated discipline, as for the University of Harvard with the Professor Roger Fisher at its head, who began an investigation project based on the experience of experienced negotiators of the entire world. The innovation of the Method Harvard consists on emphasizing the communicational process of negotiation and on trying to reach a beneficial result for all the parts involved in the conflict. From the traditional scheme win-lose, we shift to a scheme win-win. Of course, this does not mean that all the parts will obtain all they want but they obtain more than they would have obtained with other methods. The pattern provides a simple method in its theoretical conceptualisation but requires abilities to reach it in practice with good results. Some people have an innate capacity of negotiation, but even learning the method is good to order the techniques that they apply intuitively and provide them others that arise from the theoretical framework. This group of investigators elaborated a negotiation pattern that considers 7 elements.

1.1 OBJECTIVES

  • To identify the situations in which we negotiate
  • To know what are the basic elements of negotiation
  • To be aware of the importance of planning a negotiation
  • To know the phases of the negotiation process

2. ELEMENTS OF NEGOTIATION

2.1. Interests

To explain this element we will use the case of two sisters that were arguing for an orange.

Two sisters already married and with their respective families were told to clean the living room, in which other people had had a meeting. The younger sister, as entering the living room, noticed that there was nobody and that there were ten oranges left on the table. She felt very happy, because she knew nobody would ask for them. So she began to put the oranges in a bag she had, while she imagined the delicious juice she was going to prepare with these fruits she would drink that night at home.
Her elder sister entered suddenly the living room and when she saw the oranges, she called out: Wonderful, they have left us 10 beautiful oranges."
The other answered: “Why do you say they have left us? You may say, they left me 10 oranges."
"Do you think you are going to eat them all"? - The older one replied.
"Of course! You know very well that the early bird catches the worm. -The older sister answered-; so for this time I should keep the gift that was in the living room."
" And won’t you even give me a single orange?" she asked friskily the elder sister.
"I have already told you I won’t. In another occasion you will be more lucky, like it did it before" – said the younger sister.
"It is not fair! -Insisted the elder sister surprised -.What would have happened if I had entered first the living room? Would you think it would have been fair if I had kept the 10 oranges? Would you think it is right if you I do not give you any orange?"
"All right, sister–corrected the young one -, I can give you a couple of oranges."
But the eldest insisted: “ Only a couple? Only two oranges for the sister who loves you so much? You almost give me the crumbs."
This discussion went on for several minutes, and finally, after some difficulties, the eldest sister finally receives 4 of the 10 oranges.
The young goes home with her 6 oranges and made a delicious orange juice. While she was sharing it with her husband and children, she thought how lucky she had been finding the 10 oranges, and especially for getting 6.
That same night, her eldest sister also got home with her 4 oranges. Carefully she peeled them with a knife, and with the peels, she prepared a delicious cake. And while she was sharing it with her husband and daughters, she thought of how lucky she had been for getting 4, when none was hers. After the dinner, she threw the pulp of the four oranges to the rubbish, because she and her family did not like the orange juice. Then she gave a glass of milk to each member of the family, which they enjoyed with the orange cake.

This example is useful to make a clear distinction between positions and interests. The basic essentials of negotiation processes focus on the interests of the parties (motivations, aspirations, worries) and not on their positions, constraint power or legal rights.

Identify the positions and interests of each sister

2.2. Options

It refers to the possible agreements that can be reached, considering the different ways to satisfy the interests of the parties in negotiation.

In the case of a client and a supplier, we see that the position of each one is opposed and is related to the price, and in this case if one wins the other one loses. Can you consider other interests where both may win?

2.3. Alternatives

It refers to what the parties can do, solutions to solve the conflicts and their origin. The alternatives must be taken into account as much the parts can do jointly as they can do separately.

2.4. Legitimacy

It refers to the attitudes used to judge, to the arguments that each party uses. If a young person wants to negotiate with his or her parents at what time he or she must come back home, and uses, as an argument, his or her friends timetable, it can be easier. An external point of view avoids the tiredness due to opposite positions.

Let us put different negotiation examples and look for arguments that can give legitimacy.

2.5. Communication

The basic instrument for negotiation is communication. It is necessary to take into account verbal communication and not verbal communication. This must take into account the following characteristics: Active listening, Empathy, Assertiveness, To eradicate communication barriers and to transmit sincerity.

Let us go back to communication. Analyse and write those aspects of the communication that can be important for credibility in the negotiation process.

2.6. Relationship

The parties that participate into negotiation have a relationship, an interaction. The condition of this relationship is going to be one of the decisive elements of negotiation. A good relationship allows to face better the conflicts than can arise from interaction. There are two rules to achieve positive relationships:

  • To consider the relationship and the content of negotiation separately.
  • To be constructive.

2.7. Commitment

There must not be commitment at the beginning; it should only arrive when negotiation is sufficiently mature. Commitment must have the following characteristics:

  • o Clear and operative.
  • o Realist.
  • o Sufficient.

Here is a summary of the method to carry it out:

  • To separate people from the problem.
  • To focus on the interests, not on people.
  • To give alternatives of mutual benefit.
  • To insist on applying objective judgement.

3. STEPS OF NEGOTIATION

Many negotiations do not follow a preset plan, and this can lead to a failure. For a successful negotiation, the personal abilities are important, and some general steps must also be followed:

3.1. Preparation.

For the preparation of the meeting, it is necessary, like in every plan, to realise a diagnosis. For this diagnosis, we give the following points:

  • To know yourself. We should answer to the following questions: What do I want to get from this negotiation? We should specify the operative objectives of negotiation; and why is it important for me? Specifying our interests.
  • To know the other part. It will give us the lines of the strategy to be followed. We should investigate their objectives, necessities, interests, resources, negotiation style, and possibilities to reach an agreement, and the possible strategies and tactics that they can use.
  • To know the situation: we should know the context in which negotiation will take place. Using a military simile, we would analyse the field where the battle will take place.
  • Negotiation strategy. Every strategy is based on the previous diagnosis we have developed. One of the most used methodologies to make a diagnosis is the SWOT analysis (strengths, weakness, opportunities and threats), we have to strengthen the strength, take advantage of opportunities, minimize threats and work on weakness.

3.2. Management of negotiation

It is the concrete interaction where negotiation is carried out. The main instrument that we will use is communication, and one of the keys to success is a believable message. If we want our messages to be believable, we should take into account the following advice:

  • Let us speak
  • In a natural way
  • The message must have repercussions
  • It must be interesting
  • I believe what you say and you believe what I say
  • We all should win in the conclusions
  • These conclusions will last in time
  • The conclusions will be respected because they are common

Sometimes it will be necessary to carry out a negotiation protocol, it should be accepted by the two parties.

3.3. Implementation

It is the moment to carry out the commitments we have reached with negotiation. Sometimes at this stage new issues of conflicts can arise and these conflicts which lead to the following stage.

3.4. Renegotiation

You would begin a new negotiation cycle with the same characteristics as the previous phases, with new offers until you take on a commitment.

Read the following story attentively and respond to the outlined questions.

Juan is interested in buying a new computer. He got information from different places and he finally chooses a store that seems to have excellent prices. He studies what he really wants carefully, in order to be sure of the price he should pay. When entering the store he approaches an assistant, he memorizes his name and asks him to call for somebody who knows about computers because he wants to see different models.
The assistant offers to indicate Juan the computers they have. He says that he wants to find a model that he likes and with a reasonable price. "I was attracted by this store because you make profit but at the same time you give the client a good opportunity to carry out an excellent purchase and, I believe that both things are important”.
The shop assistant asks Juan the technical characteristics of the computer he prefers, an also the maximum price he wants to pay for it. Juan explains his necessities and the salesman confirms him that his products satisfy his demands, but also some of the chosen options are more expensive; so Juan answers: I don't understand why it should be so".
Juan chooses a model and asks for the price. The shop assistant indicates him that it costs €650, and Juan is surprised because according to the ad it should not cost more than €490. The shop assistant indicates him that in this very model there are two extra elements that are not included in the sale models. Juan understands it but he does not agree with the additional cost. After a short discussion, Juan says he cannot pay so much and that he will look for another place. The shop assistant presents him with a cheaper model, but Juan does not change his mind. The shop assistant offers him a new price: €580. Juan analyses it and thinks about it. He adds that the price includes delivery and installation. Juan responds that it cannot pay more than €510.
The assistant responds to Juan he cannot accept this new price, but proposes him a new price: €550. Juan says: I agree, if the price includes delivery and installation, you can do the bill."

Questions:

  • When we are going to negotiate, do we begin to negotiate without before knowing our rival?
  • When we negotiate, do we exclusively look for our interests?
  • When we carry out the purchase, are we only interested in buying the product at the best price, keeping a defensive attitude and mutual distrust?
  • Is it important to analyse the details of a negotiation before beginning a negotiation, or during the negotiation?
  • In a negotiation, is it essential to avoid conflicts and disagreements?
  • What purposes have conflicts in a negotiation?

4. Bibliography

Fisher, R.; Ury, W.; Patton, b. (1996). Obtenga el sí: el arte de negociar sin ceder. Ediciones Gestión. 2000, S.A.

Herramientas de desarrollo profesional del siglo XXI (Revista emprendedores).

Negotiation

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