Key Concepts for Skills and Strategies for Negotiation

1. Key Concept: Introduction to Negotiation

Common misconceptions about negotiation:

● Mostly undertaken by different governments, businesses and clients

● Negotiation is carried out for hostage release between two states in war
● Needed only during diplomatic missions

In reality, negotiation is not limited to government and business settings only. It is used in
our personal and daily lives as well. For example:

● With parents: negotiating play time hours, pocket money, etc

● With sibling: what to watch on TV
● With friends: where to hangout

What you will learn:

● Negotiation focused on principles such as value, moral and ethics

● How both parties can persuade each other to achieve a deal that is mutually beneficial

What you will not learn:

● Negotiation without principle: negotiation practices that compromise morals and ethics
2. Key Concept: Course Outline

This course is divided into 3 parts. In the first part you will learn 3 techniques or strategies:

● BATNA (Best Alternative to a Negotiated Agreement)

● Reservation Price and setting the target
● Art of making concessions

In the second part you will learn:

● How to deal with irrational people or irrational offers

● Power, rights and interest-based negotiation
● How “reputation” affects a negotiation

In the third part you will learn:

● How to achieve a “win: win situation” for both parties involved

● How to create more value in a negotiation

3. Key Concept: Two Factors

In this course the term ‘​Negotiation’​ is conveying two factors.

Exchange of Values:​ Negotiation only occurs between different parties or individuals when both
parties/individuals have something to gain from each other.

Collaboration:​ When a negotiation is taking place between different parties or individuals, in

essence they are collaborating or cooperating with each other.

Everyday negotiation examples:

 ● You negotiate with your rickshaw driver about the fare of the rickshaw ride
● You negotiate the price of groceries with the seller when shopping at a grocery store
● You even negotiate with your siblings or loved ones for different purposes

As negotiation is needed daily, in this course you will learn the different techniques involved. So
that you enjoy the process of negotiation and become an effective negotiator.

4. Key Concept: BATNA

BATNA is the first blockbuster strategy for negotiation. So, what is BATNA?

BATNA stands for ‘Best Alternative to a Negotiated Agreement’.

Example 1​: If you receive only one job offer, even if the salary is not desirable you will not have
much room for negotiation, because you have no alternate choice. Whereas, if you had two or
more job offers, you could select the offer that had the best pay or confidently negotiate for your
desired salary.

Example 2:​ You need a 1000-taka loan. You decide to ask your Mother and your friend, your
mother refuses to loan you 1000, but your friend agrees.

BATNA recommends that you have a backup or alternate option available so that when you
negotiate, if your first choice fails you have another option to fall back on. Moreover, having a
backup gives you confidence while negotiating, because you know that you can use your backup
options in case the current negotiation fails.

5. Key Concept: Reservation Price (RP)

Reservation Price is the price limit below or above which you cannot accept an offer. For a
buyer, it is the maximum price limit he is willing or able to pay. For a seller, it is the
minimum price below which they cannot or will not sell. Therefore, the negotiation price will
 be between the buyer’s maximum reservation price and the seller’s minimum reservation
price.

Example scenario:​ You are working in an office where your current salary is TK 40,000.
You apply for another job post in a different company and they agree to hire you with a
monthly salary of TK 45000.

You have already decided that if the new job post did not pay TK 45,000 or more you will
not change your current job post. Since they have agreed to pay according to your reservation
price, there is no need for negotiation.

Setting the target point:

In order to set the target, you need to follow these steps:

● Market research:​ Conduct research to find the market salary for the job position, and
how much you should be paid with the amount of work you will be doing. Also, you
can find out how much previous employees in that post were paid.
● Exploring your interests:​ In your scenario, it may be that instead of salary you are
more interested in negotiating for flexible working hours, or the level of liberty and
autonomy you will be given in the workplace.
● Find what the other party will lose if the negotiation fails:​ It might also be that you
are the most qualified candidate found by the company, so you have higher
negotiating power for salary or other amenities.

Reservation Price and setting the Target Point is a very important and relevant aspect of
negotiation, so use it wisely.

6. Key Concept: Making Concessions

 As both parties are negotiating to reach a deal that will mutually benefit them, it is necessary
to make a few concessions.

In our previous video on reservation price, both the buyer and the seller have a reservation
price. The range that falls between the reservation price set by each party is known as the
Zone of Possible Agreements (ZOPA) or the bargaining range.

Hypothetically, if you figure out the reservation price of your employer through research is
BDT 85,000, above which they will not agree. Your reservation price is BDT 60,000, below
which you will not work. In that case, the zone of possible agreements is from BDT 60,000 to
85,000.

When you are asked for your expected salary during the negotiation, the amount you mention
is the starting point from where the negotiation will start between you and your future
employer. It is unlikely they will accept the price you initially ask for. The art of concession
is how much you are willing to sacrifice, make it in small amounts so that it stays above your
reservation price.

In the example above, since the employer’s reservation limit is BDT 85,000, you may start
the negotiation by saying you expect a salary of BDT 83,000. As the negotiation continues,
you may agree to concede BDT 1000 and then another BDT 1000, till both of you reach an
agreement. This agreement is a win-win situation for both.

7. Key Concept: The Other Tactics and Example

In this section, you will learn why all the tactics that were taught before are important to
follow.

Example scenario: You went to the market to buy a t-shirt. The seller says the price is BDT
1500. You counter the offer, “I will buy it for 1000 TK.” The seller immediately agrees and
starts packing the t-shirt for you.
 What happened is, you won the negotiation, but you still feel like you have lost? It is because
the seller agreed too quickly, making you think that you are overpaying for the t-shirt. This is
known as the ‘winner’s curse’.

To avoid being in this position, it is important to conduct a little market research about the
products you intend to buy beforehand. Carry out BATNA and figure out the reservation
price of the product. You will at least have a general idea of the product prices, which will
help you when negotiating the price.

8.Key Concept: Two Types of Negotiation Mindset

There are primarily two types of negotiation mindset:

● Positive mindset:​ They come to the negotiation with a positive attitude, use moral
practices, and try to achieve the outcomes without resorting to unfair practices. They
are confident and view negotiation as a game. So they make a game plan to win.
● Passive mindset:​ Those who view negotiation with fear and allow the opposing
negotiating party to dictate all the terms of the negotiation.

It is best practice to view negotiation as a sport or a process to achieve a desirable outcome.

9. Key Concept: The Issue of Power in Negotiation

Power:

When one of the negotiating parties forces or threatens the other party to accept their offer.
They can force the other party by:

● Saying ‘Take it or leave it. Otherwise there is no negotiation’. This, giving the
opposite party no choice,
 ● Reminding the opposite negotiating party who the boss is, and
● Threatening or blackmailing the other party

Does showing or using ‘power’ allow the negotiating party to win?

Research has revealed that when one negotiating party uses power to intimidate or threat the
other party, the opposite party tries to respond in the same way, which leads to a standoff,
where neither party wins.

Rights:

Rights in negotiation can be a moral or legal entitlement you have or something you feel you
deserve because it is the moral, just or honorable thing in that situation.

Example:

● The government has set a ceiling price for seeds, above which sellers cannot sell to
farmers. And if any seller tries to sell above this price, you can say that you have the
legal right to buy at or below the ceiling price.
● You are a regular customer at a clothing store, one day they charge an unusually high
price for their products, you can say that as a regular customer you have the right to a
discounted price.

Interests:

During negotiation, when the opposite party makes a demand, you try to understand why they
made the demand. It’s an empathetic approach to negotiation, understanding the opposite
party to reach a middle ground.
Compared to power and rights-based negotiation, interest-based negotiation often leads to a
conversation, which usually leads to the negotiation being successfully closed sooner.

How to turn the negotiation process from being power or rights based to interest based
negotiation?

● Ask a lot of ‘Why’ questions. Example: ‘Why are you asking for such a price? Why
are you making such demands?’ etc.
● Divide the negotiation based on different factors such as, price or quality when it is a
product. And location, flexibility, and independence etc. when it is a job post.
● Generate a lot of options, don’t stay limited to one solution or option. Example; for a
job post, not just negotiating about the salary, but the geographical position of the
post, or the level of autonomy or flexibility you will receive for your position, or
about work-time flexibility and other amenities. If you incorporate many factors, it
will make your negotiation more robust and allow more room for success.
● Reciprocate the opposite parties interest when they are trying for an
empathetic/interest-based negotiation. Understand what emotional or rational reason
they have behind their demands or issues. Most often interest based negotiation
parties want to make the deal.

Recap:​ What you learned in this session:

● What is power, rights and interest-based negotiation.

● How to convert power and rights-based negotiation to interest-based negotiation.

10. Key Concept: Dealing with Irrational or Illogical Negotiator

In this session you will learn to negotiate with an irrational person or an illogical offer, and
how to deal with threats and blackmail.

The Rule’s to follow when such a situation occurs:

● Don’t reciprocate towards them the same way

● Don’t make any personal attack
● Send a mixed message

Remember:

● When personal attack and contempt becomes involved in a negotiation process, it

always breaks.
● It might seem like being a nice, polite guy will help, but actually it will make the
opposing party bulldoze over you.

Therefore, to get out of this situation you can:

● Send a mixed message:​ With the combination of using your power and rights you
suggest to them you are willing to go for an interest-based negotiation but will not
accept being insulted and threatened. You can say “listen I would really like our deal
to work because I believed we both have a lot to gain from it, but if you continue with
this behavior I will have no choice but to go to the authorities.”
● Meeting face to face:​ Talking face to face will help you learn where their interest
lies, what exactly they want to negotiate and why. If the meeting gets violent, then
both parties can list out their terms and conditions on paper. Afterwards it is best to
start with those terms and conditions that are agreed by both parties before going on
 to the ones that both are in disagreement with. When the common ground is
established it is easier to deal with the conflictual matters.

Recap:

● Clearly establish you are willing to reach a reasonable agreement but not be abused.
● Find out the common ground and then sort out the conflicts.

11. Key Concept: Reputation and Ethics

Reputation: It is the image people have of you. What is your value in terms of behavior,
character, ethics, or mentality?

If you have a very bad reputation you will be negotiating from a very weak position.

Example Scenario: You have a colleague at work who is only skilled in Microsoft excel, but
whenever he is given work, he goes to his other colleagues and begs them to do it for him,
saying “I don’t know how to work in excel”. This behavior earns him a bad reputation, and
when he tries to go for any negotiation, the opposite party is very wary to make any deals with
him.
Having and maintaining a good reputation is important for negotiation.

Ethics: It is the moral principles guiding a person, business and society.

Ethics to follow during negotiation:

Make no personal attacks to any individual or the network of the opposite party.

Don’t make threats or give ultimatums to the opposite party, for example saying “If you don’t
accept our offer, I will tell everyone that you are uncooperative and spread bad rumors”.

Do not use any illegal practices to gain an unfair advantage. Such as stealing personal files or
wiretapping their phones, to gain inside information. These are grave unethical practices.

If the code of ethics is violated, your reputation will be irrevocably damaged, which will
hamper any future negotiations you want to participate in and severely limit your options.

12. Key Concept: Factors Influencing a Win-win situation

You have reached the third section of negotiation where you will learn about reaching a
win-win situation during negotiation, where both parties feel they have won, and also learn
about value creation.
 By this session many factors related to reaching a win: win negotiation result have already
been talked about.

Factors that aid in reaching a win-win negotiation:

● Not limiting your negotiation points to only one factor, discuss about the various
benefits that can be gained and select the ones that both parties are willing to give
each other. Example: negotiating for a job post, don’t limit the negotiation point to
only salary, talk about other benefits such as independence, working hours etc.
● Reveal your interests to the other party, because as mentioned earlier interest based
negotiation is more fruitful than power and rights-based negotiation. It helps both
parties understand what it is that each wants to gain. Research reveals interest-based
negotiation has a 10% more success rate.
● The crucial factor for a successful negotiation is being honest and fair. It is okay if
you are tough or nice as long as you remain fair. Never use dishonest and unfair
practices such as lying, manipulation, and misrepresentation of facts. As discussed, a
bad reputation is detrimental to a successful negotiation.
● Aim to reduce conflict as much as possible. Start with common ground and then
address matters of conflict gradually.

Following these suggestions will help you complete a negotiation with a win: win solution.

13. Key Concept: Value Creation

The second segment of creating a win-win negotiation is value creation.

The steps to value creation are:

 ● Discuss multiple beneficial options and factors, this ensures both parties have a
variety of options that they can give and take.
● Give multiple-equivalent offers, which means giving multiple similar options.

Example scenario:​ You are negotiating with a supplier to deliver supplies to your office.
You offer them multiple options of delivering in the morning or afternoon or evening,
according to their convenience. As the supplies will not be needed that day, the timing of the
delivery will not have any negative effect. By offering your supplier multiple options, they
feel you are a generous negotiator and you value their interests.

Post settlement-settlement:

This is when you have closed a deal, but none of the involved parties are happy with the
agreement, then you can have another negotiation on different terms then the ones already
closed, this will help overcome the dissatisfaction of the present deal.

Example scenario:​ You have accepted a job position with a dissatisfactory salary, therefore
you try to compensate by negotiating for other benefits such as working from home, or more
leave days.

14. Key Concept: Conclusion

If you use all the techniques and strategies discussed in this course, you will be able to
negotiate without compromising morals and ethics while closing a very robust and value-based
negotiation satisfying all parties involved. Thank you for taking this course.