Project Report On

Negotiation and Practical Aspects

Table of Contents
1. Introduction
Negotiation is a dialogue between two or more people or parties intended to reach a
beneficial outcome over one or more issues where a conflict exists with respect to at least one
of these issues. Negotiation is an interaction and process between entities who aspire to agree
on matters of mutual interest, while optimizing their individual utilities. This beneficial
outcome can be for all of the parties involved, or just for one or some of them. Negotiators
need to understand the negotiation process and other negotiators to increase their chances to
close deals, avoid conflicts, establishing relationship with other parties and gain profit and
maximize mutual gains.

It is aimed to resolve points of difference, to gain advantage for an individual or collective, or

to craft outcomes to satisfy various interests. Distributive negotiations, or compromise, is
conducted by putting forward a position and making concessions to achieve an agreement.
The degree to which the negotiating parties trust each other to implement the negotiated
solution is a major factor in determining whether negotiations are successful.

People negotiate daily, often without considering it a negotiation. Negotiation occurs in

organizations, including businesses, non-profits, and within and between governments as well
as in sales and legal proceedings, and in personal situations such as marriage, divorce,
parenting, etc. Professional negotiators are often specialized, such as union negotiators,
leverage buyout negotiators, peace negotiator, or hostage negotiators. They may also work
under other titles, such as diplomats, legislators, or brokers. There is also negotiation
conducted by algorithms or machines known as autonomous negotiation. For automation, the
negotiation participants and process have to be modelled correctly.

We negotiate a great deal more than we realise. Sometimes it goes smoothly, sometimes it
seems difficult. While there is much advice about how to negotiate and be a ‘winning
negotiator’, the actual experience does not seem as straightforward as books suggest. Why?
Because negotiation is a complex process. This book grapples with these complexities while
recognising the idiosyncrasies of both the negotiation process and the negotiator. This
opening chapter explores some core complexities of negotiation, providing a foundation for
later chapters. Although this book will focus on the business context, the principles and skills
can be applied in other contexts such as interpersonal negotiation, sales or when resolving
legal, environmental and social issues. Very few people are employed solely as professional
negotiators; for most of us it is just an integral, perhaps unrecognised, part of our job. Figure
1.1 is a ‘map’ developed from an exercise within a company to identify who has to negotiate
with whom and over what. It shows that throughout an organisation, negotiation is deeply
embedded as a way of getting things done. Even this map does not show the full complexity
of the internal negotiations particularly in the production stage where managers and
supervisors are constantly negotiating with each other over scheduling and the use of
resources.1

Mr. Vivek Sadhale was the mentor in the session of CCM he discussed about negotiation and
its practical aspects what skills does the negotiator need to possess to win a negotiation
session and how the negotiation session should work he taught us the negotiation session
should always end with win-win situation then only the negotiation is meant to be complete.
Negotiation is a dialogue between two people to discuss the business between themselves for
deciding the terms and conditions of the business the profit ration and all the practical aspects
of the business.

2. Objects and Importance

a. Certainty

The aim of contract negotiation is firstly to achieve certainty, to record what is being
supplied, when, in what quantities and to what standard, and what are the consequences of
delay or failure to meet the agreed requirements. Many a dispute is caused by the failure of
the parties to define at the beginning of their relationship exactly what is going to happen;
one example in my experience was the failure of a major IT agreement because the parties
both thought that their man was project managing the project, in fact the issue had never been
agreed. This is especially important in the case of complex projects, where project plans and
methodologies will normally be prepared as part of the contractual documentation.

b. the best deal

Seeking clarity does not conflict with the view that negotiations should achieve the best deal,
it merely points out that both parties to a negotiation have to understand what it is that they
have agreed to. Many disputes have their origins in a lack of clarity. Careful discussions of

1
An introduction to Negotiation, Cambridge University Press http://assets.cambridge.org/.com, last seen on,
01/07/2021.
each element of the deal also ensure that each party's objectives are acknowledged and dealt
with. In the main negotiators should aim for a win-win solution which benefits both parties.

c. Achievement of an Organization's objectives

In their book "Drafting and Negotiating Computer Contracts", Paul Klinger and Rachel
Burnett [pub. Butterworths, London 1994, to be reissued Nov. 2002] the authors note that
"The goal of every negotiation must be to achieve a result which, even if it falls short of the
original objective, can be considered a satisfactory advancement towards it. Compromise is
an essential feature of most successful negotiations: each party needs to walk away
afterwards feeling that he or she has gained." (Chapter 2, page 13) Although most people,
when asked, will say that money is the most important element in negotiation, in practice it
may be only one of a number of elements. Only in unsophisticated markets, is price-
bargaining the main element of the discussions. In most markets, quality, reliability of
supply, the transform of "know-how" and the creation of a long-term relationship will be of
equal or greater importance.

d. Creation of a long-term relationship between the parties

Whilst this is not always possible, and some cultures, such as the Japanese, place more
emphasis on this aspect of negotiation, this is increasingly important as companies build
networks of alliance partners. Partnering in industries like aerospace and IT is essential, due
to the complexity of the products and related projects. As the supply chain evolves into a
virtual organization partnering is becoming increasingly important in all industries.

e. The "Ritual Dance"

Few organizations are prepared to acknowledge that the process of negotiation often serves
internal political functions. The process of negotiation with third parties may be necessary
ensure that new policies are accepted within the organization. There may also be a political or
social need to "prove" that the company has driven a hard deal with the other party. This is
sometimes the case in cultures like South Africa, which are often exposed to high levels of
conflict within their societies. US companies will sometimes be driven by such concerns.
Sometimes being shouted at is just a normal form of social discourse in that society; it may
have no serious aggressive meaning. A skilled negotiator will ignore bad behaviour by the
other side and proceed with the deal, or manoeuvre the opposing negotiator into a fight where
his (and it not always a he) aggression blinds him to his real objectives - he also needs a deal
and to retain his kudos with his fellows. Like a skilled ju-jitsu fighter, the negotiator will seek
to let the opposing side over-balance. Never, ever, lose control of your temper during
negotiations. Walk-over deals can be achieved and these normally happen where ignorance
leads the other side to negotiate in a very aggressive manner, this results in a game known as
"chicken", the first one to jump loses. In such situations the normal course of events is that
one person underestimates the other side and announces to the other members of his team that
he will wipe the floor with that idiot, or words to that effect; the negotiation then becomes
unpleasant. The game is played by sitting tight, being aggressive back if necessary, shouting
if you have to. The other negotiator then makes the mistake of linking his ego to the game,
and in his determination to win he loses control and loses face in front of the group,
especially if you remain calm in the face of his behaviour. There are variations to this game.
The Board room politics of the other company are nothing to do with the negotiator; who
may have to take care to ensure that the negotiation reflects a number of critical elements
within his own organization, for example legal and sales.

f. A Negotiator is also paid to walk away from a bad deal

A good negotiator must be prepared to walk from a bad deal, not to get the sale at any price.
Your company will not normally thank you for an unprofitable contract, or one with a poor
partner, or where it is unclear what the other side will actually do. If your company is
prepared to make a deal at any price, unless this is the launch sale, then it has problems,
see commercial infrastructure.2

3. Reasons of Negotiation

2
Negotiation Objectives, objectives of negotiation, last seen on 01/07/2021.
 3

a. Costs – Court procedure usually takes lots of money and time and as time is
money more money is wasted in court procedure than which was needed for the
negotiation session or negotiator. To reduce the cost of acquisition by achieving a
lower price.

b. Value – To achieve added value such as reduced lead or cycle times. Negotiation
keeps the relationship active between parties through court procedure mostly
breaks the relationship between both parties the example can be taken of family
court if the case is solved by negotiator there are chances of keeping the relation
active.

c. Performance – To improve the performance of overall procedure of conflict

handling. Negotiation performs better than the regular court procedure.

d. Conflict – To resolve conflict through reaching understanding. Conflict can be

solved with less money and less time by Negotiation method.

3
Reasons to Negotiate, Negotiation in Procurement | CIPS, last seen on 01/07/2021.
 e. Problem – To solve a problem by open discussion.

f. Quality – To achieve optimum quality through reducing defects.

g. Agreement – To reach mutual agreement in a collaborative style where all parties

are satisfied.

4. 7 Stages of Negotiation
The negotiation process comprises seven main stages.

1. Preparation - Arguably the most important step is preparation. Without thorough

preparation including research, knowing the objectives, understanding the concessions
and having a BATNA, the negotiation is unlikely to reach the optimum outcome.
See Negotiation Preparation and checklist.
2. Opening - This is where both parties explain what they want as a result from the
negotiation.

3. Testing - This stage is where parties try and understand what is really important to
each other and where concessions could be made. Effective communication is very
important at this stage, ensuring that good listening skills are put into play to gather as
much information as possible as well as reading body language from the other parties.

4. Proposing - This is where each party puts forward their proposals of what they would
like to achieve having heard the opening stage and been involved in the testing.

5. Bargaining – This takes place where each party offers to give up something in return
for something back i.e., tradeable. If one party has to give something up but receives
nothing back in trade, this in known as a concession.

6. Agreement - Once bargaining has been completed it is expected that an agreement can
be made. Agreement has to have acceptance from both parties to be legally binding.

7. Closure - The final stage is closure. This stage includes the documentation of what
has been agreed, whether that is a contract or minutes from a meeting. Closure is an
important stage – without the documentation the agreement is open to interpretation.4

4
7 Stages of Negotiation, Negotiation in Procurement | CIPS, last seen on 01/07/2021.
 5. 7 Rules and Tools of Negotiation
1. Clear realistic objectives – Know what success looks like. What are the minimum
outcomes you must achieve? Think about if you cannot achieve them, what is your
walk away point?

2. Develop your game plan – Understand your position and who is in the weaker
position. Most negotiations require trade-offs and compromise so it is important to
know what are the deal-breakers and where you may be willing to trade.

3. Research your opposition – Take time to study and understand your counterpart. What
is their style? Can they be trusted? What are their objectives and identify any common
goals? Communication and active listening skills will play a part here.

4. Win-Win – Aiming for a win-win is ideal where you have an ongoing relationship, as
if that party felt that they were treated unfairly in the negotiation they this may cause
issues and damage the relationship further down the line. You should still focus on
your objectives but consider the relationship more important than win-lose.
5. Active Listening – Listen to the other party and pay attention to their interests and
what matters to them and ask questions to help you understand where there are
tradeable.

6. Build Trust – Building trust is key to a negotiation. Knowing both parties are ethical
and will follow through and are trustworthy is key in the negotiation process and
continuing a relationship.

7. Focus on Value – For both parties to come to an agreement there must be value.

Negotiation Tools
 Reasons for Negotiation - The need for negotiation within procurement can
present itself in a number of ways. This model explores the reasons for which
negotiation may become necessary.
 Stages Of Negotiation - The negotiation process comprises seven stages shown in
the model.

 Negotiation Preparation - This model shows how much resource should be used
with negotiation preparation.

 Negotiation Check List - This template should be used as part of the negotiation
preparation. This check list will enable a buyer to be certain that all generic
aspects that could present themselves in a negotiation have been thought about as
well as research prior to the negotiation itself.

 Negotiation Styles - Negotiation styles vary depending on the relationship that a

procurement professional has with their supplier.

 Win-Win - This model outlines the four potential outcomes of any negotiation.

 Negotiation Ploys - Negotiation ploys/tactics are often used but can be subject to
risks. Ploys/tactics have to be carefully researched prior to introducing them into a
negotiation.
  MIL - This model outlines the goals that the parties within a negotiation can
achieve.

 MIL Template - This template is designed to be used prior to a negotiation as part

of the preparation. By recording what has to be achieved, what would be
beneficial and what would be an added bonus, a procurement professional can
have a full overview of the areas that they are able to trade or concede on

 BATNA - This model shows the importance of having a BATNA – a Best

Alternative to A Negotiated Agreement. 

 If Negotiation Fails - Whilst in industry parties enter into negotiation with a view
of generating a satisfactory outcome, it is not always possible to reach an
agreement. If the negotiation cannot conclude in an acceptable manner there are
options for escalation.5

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Rules and Tools of Negotiation, Negotiation in Procurement | CIPS, last seen on 01/07/2021.
 Figure 1.1 Explains the process of Negotiation how the actual practical negotiation works what
steps are there in a Negotiation there are nearly seven stages of successful negotiation negotiation is
of two types it can be internal negotiation and external negotiation. Internal Negotiation is carried
by internal officers within the company and no outsider is involved in internal negotiation and in
external Negotiation a Negotiator is appointed by both the parties and the negotiator is a impartial
person who is appointed by both the parties the negotiator has to decide the procedure of the
negotiation and how the procedure will be with discussion of both the parties both the parties
should agree to the procedure then the negotiation process will start the negotiators work starts here
the negotiator needs to have great skills of negotiation then only the negotiation process will come
to closure.