Essentials of Negotiation Ubteb Version

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MAKERERE INSTITUTE OF SOCIAL DEVELOPMENT
PROGRAMME : DIPLOMA IN PROCUREMENT & SUPPLY CHAIN MGT
YEAR : TWO SEMESTER : ONE
COURSE UNIT : ESSENTIALS OF NEGOTIATION
COURSE CODE : DPS 2104
Ms. Hayenje Rebecca (0787-440128/0702-076290) Page 1

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CHAPTER ONE : INTRODUCTION TO THE CONCEPT OF NEGOTIATION
LECTURE ONE
Definitions
Negotiations should not be perceived as a battle or competition in which there emerges a winner
and a loser. Negotiations are intended to benefit both parties.
This course unit is designed to introduce learners to the basic concepts of negotiation and present
procedures and strategies that produce more efficient and productive problem-solving
professionals.
We can therefore define negotiations as a formal discussion between two or more parties with
competing interests aimed at establishing a mutually agreeable contractual decision or common
understanding.
Objectives for negotiations
(i) Price
Negotiations are intended to discuss prices with an aim of getting the best prices possible.
However, price has some other factors or elements which affect it directly or indirectly such as
shipping costs, disposal costs and terms of payment (TOP). In as far as these factors can be
directly associated with a clearly measurable price factors they are to be evaluated as part of the
price package.
(ii) Quality
Quality becomes a factor when you realize that increased quality specifications result into higher
prices and that relaxing some of the non-critical specifications may result into lower prices. The
technical group should review the specifications as part of the planning process. This will help
them to know where specifications can be relaxed and where they cannot.

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(iii) Service Levels or Quantity
In most cases service levels are included in the statement of work in the form of the service level
agreement. As in quality specifications, service levels can also be relaxed and traded off as
concessions to achieve other benefits in exchange.
(iv) Building a Long term relationship
The buyers and sellers enter into negotiations in order to build long term relationships, such
relations give either parties advantage in future in business terms.
(v) Certainty
In addition to the above objectives, negotiation is aimed at achieving certainty, to record what is
being supplied, when, in what quantities and to what standard, and the consequences of delay or
failure of the parties to define, at the beginning of their relationship exactly what is going to
happen. This is very important in the case of complex projects, where project plans and
methodologies will normally be prepared as part of the contractual documentation.
(vi) 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 is that they have
agreed to. Careful discussion of each element of the deal also ensures that each party’s objectives
are acknowledged and dealt with i.e. each party gets the best deal. In main negotiations,
negotiators should aim for a win-win solution which benefits both parties.
Content of negotiation
(a) Price content of negotiation
 Terms of payment
 Price rate per unit
 Quantity discount
 Trade and cash discount (ASK THIS TO THE LEARNERS)

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(b) The contractual content of negotiation
 Type of contract e.g. lump sum, cost reimbursable etc.

 Resolution of conflicts.
 Use of subcontractors
 Payment in advance
 Milestone payments
 Conditions, warranties, guarantees.
(c) The delivery content of negotiation
 Delivery /completion time.

 Lead time deductions.
 Compensation for failure to deliver
Stages in the negotiation process

There are three main stages that negotiation processes go through. However, these depend on the
issues to be discussed. Some negotiations are simple as they focus on one issue of discussion
others are complex because they consider a multiplicity of issues relating to a contract for
example quality, quantity, system of delivery and price.
The Negotiation Process
The negotiation process falls under three phases i.e. the pre-negotiation phase/planning phase,
the actual negotiation phase and the post negotiation phase as illustrated below;
Pre- negotiation phase Meeting/actual Post – negotiation

negotiation phase phase

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Whether complex or simple negotiations will involve three main stages, these are:
1. Pre- Negotiation;
2. Actual Negotiation and
3. Post Negotiation.
1. The Pre-negotiation stage

In the legal sphere it’s believed that “cases (court) are won in chambers”. This belief implies that
victories in courts of law often depend on the outcome of the research and planning on the part of
the lawyer even before he/she sets foot in the courts of law. Buyers too can learn from the
lawyers by employing such a strategy in order to engage in more meaningful and successful
negotiations.
During the stage of pre-negotiations the following issues are considered:
I. Differentiating between facts and assumptions; there is need for parties to

identify/anticipate each other’s assumptions and facts. The assumptions should be tested
at this stage so as to come up with new alternatives beforehand.
II. Perception of strength and weaknesses of both parties; it is important for parties to
carry out a strength and weakness analysis during the preparation phase and also
understanding each party’s ability to influence and control the negotiation.
III. Who should negotiate; Negotiations can be made between individual representatives or
teams representing the buying and selling organizations. In case of negotiation between
individuals, both should have authority to conclude without referring to higher authority.
They are usually applied during re-buys or modified re-buy negotiation. A team
approach is most useful because an individual buyer does not possess all the
qualifications to stand as a sole negotiator in such situations. Each team member should
be assigned roles that include:
a. Spokesperson; This one is responsible for presenting the case and acts as a captain of
the team in terms of deciding how to respond to situations arising in the course of the
negotiations.

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b. Secretary; this person is responsible for taking notes during negotiations.

c. The Other team members; they are supposed to act as backups to the spokesperson
during the process of negotiations because they are chosen for their expertise in the issues
to be discussed.
 These are Accountants, Lawyers, I.T. Experts and management experts. It is not
useful for every member of the team to speak during the negotiations. All that is
required of them is to listen and observe critically so that they can offer useful
advice to the spokesperson.
 When you are negotiating as a team avoid disagreements because they may reveal
weaknesses of the negotiating team. If there are any differences between the team
members they should be settled in private sessions.
 Disagreements between team members can also be resolved by use of signals
which should only be understood by the team members without the knowledge of
the other team/party.
Although team decisions are good they have some limitations as indicated below:
 The tendency of group thinking even when the decisions have not been
tested to be good in this case members opt for more consensus other than
objectivity.
 The emphasis of a win-win situation is pronounced in negotiations unless
when the spokesperson chooses otherwise.
IV. Venue for Negotiation; the buyer is not expected to visit the vendors premises unless
there are good reasons for doing otherwise like when the buyer is seeking for concessions
or wishes to inspect the facility of the vendor.
There are several advantages of negotiating on the home ground which include:
 Negotiating in familiar surroundings implies that the buyer will be more comfortable than
the seller. For instance the Chinese have it that the host is the one who sets the rules for
negotiations and the host speaks last. So this puts them in an advantageous position.
 The one at the home ground is able to access the required files with ease. When the
negotiator is in the home ground, they have the luxury of calling for any file when needed
which is not the case for the visitor.

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 Ability to get expert advice. In case a technical issue is to be discussed the host can afford
to consult an expert in that field but while the visitor may not be able to afford the same
option especially when they have travelled from afar.
(v) Information / Intelligence gathering; This normally involves weighing the strength and
weaknesses of the prospective negotiating positions. It involves assembling data related to
the products, producers, sales, market prices and costs of production. It also involves
compiling data to be presented during the negotiations like graphs, tables and charts.
(vi) The range; this establishes how far parties in a negotiation process are willing to
concede before they disagree or exit the negotiation. A skilled negotiator will consider a
wider range for negotiation that is twice as much for each issue in order to exhaust the
available options and come up with a better deal. This analysis requires a major preparation
to explore these opportunities for both parties.

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Illustration showing the effect of range on negotiations
Buyer’s range Gap
There is no acceptable deal
1 2 3 4 5 6 7 8 9
Buyer’s range Exit
Exit Seller’s Range
Overlap
Any deal within the overlap is possible
 From the above illustration, assume the seller has a car he is willing to sell at 80 million
and the buyer is only willing to buy at 40 million. The quoted prices create a gap because
neither is the buyer willing to increase the price at which he is buying nor is the seller
willing to reduce the price at which he is ready to sell. In such a situation, a gap is created
and there will be no negotiation.
 However, there will be room for negotiation where the seller’s lowest price is 40 million
and the buyer’s highest price is 80 million. The negotiation process will involve the seller
convincing the buyer to take the car at any price higher than 40 million while the buyer
will convince the seller to sell at a price below 80 million.

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V. Setting objectives; it is important that parties involved set meaningful objectives in order
for a successful negotiation. Buyers should be clear about what they hope to achieve but
also empathize with likely objectives of the other parties.
VI. Tactics/ Strategy to use; a tactic is a position to be taken at an appropriate time in a
negotiation process. The team should establish beforehand the overall plan that will help
them achieve the set objectives above. Tactics can be applied on issues like whether to
speak first or allow the other party to open the negotiation, allowance to make should the
need arise, the other party’s reaction to a tactic, etc.
VII. Dummy run/mock negotiations; it is important that all the strategies, tactics/ ploys and
any other plans are practiced or tested before the actual negotiation. This will help the
parties to widen their thinking and come up with alternatives or the BATNA (Best
Alternative To a Negotiated Agreement) where the opponents think otherwise.
2. Actual Negotiation Stage

This stage is made up of several other smaller phases that include:
(a) The introductions and agreement on the agenda and rules of procedure.
(b) Determining what the actual negotiations will attempt to resolve. If the negotiations
take an adversarial approach this may be a lengthy stage because participants often
overstate their opening position yet on the other hand collaborative approach emphasizes
openness and this helps to save time.
(c) Agreeing on the common goals that must be achieved if the negotiation is to reach
successful outcomes. This will usually require some movements of both sides from the
original negotiating position but the movement will be less or more unnecessary in
partnership negotiating.
(d) Anticipation of how and when to remove the positional barriers that prevent the
attainment of the agreed common goals. At this stage, the following usually happens:
 There will be a problem solving consideration of solutions put forward by each party
determining which concessions to make.

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 It is also useful to review the points that have been agreed upon.
 In case both the negotiating parties fail to agree on an issue, they may opt for a recess or
break so that both teams may agree on the concessions to make that may enable further
progress at this point.
 If after such options the negotiations fail, the negotiating parties may opt for the
following:
a. The negotiating parties may decide to refer the issue to management.
b. May consider changing the conditions
c. May abandon negotiations with the least possible damages to the relationship.
(e) Drafting a statement by setting out as clearly as possible the agreements for comment
and signature and ends up in an agreement.
3. Post Negotiation Stage

During this stage the main activity is about following up the contract by looking at the issues that
were agreed upon during the negotiations and when the process of procurement does not rhyme
with the contract specifications it may be cancelled. It also involves;
 Producing a draft reporting honestly on what was agreed up on in the first agreement and
forwarding it for comments and agreement by the other party.
 Ensuring the commitment of your organization to making the agreement work.
 Preparing legal contracts in line with the final agreement of the parties.
 Implementing the agreement by setting up joint implementation teams and performing

your part of obligation.
 Establishing procedures to monitor the implementation process and corrective measures

where the process differs from the original plan.
 Reviewing the actual process of negotiation to assess what went wrong and what should
be revised in future.

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End of lecture questions
1. Define the term negotiation
2. Briefly describe the objectives of negotiation
3. Mention the price, contractual and delivery content of negotiation
4. Outline the three major stages of negotiation
5. What aspects should be considered when planning for negotiation?

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LECTURE TWO
Types/approaches to Negotiation
A negotiator will need to select a general negotiation approach. There are many techniques but
the two most common approaches to negotiation are positional/ adversarial and interest-based/
collaborative approach.
(i) The adversarial /positional approach; this is also known as the win-lose approach or lose –
win approach. It involves taking positions in a way that one party wins and the other party loses.
This is why the other party is referred to as an adversary (enemy) hence the name adversarial
approach.
Circumstances under which positional/adversarial approach is often used;
 When the resource being negotiated is limited (time, money, psychological benefits)
 When a party wants to maximize his/her share in a fixed sum pay off.
 When the interests of the parties are not interdependent, are contradictory or are mutually
exclusive.
 When current or future relationships have a lower priority than immediate substantive
gains.
Assumptions by positional negotiators
 Resources are limited
 The other negotiator is an opponent; therefore be hard on him/her
 A win for one means a loss for the other
 The goal is to win as much as possible
 Concessions are a sign of weakness

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 There is a right solution-mine
 Be on the offensive at all times
Characteristics of the Adversarial Approach
 This approach emphasizes competition with an aim of attaining goals at the expense of
the other party (adversary). In a way it is a manipulative approach.
 It employs the strategy of secrecy i.e. retention of information and low levels of trust
from the perceived adversary.
 The desired outcomes of the negotiation are often misrepresented so that the adversary
cannot find out what the opponent really requires.
 In this approach there is little empathy. Empathy is one’s ability to feel with the other
party, in other words, putting one’s self in the shoes of the other party. For instance if you
are a buyer you put yourself in the position of a seller and vice versa.
 The strategies used are unpredictable and are based on various negotiating ploys designed
to manipulate the other party.
 The parties use threats and ultimatums (deadlines) with the aim of keeping the other on
the defensive. Usually the ultimatums are unrealistic.
 This approach does not give room for changing the given position such position is
defended by rational and irrational arguments.
 The approach is hostile and aggressive because both parties have “the us against them
attitude”. This consequently causes antagonism in team negotiations. As they both seek to
outwit the other by displaying their strength.
 The unhealthy extreme of this approach is reached when either party assumes that
movement towards one’s goal is facilitated by locking or preventing the other party from
attaining its goal.(this approach is also guided by the philosophy that “we either

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“ win or they lose”)

 Lastly if an impasse occurs negotiations are broken off.
(ii) The collaborative/ interest-based approach; this is also referred to as the integrative
/partnership approach. In this approach all parties to the negotiation end up as winners. This is
why it is also referred to as the Win-Win approach. This approach relies on the use of the
creative problem solving techniques where both parties can benefit without the other party
having to lose. This is why is the other party referred to as a partner or collaborator. In this
approach both parties are willing to share concerns, ideas and expectations.
Negotiators pursuing an interest-based negotiation approach attempt to identify their interests or

needs and those of other parties prior to developing specific solutions. After the interests are
identified, the negotiators jointly search for a variety of settlement options that might satisfy all
interests, rather than argue for any single position. The parties select a solution from these jointly
generated options.
This is the reason as to why this approach is frequently called integrated bargaining because of
its emphasis on cooperation, meeting mutual needs, and the efforts by the parties to expand the
bargaining options so that a wiser decision, with more benefits to all, can be achieved.
Circumstances under which collaborative /interest- based approach can be used
 When the interests of the negotiators are interdependent
 When future relationships are a high priority
 When negotiators want to establish cooperative problem-solving rather than competitive

procedures to resolve their differences.
 When a compromise of principles is unacceptable
 When negotiators want to tailor a solution to specific needs or interests.

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Assumptions by collaborative negotiators
 Resources are unlimited.
 All negotiators’ interests must be addressed for an agreement to be reached.
 Parties look for objective or fair standards that all can agree to.
 Belief that there are probably multiple satisfactory solutions.
 Negotiators are cooperative problem-solvers than opponents.
 People and issues are separate. Respect people, bargain hard on interests.
 Search for win/win solutions.
Characteristics of the Collaborative Approach
 In this approach the emphasis is put on finding out what is held in common with the other
party.
 This strategy is based on experience where information is shared, where there is a high
degree of trust in the perceived partner.
 The desired outcomes are made known to the other party so that there is no hidden
agenda and issues are clearly understood.
 In this approach each party is concerned with the other party and so there is empathy
(feeling with).
 This strategy is aimed at reaching at a position that is acceptable by both parties.
 Both parties refrain from threats or any other method that is considered counter-
productive to the vital solutions to the perceived problem.
 The need for flexibility is assumed for any position that is taken.
 The emphasis is put on creative logical ideas and approaches to constructive resolutions
or differences.
 This approach is essentially friendly and non-aggressive. It is guided by the philosophy
that “we are in this together”.

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 The key attitude is how the respective goals for both parties be attained. The extreme
reality of this approach is reached when it’s assumed that whatever is good is good for
both parties.
 Lastly if an impasse occurs it’s regarded as a further problem that needs to be resolved by
the intervention of a higher party (either management or other internal/external
mediators).
Costs and benefits of interest-based negotiation
Costs
 Requires some trust
 Requires negotiators to disclose information and interests
 May uncover extremely divergent values or interests
Benefits
 Produces solutions that meet specific interests
 Builds relationships
 Promotes trust
 Models cooperative behavior that may be valuable in future
Evaluation of the Adversarial and Collaborative Strategies
An adversarial approach may be appropriate on a few occasions which include:
i. Where there has been no long relationship between the parties; or when there is no
intention of building one, in other words when the transaction is going to be a one-off.

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ii. When there is need for a quick simple solution to a disagreement an adversarial approach
may be appropriate.
Although the collaborative approach is time consuming and difficult to achieve it is important to
use it, because of its advantages.
i. The collaborative approach is more stable and leads to long term relationships which
create solutions to multiple mutual concerns.
ii. This approach may be the only way to obtain an agreement where both parties have high
aspirations and resist making concessions.

1. Explain the two major approaches to negotiation
2. What advantages and disadvantages associated with each approach to negotiation?
3. If you were to lead a team of negotiators, what approach would you recommend to be
used and why?

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LECTURE THREE
Dead Locked Negotiations (Impasse)
Negotiations sometimes come to an impasse when both sides see no prospects of further
movement or concessions. The techniques of resolving such deadlocks include:
 Taking a break for both parties in order to become focused.
 Lightening the atmosphere by use of some humor (You crack a joke to make the
atmosphere more interesting).
 Agreeing to disagree in principle of the parties agree in principle they also agree on
objectives.
 Considering consequences of the non-agreement for the concerned parties can help to
break a dead lock.
 Obtaining assistance from third parties because they can listen objectively to the
arguments, classify issues and where required adjudicate (judge and award points to
either parties).
Negotiation Tactics/Ploys
A ploy is a maneuver in a negotiation process aimed at achieving a particular result from the
other party. It is during the actual negotiation process that parties will from time to time be faced
with one side using a ploy or tactic to try and gain advantage over the other. All ploys have
counters that an experienced negotiator would be aware of. It is therefore important to note that:
 Reliance on ploys can ruin a long-term relationship.

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 Ploys when recognized can be disarmed.
 Knowledge of ploys assists the negotiation but reliance on them exclusively should be
avoided.
Examples of ploys and how they can be countered include;
Ploy Measure
Nice guy/Bad guy Style match or adopt contrast style
Add on Make sure you get your money’s worth
Deadlines Avoid revealing what time you have to finish
Russian front Do not accept poor deals- consider your BATNA
Other tactics or ploys
(i) Silence; when you have asked a question, wait for an answer. Silence can put a lot of pressure
on the other part.
(ii) Building block technique; this technique is very powerful and can easily be practiced by
buyers. The buyers will progressively ask for a better offer step by step e.g. for additional
quantities during scarcity and an increased range of products to be supplied. For example, the
buyer may make such a request, “you have charged me a good price for 8 months contract but
what if we extended it for 3 years.
(iii) Broken record; this tactic is linked to the conditioning process where it is assumed that
when you insist or keep requesting the same thing over some time, eventually the other party
begins to believe it e.g. offering products on credit.

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(iv) Recess; when the negotiation has reached a standstill, or when the other negotiator has
provided or asked what you were not expecting, it is advisable to call for a recess. During the
recess, have a meeting with the team to decide how to move negotiation forward.
(v) Onus transfer; this tactic is used to obtain empathy. For example, “if you were in my shoes
what would you do”
(vi) One more thing; this tactic is used to get the supplier make a further move when the deal is
at its conclusion. For example one may make such a comment “well I think we are almost there,
there is just one more thing we need to discuss”. This may be on delivery, terms of payments that
have not agreed upon.
(vii) Re-escalation of demand; this is where one party threatens some action on the other. For
example, one may make a comment such as “if you cannot move any further of this, then I am
afraid we must go back to our original position”.
(viii) Deadlines; suppliers tend to make comments such as “you must sign the contract by the
end of the month to get the 20% discount. More often these deadlines are nothing than a
technique. Buyers can also use same technique to gain an advantage.
1. What is meant by the term dead locked negotiation?
2. Define the term ploy as used in negotiations
3. Describe some of the ploys negotiators are likely to use during negotiations so as to
achieve their objectives

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CHAPTER TWO
FACTORS THAT AFFECT NEGOTIATION
LECTURE ONE
Introduction
There are three critical variables that impact on the nature of negotiation
 Power, Time and Information
(i) Power; it is important to make a realistic assessment of power relationship in any purchasing
negotiation. Power involves being able to control or manage the decisions of the other party.
There are many ways in which this can be done, which range from managing their perceptions of
potential loss through reducing their alternative networks.
Sometimes the balance of power will sit with the buyer because of the size of the contract and
the buying power. Sometimes the balance of power is in the supplier’s favor. Where the buyer is
a small customer or the supply has an actual monopoly, a geographical monopoly or a virtual
monopoly position in the market.
Being the powerful party in a negotiation is, in neutral. It is neither good nor bad neither ethical
nor unethical. However, market power should not be misused to damage or eliminate or exclude
competitors from the market. Misuse of power will often incur costs later in the relationship.
Organizations can increase their negotiating power by identifying a number of alternative

products/services that could meet their requirements and by having a range of alternative
suppliers, thus reducing their dependence on buying a particular item from a particular supplier.
(ii) Time; the management of time within the negotiation, slowing the process down and
speeding it up according to the organization’s needs is a common practice. It also helps one party
when situations change in unexpected direction; taking control of time is often a way of taking
control of the rest of the negotiation. However, it should be noted that, generally, good outcomes
in purchasing negotiations cannot be achieved in tight timeframes, it is worth investing the time
that is necessary to explore issues, identify the needs and interests behind expressed positions

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and develop creative and innovative solutions to mutual benefit to the negotiation. Time is a
valuable commodity in a purchasing negotiation. The organization should make the best use of
the available time to improve its negotiating position by gathering useful information which
allows the development of alternatives to the solution being proposed by the supplier.
(iii) Information; information is at the heart of any negotiation. Adequate attention to gathering
information during the preparation phase of a negotiation can significantly enhance the
likelihood of a mutually satisfactory agreement being reached during the formal phase of the
negotiation. During the formal phase, it is a common strategy for parties to conceal their true
interests and priorities. The chance of obtaining accurate information from an experienced
negotiator during the adversarial negotiation is quite low. Information is normally easiest to
gather during the preparation phase before the formal negotiation begins.
The more information you have about the other party’s financial situation, real priorities, needs,
deadlines, costs and organizational pressures, the easier it will be to develop negotiating
proposals which address these issues, and the stronger the negotiating position will be.
There are so many sources of information on suppliers and markets. Sources include; the media,
libraries, government publications, statistics, product and consumer reports, online services and
professional bodies- and the suppliers themselves, through their literature, their websites and
through their sales force at any exhibitions at which they are displaying their goods or services.
Other sources of information include contact with third parties who are familiar with the other
party, including current and previous customers or even competitors of the other party, who may
be able to give you an insight into industry issues and prevailing conditions, cost and or price
structures, product availability and design features.
However, one should never behave in a manner that is unethical or unfair in your attempts to
gather information to use during negotiations. Be aware that the information received may not
always be complete or accurate and one should always check information for their own
satisfaction before relying on it. Negotiators should also keep written information because it is
impossible to keep everything in the head. This information can is always useful during the
formal negotiation phase.

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Factors that influence negotiations and their outcome
(i) The type of relationship you have or would like to create with the other party.
For example with collaborative relationships, it is easier to resolve a conflict since
openness saves time than distributive relationships where there is a high level of
competition.
(ii) The negotiator’s Personality;- negotiators are either purchasers or suppliers who
represent their respective organizations. The personalities of these parties play a big
role in negotiations. The term personality is defined as the relatively enduring and
stable pattern of behavior, thinking and feeling which characterize an individual. The
different personalities of the members who comprise the negotiating teams have a
way of affecting others for instance because of their personalities, different
negotiators will employ different tactics during the process of negotiation. One’s
own personality and style will determine how much one trusts the other person. How
free one is with his/her emotions and how much one wants to conceal or reveal
his/she expectations and intentions in the process. For example, a solver negotiator is
cooperative concerned about the other party’s interests and committed to fairness and
efficiency. Therefore, his approach is to resolve the conflict amicably.
(iii) Time – taking control of time is often a way of taking control of the rest of the
negotiation. Good outcomes in purchasing negotiations cannot be achieved in time
frames. It is worth investing the time that is necessary to explore issues, identify
needs and create innovative solutions of mutual benefit to the negotiation. It is
important to note that time is a big factor in negotiation because “necessity never
made a good buyer”. They should therefore notify buyers their requirements in
advance to ensure that the purchasing function has adequate procurement and lead
time to avoid negotiating under the constraint of urgency.
(iv) Negotiators as representatives are affected by the amount of authority the

representatives have to make decisions on behalf of their organization. The authority
may vary from that of a mere emissary (ambassador) to a free agent. An emissary has

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positions fixed by the superiors, on the one hand and the free agent is at liberty to take
positions that he or she assumes to be the best for his or her organization on the other
hand. Research suggests that the fewer the constraints imposed on a negotiator the
greater the shape of his or her personal characteristics such as knowledge; experience
and personality influence the negotiation process. There are five sets of conditions
that prevent negotiators from responding spontaneously to their opposite members.
(v) The negotiator’s position in the market place; your relative power position will
influence the negotiation situation, e.g. if the buyer is the only one of the few buying
firms of a particular item, then they have a relatively higher power position to
influence the negotiation in his favor.
(vi) Physical space; sometimes where the negotiation takes place can be important. Are
you negotiating in a space you are uncomfortable and the other is comfortable?
Negotiating space should always be appropriate to both parties.
(vii) The range of options available to you- including the BATNA (Best Alternative to a
Negotiated Agreement), you need to know when not to engage at all and when not to
continue to engage in negotiation. For example, it may not be appropriate for one to
enter into negotiation;
 When you could lose everything you have.
 When demands made are unethical.
 When you are not prepared to negotiate.
 When you are not interested in the outcome because you a have nothing to
benefit/gain.
 When you have no time to negotiate as you would want to.
 When you do not trust the other party to implement the agreed solution.
 When waiting will improve your overall position.

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(viii) Subjective utilities; people place very different values on elements of a negotiation
e.g. you may place high value on price and the lowest value on quality. It is important
to be aware of your subjective utilities and try to ascertain the other person’s
subjective utilities. To find out what is valued by the other party is one of the key
parts of negotiation and should be done in the preliminary phase.
(ix) Past interaction; if there is a history of conflict to a resolution with this person, there
is a likely hood for this to negatively affect the negotiation due to bias and mistrust
among the parties.
(x) Information – the more information you have about the other party’s financial
situation, real priority needs, deadlines, costs and organizational pressures, the easier
it will be to develop negotiation proposal which address these issues and the stronger
the negotiation position will be.
(xi) Skill and experience of the negotiating team or individual will most definitely win
the best deal from a given negotiation process.

27
General factors that weaken negotiation positions
 Lack of enough preparation time.
 Lack of knowledge with regard to market developments, market position of the suppliers
and your own company’s relative position.
 Lack of knowledge of the supplier’s cost structure.
 Too little listening and too much talk by the negotiating parties.
 Non or very few alternative sources available- BATNA.
 Where there are very few potential suppliers and buyers of a given product or service.
 In cases where demand for a particular item is urgent and cannot be postponed.
 Anxiety to obtain business.
 When the supplier uses arguments during the negotiation process that were not
anticipated by the buyer.
 Lack of experience in negotiating.
 When the buyer is well known for unfair business dealing and differed payments.
 Few valid arguments to support either parties point of view.
 When both parties’ contribution to the other is small or insignificant.
 When the buyer lacks relevant information about the supplier’s financial situation,
manufacturing process and any other relevant information to be considered.

28
Summary of factors that strengthen a buyer’s negotiating position:-
 If his or her demand for a given commodity can be delayed or is not urgent.
 If the suppliers are anxious to obtain business from the buyer.
 If the buyer is in a monopolistic or semi-monopolistic position. That is when there are
only one or a few firms that require that commodity/service.
 When the demand can be met with alternative products or substitutes.
 When the buyer has a reputation of fair dealing and prompt payment.
 When the buyer is well informed about the suppliers’ financial situation manufacturing
processes and other relevant intelligences.
Summary of factors that strengthen the supplier’s negotiating position
 The demand for a commodity or service is urgent. For example during the Christmas
season some commodities become expensive because of the importance attached during
such a season.
 The suppliers are indifferent about accepting the business; that is they are not affected by
either winning or losing a given business opportunity.
 The supplier is in a monopolistic position or semi-monopolistic position he or she is in a
stronger position to negotiate with any buyer.
 The supplier owns the necessary specialized machinery or tools required by a given
buyer.
 The buyers wish to deal with the suppliers due to their reputation and quality, reliability
of their products.
 The supplier is well aware of the buyers negotiating position.

29
1. List the three major factors that affect negotiation
2. Briefly explain the factors that influence negotiations and their outcome
3. What factors weaken the negotiation positions of both buyers & suppliers and how could
they be overcome?
LECTURE TWO

30
QUALITIES OF A GOOD NEGOTIATOR
There are various qualities that make a good negotiator such qualities vary from person to
person. They include:
 A good negotiator should have good planning skills. He or she should be able to carry
out investigations in order to keep him or herself with the necessary facts and figures so
that he or she can use them to his or her advantage.
 In same regard a good negotiator should get the mandate to negotiate on behalf of
his or her company. In other words he or she should acquaint himself or herself the
highs and lows of the company in order to avoid making mistakes.
 He or she should be able to think clearly even under stressful situations by knowing
when to take risks. This is necessary because such knowledge enhances his or her
position during the negotiations. E.g. when a potential client may be hesitant about the
performance of a new system the negotiator who has confidence in the designing the
system may go ahead and implement it with a technical team. Such courage enables him
or her to win over client.
 A good negotiator should be generally intelligent. Such intelligence should enable

him/her to analyze issues critically. The good negotiator should be well qualified to
negotiate over the issues at hand
 A good negotiator should have enough knowledge about the product in question.
This should be in terms of quality, availability of other suppliers and their rates, the legal
issues to consider and the costs of production. This can put their negotiating team in a
strong position to know how much they can offer as their biggest offer.
 Good communication skills are a requirement for a good negotiator in over three
perspectives. First he/she should be able to communicate clearly either in a verbal or
written way. Second he/she should be a good listener so that when necessary he/she takes
time to listen to the views/offers of the other party (opposite number). Third, he/she
should be able to build a rapport (warm and conducive relationship/dialogue) with the

31
other party during the negotiation process. Fourth, he/she should be able to role take
(interpret) the non-verbal cues of the other party and use them to his or her advantage.
 A good negotiator should be organized in time by noting down the issues for
discussion. He/she may do well to carry along the necessary information about the
subject of discussion.
 A good negotiator should be a person of high moral integrity. That is someone who
conforms to the set ethical standards either by abiding to professional code of conduct or
the general ethical principles of the community.
 He/she should have the ability to perceive or utilize his/her powers. For instance
being able to purchase in bulk, a prompt payments ;( read sources of power during
negotiations).
Effective behavior for negotiation (Verbal and non- verbal communication during
negotiation)
(a) Verbal and non-verbal communication during negotiation
Human beings are able to communicate in a variety of ways besides the use of words.
This type of communication is referred to as non-verbal communication. Among humans,
body language accounts for a large part of meaningful communication. The way we sit,
stand, gesture, or orient ourselves in a group often helps others make accurate judgments
about our thoughts, feelings, and intentions.
Mannerisms such as a clenched jaw, narrowed eyes, or slumped posture can be

interpreted as conveyed anger, distrust, or disinterest. On the other hand steady eye
contact, a tilted head, and a reassuring smile can demonstrate interest and empathy. As
we develop a greater sensitivity to body language and its implications, we can be more in
tune with the thoughts and feelings of others. We can also become more certain that the
messages we are communicating are the ones we intend to convey.
Interpretation of postures

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Posture Possible meaning
Leaning forward when making a Interested, wants to emphasize a point.

point
Avoiding eye contact Maybe embarrassed, not telling the truth.
Arms folded, body turned away from Defensive, no compromise, interested.

you
Body turned towards you leaning Interested, warning towards your comments
forward
Looking away at a watch or through Wants to leave or avoid any further discussion
a window
Hands supporting head and leaning Confidence

back in chair
Stroking nose regularly with a finger May be lying

avoiding eye contact.
Good eye contact, fingers stroking Interested in what you are saying
1. What are the qualities of a good negotiator?
2. Briefly describe the various postures that can be used by negotiators during negotiation
and their possible meaning
3. What could be the danger of failing to interpret postures appropriately during

negotiation?
CHAPTER THREE
SUPPORT TOOLS FOR MANAGING NEGOTIATIONS

33
LECTURE ONE
Introduction
Support tools in negotiation provide the negotiator with information that enables informed
decision making on aspects like tactics and ploys to use, what position to take, etc. They enable
the analysis of the supplier’s firm, the industry in which this supplier operates as well as the
macro environment that is likely to influence the activities of the supplier and therefore
negotiation.
These tools include SWOT analysis; PEST analysis; Cost/Price analysis; Market analysis;
Industry analysis. All these tools enable the negotiator to assess his or her position to find out
whether it’s weak or strong:
(a) SWOT Analysis
A SWOT is an analytical tool that considers internal and external factors that will have an
influence on negotiations. The acronym stands for Strengths, Weaknesses, Opportunities
and Threats. Strengths and Weaknesses are internal to the firm while Opportunities and
Threats relate to external issues typically identified as a result of undertaking a PESTEL
analysis. The reason for conducting a SWOT analysis is that the firm is able to diminish
its weaknesses by using its strengths to focus on opportunities. Thus in turn overcomes
threats. The tools can be applied in both the supplying and buying firms.
Strengths Weaknesses
 High purchasing power  High sensitive imported materials
 Regular demand
 Purchasing good will
Threats Opportunities
 Few suppliers  Alternative materials
 Competition for new materials from  partnerships

34
competitors
Summary of the SWOT analysis
 Strength in this is used to mean an internal advantage that one party has over the other
negotiating party in form of good technology, better systems of work or better trained
employees and negotiators.
 A weakness is a disadvantage one party has over another one for example poor
technology, lack of a best alternative to a negotiated agreement (BATNA); poor systems
of work and procedures.
 An opportunity is an external advantage before a given party that requires some effort to
make use of it. For example a substitute product or other suppliers with better prices or
products.
 A threat is an external factor that may put one negotiating party at a risk if no action is
taken to avert it, for example another purchaser with better offerings or an impending
natural disaster. Before professionals can go for a negotiation session, they have to
assess their strength, weaknesses, opportunities and threats to find out their standing
against the other party.
(b) The Break Even Point Analysis
This is a tool that enables suppliers to tell whether they are making a profit or not when
producing. Production entails two types of costs which are the fixed costs and variable costs.
The fixed costs are the costs which do not change irrespective of the amount of goods or
services produced such costs include management costs, rental costs and utilities.
The variable costs are those costs that are incurred when production takes place and change
due to the amount of goods or services produced such costs include; labor costs, cost of raw
materials and others.

35
A producer is said to break even when the revenues are equivalent to the costs of production
(both fixed and variable costs). A producer begins to make profits when the sales or revenue
exceeds or goes beyond the breakeven point. So when negotiating a producer or supplier will
avoid offering at prices which go below the breakeven point because if this happens it
indicates that a supplier is operating at a loss and this is unhealthy for any business.
On the other hand when the purchaser gets to know of the breakeven point of the supplier,
he/she can know what to offer in addition to the breakeven point.
The various cost and revenue relationships are illustrated in the diagram below
Sales Revenue
Break Even Point Profit Total costs
Cost
loss Fixed costs
Units sold
At BEP: TC=TR
But Total cost (TC) = Total Fixed Cost (TFC) + Total Variable Cost(TVC).
So TFC+TVC = TR.
But Total Revenue (TR) = Price X Quantity (P * Q)
Thus :TFC+ TVC = P * Q
Also ; TVC= VC * Q
Substituting VC X *Q with TVC

36
TFC+ VC* Q= P * Q
Making FC the subject of the formula;
FC= P*Q - (VC * Q)
Factorizing out Q
FC= Q(P-VC)
Dividing both sides with P-VC
FC = Q (P-VC)
(P-VC) (P – VC)
FC = Q
( P-VC)
Break Even Point in units = FC
(P- VC)
Break Even Point in monetary terms = FC * Sales price per unit
(P-VC)
Illustration of the Break Even Point tool
For example, the costs for producing a table have been estimated as follows;
Material: Sh. 10,000.
Labor: Sh. 6,000.
Total variable cost: Sh. 16,000.
Table selling price: Sh. 24,000.
Contribution: Sh. 8,000.

37
Assuming that fixed costs are sh. 80,000. The sale of 10 tables will cover the fixed costs, and
all of the contribution after the 10th table becomes profit (i.e. the breakeven point is 10
tables). Estimating a supplier’s breakeven point is a useful aid to the preparation stage for
negotiation or price analysis. A buyer is in a stronger bargaining position when a supplier is
operating with spare capacity.
LECTURETWO
(c) PESTEL Analysis
Political, Economic, Social and Technological

38
Negotiators can analyze the political environment in which they are negotiating in by
assessing how the policies of government may either positively or negatively affect their
transactions. So decisions are made under the guidance of such laws or policies.
Economically the negotiators pay attention to the economic issues in the environment that
may affect their transactions and negotiations and they factor them in their calculations.
Socially the negotiators pay attention to the cultural values and such values affect the
negotiations like the procedure of negotiation like the common saying goes that “if you go to
Rome act like the Romans do”. Negotiators have to pay attention to the cultural values and
norms of the people they are going to negotiate with. Like if you are going to negotiate with
companies that have a strong background of Islam ladies are required to dress appropriately
to suit the expectations of their counter parts. Otherwise indecent dressing may jeopardize the
negotiation process.
Technologically the negotiators may be required to use the modern technology in the process
of negotiation like during presentations. In case one intends to research about a given
organization use of the internet may be appropriate.
The PEST tool is also useful during the preparation for the negotiations. The modern scholars
have gone ahead to add other letters on PEST as PESTEL. The other two letter mean E for
environmental and L for legal issues.
(d) The Learning curve
The learning curve is an experimental relationship between the number of units produced
and the number of labor hours required. Putting it more simply, the more often a task is
repeated, the less time it takes. It has also been referred to as an improvement curve, an

39
experience curve and a time reduction curve. The significance of this is that where a task
has a labor element when there are repeat orders, the supplier’s labor cost will fall and
their profit margins increase. It is unreasonable, therefore for the buyer to expect a price
reduction in such circumstances, or at least be in a position to reject applications for price
increases.
The time taken to do a task reduces for a number of reasons:
 The development of team work
 Specialization and division of labor as knowledge of work increases.
 Remembering drawings and instructions so that there is no need to refer to them.
 Improving the layout of the task, such as the positioning of tools and materials.
 The development of stamina and the ability to maintain high work rates.
 The development of dexterity and judgment- known as psychomotor skills –

experience using hands and the head.
 Improvements in working methods and management innovations.
Illustration of the learning curve
Number of units Labor hours Cumulative labor Average labor hours

produced required hours required

40
1 100 100 100
2 80 180 90
3 74 254 84.7
4 70 324 81
It should be noted that when production doubles from 1 to 2, average labor hours per unit fell
by 10% from 100 to90. Similarly, when production doubles from 2 t0 4, there was a further
reduction of 10%. As there is a constant learning rate of 10%, this is an example of a 90%
learning curve. There are different learning rates for different activities such as assembly
work, welding and electronic.
The learning curve of course will only apply when there is substantial labor content, and
therefore it does not apply to capital –intensive production- machines do not learn.
Briefly describe how the following tools can be used to support negotiations
1. SWOT Analysis
2. Break Even Analysis
3. PESTEL Analysis
4. Learning curve Analysis
CHAPTER FOUR
CONFLICT MANAGEMENT IN NEGOTIATION
LECTURE ONE

41
Introduction
Conflict arises when the parties are focused on the same goal, such as price, where the supplier
wants to achieve as high a price as possible, and the purchaser as low a price as possible. Often
conflict has negative connotations which include:
Disadvantages conflicts
 Processes become competitive which may lead to further escalation
 Miss-perception and bias exist
 Negotiators get emotional (irritated, angry, and frustrated) as conflict escalates.
 Issues become blurred.
 Thinking becomes rigid.
 Differences are magnified.
 Conflict escalates.
Benefits of conflict
 Discussion leads to greater awareness of problems which may enhance problem solving.
 Conflict challenges current practice, potentially highlighting poor practice.
 Withstanding conflict builds relationships among colleagues.
 Promotes self-awareness and awareness of others.
 Enhances personal, including psychological, development as ways are sought to

overcome conflict style and preferences.
Types of conflicts
By evaluating a conflict according to the five categories below- relationship, data, interest,
structural and value - we can begin determine the causes of a conflict and design resolution
strategies that will have a higher probability of success.

42
(a) Relationship conflicts; Relationship conflicts occur because of the presence of strong
negative emotions, misperceptions or stereotypes, poor communication or
miscommunication or repetitive negative behaviors. Relationship problems often fuel
disputes and lead to an unnecessary escalating spiral of destructive conflict. Supporting
the safe and balanced expression of perspectives and emotions for acknowledge (not
agreement) is one effective approach to managing relational conflict.
(b) Data conflict; Data conflicts occur when people lack information necessary to make wise
decisions, are misinformed, disagree on which data is relevant, interpret information
differently, or have competing assessment procedures. Some data conflicts may be
unnecessary since they are caused by poor communication between the people in
conflict. Other data conflicts may be genuine incompatibilities associated with data
collection, interpretation or communication. Most data conflicts will have “data
solutions”.
(c) Interest conflicts; Interest conflicts are caused by competition over perceived
incompatible needs. Conflicts of interest result when one or more of the parties believe
that in order to satisfy his/her needs, the needs and interests of an opponent must be
sacrificed. Interest- based conflict will commonly be expressed in positional terms. A
variety of interests and intentions underlie to motivate positions in negotiation and must
be addressed for maximized resolution. Interest –based conflicts may occur over;
 Substantive issues (such as money, physical resources, time, etc.)
 Procedural issues (the way the dispute is to be resolved)
 Psychological issues (perceptions of trust, fairness, desire for participation,

respect, etc.)
For an interest – based dispute to be resolved, parties must be assisted to define and express their
individual interests so that all of these interests may be jointly addressed. Interest- based conflict
is best resolved through the maximizing integration of the parties’ respective interests, positive
and desired experiential outcomes.

43
(c) Structural conflicts; structural conflicts are caused by forces external to the people in
dispute, limited physical resources or authority, geographic constraints (distance or proximity),
time (too little or too much), organizational changes etc. make structural conflict seem like a
crisis. It can be helpful to assist parties in conflict to appreciate the external forces and
constraints bearing upon them. Structural conflicts will often have structural solutions. Parties’
appreciation that a conflict has an external source can have effect on them coming to jointly
address the imposed difficulties.
(d) Value conflicts; value conflicts are caused by perceived or actual incompatible belief
systems. Values are beliefs that people use to give meaning to their lives. Values explain what is
“good” or “bad”, “right” or “wrong,” “just or “unjust”. Differing values need not cause conflict.
People can live together in harmony with different value systems.
Value disputes arise only when people attempt to force one set of values on others or lay claim to
exclusive value systems that do not allow for divergent beliefs.it is of no use to try and change
values and belief systems during relatively short and strategic mediation interventions. It can
however be helpful to support each participant’s expression of their values and beliefs for
acknowledgment by the other party.
Conflict handling styles
What makes conflict more difficult to manage is the way the parties view the other party’s
outcome in relation to their own. For example, when the other party’s outcome is considered as
important as the purchaser’s, then the approach to negotiation focuses on problem solving; where
the outcome for both is unimportant, then there may be little point in negotiating at all!

44
Successful conflict resolution will depend on the type of people involved, the nature of conflict,
the personal relationship between the parties and the skill and knowledge of whoever is trying to
resolve it. Thomas Kiliman developed a simpler way to resolve conflicts as shown in the
illustration below;
The Thomas Kilmann’s model of conflict management
A
s Competing
s Collaborating
e
r
ti Compromising
v
e
n
e Avoiding
s
s Accommodating
Cooperativeness
This model plots five different modes of conflict resolution on two axes: i.e. on the X-axis is
concern for others or cooperativeness and on the Y- axis is concern for oneself or assertiveness.
Each of these models has strengths and weaknesses in different situations and different people.
(i) Integrating (problem solving or collaborating); this involves working through your
needs and the other party’s needs to arrive at an agreed solution based on a balance of
the two. It takes a lot of time compared to competitive or accommodative strategy but
its time well spent if it brings out the different perspectives and ideas which can then
be merged together to form a successful resolution. With this approach, both parties’

45
outcomes are important. It’s used when issues are complex and therefore the need for
brainstorming to attain better solutions, commitment from both parties is just as
important and party cannot solve the problem alone.
(ii) Obliging (accommodating or yielding); this is the opposite of competing where you
adapt to the other person’s needs or wishes. When it has been identified that it is
important for the other party to achieve their outcome, but less so for the
organization. It is typically used when the organization is wrong or weak and the
future relationship is important i.e. issue is more important to the other party.
(iii) Dominating (competing or contending); this can be used where quick action is
needed for unpopular decisions or where an open debate would be dangerous and
inappropriate. Parties pursue their own self-interests and adopt a style which
incorporates threats and intimidation. The approach is typically used where the issue
is not important to them, but it is to you, it could be costly to you, it may be necessary
to overcome a particular behavior of the other party, a quick decision is needed.
(iv) Avoiding (inaction); Avoiding a decision is a valid way of dealing with some
conflict. It may not please the parties, but you have little control where emotions are
running high and a decision taken would be dangerous or damaging. It becomes
dangerous if over applied as people will start avoiding decision making.
(v) Compromising; ‘ Let’s make a deal’. This is as balanced as collaborating but is more
about negotiation and trade-off. Even if you are entirely in the right or wrong, you
yield to something to make a compromise deal. It is valuable where time is tight or
where views are entrenched and power is evenly balanced. It’s a half-hearted attempt
at problem solving. It’s used when goals are mutually exclusive, temporary solution is
needed, integrating or dominating styles have not been successful.
1. Define conflict as used in negotiation
2. Describe the different types of conflicts clearly bringing out their causes and how they
should be dealt with

46
3. What benefits are associated with conflicts?
4. Outline any four conflict handling styles you know of
LECTURE TWO
Resolving conflict through facilitators
Resolving conflicts through 3rd parties after a negotiation process has failed will most likely lead
to a competitive approach to resolve the conflict and therefore lead to a win-lose situation as
illustrated by the diagram below;

47
Decision made by negotiators Decisions made by appointed 3rd parties Decision made by
legal entities
Increasing win-lose outcome
Conflict avoidance
Discussion and problem solving Administration and arbitration
Source : Moore (1996)
Third parties – there is often a resistance to bring in third parties, people outside the conflict to
help find a resolution. Where help from these third parties is sought, it can on a partisan basis;
such as reaching up hierarchy of the organization you are representing to get a director to ‘ back
you up’ for example. Limited use of third parties to resolve negotiation conflicts miss out on
very powerful and effective ways of resolving conflict. Neutral third parties can bring swift and
lasting success.
Negotiator solicitors- one or both of the sides engages someone to negotiate on their behalf to
remove personalities from the conflict. One extreme example would be to engage a solicitor to
help resolve a dispute. That solicitor is working on your behalf and will follow your instructions,
but their aim is to achieve resolution and they should recommend actions and results you may or
may not find palatable.
Mediator; a mediator can be very valuable to bring the sides together. A mediator is neutral and
manages the discussion between the two sides; sometimes as a go between or a referee. Just
bringing the two sides together and ensuring that problems are aired a d discussed fairly can help
resolution and this is often used to avoid disputes reaching legal action.
Arbiter – this is the final level where someone is brought in to listen to both sides and make a
binding decision which both must accept e.g. a judge to preside over a dispute.

48
The five Ps of conflict management
 Perceptions; people associate conflict with negative responses such as anger, fear,
tension, and anxiety. Rarely do we perceive any benefits from being involved in a
dispute. Our negative perceptions impact our approach in resolving conflict as we strive
to eliminate the source of these negative feelings.
 Problems; Anyone can be involved in a conflict, and the amount of time, money and
equipment needed for resolution will vary according to its complexity.
 Processes; there are different ways to go about resolving disputes i.e. suppress the
conflict, give in, fight, litigate, mediate, etc.
 Practices; power, self-interest, and unique situations are all factors relating to why
people resolve disputes the way they do.
 Principles; we determine the priorities of all resolution processes on the basis of an

analysis of our fundamental values regarding efficiency, participation, fairness,
compliance, etc.
Techniques used to regain control
 Do not react, but mentally distance yourself from the discomforting tactics being
employed.
 Disarm the other party by listening carefully, acknowledging points being made and
provide them with your views-positive response to a negative behavior.
 Reframe the negotiation by asking open ended and problem solving questions.
 Make saying ‘no’ problematic for them by letting them know you have a good BATNA.

49
CHAPTER FIVE
NEGOTIATION ETHICS
LECTURE ONE
Introduction

50
This topic is very important because of the ethical perspectives largely determined by the fact
that negotiations are either collaborative or integrative. Fisher and Ury distinguished between
positional and principled negotiations. Positional negotiations view negotiations as an adversarial
or conflict situation in which the other party is considered to be an enemy. It’s based on four
assumptions:
 We have the correct and only answer to the problem.

 There is a fixed price.
 Negotiation positions are equivalent to the opposite interests.
 It’s not our responsibility to solve problems of the other party.
In positional negotiations, positions and interests are closely related. Often negotiations do not
move from a fixed position because of the psychological pressures or needs. Here a leader of the
negotiating team refused to consider alternatives for fear of losing face or being seen by team
members as backing down.
Positional Negotiations have at least two drawbacks i.e. It’s a win-lose situation. It has only two
ways to go which are forward to victory and backward to defeat. From the ethical point of view
positional negotiations lead to such tactics as:
 Misrepresentation of positions
 Bluffing (lying)
 Threatening and
 Manipulation
On the other hand, Principled negotiations are also referred to as collaborative negotiations.
These differ from positional negotiations. The very term principled has an ethical
connotation/meaning.
Ficsher and Ury criticized principled negotiations on four grounds:
i. Arguing about positions produces unwise arguments compromising other values. For
instance it involves both parties giving up something and this implies that neither of the
parties is satisfied with the outcome.

51
ii. Arguing about positions implies wasting time unwisely trying to reconcile extreme
positions.
iii. The ongoing relationships are endangered because anger and resentment comes up as a
result of one side being forced to bend to the rigid choice or will of the other.
iv. Positional bargaining is worse when there are many partners and it’s hard to change
constituency positions than those of individuals.
Some scholars wonder whether negotiations can be ethical.
Reasons as to why negotiations can hardly be purely ethical
 It is commonly believed that successful negotiations are enhanced by the deceitful tactics
such as bluffing and outright misrepresentation of facts.
 Negotiators have the responsibility of obtaining the best results for those whom they
represent.
 What is ethical is affected by factors such as bribery and deception which can be
accepted in some areas of the world and refuted in other areas. Like the saying goes that
“when you go to Rome do as the Romans do”.
 Self-interest is the most powerful of all motivations when negotiating people have a
tendency of being egoistic. That is paying more attention to individual interests as
opposed to the common interests.
 Ethical negotiations are only idealistic. That is they do not work in the real world.
Unethical Tactics used in Negotiations
Unethical tactics used in negotiations are also referred to as ploys. During negotiations the
parties involved tend to employ some of the unethical tactics to their advantage. In order not to
fall victim of them, a professional negotiator should know them so that they can devise strategies
to get around them.

52
Roy Webb (2005 ) one of the trainers of negotiators, holds that such ploys have counter-ploys
and he presents his beliefs about ploys as below:
 All ploys have counter ploys (solutions) which can be used by experienced negotiators.
 He cautions that reliance on ploys can ruin long term relationships.
 Ploys when recognized can be disarmed.
 While knowledge of ploys assists negotiators reliance on them should be avoided.
The Examples of ploys include:
1. Nice guy/hard guy. This involves the negotiator facing two people; one aggressive and
difficult to deal with and the other soft and conciliatory. The idea is that you become so
afraid of the hard guy that you make concessions to the softer negotiator.
2. Add-ons: It is only the basic deal that is negotiated and all the other items cost more
money. The trick is that after negotiated for the basic item like a car after agreeing on the
price of the car the seller claims that the negotiated price was not inclusive of the car
radio, spare tyre and tool box. So all these other add-ons require separate payments on
top of the agreed price.
3. Deadlines and ultimatums: telling the other party that the deal has to be completed by a
certain period of time otherwise it will be called off. The intention of this trick is to put
pressure on the other side into making hasty decisions without considering better
alternatives.
4. Russian front: In this case the negotiators are given two options in which one is too bad
and the other less awful, so that the negotiator has only two choices to make. Yet in
realistic situations there would be better options.
5. Empty ladder: This involves attempting to con the other side by lying that they have
little to offer so that the other party is tricked to reduce on their demands.
6. Approval from higher authority: this involves telling the other party that the position
is fixed if there is need to consult the higher authorities at the base. The idea is that the
other side has to agree on the current position that does not require further consultation or
approval from higher authority.

53
7. The other buyers’ ploy: This is a straight threat to the other party that is my final offer if
it’s not accepted there are other buyers who are willing to offer me at a higher price. So
you either take it or leave it.
8. Think of your reputation: This ploy appeals to the credibility of the other party i.e. if
the opponent does not accept the proposal he or she will lose their credibility.
9. Power of legitimacy people believe in they see in print is not negotiable. This is what
makes price lists powerful. If you have to present price increases are easily believed
when put in print. Some people go ahead to show memos from bosses announcing the
increase.
10. Body language: It’s important to react verbally and visually during negotiations when
offers are made. Human nature is such that you can believe and accept these outbursts
against us and our negotiating positions. The negotiator should ensure that he or she
reacts to the other party’s offers. If you show no reaction the other party may be tempted
to ask for more and more concessions and you will lose the initiative in the negotiation.
Research question
Why do you think negotiations can be hardly ethical?
CHAPTER SIX: NEGOTIATION IN AN INTERNATIONAL CONTEXT

LECTURE ONE
Introduction

54
Cultures vary from country to country and from region to region, within the same country. It is
important to understand the aspects of culture and their impact of negotiation.
Definition of culture
Culture is a total communication framework and includes shared meanings, values and beliefs,
group and ethnic orientation, judgment and opinion on good and bad, language.
Without an intimate understanding of these aspects, misperception and distortion in
communication is certain. Culture impacts all areas of an international negotiation; the
motivations the parties have to enter the negotiation, the process of negotiation, the outcomes
achieved, the traditions and values that underlie the agreement and the specific situational
conditions within which the negotiation takes place.
Dimensions of culture/Aspects of culture

Hosfstede (1991) identifies five (5) dimensions of culture. These include;
(a) Individualism/Collectivism; this represents an independent versus a team approach;
where impact is likely to be on processes, outcomes and preferences for conflict
resolution. Collectivist cultures favor a longer term relationship whereas
individualistic cultures focus on the short term, preferring to introduce new
negotiators to resolve problems.
(b) Power distance; this refers to acceptance of inequality in society and the use of
power. High power distance cultures tend to defer decision making in negotiations to
a leader within an organization which results in a slow process, whereas low power
distance cultures tend to make decisions more quickly because they are made through
the organization.
(c) Masculinity/Femininity; this refers to male assertiveness versus the more female
concern for relationships. More masculine cultures favor more competitive
negotiations whilst feminine cultures prefer collaboration and compromise.
(d) Uncertainty Avoidance; this is the extent to which structures and risk avoidance is
preferred to rapid change and new situations. Those cultures that prefer structure and
are therefore more stable, tend to be high in avoiding uncertainty. Such cultures are
comfortable with ambiguity and prefer procedures and rules to guide the negotiation

55
process. Cultures that are low in avoiding uncertainty are more appreciative of less
structure in the negotiation process.
(e) Long term orientation; this includes work ethics and commitment. This dimension
dates to deeply rooted values and traditions. A high orientation in business may
indicate non-acceptance of outsider influence whereas a low orientation my indicate
willingness to accept change more easily.
Preparing for cross-cultural negotiations
There are a number of problems that negotiators should be able to deal with in cross-cultural
negotiations. These include;
 Overcoming culture shock; negotiators typically go through four phases of
adjustment to a new cultural setting; excitement and anticipation, awakening,
disillusionment and realization.
 Dealing with your boss; because of the protracted nature of the negotiation, your
boss may be unhappy with status reports on progress, especially when it is
perceived that little has been achieved other than social interaction.
 Dealing with the negotiation team; negotiators may have to deal with escalating
costs with personality issues and disagreements among team members, and
building the team approach for negotiation.
 Resolving ethical issues; bribery and payments- made to individuals to speed up
or guaranteed desired outcomes may be common place in some cultures, or the
giving of gifts may be seen as a good way to build relationships.
 Venue; costs and culture shock are key problems to negotiating in a foreign
country.
 Pace of negotiation; what pace will the negotiation take? Fast? Slow?
 Negotiating strategies; opening offer, BATNA, presentation of issues including
level of detail and formality, concession patterns, conflict resolution processes.
 Decision making process; including authority, team roles, interests and positions
of individuals.
 Contractual aspects, including bureaucracy, need for an advisor, etc.
Dos and don’ts for cross-cultural negotiations

56
Hendon etal (1996), recommend a number of dos and don’ts for cross –cultural
negotiations
 Plan effectively; know the limits to the information you want to disclose to the
other party; ensure the team knows what they are doing; it is also to prepare for
the tactics the other party is likely to use, so take time to research this aspect
thoroughly.
 Undertake preliminary work with advisors, mediators or others who are familiar
with the cultural context and who may act as a go-between. This will help to build
the relationship with key individuals before the main negotiators attend a face to
face meeting.
 Take time to learn the local language, or employ an interpreter, if the latter, learn
how to use one effectively.
 Use visuals to support the communication process in the negotiation meeting,
pictures are easier than words to understand.
 Use time effectively; be prepared for a longer negotiation process and take care
not to reveal return plans as they may be used against you.
 Use ethnic origin individuals with care. Most people are loyal first to their
original culture and second to their citizenship but where an individual has been
‘acculturated’ into an organization and country, then it is possible they may have
lost touch with subtle and key cultural overtones.
 Be aware of longer term implications of the negotiation and agreement reached.
In some contexts the agreement reached is the first stage of a continuing
relationship.
 Do not be intimidated into reaching an agreement; this is especially true if you
have identified your BATNA.
 Be aware that the other party’s approach to negotiating may be different. Take
care therefore, not to assume the tactics you use are perceived in the same way by
them.

57
1. Briefly describe the various cultural dimensions and how they are likely to influence
negotiation
2. What factors should a skilled negotiator consider when preparing for cross-cultural/
international negotiations?
3. What are the dos and don’ts for cross-cultural negotiation?
Reading list
1. Kenneth Lyson & Brian Farrington (2006), Purchasing and Supply Chain Management
7th edition, Pearson Education Limited.
2. CIPS (Chartered Institute of Purchasing and Supply) Study guide, Tactics and
Operations.
3. Robert M. Monczka, Robert B. Hand Field, Larry C. Guimpero, James L. Patterson and
Donald Watters, Purchasing and Supply Chain Management.

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1

MAKERERE INSTITUTE OF SOCIAL DEVELOPMENT

PROGRAMME : DIPLOMA IN PROCUREMENT & SUPPLY CHAIN MGT

YEAR : TWO SEMESTER : ONE

COURSE UNIT : ESSENTIALS OF NEGOTIATION

COURSE CODE : DPS 2104

Ms. Hayenje Rebecca (0787-440128/0702-076290) Page 1

CHAPTER ONE : INTRODUCTION TO THE CONCEPT OF NEGOTIATION

Objectives for negotiations

Ms. Hayenje Rebecca (0787-440128/0702-076290) Page 2

(iii) Service Levels or Quantity

(iv) Building a Long term relationship

(vi) The best deal

(a) Price content of negotiation

Ms. Hayenje Rebecca (0787-440128/0702-076290) Page 3

(b) The contractual content of negotiation

 Type of contract e.g. lump sum, cost reimbursable etc.

(c) The delivery content of negotiation

 Delivery /completion time.

Stages in the negotiation process

The Negotiation Process

Pre- negotiation phase Meeting/actual Post – negotiation

Ms. Hayenje Rebecca (0787-440128/0702-076290) Page 4

1. The Pre-negotiation stage

During the stage of pre-negotiations the following issues are considered:

I. Differentiating between facts and assumptions; there is need for parties to

Ms. Hayenje Rebecca (0787-440128/0702-076290) Page 5

b. Secretary; this person is responsible for taking notes during negotiations.

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Ms. Hayenje Rebecca (0787-440128/0702-076290) Page 7

Illustration showing the effect of range on negotiations

Buyer’s range Gap

There is no acceptable deal

Buyer’s range Exit

Exit Seller’s Range

Any deal within the overlap is possible

Ms. Hayenje Rebecca (0787-440128/0702-076290) Page 8

2. Actual Negotiation Stage

Ms. Hayenje Rebecca (0787-440128/0702-076290) Page 9

3. Post Negotiation Stage

 Ensuring the commitment of your organization to making the agreement work.

 Implementing the agreement by setting up joint implementation teams and performing

 Establishing procedures to monitor the implementation process and corrective measures

Ms. Hayenje Rebecca (0787-440128/0702-076290) Page 10

End of lecture questions

1. Define the term negotiation

2. Briefly describe the objectives of negotiation

3. Mention the price, contractual and delivery content of negotiation

4. Outline the three major stages of negotiation

5. What aspects should be considered when planning for negotiation?

Ms. Hayenje Rebecca (0787-440128/0702-076290) Page 11

Circumstances under which positional/adversarial approach is often used;

Assumptions by positional negotiators

 Resources are limited

 The other negotiator is an opponent; therefore be hard on him/her

 A win for one means a loss for the other

 The goal is to win as much as possible

 Concessions are a sign of weakness

Ms. Hayenje Rebecca (0787-440128/0702-076290) Page 12