Stages of negotiation
Vocabulary.
A negotiation is a discussion between people who want to reach an agreement.
Whether negotiating a a business deal or a salary. A negotiation will normally go through five stages.
Planning.
Before entering a negotiation, negotiators must plan and prepare their positions.
In the planning stage, negotiators will research the other side's position and anticipate where they may agree or disagree.
They will also set goals, establish their bottom line and research the other side.
Clarifying.
During the clarifying stage, negotiators will contact each other to clarify what they want to achieve.
By discovering what the other side wants. Both parties can see if they share common goals.
Once their needs have been clarified, the negotiations can begin.
Finding common ground helps create a positive negotiating environment.
During the planning stage, both sides will determine what they want and what they are willing to accept.
By clarifying what the other side wants. Both parties can see whether they share common goals.
Bargaining.
During the bargaining stage, negotiators make compromises until an agreement is reached.
They often aim for an outcome that benefits both sides without giving up too much.
Settling.
In the settling stage, negotiators reach an agreement and decide how to implement it.
After the terms of an agreement had been decided, a contract will be drafted and signed.
If an agreement can't be reached, negotiators may find a 3rd party for advice.
Implementing.
In the implementation stage an agreement or contract is put into effect.
Implementing an agreement strengthens the relationship between both parties.
If both parties follow through on the agreement, it will be easier to negotiate next time.
During the bargaining stage, negotiators often seek an outcome that benefits both parties without compromising too much.
Once an agreement has been implemented successfully, it will be easier to negotiate in the future.
Negotiating terms
Vocabulary.
Anchor point.
An anchor point is a reference point that negotiations are centered around.
It is the best outcome that one side hopes to achieve.
Normally the first offer made during negotiations serves as the anchor point.
Negotiators try to anchor the negotiation to their advantage, to gain the upper hand.
Bottom line.
A bottom line is the worst outcome that one side will accept.
If someone is pushed beyond their bottom line, they may walk away from the negotiations.
BATNA stands for best alternative to a negotiated agreement.
It is the second best option the site may have in a negotiation.
A BATNA can be used as an alternative, if an agreement can't be reached.
When one side has a good BATNA, they can make fewer compromises, so they have more power.
Knowing your bottom line can prevent you from settling for an unfair deal.
They can use it as an alternative to negotiating. So they don't need to compromise as much.
If someone is offered something below their bottom line, they may walk away from the negotiations.
Leverage.
Leverage is the power that one side has to influence another.
If you have more leverage in a negotiation, you can persuade people to accept your terms.
Typically the side most in need of an agreement. It has the least amount of leverage.
Deadlock.
In a deadlock, neither side is willing to compromise and no agreement can be made.
A deadlock happens when one side pursues its own interests, instead of mutually beneficial terms.
To break a deadlock, negotiators must find a win win outcome.
Concession.
A concession is a compromise that's made in order to reach an agreement.
Making concessions allows both sides to get part of what they want.
But giving too many concessions makes one side seem weak or desperate.
The more leverage you have, the stronger your position will be.
They broke the deadlock by offering a large concession to the other side.
If you make concessions too early, you may not get as much as you could from the other side.
Negotiating Techniques
Vocabulary.
You can use various techniques to help improve your chances of having a successful negotiation.
Listen actively.
Listen actively to your counterpart to understand their needs and point of view.
This shows them that you are interested in their needs, which helps build trust.
Build rapport.
When people have rapport they understand each other and communicate well.
Building rapport increases the chance of reaching an agreement during a negotiation.
Rapport can be built by listening actively sharing information and finding common interests.
Ask open-ended questions.
Asking open-ended questions allows you to gather more information from the other side.
It encourages your counterparts to give longer answers. which helps you to know their position and needs.
Understood their point of view.
By showing interest in your counterparts' needs you can build trust.
People may try to control negotiations by focusing on their interest. Both sides find common ground.
Set a high anchor.
Setting a high ankle anchor point increases your chances for a good deal.
By setting a high anchor point, your counterpart may make concessions that are closer to what you want.
However, if your anchor is too high, you may be seen as unreasonable or unrealistic.
Emphasize urgency.
Creating a sense of urgency can lead to a quick agreement.
If negotiations are moving slowly, you can set a deadline or stop the talks.
But if you are too aggressively, the other side may become uncomfortable and walk away.
To create urgency. He said he would give them until Friday to accept his terms or he would pull out of the negotiations.
Creating a sense of urgency can help you reach a quick agreement.
Negotiation styles
Vocabulary.
Because people have different negotiating style, it can be hard to predict how the other party will act in the negotiations.
Knowing different negotiation styles will prepare you to negotiate successfully.
Avoiding.
Negotiators who have an avoiding style are often cautious and try to avoid conflict.
They don't immediately pursue their own interests and let their counterparts control the negotiation.
Accommodating.
Accommodating negotiators focus on building and maintaining relationships with their counterparts.
Rather than pursuing their own interests, they are concerned with how to satisfy the needs of the other party.
An accommodating style can works well when the relationship with the other side is more significant than the negotiation.
If one side is too accommodating, they may concede more than they need to.
Negotiators with an avoiding style don't immediately pursue their own interests.
Compromising.
Compromising negotiators look for the middle ground.
They will often make concessions in order to satisfy both parties basic needs.
Collaborative.
Collaborative negotiators try to understand and cooperate with their counterparts.
They focus on solutions that satisfy the needs of both parties as much as possible.
Competitive.
Competitive negotiators are aggressive.
They focus on their own needs rather than maintaining a relationship with the other party.
Negotiating in a competitive way can lead to a fast agreement, but it can also lead to a fast deadlock.
Do you use a compromising style? The other side may think you are weak.
Collaboration may not work. Well, if the other side is not interested in a win win situation.
We don't mind compromising and settling for less. As long as the relationship remains strong.
A collaborative style can be mutually beneficial because negotiators look for a win win situation.
Collaborative negotiators think of solutions that can satisfy the needs of both parties as much as possible.
I didn't like how aggressive he was when he kept trying to push me beyond my bottom line.
Internal resources
Vocabulary.
A swot analysis consists of internal analysis and external analysis.
In order to handle opportunity and threats, a company needs to understand its internal resources.
Financial resources.
Financial resources refer to the money that is available for a business to use.
Financial resources includes cash, stocks and bonds.
If a company doesn't have enough financial resources, it may be unable to invest in new business projects.
Tangible assets.
A tangible asset is an asset that has a physical form.
Equipment or property are examples of tangible assets.
What is an example of a tangible asset? A logo to a property real estate.
The company liquidated most of its assets to generate cash.
A lack of financial resources is a major threat to our company that can hinder it's activities.
A company needs to have enough financial resources bonds to changes in the market.
The company was forced to sell most of its tangible assets to pay off its debt.
The company was on the verge of bankruptcy, said to stay afloat.
Intangible assets.
An intangible asset is an asset that is not physical.
Intellectual property and brand equity are examples of intangible assets.
Some intangible assets like brand recognition cannot be sold, but increase the value of a company.
Human capital.
Human capital refers to people employed by a company.
It is sometimes called human resources.
Human capital includes employees and the intangible value they add to our company.
Businesses can invest in human capital by offering training and education opportunities to their employees.
Some intangible assets like copyrights can be purchased.
Negotiating advice
Dialogue.H
Hey jack it's Alice.
Hey, Alice, what's up?
Actually, I'm calling you for some advice. Last week you told me you had negotiated a big race for yourself. So I'm wondering if you can give me some tips.
Sure, i'd be glad to help. What do you want to know?
I'll have a performance review next Friday. And I really want to use this opportunity to negotiate a raise. Do you think I should make the first offer?
Well, traditional wisdom would suggest you let your boss make the first offer. But the key is that whoever makes the first offer sets an anchor point around which the negotiation will be settled. If you start high, your boss may adjust the figure down slightly, but that's better than receiving a low offer and trying to negotiate up.
That makes a lot of sense. Actually I was hoping to get a 10% raise. So I should probably ask for like a 15% raise first. So i'll have room to make concessions, right?
You've got the idea. It's more likely that you can get a bigger race that way.
Is there anything you've done that really shows your boss why you deserve a raise?
Yes, sure. I developed managed and launched our last three marketing campaigns. As a result, our sales have increased by 25% over the past two quarters. In addition, I have taken on responsibilities that are not in my job requirements, such as leading team meetings and mentoring new staff.
Wow, I definitely would give you a big raise if I were your boss.
Thanks, but I'm still concerned. What if he turns me down?
Well, in that case, you need to be firm and stick to your position. Try to find out why your request was rejected and how you could improve in the future. And don't be afraid to ask to revisit the conversation at a later time. A good manager will recognize your achievements and value to the company.
You're right. Thank you so much jack. I'll definitely use your tips next Friday.
Don't mention it. I'm confident you'll get what you deserve.
Thanks. Talk to you later. Bye
Good luck.
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