Negotiation is the process by which the people or companies settle their differences between them. It is the method by which a deal is reached by avoiding any argument or dispute. In business, negotiation skills are vital in both informal everyday communications and formal agreements like sales, rent, delivery of services, and other legal agreements. Good negotiations are essential for successful business as it helps to form better relations. The aim of negotiation is to reach a deal in order to take part in activities that would have mutual advantages. Each people or company tries to come to a deal which would useful for their benefits.
1. While choosing the negotiators by the company, they have looked for a proper structure of the team. They have understood the importance of the agreement. The structure of the team has been arranged according to the seniority level, those who are specialists in their departments and has the power of decision making (Marocco et al., 2015). The total number of participants in the negotiations has also been decided.
Chairman – The Chairman might not be the chief negotiator but controls the team.
Summarizer – This is an important role, as their job is to summarize the main components of the agreement. The aim is to ignore confusions and make sure that both the parties have the same understanding of their deal (Groves et al., 2015).
Specialist – This is the role of the agreement and could be an advocate or a technical expert. It is vital to keep in mind the aspects of other company while selecting the right person for this role.
Observer – This role is generally removed from the team, but is significant for realizing the interests that are motivating the other company.
The processes adopted to train the negotiators by the company are as follows:
- Prepare To Make Mistake – The training of negotiation is a humbling experience. By realizing in training the areas needed for improvement, the individual has become a better negotiator.
- Proactive Approach – Besides taking notes, the negotiator has thought about the ideas of negotiation that could be implemented for negotiations
- Practice New Skills –Perfection is attained by practice. The individuals would be wrong if they thinks that whatever is learned in book, would become a part of negotiation skills (Gelfand and McCusker, 2017). By implementing the new techniques, the negotiator has been able to put the new skills in work when it is most needed.
- Cooperative – Purchasing and selling are competitive, but being cooperative is essential for fruitful negotiation. The problem is that most negotiators are employed to be competitive people (Ting?Toomey, 2017). The negotiators have the practical skill of deciding when to drop the competitive mentality which is beneficial for purchasing or selling and rather adopt the cooperative negotiation skill. This has helped to get more negotiated agreements.
- While the company takes preparation for the negotiation, they have to analyze the team members of other company to find them as a person.
- The company has to remember that they would negotiate with the employees of the other company and not with the company. So, they have to gather information about them as much as possible, to gain knowledge about their likely behavior.
2. The most common mistakes occur even before the bargaining ever starts. The issue is not in poor preparation but no development. Most of the companies assume that negotiation cannot be learned and so does not prepare sufficiently for negotiation. They believe that real action would be at the time of the talks, but they might be wrong (Gascón et al., 2016). Even smart and motivated persons come for negotiations with poor preparations. It is essential to implement a systematic process which would help the company to prepare for a negotiation.
BATNA and ZOPA– The full form of BATNA is Best Alternative to a Negotiated Agreement. After the failure of any negotiation, it is the most beneficial alternative process, to start a new negotiation. Both the companies have to access their BATNAs before the new negotiation take place, based on interests of each party. This might consist of different circumstances like the delay in negotiations, shift to a new negotiating partner, court’s petitions, strikes, and the development of other agreements. It is the main focus and motivational force for the successful negotiators (Jang et al., 2018). Generally, a company would not agree to adopt a worse solution than BATNA. The company has to take care to make sure that the agreements are correctly valued, considering all the factors like the value of the relationship, time value of money and the possibility that the other company might arise at the time of bargaining. BATNA is the cost at the company is disinterested to deal with the other company because it is just equal to that which the company could get elsewhere (McGraw, 2017). The full form of ZOPA is Zone of Possible Agreement. It is all about selecting negotiation zone between two companies after both of them had agreed for a deal.
The steps are undertaken by the company before any important negotiation are as follows:
- Measure the BATNA – It is the first step of negotiation. The company has measured the BATNA as the present negotiation leads to no agreement as it finishes in a stalemate. It is not possible to understand the time of accepting the final offer and the time of walking away to head towards other deals, without knowing BATNA (Grisctiet al., 2016). BATNA needs three steps:
- Recognizes all the possible alternative options the company needs when they understood that the deal with the other company could not finalized
- Calculates the value of each alternative
- Chooses the best choice and it is the BATNA of the company
- Reservation Value Calculation – The measurement of BATNA is essential as it allows the company to calculate the reservation value or the walk-away value of the present negotiation.
- Measure the BATNA of Other Company – After the calculation of BATNA and reservation value of the company, the company knows the lowest offer of negotiation. But if the other company has not agreed for lowest cost, then it has to find out high value which would have finalize the deal.
- Reservation Value Calculation of Other Company – It is time to calculate the reservation value of other company.
- Measure the ZOPA – After the calculation of BATNA and reservation value of each company, the company has calculated the ZOPA.
- The first step to improve BATNA is that the company have to grab the opportunities of negotiations.
- The company also have to found the opportunities of value creation which moves the negotiations beyond the cost bargaining.
- Better alternatives options are necessary for developing a strong BATNA. The options have to be real and valuable actions.
3. The review process of the company based on its negotiation skills is done by evaluating the performance from poor to good. The review is done step by step from pre-negotiation than information exchange after that the negotiation, review and evaluation and at last the analysis of the impact of negotiation (Smith, Grosso and Grosso, 2015). The negotiation process helps the company to learn the negotiation tactics to have better negotiations in the future and bring better deals which forward brings more values to both the parties. There are five steps to evaluate the negotiation process. The first step that the company applies for the negotiation process is whether the preparation for the pre-negotiation is sufficiently thorough. After that it reviews that whether the company is familiar with the legal issues and operative facts. Next the company understands the side’s value system. The second step describes the principal aim that is to decrease the asymmetric information by interchanging information by providing qualified work. The third step states the process of negotiation and the tactics that worked or not. The fourth step indicates clarity, closing, and commitment required within the organization (Monahan et al., 2018). The fifth step reviews the process that turns back to step 1 and estimates the process of negotiation. At last, it discusses the impacts of negotiation not only to the organization but also to the clients and employees.
The negotiation process is reviewed to provide with the information of development of a different method of negotiation. It is used to gather information on whether an organization has utilized the Preliminary stage or possible information stage to generate a positive negotiating environment or articulate a party (Johnson, Gratch and DeVault, 2017). It is reviewed whether an organization has used the cooperative stage to increase their joint returns. It is used to evaluate whether the negotiation is prepared sufficiently and is the organization familiar with the legal issues and operative facts. It helps to acknowledge that the information exchanged is based on qualified giving and identifying interests. It helps to know the multiple offers, continuing multiple offers, first offer, different offer, tactics, techniques, and concessions. While closing the deal, it helps to know the factors that influenced the process of closure (Chapman, Miles and Maurer, 2017). The influential factors such as distributive or integrative, the impact of time, mutual benefit, ethics of negotiation and no settlement. It helps to know that if no agreement was achieved than what steps have been taken to create a bilateral accord. It helps the organization to acknowledge what are the steps not have been implemented and how to avoid the mistakes in the future. It helps in realizing the fact of techniques that have not been used by an organization to enhance his negotiation skills that must be implemented in the future (Lin, Kraus and Mazliah, 2014). Reviewing the negotiation process helps to know the impact of negotiation whether it is a potentially long term, medium term or immediate. The organization gathers information about its relationships with the negotiation process that puts a significant impact on its business.
4. A person was working as an accounts manager for the mining trucks in South America. He was held as the accounts manager for the mining division and was in charge of all the commercial transactions that deals among the Global Mining Company and dealer that operates its business in the country. The annual revenue of the company was estimated from 6% to 8% for the dealer that makes his company the third largest worldwide (Tasa and Bell, 2017). He started with the process of initial negotiation in July 2012, by purchasing trucks for all the mines from this company across the world. He planned to buy old trucks from other mining organizations in the country move the trucks in the capital city to overhaul them and sell them to the company. The deal was held for nine trucks that involve the all in price for the company that included the overhaul labor, freight, old truck, new components and parts, assembly and disassembly of parts and work as well as testing on warranty and site. In December 2012, after various negotiations not only with the mining corporation but also with the company he organized a meeting with the headquarters of the mining company to describe the final proposal and close the deal (McCarthy and Hay, 2015).
After the meeting they agreed with the terms and conditions of warranty and price of each truck was held for US$2.2 M. After three weeks since he went to his country the company called him by stating that the Strategic Acquisitions VP has sanctioned the purchase of a truck. He worked for seven months in this particular case, by organizing 40 meetings with the internal team ad 20 meetings with the company. After he received the email, it stated the fact that they are ready to purchase the trucks and they are delighted to have an agreement with him. They provided with the extra information that was based on the specific changes in the warranty that the company requires and that has been fulfilled in December. They stated that this change would bring a 50% profit to the overall business. In that particular moment when the deal was closed, he again saw three options the first options states that he could accept the new policies and put the profits in risk for which negotiating for months. The second option says that he could be in his initial position defending the warranty policies and put the entire deal in danger (Hesse et al., 2015). Whereas, the third option states the fact that he could open a new negotiation giving importance to those policies and holding some others which is time-consuming. He realized that the company accepted and understood the warranty policies in December.
The paper demonstrated the process of negotiation that takes place within an organization. It is observed that negotiation skills play a vital role within an organization to execute its business effectively. It discussed the negotiation processes that are chosen by an organization to acquire the basic negotiation skills. It provided with the information of how the negotiators are provided with appropriate training to achieve the organizational goals. Also, it provided with recommendations on how to develop the negotiation processes and improve the negotiation skills and what an organization undertakes negotiation processes. Thus, the paper provided with the importance of a negotiation process that will be beneficial in the future.
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