12. Negotiation Skills – Business Communication, 2nd Edition

12

Negotiation Skills

“I’ll make you an offer you can't refuse!”

 

Vito Corleone in The Godfather

COMMUNICATION AT WORK

Anil and Manav are friends. They are trying to decide whether to go to the cinema or watch a cricket match.

 

Anil:

You are coming to watch the cricket match with me today, aren't you?

Manav:

No. I really don't want to. There’s a very good film showing at the Ritz. Come to that instead.

Anil:

No, I don't think a film would be as interesting as the cricket match. Surely, you'd rather come to the match?

Manav:

No. I think today’s match will be quite boring. Don't you prefer the cinema to cricket?

Anil:

I suppose so, but this is a crucial match for our team. You like cricket too, don't you?

Manav:

Yes, I do, but the film is on only today. I think you should come with me to the cinema and watch the match tomorrow. How does that sound?

Anil:

No. I'm not coming to the film.

Manav:

You are, you know.

Anil:

I really want to watch the match—I'm not coming to the film!

Manav:

Oh yes you are. It’s raining today.

Anil:

Oh dear. So it is. Okay, you win but if the weather is good tomorrow, you’ll come to the match with me, won't you?

Manav:

Yes. Of course.

 

Upon completion of this chapter, you should be able to:

  1. Explain the negotiation process.

  2. Understand the factors aff ecting negotiation.

  3. Know about the subjective factors that aff ect negotiation outcomes.

  4. Understand the stages in the negotiation process.

  5. Identify diff erent skills of initiating, discussing, and concluding the process of bargaining.

  6. Know how to handle deadlocks.

WHAT IS NEGOTIATION?

Negotiation is a process of bargaining in which two parties, each of which has something that the other wants, try to reach an agreement on mutually accepted terms. Everyday examples of negotiation are:

  • A brother and a sister debating which movie to watch
  • Two friends trying to settle the amount for which one wants to sell his old car to the other
  • Two sisters fighting over how a box of chocolates should be divided between them
  • An employee making a suggestion to her manager regarding her salary
  • A salesperson trying to arrange a meeting with a prospective wholesaler/dealer

The Oxford Dictionary of Business English defines negotiation as:

  1. “a process of trying to reach an agreement through discussion”,
  2. “a meeting where this discussion takes place”.

The Winston Simplified Dictionary defines negotiation as, “the discussion and bargaining that goes on between parties before a contract is settled or a deal is definitely agreed upon”. Alan Fowler defines negotiation as “a process of intervention by which two or more parties who consider that they need to be jointly involved in any outcome, but who initially have different objectives, seek by the use of argument and persuasion to resolve their differences in order to achieve a mutually acceptable solution”1. According to Bill Scott, “A negotiation is a form of meeting between two parties: our party and the other party”2. The objective of most negotiations is to reach an agreement in which both parties together move towards an outcome that is mutually beneficial.

1

Explain the negotiation process.

 

Negotiation is a process of bargaining in which two parties, each of which has something that the other wants, try to reach an agreement on mutually accepted terms.

THE NATURE OF NEGOTIATION

The following points make the nature of negotiation quite clear:

  1. Negotiation takes place between two parties. Both the parties are equally interested in finding a satisfactory result.
  2. Negotiation leads to agreement through discussion, not instructions, orders, or power/influence/authority.

When a manager deals with other managers or customers and suppliers over whom he or she has no authority, he or she tries to reach an agreement through discussion, persuasion, and argument. In other words, the manager must negotiate with the other party.

Suppose you are a manager in the marketing department of a company. You need the help of an analyst from another department to complete an urgent project report. The other department may not be willing to spare the services of the analyst you badly need. You would need to discuss the matter with your colleagues and make your case using convincing arguments, by negotiating with the analyst and the other department. Reaching an agreement is the objective of negotiation.

 

Reaching an agreement is the objective of negotiation.

Consider the following situation, which shows how negotiations work.

Mr and Mrs Rai wanted to sell their house. They had approached many property dealers in their area. Several agents had seen their property and knew their intentions, including the minimum price they would be willing to accept. The Rais quickly realized that in their area, nearly every property agent had come to know of their desire to sell the house as early as possible. This worked against them, and every time they were made an offer, it was lower than the previous one. They became desperate and began to believe that it would not be possible to sell their house for a reasonable price because they made the mistake of disclosing their keenness to sell. One day, they happened to mention this to one of their friends. He gave them the contact information of a very prominent builder, Mr Devraj, from another part of the city. Mr Devraj answered the Rais’ call and immediately enquired about the location of the plot and the built-up area. Next, he asked them their asking price. He paused, and then said, “Think about the price again”. This made the Rais feel a bit shaky. They had told him the price they wanted, not the prices the property dealers had offered them thus far. Not wanting to lose the chance of selling their house, they reduced their asking price by Rs 5 lakh. Mr Devraj promptly asked, “Is that final?” With some trepidation, they said, “Yes”. In a businesslike tone, he said, “Done” and promised to send them Rs 10 lakh as an advance the next day. He also remarked that he would have the remaining amount sent within a week. The Rais wanted him to see the house, but he said, “There is no need for that; I am familiar with the sector”.

At the time of the full and final payment, the Rais learnt that they were not able to get the desired price for the house from other, smaller property dealers because the house had an old-fashioned design and would need to be demolished. What these property dealers were offering was the price of the land only. However, Mr Devraj, being a builder, would be able to use the basic architecture and give the house a new look.

THE NEED FOR NEGOTIATION

The need to negotiate is defined by the situation. Some situations require negotiating, others don't.

Situations Requiring Negotiation

Negotiation is necessary when an issue involves more than one person and the problem cannot be resolved by a single person. Whenever two or more persons or parties are involved, they are bound to have different views or aims regarding the outcome. The way to overcome disagreement is by negotiating.

Negotiation can take place only when both concerned parties are willing to meet and discuss the issue at hand. That is, they both must want to reach a decision by discussion, not force or authority.

There are formal and informal situations in negotiation.

Formal Negotiations

  • There is a prearranged meeting of the two parties.
  • The agenda is already fixed, and both parties know what is going to be discussed.
  • Generally, more than two persons are involved in the discussion.
  • In formal negotiations, there is time to prepare and assign roles for each person in each party. For instance, one person can put forth their side’s reasons and suggestions, another can explain the side’s points more thoroughly, and the third can closely follow the flow of the discussion and point out anything that has been missed.
  • A formal negotiation is simpler to handle than unannounced meetings. There is time to study the entire situation and find out the strengths and weaknesses of the other party.

A formal negotiation is simpler to handle than unannounced meetings.

Generally, a formal negotiation is for settling a dispute or a conflict between two warring parties, such as for a labour or workers’ strike. Negotiations in such situations are formal; the meeting between the two parties is fixed beforehand and both parties have time to prepare their bargaining points.

Informal Negotiations

Informal negotiations are unannounced and casual meetings, such as when a staff member drops by a colleague’s office and discusses a problem, which they attempt to resolve. This is an informal negotiation because:

  • It is unannounced.
  • It involves just two persons.
  • It appears casual (although the colleague who initiated the discussion might have planned this approach deliberately).
  • It does not give one time to prepare for the discussion, so one cannot study the strengths or weaknesses of the other side.
  • Its friendly and informal approach is meant to influence the outcome.

Situations Not Requiring Negotiation

The following types of situations will not require negotiation:

  • When one of the two parties/persons immediately accepts or agrees to what the other is suggesting. In such a situation there is no need for negotiating. The desired result is already achieved.
  • Whenever one of the two parties refuses even to consider or discuss the suggestion or proposal. For example, suppose a supplier or a dealer completely refuses to reduce the price or consider any suggestion of partial payments, there is no possibility for negotiation.

However, people often encounter situations in which there is neither direct acceptance nor complete refusal at the outset. In such cases, the two persons deal with each other by discussing the possibility of reaching a mutually acceptable end.

FACTORS AFFECTING NEGOTIATION

The factors discussed in this section usually affect the outcomes of negotiations.

2

Understand the factors affecting negotiation.

Location

The location of a negotiation can influence the level of confidence of one party. When the location is one party’s office, for instance, that party has several advantages. They are on home ground, an area of strength. They can access whatever information or material is needed during the course of the negotiation. They can also extend social courtesies as a token of goodwill; this could move the negotiation towards agreement.

Timing

  • The choice of time for holding discussions and the length of the discussion should be fixed according to mutual convenience.
  • There should be adequate time for the smooth exchange of ideas through different stages of negotiation. The preparation time and the timeframe for implementing the agreement afterwards should also be carefully fixed.
  • To be effective, negotiations should be timely. That means they should be carried out before it is too late to reach an agreement.

Subjective Factors

Often the outcome of a discussion does not depend wholly on objective factors such as logic and the facts of the matter under consideration. The final outcome may also be determined by subjective factors relating to influence and persuasion.

3

Know about the subjective factors that affect negotiation outcomes.

  1. Individual relationships: The conduct of negotiations is influenced not only by the real situation of the matter but also by the relationship and rapport between the two persons/parties involved in the process of discussion.
  2. Fear of authority: Often one side’s bargaining power is conditioned by fear of authority, higher connections, and the other party’s capacity to hurt their professional future.
  3. Future and practical considerations: When personal relationships are at stake, the negotiators may not wish to win the argument at the cost of the relationship. Moreover, the fear of losing business in the future is a strong factor in bargaining/negotiation positions, as is the effect on the participants’ reputations.
  4. Mutual obligations: The memories of past favours by the other party may also influence the negotiation.
  5. Personal considerations: Self-questioning helps the negotiator identify the factors influencing his or her bargaining position and strengths. Both formal and informal negotiations are influenced by questions such as:
    • “How does my position on this proposal/issue take into account the likely effect on our future working relationship?”
    • “Am I allowing myself to be unduly influenced by a sense of obligation? Am I hoping to achieve too much by emphasizing past obligations?”
    • “What are my goals for this negotiation?”

Persuasive Skills and the Use of You-Attitude

Persuasion includes a range of skills for convincing other people of the need to accept or agree to a course of action. It is an essential element of effective business communication. It helps in resolving issues on which there is a difference of opinion, but that need solutions that are in the interest of all. In negotiations, people are gradually persuaded to accept the other party’s view to some extent.

 

Persuasion includes a range of skills for convincing other people of the need to accept or agree to a course of action.

As you must have seen yourself, persuasion is not one single thing. It is a mixture of skills—attitude, psychology, language, tone, body language, and so on—used to convince the other party to accept one’s view despite their objections or alternate proposals.

 

Persuasion is not just one single thing. It is a mixture of skills—attitude, psychology, language, tone, body language, and so on—used to convince the other party to accept one’s view despite their objections or alternate proposals.

“You attitude” is an essential aspect of negotiations. Nothing convinces more than facts. But in order to persuade people, the facts should be discussed from the other party’s point of view. A skilled negotiator should be able to highlight how the other person stands to gain from his or her suggestions. He or she must understand the other party’s needs and be able to reconcile what would be a good result for him or her with the needs of the other party. This allows persuasion to end negotiations and discussions with a satisfying conclusion for both sides (creating a win-win situation).

 

A skilled negotiator must understand the other party’s needs and be able to reconcile what would be a good result for him or her with the needs of the other party.

The range of persuasive skills can be classified under the following broad headings:

  • Style: Being collaborative rather than confrontational
  • You attitude: considering the other person’s viewpoint
  • Talking and listening
  • Probing and questioning
  • Taking breaks when necessary
  • Concessions and compromises
  • Summarizing
  • Reaching an agreement

At the end of the discussion, both sides should be sure that the final agreement covers all necessary points and they are clearly expressed and understood.

STAGES IN THE NEGOTIATION PROCESS

Generally, the process of negotiation moves from the stage of “offer” to that of “agreement” via the stages of “counter-offer”, “concession”, and “compromise”. All discussions that progress successfully from opening differences to a final, mutually acceptable outcome/conclusion usually move through the same general sequence. During informal discussions this sequence may not always be obvious, yet it is there with respect to the most important aspects of negotiations.

4

Understand the stages in the negotiation process.

 

At the end of the discussion, both sides should be sure that the final agreement covers all necessary points and they are clearly expressed and understood.

According to Alan Fowler, the stages of an effective discussion are:

  • Preparing and planning
  • Exchanging initial views
  • Exploring possible compromises
  • Searching for common ground
  • Securing an agreement
  • Implementing the agreement

These six stages can be grouped into three basic phases:

  • A preparation phase before the negotiation begins
  • The actual negotiating process—the interaction that leads to the final agreement and an outcome
  • The implementation of the agreement

Negotiation implies that both parties accept that an agreement between them is needed (required or desirable) before any decision is to be implemented. The direction of the discussion is towards that desired agreement. Hence, it requires careful preparation and handling.

 

Negotiation implies that both parties accept that an agreement between them is needed (required or desirable) before any decision is to be implemented.

The Preparation Phase

Like all effective communication/discussion, negotiations have to be planned. Tim Hindle, in his book Negotiating Skills, says, “Bear in mind that it is almost impossible for a negotiator to do too much preparation”.3

There are two respects in which the negotiator has to be prepared before the negotiation:

  • Assessing the relative strength of the two parties
  • Setting negotiating objectives. At this stage, the negotiator should try to answer the following two questions:
    • What are the real issues?
    • Which parties should be involved?

Knowing the real issues at hand helps the negotiator feel confident and fully prepared about two things:

  • That he/she knows the subject matter well and is not likely to be surprised by the other party introducing unexpected facts or figures
  • That he/she is clear about the desired goal of the discussion

Negotiators should be realistic about their objectives. If they fail to persuade the other side to accept their ideal solution, they should be prepared to lower their expectations. If the ideal is not achievable, they should be very clear and firm about the lowest outcome acceptable to them. It is important for the negotiators to know what points they are willing to concede and what their limits are.

In the preparation stage, negotiators should also plan the best way of arguing their case, considering particularly the other person’s likely viewpoint and objectives. They should assess the strength of each party’s bargaining position. To be well prepared before the actual negotiating process begins, negotiators should:

  • Be sure that they know enough about the subject matter to be discussed
  • Decide their objectives and limits
  • Plan how best to argue their case

The Negotiation Phase

Most effective negotiations follow a set sequence:

  • The parties begin by defining the issues at hand. They ascertain the scope of the negotiation.
  • Each side then puts forward what it is seeking. First, the party that is making a claim presents its case, and then the other party gives an initial response—thus, both the parties define their initial positions.
  • After that comes a more open phase in which the initial positions are tested through argument.
  • The parties then move to discussing a possible solution that could result in a resolution.
  • Firm proposals in more specific terms are then discussed and modified before both parties accept them.
  • Finally, an agreement is spelled out and a conclusion is reached.

The Implementation Phase

Some scholars do not consider the stages of preparation and implementation to be parts of negotiation. But they constitute two basic phases of the actual process of negotiation—one before initiating the negotiation process and the other after concluding discussions.

 

Some scholars do not consider preparation and implementation to be parts of negotiation.

  • The purpose of negotiation is to achieve a decision; the purpose of an agreement is to implement the agreed-upon decision/outcome.
  • If due attention is not paid to the implementation of a negotiation, then the negotiation fails.

Three steps to prevent failure of implementation are:

  • In all formal negotiations, confirm in writing all that has been agreed upon.
  • As far as possible, mention an implementation programme in the agreement. This includes mentioning who is supposed to do what and by when. This matter, if left undefined, may become the subject of disagreement later.
  • Ensure that every concerned person, not only those involved in t\he discussion, is told about the agreement, its implications, and the actions that are to follow.
NEGOTIATION STRATEGIES

Some of the elements listed as part of the negotiation process are strategic in nature. They are discussed here as strategies to be used at different stages of negotiation.

5

Identify different skills of initiating, discussing, and concluding the process of bargaining.

Initial Strategies

Before the negotiation, the negotiators must plan their strategies.

  • A successful negotiation should plan the discussion according to the psychological needs of the other party and use appropriate strategies to maximize his or her advantage and gain information about the objectives of the other party.
  • He or she should focus on the need to reach a mutually satisfactory conclusion by joint problem-solving.
  • The negotiator should sell “sunny-side up”. He or she should think about how the other person will see the proposal and should try to identify and “sell” the benefits of his or her case.
  • The negotiator should be able to alter his or her position (within planned limits) if needed to achieve this approach.
  • Instead of talking compulsively, a good negotiator allows the other party to say what they wish and develops a dialogue with them.

Instead of talking compulsively, a good negotiator allows the other party to say what they wish and develops a dialogue with them.

One can start the discussion with language such as: “The general point of our discussion is…, which I think has come up because of. … But before I go into details, it would be helpful if you first outline your view”.

During the Discussion

The following are some strategies that should be used during the course of the negotiation:

  • Neither side should state its entire case in the beginning of the discussion; this should develop as the discussion proceeds. If one side puts forth everything at the beginning, it leaves itself no chance to change position in light of the other side’s arguments.
  • It is important to listen carefully to the other speakers’ arguments and notice their facial expressions, gestures, and body movements, in addition to the words. Non-verbal clues and cues will tell the listener how the other side feels—confident or nervous, irritated or calm.
  • Neither side should interrupt the other. Interruptions annoy instead of encouraging cooperation.

     

    The strategy should be to allow the discussion to move towards agreement. To do this, one must psychologically encourage cooperation throughout the discussion.

  • Good negotiators put forth searching questions to verify the correctness of facts offered by the other party, such as dates, figures, and so on, or of their logic. If a negotiator doubts the accuracy of the other side’s information, he or she should not directly challenge them by saying, “You are wrong”. Instead, the negotiator may ask further, probing questions, such as “Could you explain the connection between that point and what you said earlier about X?” or “I have not understood the logic of that. Could you put it in a different way?”
  • One should not take on a confrontational tone. The strategy should be to allow the discussion to move towards agreement. To do this, one must psychologically encourage cooperation throughout the discussion.
  • Both parties should use impersonal terminology to point out corrections, rather than making personal criticisms.

     

    Both parties should use impersonal terminology to point out corrections, rather than making personal criticisms.

  • It can be useful to take breaks. During the discussion, a short break of 10 minutes can be useful for two purposes: to have a chance to consider new points or proposals before deciding on final commitments and to change the mood of the discussion if it has become too emotionally charged.
  • Both sides must use concessions and compromises. At times, it may be impossible to move further without making some concessions. Strategy is concerned partly with timing and partly with the way possible concessions are introduced into the discussion. When the participants realize that attitudes are hardening and the same points are being repeated without a resolution, the discussion could be changed to an exploratory phase.
  • Participants can use conditional compromises such as by saying things like, “Since we now know each other’s initial views, could you tell me what your response would be if I accepted this part of X, which you have suggested?”, “Would you do X if I agreed to do Y?”, and “Would you be able to agree to X if I am able to postpone taking action on Y?”
  • It helps to emphasize what the other person stands to benefit from the compromise. The other side should not feel that he/she is losing by accepting the concession or compromise. Some tips include:
    • Commending and thanking the other party for a good suggestion.
    • Not allowing the discussion to go on for too long without bringing in concessions/compromises necessary for reaching agreement.
    • Introducing concessions/compromises on a non-commitment basis.
    • Seeing that the concessions made by each side match.

Reaching an Agreement

Tips for reaching a final agreement are:

  • After a long and difficult discussion, “final” should be taken as final. No further concessions or compromises should be allowed.
  • Negotiators should be tactful and persuasive to ensure that the final outcome is seen as beneficial by the other party.
  • The key strategy in any negotiation is persuasion.
  • Negotiators should emphasize the other party’s benefits and should be enthusiastic about the other party’s cooperation and suggestions.

Be tactful and persuasive to ensure that the final outcome, which is of advantage to you, is also seen by the other party as a benefit to them.

Summarizing

It helps to summarize the agreements and conclusions at the end of the discussion.

  • The negotiators can suggest something such as, “I think it would be helpful if we could summarize all that we have discussed to reach this agreement”.
  • Alternatively, one party might suggest: “Let’s note it down so that no point is later missed by anyone”. It is a good strategy to use written summaries at the end of discussions. This leaves no scope for disagreement later about what has or has not been agreed upon.

Deadlocks

Reaching a mutually satisfactory end is the basic objective of any negotiation. If there is no final agreement reached, even after a prolonged discussion, the strategy should be to:

  • Instead of going round in circles on a contentious point, move on to the next point on the agenda.
  • Point out that no further concessions can be made regarding the point of contention, as they would be of no benefit to either party.
  • Explain and emphasize the consequences that would result from a deadlock, such as the need to refer the matter to those with greater authority or eventually to external arbitration or third-party mediation.
  • Use the ethical aspect of agreement, such as upholding the organization’s values, the greatest good of the largest number of people, and so on.
  • Even in the situation of a deadlock, remain positive and hopeful of reaching a mutually agreeable solution.
  • Finally, point out that third-party intervention in the form of legal arbitration or conciliation may not benefit either of the parties, for whom it is best to decide the matter through mutual understanding.
6

Know how to handle deadlocks.

SUMMARY
  • This chapter explains the process of negotiation with the help of examples of formal and informal situations that require skillful discussion to reach an agreement.
  • Negotiation can take place only when both concerned parties are willing to meet and discuss the issue at hand. That is, they both must want to reach a decision by discussion, not force or authority.
  • Factors affecting negotiation include location; timing; subjective factors such as the relationship between the two individuals involved, the bargaining position of each side, practical future considerations, mutual obligations, and personal considerations; the use of you-attitude; and the persuasive skills of each side.
  • The three stages of the negotiation process are the preparatory phase, the actual negotiation, and the implementation of the agreement.
  • Negotiators must be well prepared for negotiation, and should understand the various strategies of initiating, discussing, and concluding negotiations, as well as how to deal with deadlocks.
CASE: FARSIGHTED NEGOTIATION

Several years ago, when Rakesh wanted to build a house in Faridabad, a property dealer showed him a number of plots in different sectors. He liked a particular plot of 500 square yards in Sector 9. The owner of the plot, Mr Roshan Lal Sharma, was a non-resident Indian who had taken extended leave to be in India so that he could sell his plot.

Before going to Mr Sharma, Rakesh wanted to obtain more information about the owner of the plot to strengthen his bargaining power. Mr Sharma was an engineer, and had been abroad for more than 15 years. He had a house in Delhi. Rakesh believed that it would be easy for him to negotiate the deal with Mr Sharma if they could meet in Faridabad. However, Mr Sharma conveyed his inability to come down to Faridabad because of other commitments that day. The property dealer suggested that Rakesh go to Delhi and finalize the deal. Rakesh was very keen to close the deal the same day.

Rakesh, along with his two sons, the property dealer, and Mr Sharma’s dealer, went to Mr Sharma’s house in Delhi to meet him. Rakesh’s dealer introduced him and his sons to Mr Sharma. After the introductions, Mr Sharma excused himself and went into the adjoining room with Rakesh’s dealer, while Rakesh, his sons, and Mr Sharma’s dealer waited in the living room. Mr Sharma enquired about Rakesh and his family and his interest in Faridabad. They spoke within hearing range of the others.

On returning to the room, Mr Sharma kept silent and seemed to want Rakesh to begin the discussion. Rakesh began by praising the plot, especially the location. He told Mr Sharma that he had decided on this plot after taking a look at many different properties. He also explained that he was leaving for Jamshedpur the same night and, therefore, would like to finalize the deal before that. Mr. Sharma was happy to hear this.

When Rakesh asked Mr Sharma about the price, he did not give Rakesh a straight answer; rather, he put forth a counter-question and asked Rakesh about the prevailing rates and what price he had in mind. Rakesh evaded the question by saying that the rates varied from sector to sector, size to size, and location to location. Mr Sharma said his dealer knew the price of the plot and should have informed him about it. Rakesh said that the dealer had indeed informed him about the price, but that was higher than the rate prevailing in Sector 9. Mr Sharma said that he would like to know what Rakesh’s offer was. Rakesh consulted his dealer and quoted the price suggested by him. Mr Sharma, again, did not accept the price. Rakesh raised his offer by Rs 500 per square yard, and, this time, Mr Sharma readily accepted the offer. Rakesh believed that the deal was completed.

However, while Rakesh was turned towards his dealer, Mr Sharma, rather suddenly, raised the issue of payment of the penalty charges for not constructing the mandatory percentage of the approved plan of construction within the stipulated time as prescribed by the Faridabad Municipal Corporation. He insisted that the buyer should bear the penalty charges on the plot. The penalty amount was for three years. Rakesh found the demand rather unreasonable. He tried to convince Mr Sharma that the demand was not logical. He failed to understand why he, as the buyer, should bear the penalty cost. Mr Sharma, however, kept repeating that this was his personal decision and his decisions were not subject to the questions of logic or correctness. Rakesh’s sons also felt that they should not give in to this demand. The two dealers strongly objected to the demand and thought that Mr Sharma was behaving arrogantly and unreasonably. They suggested that Rakesh drop the proposal and said they would help him buy another plot. At this point, Rakesh excused himself and asked the two dealers to step out with him for a discussion. Mr Sharma also left the room.

Rakesh came back to the room with a smile and, to everybody’s surprise, offered the amount he had brought with him to Mr Sharma as advance money, conveyed his decision to accept the penalty cost, and asked Mr Sharma to finalize the deal. Both his sons were surprised at the sudden change in his perspective. However, everyone was relieved that the deal was finally sealed.

Within three months of Rakesh’s purchase, his plot’s price rose to three times what he had paid for it. By considering the long-term advantages of buying the plot, Rakesh had made a smart decision when he accepted Mr Sharma’s offer. Within a year, the house was ready on the same plot. Rakesh and his wife celebrated their fiftieth wedding anniversary with their family, relations, and friends in their new house that year.

 

Questions to Answer

  1. Discuss the strategy employed by Mr Roshan Lal Sharma to strengthen his position as the negotiator.
  2. Was it impulsive of Rakesh to accept Mr Sharma’s terms against the advice of the two dealers and his sons? Discuss.
  3. What do you learn about negotiation strategies from this case?
REVIEW YOUR LEARNING
  1. Is negotiation basically meant for resolving conflicts in the workplace? Does it have any place in our personal lives?
  2. Discuss the subjective factors that influence the outcome of a negotiation.
  3. Analyse the different stages of the negotiation process.
  4. Comment on the role of a third party in the case of negotiation deadlock.
  5. What is a win-win situation?
  6. Is it wise to accept what you get, instead of rejecting it in the hope of what you may get? Give your own reasons for your choice in light of what you have learnt in this chapter.
  7. “In a fundamental sense, every negotiation is for the satisfaction of needs.” Discuss.
  8. What is the correct approach and goal of negotiation?
  9. “Negotiation is a way of behaving that can develop understanding and acceptance for achieving a shared purpose.” Discuss.
  10. “While negotiating, you listen more than you talk if you would like to have the final say.” Explain how this maxim leads to a successful negotiation.
REFLECT ON YOUR LEARNING
  1. Consider the role of psychology in achieving success in negotiations.
  2. Do you believe that you can negotiate anything? Point out any exceptions to this claim.
  3. Analyse the power of legitimacy (authority) in garnering compliance with a request. Think of some examples from your personal experience.
  4. “Never be judgmental about the intentions and behaviours of your opponents in a negotiation.” Why?
  5. To what extent should our negotiations be planned beforehand? What examples come to mind?
APPLY YOUR LEARNING
  1. A is eating in a restaurant and B is a waiter.

     

    A: Waiter!
    B: Yes, sir?
    A: Look, I’ve been sitting here for ten minutes and you still haven't even given me the menu.
    B: I can't help that. We’re very busy. You’ll have to wait.
    A: I'm damned if I’ll wait any longer. Bring me the menu immediately.
    B: I'm sorry, sir. I’ve got those people over there to serve first.
    A: Right. I'm going then and I won't come to your blasted restaurant again.
    B: I'm afraid I can't help it if you are unwilling to wait for your turn!

     

    A and B do not seem to get along too well! What goes wrong? If you were A, how would you handle the situation?

  2. A young man, Anoop, is trying to persuade his brother, Bala, to lend him his scooter.

     

    Anoop: I was just wondering if you were using your scooter this afternoon.
    Bala: Why?
    Anoop: Well, I promised Ravi I'd pop over and see him before he went to Delhi.
    Bala: How about going by bus?
    Anoop: It’s more expensive than using a scooter and it takes longer.
    Bala: Oh, yes! It’s more expensive than using my scooter, my petrol, my insurance, my road tax—much more expensive. Why not go by train? Oh yes! Too expensive!
    Anoop: If you’re not using it, you could lend it to me. Why not? I’ll put some petrol in it for you.
    Bala: Okay, I can't see any reason why you shouldn't have the scooter, then. Don't forget the petrol.
    Anoop: Thanks.

How does Anoop induce Bala to lend him the scooter? He makes suggestions and proposals. List these and also Bala’s counter-arguments.

SELF-CHECK YOUR LEARNING

From the given options, please choose the most appropriate answer:*

  1. As compared to unannounced negotiation, formal negotiation:
    1. is simpler
    2. is more difficult
    3. requires less preparation
    4. is more time consuming
  2. Informal negotiation involves:
    1. three people
    2. four people
    3. two people
    4. any number of people
  3. Persuasion is an essential element of effective negotiation because it helps in:
    1. resolving disputes among people
    2. settling issues between two parties
    3. effecting agreements and solutions in the interest of all
    4. achieving one’s own interests
  4. The final aim of negotiation is to:
    1. reach an agreement
    2. implement an agreement between two parties
    3. win at all cost
    4. end a dispute
  5. A negotiation is discussed in a tone that focuses attention on the need to reach a satisfactory solution by:
    1. force
    2. joint problem-solving
    3. setting conditions
    4. making proposals
  6. Negotiation strategy is partly concerned with:
    1. ending the discussion
    2. avoiding failure
    3. prolonging the length of the negotiation
    4. searching for a common goal
  7. Negotiation implies that both parties accept that the agreement between them is:
    1. conditional
    2. final and binding
    3. subject to further dispute
    4. necessary
  8. One’s negotiation objective should be:
    1. ideal
    2. realistic
    3. personal
    4. social
  9. In order to persuade others, facts should be discussed from the point of view of a:
    1. third party
    2. first party
    3. second party
    4. fourth party
  10. In negotiations, the interpretation of a cue requires skill because it may be:
    1. ambiguous
    2. verbal
    3. intentional
    4. behavioural