Business Negotiation is process between two or more parties to full fill their needs and create a value for underline assets. Fisher and Ury describes four principals for effective negotiation and three ways to overcome common obstacles in negotiation. Negotiations often take in the form of positional bargaining or principal based negotiation. In positional bargaining, each party opens with their position issue in which each party offers extreme position. Haggling over a price is classic example of positional bargaining. But, positional bargaining is inefficient because this type of agreements to neglect the parties’ interest and tends to harm relationship between parties. Other way to negotiate is principal based negotiation. The four principal under principal negotiation is 1) Separate a problem with people 2) Focus of interest rather than positions 3) Generate a different options before settling a problem 4) Insist that the agreement be based on objective criteria.
The process begins with analysis of situation, interests & perceptions followed by responding to that situation or problem and solution of problem.1) Separating people and IssuesWhen people will more involve with issues, it become positions of personal attacks. Hence, Issue must be separate from people and it will not damage relationship and to get clear view of substantive problem. The three basic sorts of problems are between people and issue. The first is perception between two parties. Each party should try to make proposal which would be appealing to other side and more involve in process more likely to support the outcome. The second is emotions.
Both parties must allow the other side to express their emotion and acknowledge them and try to understand their sources. The third is communications. Both the parties should have active listening and to understand what other parties trying to convey their interest.
2) Focus on interestGood agreements focus on other party interest. So, the first step is to identify the parties’ interest or needs. Once parties identify their interest, they can discuss between them. Both parties must have clear focus on their interest and remain open to discuss their interest.3) Generate optionsParties may decide an option and fail to consider alternatives. Parties may define a problem in win-lose situation.
So, there are four stages to create and analyze an option. First is stating a problem. Second is analyzing the problem. Third is considering general approach and forth is considering specific actions or generate options. Parties can choose an option which is low cost and high benefit to them.
4) Use objective criteriaWhen interests are clashes, the parties should use objective criteria to resolve their differences. The parties must agree on best criteria for them. There are three points to use objective criteria. First, each issue should be approached as a shared search. Second, each party must be open mind. Third, it should be reasonable. No negotiation method can completely overcome difference in power.
The weaker party may reject offer below worst acceptable outcome (bottom line). As well as, the weaker should concentrate on best alternative (BATNA). They should reject the offer worsen their BATNA.
The weaker party may look at other party BATNA to overcome difference in power. Thus, the party with their best BATNA is more powerful in negotiation. Sometimes one party makes personal attack to maximize their gain and refuse to take part in principal negotiation. Under this approach, there are three approaches for dealing with other party. First, one party may continue with principal approach.
Second, party may refuse to respond in positional bargaining. And if second party remains stuck in positional bargaining than third party is brought in to negotiate what their underline interest are.Sometimes parties use unethical and unpleasant tricks like deception about facts, threats and bargaining chip to gain advantage in negotiation. The best ways to protect against these are to seek verifications or put claim on writing, psychological fair change and make-take-it or leave it offers from other party.Sometimes, negotiators behave like uncooperative or intransigent. The first step in bargaining is controlling own behavior.
When facing with difficult opponent; identify your underline interest and BATNA or to review the discussion on some other days. The next step is to charm an opponent by stepping down to their side. The third step is to reframe a dispute in terms of interest rather than position.
And the forth step is to write in agreement. If one party refuses to put it in agreement than other party should deploy BATNA to gain more power in negotiation. In conclusion, the goal of negotiation is win-win for both parties and builds a good relationship using shared problem solving process.