Negotiation Skills in Business - Assignment Example

Negotiation

Negotiating is an essential skill that any business person should have. Before one takes on purchasing something, they need to have a proper strategy to ensure the best outcome from the deal. Negotiation is a way of getting what a person needs from another. The negotiating process depends on what type of business a person wishes to undertake (Rubin & Brown, 2013). During the negotiation, the key players are usually tensed. However, there is that one critical goal that both buyers and sellers share; getting too close a deal that will benefit them as well as the stakeholders. In the buying and selling, the primary objective is to get the best deal that favors both parties.

The four parameters in the dual concern model way of negotiating include; competitive conflict, accommodating and avoiding and collaborative conflict. The competitive conflict style involves maximizing the assertiveness and minimizing the empathy. A competitive negotiator seeks to dominate and control the negotiation. The players in this game only want to lose or win and, thus, do not care about each other’s feelings (Coburn, 2013The accommodating conflict style involves capitalizing on empathy and minimizing assertiveness. This means that each person wants to meet the needs of the other. The negotiation process is usually calm and has no intense moments. Accommodative negotiators want to agree more than they need to win.

On the other hand, the avoiding conflict has little assertiveness and empathy. The negotiators, in this case, avoid conflicting at all costs and focus on tactics and diplomacy. The problems involved in the negotiation are sidestepped and never solved. Then, the compromising style that requires fairness and gives or take bargaining, which ends up in fast decisions, thus the negotiators miss some opportunities. Finally, the collaborative process that involves high assertiveness and empathy. It means that as much as the negotiators need to meet their desires, they care about the other party’s needs (Dudek, 2013).

Scenario One

Buy and Sell

First in the negotiation process, one should know that price is not everything. For the seller, they should go beyond the price and find other priorities that the buyer may want to look. Secondly, make the concessions strategic by making the other party knows that the item being sold is of value. Secondly, ensure that the buyer can return the favor and demand it. If you notice the customer may not return the favor, come up with a condition that they must meet for them to purchase. However, as the seller make the conditions in installments so that you have a better winning position than the other party. Another important strategy is to have a clue on the walk away number (Pruitt, 2013).

The seller should know the highest and lowest price they could sell an item. Then, understand your position, by understanding the interests of the other party. In case, the customer represents a company, learn to tell the difference between the client and the company he represents. As the seller, make the first offer as it will help begin the discussions. The first stated price influences the subsequent price discussions. In the negotiation, expect sunk prices. Moreover, you cannot spend time negotiating and end up empty handed. Also, make sure you have the best alternative to a negotiated agreement if the negotiation fails. BATNA has used leverage in any negotiation. Both parties should be aware of the other party’s BATNA and compare it to the offering.

Scene:

Jacky wants to buy a car from Harry, a car dealer. The negotiation process is as follows.

Harry: Well, Jacky what do you think? Isn’t it a great car?

Jacky: Of course, it is such a great car, but that price is too high. I will give you $8,000

Harry: That is a very unrealistic price for such a good car. The car price is at $12,000 and as you can see the car has very many advantages, so a price at $11,000 would be logic.

Jacky: Okay, let me push my price to $9000.

Harry: Jacky. You know I have had about two other people test driving it and are willing to buy it at $10, 500. One is even promised to come before dusk. You have to do better than that.

Jacky: I am going to give you $9,500, I cannot go more than that.

Harry: This car, Jacky suits you and your kind of travels. You cannot let it go for just $1000. Just add that money and you will not regret your decision.

Jacky: Look, Harry, I’m adding the last money I can offer, $500. That’s my final offer.

Harry: You could use an extra $300, and I will throw you a sunroof.

Jacky: You have a deal if there is a sunroof.

In this scenario, the salesperson used the position to move the client towards his preferred requirements. The negotiation was a compromising one (Fujita, 2014).The seller used power to make the customer compromise her stand. Finally, he offered a sunroof to get the customer to give $300 more. The seller uses power, emotion, logic, trade and compromise to get the client to buy the car. Logic tells the buyer to be reasonable; power tells the customer of what they will miss if they do not take the item; emotion tries to bring fairness to the negotiation while trade involves what will be given if the buyer considers buying, and compromise is splitting the difference with the purchaser. The compromising method of negotiation in business will always get the buyer and the seller the best deal, and no regrets will be involved

Scenario Two

Conflict/ dispute resolution

A longtime customer is offended by the new employee’s actions and words. The customer begins shouting and exchange harsh words with the employee. The manager has to act as the mediator between the two to avoid losing his best employee and his long term customer.

Customer: Excuse me?

Employee: Yes, Please.

Customer: I bought an item yesterday. Unfortunately, it was expired.

Employee: What I’m I supposed to do? If something expires, you throw it away!

Customer: Why would you say something so inconsiderate? I bought this item for your business, and it had already expired by yesterday.

Employee: See, I cannot help you. First, I don’t think that item was expired. We check for expired goods every day. You must have bought it and waited for it to expire and then bring it back.

Customer: I have shopped here for over six years, how can I do that? Who are you? Are you new? Can I talk to the manager?

Employee: We could solve the issue without the manager.

Customer: No! No! Bring the manager. I wish not to speak to you right now!

Manager: Let us all calm down and explain what the problem is.

Customer: I bought an item here yesterday, only to realize it had expired, which is unlike you, so I brought it back. But, when I explained my situation to the employee, he said that I was lying, and must have waited for some days after I bought the item, to come and complain.

Manager: (to the employee) that is very wrong and I am sure you know the business ethics. It would have been better to listen first and come up with a solution instead of bringing up this argument.

Employee: I am very sorry, I should not repeat that again, and all items shall be thoroughly checked for expiry every day.

The manager comes in to help solve the conflict in an amicable way. First, he begins with an icebreaker. He tells the employee to talk about business ethics, then tells the customer to tell him about her life a little bit. The manager then goes to the conflict, and the choice of negotiation is a collaborative style, do that both parties can be satisfied. Both the customer and the employee are advised to listen to each other. Hence, the employee start telling about the situation as the customer listens carefully. The manager ensured that the customer did not shout as they talk since the resolution would not be successful. Both parties listened to one another carefully showing that they needed to come to a consensus.

Notably, the customer and employee used positive language, unlike when they were arguing. Using positive language enhances great solutions efficiently. The next strategy was to be specific, measurable, achievable, realistic and timed. The manager asked the employee and the customer to be specific of their problem. They were also advised to talk about a measurable solution and one that can be achievable. The solution was also to be realistic and timed. Thus, the customer could not ask for compensation that was too much above the price of the expired commodity. Separating the person from their problem is also essential as it helped the manager not to favor the new employee, who was very hardworking and loved by all. The facts were laid out, and the employee and the customer explored their problem together.

Using the zone possible agreement style of negotiation, which yields an applicable agreement, the customer and the employee formed a zone where their issue would be negotiated. They agreed that some amount of money would be paid as a refund for the expired goods. This was fine with the manager. The employee was also given a two-week period to work on his communication skills with the guidance and counselor at the office. Then, a solution was established as each party decided to compromise on the situation.

Scenario 3

Recruitment Interview

Recruitment is the process of identifying, screening and hiring the most qualified candidate for the vacant job. For the recruitment to happen there has to be an offer. Alvin has been offered a job a Blue Springs but needs to negotiate the low salary offered.

The offer:

Employer: Hi, Alvin! It was a pleasure meeting you on Friday, at the Blue Springs ICT company. We at the company thinks that you are fit to join us. We are prepared to make you an offer as the junior manager at the programming department at an annual salary of $26,000.

Alvin: Thank you so much for your consideration to that position. As I had already expressed in the last interview, I am very interested in that position. However, I wish to have time to evaluate your offer before I give you my decision. Moreover, is have some questions regarding that position, when is the appropriate time to talk to you.

Employer: I am sorry Alvin, this is not a very appropriate time. Could you please call in tomorrow?

Alvin: No problem, I will. Thank you.

Following Up

Alvin: Hello, this is Alvin, calling again about the junior manager ICT position. Is this a good time to discuss the question I have at the position. I am still very interested in the position you offered.

Employer: Hi, Alvin, it is so nice to hear from you again. We have been waiting on your decision about our offer. This is a very good time to talk. What were your concerns?

Alvin: I have reviewed your offer on the position and also the salary you offered. Unfortunately, I found out that the salary does not match up to the cost of living in the Blue Springs area. The salary is way below average. Is the salary negotiable?

Employer: that is a good observation, but, I’m surprised you find the salary offered below average. Here at the company, we have made sure to create offers that can compete all over the country. Could you please explain more on the issue?

Alvin: Sure. The data I looked at showed that the same position in other companies in the area received a salary of between $33,000 to & $40,000 annually. For example, the QWERTY company offers $38,000 and give out bonuses. I want to reassure you I am very interested in the job, but I need to be sure I will pay my bills with no financial strains. I hope I was able to show that I have unique expertise in the field that I would like to bring to your company. I know that I will be of great help to the company, and I will grow my skills significantly, but I need to feel comfortable moving to Blue Springs.

Employer: That makes a lot of sense. The concerns on the salary are valid, but I see that you did not look at our benefits packages. The benefits package is quite competitive and makes up for any salary difference.

Alvin: I did look at the benefits package, and I must admit it is very great. I even talked to Doreen, the HR and she explained the details of the health plan and insurance benefits. However, I still would like to request that the salary is increased.

Employer: I understand your concerns about the cost of living which is quite expensive in this area. However, we have a fixed salary to ensure equity among all new hires. Also, we evaluate our new employees to ensure that the salary is proportional to their work. The evaluation is on a 3-month basis or 6 months depending on the situation at hand and the performance. Since you are moving from New Estate to Blue Springs, we can offer you up to $2000 to help you settle. Is that good enough for you?

Alvin: Thank you so much for that consideration. I think that will be a good start. The relocation assistance will help me a great deal. Thank you for taking the time to having this discussion with me.

The employer and Alvin took a collaborative conflict style of negotiation. Both were concerned about the feelings of the other and took the time to listen to each other’s concerns before coming to a consensus. The employer and Alvin used the BATNA to come to a conclusion, with the employer coming up with a better alternative than increasing the salary at once.

Scenario 4:

Real Estate Deal

Whether you are the buyer or the seller, you need natural and reasonable strategies to negotiate and triumph. Negotiating in the real estate market is complex and the transactions made are unique. The buyer and the seller need to have an outcome that favors them. They need to look at the current market sales regarding the real estate. Both the seller should look at the period in which the market favors either of them. For instance, if the property is in a good neighborhood with fewer sales, the deal will probably be good for the seller. However, if there some bad press about your property, the buyer has more leverage than you.

The details on the property are also a great dictator of the negotiation. The houses, for instance, may be the same, the price the same, but the deal may be different. The first owner may need more money for renovation and the second may have no additional costs. As the seller, you would probably prefer the second owner who has no additional costs. On the other hand, a buyer may prefer the first house that may have a discount due to the cost of repairs. Another consideration is the transactions involved, which are houses for money. The buyer will need to know if the home has been preapproved by the lender, the interest rates, and down payments. The buyers will prefer the house with lower benefits, while reduced down payment is good for both the buyer and seller. Brokerage is also common, and buyers are also adopting the representation style in negotiations (Peled et.al, 2013).

Scene:

James: Mr. John, how are you?

John: I am very fine. I have come to discuss the house we agreed upon on the telephone.

James: Right, I remember perfectly. The house is situated in Michigan Estate. Just five minutes from where we are standing.

John: I would like to view it if that is fine by you.

James: of course

James: As you can see, the house is big enough. It has five bedrooms, two bathrooms, swimming pool. The interior design is perfect for a family. The swimming pool is just in place for resting and built in the direction of the sun, and the compound is big enough for family play time.

John: I must admit the house looks great, but, why does the swimming pool look unattended, the wall on the left end seems to be breaking. Has that excludes in the price, because if not, I think the house is not worth that price?

James: The faulty areas will be repaired just in time for you to move in. The price is quite negotiable, and the house itself is in an exquisite condition.

John: I would like the price reduced by $40,000 due to the faulty areas, and again that price is too high for a five-bedroom house without a study room.

James: $40,000 is not acceptable, the only acceptable reduction is up to $9,000.

John: $9,000 is still not fair considering the size and the faulty areas. Are there any other hidden property costs?

James: The property does not have hidden costs, and that is the best deal I can offer.

John: Then, in that case, I will have to look somewhere else for a better house.

This is a case where the buyer has more leverage over the seller. The faulty areas around the house did not match the price of the house. Further, the buyer and seller used the competitive parameter for their negotiation. This parameter means that the buyer and seller are likely not to come to a consensus. They both want to win and do not listen to one another carefully. The seller seems unprepared for the questions being asked by the buyer, thus making the buyer take over the whole negotiation. The negotiators failed to take into consideration the BATNA, best alternative to a negotiated agreement, making agreeing on the price difficult. There was the existence of ZOPA, whereby there was a negative zone in the bargaining. The $40,000 and $9,000 bargain was negative, which ended in the parties walking away.