Negotiation Skills for Managers - Research Paper Example

? Negotiation Skills for Managers Negotiation Skills for Managers “Business negotiation is the process by which typically two or more parties come together to try to create a mutually agreeable contractual decision” (What is Negotiation?, n.d). Each party may have some kind of self-interests which he may try to protect through the negotiation process. At the same time, it is the duty of the negotiating parties to be flexible in their approaches and demands so that the negotiation process occurs in a positive environment. According to Lewicki et al.(2006), “Negotiation occurs for one of two reasons: 1) to create something new that neither party could do on his or her own or 2) to resolve a problem or dispute between the parties” (Lewicki et al. 2006, p.3). For example, a sales manager and his clients may have contrasting interests. Clients always like to get the job done as cheaply as possible whereas the manager would like to get that job for a price as higher as possible. A compromise is necessary between the manager and his client in order to protect mutual interests as much as possible and for that purpose negotiation is a must. Since sales is a profession in which negotiation takes place quiet frequently, I decided to interview a car salesman of a Toyota dealership in order to get more awareness about various aspects of business negotiations. This paper is written based on the interview I conducted with that Toyota car salesman. My own perspectives of negotiation In my opinion, various types of negotiations occur every day in our life. However, in business world, negotiation occurs between an organization and its clients, organization and its employees, organization and its suppliers, organization and communities in which it operates. However, negotiations between the sellers and buyers are more common in the business world. The seller wants to sell his product for maximum prices whereas the buyer would like to purchase things for minimum prices. Since these two motives are traveling in opposite directions, negotiation is the only way to settle the issues between the sellers and buyers. In short, better deal is the major motive behind every business negotiation. It is not necessary that all negotiation process may end up in victories or failures. In certain cases, both the parties may sacrifice many of their interests to get the work done. Characteristics of business negotiations As per the opinions of the car salesman I interviewed, negotiations can be classified into two different groups; 1) Negotiations that end up in the victory of one party and the failure of the other party 2) Negotiations that end up in victory to both the parties. He has labeled these negotiations as distributive (win-lose) and integrative (win-win). He has pointed out that a win-win or integrative negotiation is always desirable as both the parties may get some benefits out of the negotiation process. Distributive or win-lose negotiations may end up in the victory of only one party at the expense of the other. I asked him about the type of negotiation usually he undertakes and the reasons for that. He has told me that majority of the times he will go for integrative negotiations and only at the unavoidable circumstances; he will go for the distributive type of bargaining. In his opinion, business concepts are changing rapidly. Business management principles in the past and at present are entirely different. Earlier, sales people concentrated more on selling the goods at any cost. They used all positive and negative tactics to sell the product in the past. In other words, the intentions of a salesman in the past were to conduct only distributive negotiations in which the ultimate winner would be the salesman. As a result of such distributive negotiations, many companies lost their customer base as cheated customers or the losing customers started to look for other options. He has mentioned that as per the modern business principles, retaining of the customers is as important as attracting a new customer and therefore organizations started to concentrate more on integrative bargaining in sales deals. Integrative negotiations are useful for building relationships between the parties involved in the negotiation process whereas distributive negotiations may damage the mutual relationships between the parties. In other words the long term benefits of Integrative negotiations are more than that of distributive negotiations. So, parties in negotiations will always try to conduct win-win negotiations in order to strengthen their mutual relationships. Current business is all about establishing long term relationships with customers, employees and all the other stakeholders of an organization. I asked him what actually occurs in a negotiation process. He has quoted Yuan et al (2003) to reply this question. “Negotiations may involve several stages, such as greeting, background information exchange, agenda setting, issue discussion, and final agreement formulation, and different media may be used by negotiators to perform different tasks” (Yuan et al 2003, p.107).He told me that it is important to know the demands of the opposite party clearly before putting forward our own demands in a negotiation process. In his opinion, organizations are smart enough to send only able representatives for the negotiation processes. They may not reveal their actual demands at the beginning of the negotiation process. He has made this point clearer with the help of the following example. Suppose party A have $ 10000 budget for doing certain project and Party B can complete this project for $ 7000 and still earn profits. In such cases, A may not disclose his budget until B provides certain ideas about the cost factor. Same way, B may not disclose the cost factor until he knows the budget of A. Both the parties will definitely try to know the budget and cost factors prior to the negotiation process in order to gain advantages in the negotiation process. In short, “Each party in the negotiation will have its own individual objectives or goals, involving values for each issue being negotiated, which need not be revealed to others and need not be quantified” (Thiessen et al, 1998, p.114). In my opinion, integrative or win-win negotiation is better than distributive or win-lose negotiation. As mentioned earlier, integrative negotiation may end up in strengthening the relationships between the parties and it may yield long term benefits. On the other hand, in distributive bargaining, one party may take advantage at the expense of other. In such bargaining, the losing party may not develop positive attitudes towards the winning party and therefore long term relationships may not develop between them. Moreover, the losing party may try to engage in malpractices to compensate for the losses which may strain the relations further. Suppose a sales manager of a printing unit failed to canvass a job for the desired price. He will try to reduce the quality of printing in order to compensate for the losses he incurred as part of the distributive bargaining with his client. Delivery of cheap quality printed material may destroy his relationships with the client. Thus, distributive bargaining has the potential to destroy relationships. In my opinion, the most important aspect of any negotiation is “Being a good listener”. It should be noted that party A can formulate his strategies based on the opinions of party B. So, it is better to allow the opposite party to speak as much as possible at the beginning of a negotiation process. Moreover, it is better to keep diplomacy in negotiation process in order to gain the confidence of the opposite party. It is always better to speak in flexible manner instead of using adamant languages in a negotiation process. Body language also plays an important role in the negotiation process. Gestures and facial expressions can communicate more ideas than what is actually exchanged verbally between the parties. The appearance of the parties in a negotiation process is least important. Suppose party A looks better than party B whereas party B has better communication skills than party A. Party A’s better appearance may not help him in the negotiation process whereas party B’s communication skills may help him immensely in the negotiation process. “BATNA means 'Best Alternative to a Negotiated Agreement” (BATNA - Best Alternative, 2010). BATNA is often used when a stalemate occurs in a negotiation process. There is no point in continuing a negotiation if both the parties are adamant in their demands. In such cases, it is better to use BATNA in order to break the stalemate and continue the negotiation process in a positive manner. Many people have the false belief that BATNA and reservation points are one and the same. However, these things are entirely different as far as negotiation is concerned. Reservation point is the “The point beyond which you will not accept a deal and will turn to your BATNA. The reservation point is the quantification of BATNA, the trigger point where you will take your next best alternative instead of negotiating” (Beer, 2003). Winner’s curse is another term associated with the negotiation process. There are plenty of examples in which some sales managers go beyond certain levels to canvass businesses. They will realize the problems only after the project is being allotted to them. In such cases, they will be forced to complete that project even if it is non-profitable. Such situations are usually referred as winner’s curse in negotiation process. Conclusions Negotiation is a process through which two or more parties settle the differences between them in order to complete a project. Integrative negotiation is better than distributive negotiation since such negotiations establish long term relations. References 1. BATNA - Best Alternative (2010). Retrieved from http://www.negotiations.com/articles/best-alternative/ 2. Beer J.F. (2003). Negotiation. Retrieved from http://www.culture-at-work.com/distribute.html 3. Lewicki, R. J., Barry, Roy J. Lewicki (Author) › Visit Amazon’s Roy J. Lewicki Page Find all the books, read about the author, and more. See search results for this author Are you an author? Learn about Author Central B & Saunders Bruce Barry (Author) › Visit Amazon’s Bruce Barry Page Find all the books, read about the author, and more. See search results for this author Are you an author? Learn about Author Central D.M . (2006), Essentials of Negotiation, Publisher: McGraw Hill Higher Education; 4th edition (September 1, 2006) 4. Thiessen E.M., Loucks D.P., & Stedinger J.R. (1998).Group Decision and Negotiation Computer-Assisted Negotiations of Water Resources Conflicts, Kluwer Academic Publishers. Printed in the Netherlands 5. What is Negotiation?, (n.d.). Retrieved from http://www.the-cost-reduction-consultant.com/whatisnegotiation.html 6. Yuan Y & Head M & Du M (2003), The Effects of Multimedia Communication on Web- Based Negotiation, Kluwer Academic Publishers. Printed in the Netherlands Read More