Negotiation Techniques

ALLAMA IQBAL OPEN UNIVERSITY,

ISLAMABAD
(Department of Business Administration)

Course: Management Theory & Practice

Level: MBA
Course code: 8506

Assignment Title:
Negotiation Techniques

Submitted To: Submitted By:

Ms. Sania Nawaz M. Haroon Khan
(MBA Marketing, Roll Number: BU 549995)

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Negotiation Techniques

Acknowledgements

In the name of Almighty Allah, the most gracious, the most beneficent by help of whom I
am able to complete my assignment which is about negotiations techniques of an organization. I
am grateful to Allah almighty, for enabling me to fulfill this tiring, but interesting job for the
completion of my assignment.

No doubt Allah is the main source of knowledge and wisdom. It is a great blessing of
Almighty Allah, that He enables me because of His Holy Prophet (peace is upon him) I am
presenting my humble contribution for distribution of knowledge. I bow my head before
Almighty Allah who gave me courage, knowledge and confidence and to carry on assignment
and enabled me to accomplish it.

I would not be going to do justice in presenting this assignment without mentioning the
people around me who have been inextricably related with the completion of this assignment. I
would like to express my heartfelt thanks to our course teacher for his support and guidance,
which he rendered throughout the study to peruse this assignment. Finally, for any all too fallible
errors, omissions and shortcomings in the writing of the report only I am responsible for which
we hope that all concerning regards of this assignment will forgive us.

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Abstract

Almost every day, we negotiate with suppliers, customers, bosses, and colleagues - often
without realizing it! Negotiation is a key skill which can significantly improve both individual
and business performance. Effective Negotiation can save time, money, stress and even
relationships while resulting in better deals, higher sales and more satisfied clients and suppliers

Effective Negotiation helps you to resolve situations where what you want conflicts with
what someone else wants. The aim of Negotiation is to find a solution that is acceptable to all
and leaves both parties feeling that they've won in some way.

Today, most organizations have to face the complex challenges linked to market
development, growing customer power and increased competition. In this context, an effective
way to support the achievement of the organization’s growth objectives is to optimize
negotiation skills. The course illustrates how to improve company profitability through the use of
effective customer negotiation techniques.

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Table of Contents

 Title page
 Acknowledgement
 Abstract
 Table of contents
 Introduction to the issue
 Practical Study of Organization
 Data collection method
 SWOT analysis (strength ,weaknesses ,
opportunities , threats)
 Conclusion
 Recommendations
 References

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Negotiation Techniques

Introduction to the Topic

NEGOTIATION:

Negotiation is a discussion between two or more disputants who are trying to work out a
solution to their problem. This interpersonal or inter-group process can occur at a personal level,
as well as at a corporate or international level. Negotiations typically take place because the
parties wish to create something new that neither could do on his or her own, or to resolve a
problem or dispute between them.

Negotiation is a technique of discussing issues among one selves and reaching to a

conclusion benefiting all involved in the discussion. It is one of the most effective ways to avoid
conflicts and tensions. When individuals do not agree with each other, they sit together, discuss
issues on an open forum, negotiate with each other and come to an alternative which satisfies all.
In a layman’s language it is also termed as bargaining.

An individual representing an organization or a position who listens to all the parties

carefully and comes to a conclusion which is willingly acceptable to all is called the negotiator.

When parties negotiate, they usually expect give and take. While they have interlocking
goals that they cannot accomplish independently, they usually do not want or need exactly the
same thing. This interdependence can be either win-lose or win-win in nature, and the type of
negotiation that is appropriate will vary accordingly. The disputants will either attempt to force
the other side to comply with their demands, to modify the opposing position and move toward
compromise, or to invent a solution that meets the objectives of all sides.

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Mutual adjustment is one of the key causes of the changes that occur during a
negotiation. Both parties know that they can influence the other’s outcomes and that the other
side can influence theirs. The effective negotiator attempts to understand how people will adjust
and readjust their positions during negotiations, based on what the other party does and is
expected to do. The parties have to exchange information and make an effort to influence each
other. As negotiations evolve, each side proposes changes to the other party’s position and makes
changes to its own. This process of give-and-take and making concessions is necessary if a
settlement is to be reached. If one party makes several proposals that are rejected, and the other
party makes no alternate proposal, the first party may break off negotiations.

The parties must work toward a solution that takes into account each person’s
requirements and hopefully optimizes the outcomes for both. As they try to find their way toward
agreement, the parties focus on interests, issues, and positions, and use cooperative and/or
competitive processes to come to an agreement.

Objectives of negotiation process:

 Determine when it is advisable to negotiate.

 Evaluate the financial implications of the negotiation.
 Define a structured approach to the negotiation process.
 Establish clear negotiation objectives and bargaining limits.
 Determine the negotiation tactics and action plan.
 Set limits, values and establish key roles.
 Recognize negotiation styles and their implications.
 Interpret your counterparts’ signals – recognize the will to give ground and in which
direction.
 Negotiate effectively.
 Close the negotiation.

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 Describe the principles of negotiation as part of a win-win strategy.

 Describe customer objection types.
 Discuss the ways in which to manage customer objections.
 Highlight the methods of value creation in the course of a negotiation.
 Understand how to operate with counterparts who are trained in negotiation techniques.

Your ability to negotiate well on your own behalf is the key to both personal and business
success. You can always get a better deal if you know how to improve your interpersonal skills.
You never need to settle for less or feel dissatisfied with the result of any negotiation. The secret
to knowing how to negotiate, is through understanding that there is almost always a way that you
can get better terms or prices, whether you are buying or selling. Your job is to find that way.

The word “ask” is the most powerful word in business communication and negotiation.
Most people are so paralyzed by the fear of rejection and disapproval that they are afraid to ask
for anything out of the ordinary. They just accept what is offered to them and hope for the best.
But this is not the case with top negotiators with excellent interpersonal skills.

The top negotiators will quite calmly and confidently ask for any kind of price or term
that is remotely within reason. You will be quite astonished at the better deals you will get by
simply asking for a lower price if you’re buying and asking for a higher price if you’re selling.
Ask for what you want. Ask politely. Ask expectantly. Ask optimistically. Ask courteously. Ask
repeatedly. Ask in different ways. But never be afraid to ask.

An important thing to remember when learning how to negotiate is that everything is

negotiable. All prices and terms are set by someone, on some basis. Most prices and terms are
merely “guesses” at what the other person will accept. They are never written in stone.

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Elements of Negotiation:

Negotiation
↓
Process + Behaviour + Substance (Agenda)

 Process:

The way individuals negotiate with each other is called the process of negotiation. The
process includes the various techniques and strategies employed to negotiate and reach to
a solution.

 Behavior:

How two parties behave with each other during the process of negotiation is referred to
as behavior. The way they interact with each other and the way they communicate with
each other to make their points clear all come under behavior.

 Substance:

There has to be an agenda on which individuals negotiate. A topic is important for

negotiation. In the first situation, going for the late night movie was the agenda on which
you wanted to negotiate with your parents as well as your friends.

To conclude, negotiation is simply a technique, a discussion among individuals to reach

to a mutual agreement where everyone gains something or the other and conflicts are avoided.

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Negotiation Techniques:

Negotiation is referred to as the style of discussing things among individuals in an effort

to come to a conclusion satisfying all the parties involved. Discussions should be on an open
forum for everyone to not only participate but also express their views and reach to an alternative
acceptable to all.
It is important how we negotiate with each other. One must know the difference between
negotiating and begging. Do not stoop too low to get a deal closed. Negotiation must be in a
dignified way. One has to be extremely patient and also understand the second party’s needs and
interests as well. Never impose your ideas on anyone. Let everyone speak their mind and decide
something which would favor one and all.

Let us go through some negotiation techniques in detail:

• The first and the foremost technique for an effective negotiation is one should be well
informed with everything related to the deal.
Find out even the minutest detail you think is important and you might require at the time
of negotiation. Be prepared for everything. Remember the second party might ask you
anything.
Janet wanted to purchase a new laptop. She checked out the prices of almost all the
leading brands along with their features before going to the outlet. She went well prepared and
thus managed to crack the best deal and took the best quality laptop with the maximum possible
discount.


• Take good care of your posture as well as your body movements.

Look confident. While speaking, don’t look around or play with things. It’s just a
discussion, no one will kill you if you are not able to close the deal. Don’t stammer in between or
start sweating in front of others. The second party will take undue advantage if they find you
nervous. Take care of your dressing as well. Don’t wear anything which is too casual. If you
dress casually people will not take you seriously.


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• Be very focused. One should be very specific what he wants.

First ask yourself what is the purpose of this negotiation? What do you actually want?
What is the affordable price for you? Be firm and stick to it. Be very specific and clear.


• Never keep things to yourself and crib later.
Don’t assume that the other person can read your mind on his own. One needs to ask for
what he wants. A mother will not feed her child unless and until he cries. Speak your heart out. If
you are not satisfied with the deal, show your displeasure to others. Express them that you are
not very happy with the price and it needs to be revised.


• Be a patient listener.
Listen to others as well. Think about their interest and needs as well. Don’t ask for
anything which would not benefit the second party. Don’t jump to conclusions and never
interfere when the other person is speaking. Listen to the other party’s proposal as well; he might
come up with something unique which you could not even think.


• Be realistic.
Don’t ask for something you yourself know is not possible. Don’t quote anything just for
the sake of it. One should be a little practical in his approach. Don’t ask for irrational discounts.
Be logical. It’s nothing bad to think about your personal interests, but one should not be mad for
it. If you want to purchase something, also remember that the store owner has to earn his profits
as well.


• Don’t be in a hurry to close the deal.

Take your time to discuss things among yourselves. Make sure you are deciding
something which would be a win win situation for all. Never drag any discussion and make the
conversation too long. Too much of pleading and persuasion result in a big zero and no
conclusion can be drawn of it.

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• Know where to compromise.

An individual has to compromise sometimes to come to an output. If you feel that if you
accept some terms and conditions, things would be better and it would not harm you much, go
ahead. Everyone needs to compromise sometimes or the other. Even in marriages, one partner
needs to negotiate with the other for better understanding.


• Communication is also important in negotiation.

Speak clearly and precisely. One should not confuse others. Playing with words is one of
the biggest threats to negotiation. Don’t use derogatory or lewd remarks against anyone.


• For a third party it’s always better to sign a contract or have something in black and
white so that no body backs out later.
It’s always better to sign agreements in the presence of both the parties for better
transparency. At workplace after every discussion and negotiation, emails or minutes of the
meeting must be circulated among all the team members for everyone to get a clear and the same
picture.

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Practical Study:

Today, most organizations have to face the complex challenges linked to market
development, growing customer power and increased competition. In this context, an effective
way to support the achievement of the organization’s growth objectives is to optimize
negotiation skills.

Business people and officials in Pakistan usually have only limited exposure to other
cultures except for neighboring countries. Its culture is quite homogeneous. When negotiating
business here, realize that people may expect things to be done ‘their way,’ and let them set the
pace initially until you have had a chance to determine how your interactions are most effective.
Always keep in mind that this is an Islamic country. Showing any disrespect for the religion
could have disastrous consequences.

In Pakistan, the primary approach to negotiating is to employ distributive and

contingency bargaining. While the buyer is in a superior position, both sides in a business deal
own the responsibility to reach agreement. They expect long-term commitments from their
business partners and will focus mostly on long-term benefits. Although the primary negotiation
style is competitive, Pakistanis nevertheless value long-term relationships and look for win-win
solutions. They respect hard bargainers as long as they avoid creating direct conflict. Attempts to
win competitive advantages should not be taken negatively. You earn your counterparts’ respect
by maintaining a positive, persistent attitude.

Negotiation by Procurement Department of an Organization:

We often hear from our clients about the challenges they have these day negotiating with
Procurement. This is no surprise. Over the past few years, procurement departments have
become more powerful, more sophisticated, and at times seem dead-set on commoditizing every
aspect of our solutions. For sales professionals, sales negotiations with Procurement is an

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ongoing struggle of dealing with third party negotiators, blind RFP’s, reverse auctions,
commodity pricing, and hardball sales negotiating tactics.

Working with Procurement often feels adversarial. Not only are they expert negotiators,
they’re trained to drive down costs and get discounts. Procurement works to mitigate risk, make
sure suppliers are operating ethically and professionally, screen out suppliers who aren’t fiscally
stable, and project a return on strategic investments.

USAID:

The United States Agency for International Development (USAID) is an independent

agency of the United States federal government that is primarily responsible for administering
civilian foreign aid and development assistance. With a budget of over $27 billion, USAID is
one of the largest official aid agencies in the world, and accounts for more than half of all U.S.
foreign assistance.
For more than 60 years, the United States and Pakistan have worked together to forge a
relationship that benefits the people of both countries. This cooperation has produced
transformative ideas and institutions that are still considered landmark accomplishments for
Pakistan.
In 1947, the United States was one of the first countries to recognize an independent
Pakistan and to extend considerable assistance for the establishment of key institutions. With
U.S. support, Pakistan was able to undertake many notable development projects, such as the
Institute for Business Administration, Jinnah Postgraduate Medical Center, the Indus Basin

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Project, Faisalabad Agricultural Institute, and a variety of other efforts that laid the path for
Pakistan’s Green Revolution.

In the 1960s and 1970s, the United States was a major donor for the construction of the
Mangla and Tarbela dams, which at the time of their completion accounted for 70 percent of the
country’s power output. In the 1980s and early 1990s, the United States helped build the Guddu
Power Station in Sindh and the Lahore University for Management Sciences, which is now
considered to be one of the nation’s top business schools.

USAID Procurement Department and their negotiation process:

Every organization’s procurement strategy should be uniquely tailored to meet the needs
of the business. The strategy you create should consider the company’s current status and
protocols, stakeholder buy-in of procurement strategy, market conditions, and company goals,
initiatives, and objectives.

USAID goals of procurement and negotiation strategy:

 Minimize error and lost savings opportunities

 Identify authorized buyers
 Eliminate maverick spend
 Align purchasing with company objectives
 Increase efficiency with timely deliveries
 Ensure purchasing complies with federal and state regulations
 Leverage supplier relationships for more favorable contracts

They use their expertise and negotiation skills to meet with vendors, work out contract
terms and their decisions have a major impact on the company's operations. They constantly

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monitor what the company purchases, delivers and spends to determine if goods are defective or
not meeting performance demands. They also hire new buyers and purchasing agents and
provide product-specific training to prepare new employees for their roles. Being confident and a
good negotiator is important.

USAID generally follows the below steps:

Step 1. Project Design:

USAID Missions develop an overarching Country Development Cooperation Strategy
(CDCS) with substantial input from partner governments, industry, civil society, and
development partners to understand challenges and resources available. From the CDCS,
USAID then designs projects and activities to create an acquisition and assistance (A&A) plan.

Step 2. Identify the Requirement:

USAID will work towards defining the results to be accomplished under discrete
activities which may be obtained via an assistance or acquisition award.
Acquisition refers to obtaining goods and services, through various types of contracts, for the
use or benefit of the Agency.
Assistance refers to transferring funds.

Step 3. Market Research:

USAID conducts market research to determine how best to implement our development
objectives for delivery of foreign assistance. During this step, USAID acquires information on
the level of local capacity available and the participation of small business, as well as the
feasibility of the requirement.

Step 4. Evaluation:
Typical evaluation criteria include the following:
 Past Performance
 Technical Approach
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 Personnel
 Corporate Capability
 Management Plans

Step 5. Negotiation:
If USAID wants to negotiate with your organization before deciding whether or not to
award to you, your organization should learn about our policies that will become a part of the
contract or assistance award.

USAID Procurement Negotiator Responsibilities:

 Development and Maintenance of a comprehensive equipment and commodity

procurement plan, with timelines, and be able to brief the management succinctly on
status and issues/solutions.
 Manage the procurement process for multiple large international and local procurements
including bid preparation, development, evaluation and award, administration including
warranty and closeout.
 Monitor to ensure that all funds are expended in accordance Government of Pakistan and
US Government agreements and the applicable Pakistani and U.S. Laws and Regulations.
 Establish and maintain proper required records of all procurement.
 Supervising an efficient bid evaluation process.
 Preparation of the bid evaluation plan.
 Maintain confidentiality of bids.
 Supervise the technical and commercial evaluation process.
 Prepare award recommendations as required to obtain approval for award. Preparation of
purchase order or contract.
 Vendor notifications and execution of the contract.
 Award notifications and formal signatures of agreement with successful vendor.
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Data Collection Method:

I have collected data from different books, articles, internet, and also through online
recorded interviews of the respective persons or employees.

SWOT Analysis:

The SWOT Analysis (Strengths, Weaknesses, Opportunities and Threats) is a very useful
business tool for business marketing and process planning but can be applied with ease in a
Negotiation process.

The SWOT analysis can be used to arrive at a win-win agreement for both parties by
quickly applying the above factors. In most any negotiation there are strengths, weaknesses,
opportunities and threats on both sides of the table.

The party that best analyzes and applies these factors will normally drive the negotiation
and in the end wind up with the win that best suites their needs whether it be price, quality or
timing or a combination of the three.

Strengths:

 Relationship with customer

 Knowledge of customer’s need
 Experience
 Market position
 Financial resources
 Knowledgeable staffing
 Product strengths over competition

Weaknesses:

 Staffing
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 Margins too low

 Market position

 Product weaknesses
 Financial resources

Opportunities:

 New complimentary market

 Market poised for growth
 Competition Weaknesses
 Strategic alliance

Threats:

 Economy
 Loss of key staff
 Cash Flow
 New technology
 New government regulations
 Increased competition

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Conclusion

Negotiation and strategic selection of goods and services is important to an organization.

Purchasing is the process of how goods and services are ordered. Purchasing can usually be
described as the transactional function of procurement for goods or services.

Your ability to negotiator agreements, dissolve deadlock situations, precondition

expectations and attract sustainable deals requires all of the skills, attributes, knowledge and self-
awareness we have covered in this assignment. For many, the challenges presented by
negotiation don't come naturally and, as with any performance coupled with your own
motivation to continuously improve, you have one of the most rewarding (in so many ways)
personal development opportunities available to you. Negotiating effectively is firstly about you
accepting that it is only you who can influence the situations you are faced with. You can blame
the market, personalities, timing, your options, the power balance or any circumstance that you
may think happens to be working against you, but ultimately it is you who can turn around
situations and make what would otherwise be deadlock situations into workable and profitable
deals. It is time to stay calm, see the tactics for what they are and exercise nerve and patience.
Power real or perceived, however generated, will play its part in your negotiations and, no matter
how good you are as a negotiator, where the balance of power is against you or your
circumstances, you will no doubt experience the frustration of feeling of being compromised.
Trust your instinct, exercise composure. It will make the difference between those agreements
where you create value and those where you simply distribute it.

If you’re an effective negotiator, you can increase your business dealings and give
yourself a set of clients that pay well and don’t make unreasonable demands. Before you enter
the negotiation, carefully plan out your bid and include all the details you want to have in
advance before you start making deals.

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Recommendations:

 Prepare, prepare, prepare. Enter a negotiation without proper preparation and you've
already lost.
 Pay attention to timing.
 Leave behind your ego.
 Ramp up your listening skills.
 If you don't ask, you don't get.
 Anticipate compromise.
 Offer and expect commitment.
 Don't absorb their problems.

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References:

 https://www.pon.harvard.edu/freemium/negotiation-skills-negotiation-strategies-and-
negotiation-techniques-to-help-you-become-a-better-negotiator/
 https://www.bio.org/sites/default/files/Negotiation%20Strategies_Lesley%20Stolz.pdfhtt
ps://www.bio.org/sites/default/files/Negotiation%20Strategies_Lesley%20Stolz.pdf
 https://www.pinnacletelecom.com/blog/bid/287899/swot-in-
negotiationshttps://www.pinnacletelecom.com/blog/bid/287899/swot-in-negotiations
 https://www.oreilly.com/library/view/the-negotiation-
book/9780470664https://www.oreilly.com/library/view/the-negotiation-
book/9780470664919/9780470664919_conclusion-051.html
 https://www.slideshare.net/mobile/PallaviBelkar/negotiation-
15309055https://www.slideshare.net/mobile/PallaviBelkar/negotiation-15309055
 https://www.managementstudyguide.com/negotiation-techniques.html

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