BUSINESS ETHICS

AND
NEGOTIATION SKILLS

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TABLE OF CONTENT

MODULE – 1

Business Ethics

MODULE – 2

Preparing the Negotiations

MODULE – 3

Tactics of Negotiation, Negotiation Stages and Phases

MODULE – 4

Negotiation Styles and Strategies

MODULE – 5

Countering manipulation and psychological press

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 MODULE 1

BUSINESS ETHICS

Contents

1.0 Introduction
1.1 Definition and Meaning
1.2 Characteristics of Business Ethics
1.3 Importance of Ethics
1.4 Scope of Ethics
1.5 Types of Ethics
1.6 Ethical Theories
1.6.1 Teleological Ethical Theories
1.6.2 Deontological Ethical Theories
1.6.3 Virtue Ethical Theories
1.6.4 System Development Ethical Theories
1.7 Causes of Unethical Behaviour
1.8 Ethical Abuses
1.9 Work ethics

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1.0 Introduction

Etymologically the term “ethics” correspond to the Greek word “ethos” which means
character, habit, customs, ways of behaviour, etc. Ethics is also called “moral
philosophy”. The word “moral” comes from Latin word “mores” which signifies customs,
character, behaviour, etc. Thus ethics may be defined as the systematic study of human
actions from the point of view of their rightfulness or wrongfulness, as means for the
attainment of the ultimate happiness. It is the reflective study of what is good or bad in
that part of human conduct for which human has some personal responsibility. In simple
words ethics refers to what is good and the way to get it, and what is bad and how to
avoid it. It refers to what ought to be done to achieve what is good and what ought not to
be done to avoid what is evil.
As a philosophical discipline, ethics is the study of the values and guidelines by which we
live. It also involves the justification of these values and guidelines. It is not merely
following a tradition or custom. Instead it requires analysis and evaluation of these
guidelines in light of universal principles. As moral philosophy, ethics is the
philosophical thinking about morality, moral problems, and moral judgements.

1.1 Meaning and Definition

Ethics:

Definition: The Ethics is the branch of philosophy that deals with the principles of

morality and the well-defined standards of right and wrong that prescribe the human
character and conduct in terms of obligations, rights, rules, benefit to society, fairness,
etc.

Meaning: The ethics encompass the human rights and responsibilities, the way to lead a
good life, the language of right and wrong, and a difference between good and bad. This
means it is concerned with what is right or wrong for the individuals and society. 

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 Business Ethics:
Definition: According to Andrew Crane, “Business ethics is the study of business
situations, activities, and decisions where issues of right and wrong are addressed.”

Meaning: In short, business ethics means to conduct business with a human touch in
order to give welfare to the society.

1.2 Nature/Characteristics of Business Ethics

The characteristics or features of business ethics are:-

a) Code of conduct: Business ethics is a code of conduct. It tells what to do and what

not to do for the welfare of the society. All businessmen must follow this code of
conduct.
b) Based on moral and social values: Business ethics is based on moral and social
values. It contains moral and social principles (rules) for doing business. This includes
self-control, consumer protection and welfare, service to society, fair treatment to
social groups, not to exploit others, etc.
c) Gives protection to social groups: Business ethics give protection to different social
groups such as consumers, employees, small businessmen, government, shareholders,
creditors, etc.
d) Provides basic framework: Business ethics provide a basic framework for doing
business. It gives the social cultural, economic, legal and other limits of business.
Business must be conducted within these limits.
e) Voluntary: Business ethics must be voluntary. The businessmen must accept
business ethics on their own. Business ethics must be like self-discipline. It must not
be enforced by law.
f) Requires education and guidance: Businessmen must be given proper education and
guidance before introducing business ethics. The businessmen must be motivated to
use business ethics. They must be informed about the advantages of using business
ethics. Trade Associations and Chambers of Commerce must also play an active role
in this matter.

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 g) Relative Term: Business ethics is a relative term. That is, it changes from one
business to another. It also changes from one country to another. What is considered
as good in one country may be taboo in another country.

1.3 Importance of Ethics

a) Long-term growth: Sustainability comes from an ethical long-term vision which
takes into account all stakeholders. Smaller but sustainable profits long-term must
be better than higher but riskier short-lived profits.
b) Cost and risk reduction: Companies which recognise the importance of business
ethics will need to spend less protecting themselves from internal and external
behavioural risks, especially when supported by sound governance systems and
independent research
c) Anti-capitalist sentiment: The financial crisis marked another blow for the
credibility of capitalism, with resentment towards bank bailouts at the cost of
fundamental rights such as education and healthcare.
d) Limited resources: The planet has finite resources but a growing population;
without ethics, those resources are depleted for purely individual gain at huge cost
both to current and future generations.

1.4 Scope of Ethics

Ethical problems and phenomena arise across all the functional areas of companies
and at all levels within the company.

a) Ethics in Compliance: Compliance is about obeying and adhering to rules and

authority. The motivation for being compliant could be to do the right thing out of
the fear of being caught rather than a desire to be abiding by the law. An ethical
climate in an organization ensures that compliance with law is fuelled by a desire
to abide by the laws. Organizations that value high ethics comply with the laws
not only in letter but go beyond what is stipulated or expected of them.

b) Ethics in Finance: The ethical issues in finance that companies and employees
are confronted with include:
 In accounting – window dressing, misleading financial analysis.
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  Related party transactions not at arm’s length
 Insider trading, securities fraud leading to manipulation of the financial markets.
 Executive compensation.
 Bribery, kickbacks, o0ver billing of expenses, facilitation payments.
 Fake reimbursements

c) Ethics in Human Resources: Human resource management (HRM) plays a

decisive role in introducing and implementing ethics. Ethics should be a pivotal
issue for HR specialists. The ethics of human resource management (HRM)
covers those ethical issues arising around the employer-employee relationship,
such as the rights and duties owed between employer and employee. The issues of
ethics faced by HRM include:
 Discrimination issues i.e. discrimination on the bases of age, gender, race,
religion, disabilities, weight etc.
 Sexual harassment.
 Affirmative Action.
 Issues surrounding the representation of employees and the democratization of the
workplace, trade ization.
 Issues affecting the privacy of the employee: workplace surveillance, drug testing.
 Issues affecting the privacy of the employer: whistle-blowing.
 Issues relating to the fairness of the employment contract and the balance of
power between employer and employee.
 Occupational safety and health.

d) Ethics in Marketing: Marketing ethics is the area of applied ethics which deals
with the moral principles behind the operation and regulation of marketing. The
ethical issues confronted in this area include:
 Pricing: price fixing, price discrimination, price skimming.
 Anti-competitive practices like manipulation of supply, exclusive dealing
arrangements, tying arrangements etc.
 Misleading advertisements
 Content of advertisements.

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  Children and marketing.
 Black markets, grey markets.

e) Ethics of Production: This area of business ethics deals with the duties of a
company to ensure that products and production processes do not cause harm.
Some of the more acute dilemmas in this area arise out of the fact that there is
usually a degree of danger in any product or production process and it is difficult
to define a degree of permissibility, or the degree of permissibility may depend on
the changing state of preventative technologies or changing social perceptions of
acceptable risk.
 Defective, addictive and inherently dangerous products and
 Ethical relations between the company and the environment include pollution,
environmental ethics, and carbon emissions trading.
 Ethical problems arising out of new technologies for eg. Genetically modified
food
 Product testing ethics.

1.5 Types of Ethics

a) Personal Ethics: Personal ethics is a category of philosophy that determines what

an individual believes about morality and right and wrong. This is usually
distinguished from business ethics or legal ethics. These branches of ethics come
from outside organizations or governments, not the individual’s conscience. These
branches of ethics occasionally overlap. Personal ethics can affect all areas of life,
including family, finances and relationships.

b) Social Ethics: Social ethics is the collection of values and behaviors of a given
culture or people group. Social ethics vary greatly from culture to culture, but
most often the social ethics of civilized societies reflect the moral standards.

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 1.6 Ethical Theories
Several philosophers have propounded different types of ethical theories which are
explained below:

1.6.1 Teleological Ethical Theories: The Teleological Ethical Theories are concerned

with the consequences of actions which means the basic standards for our actions being
morally right or wrong depends on the good or evil generated.
Types of Teleological Ethical Theories :
a) Ethical Egoism: The ethical egoism is a teleological theory that posits, an action is
good if it produces or is likely to produce results that maximize the person’s self-
interest as defined by him, even at the expense of others . It is based on the notion
that it is always moral to promote one’s own good, but at times avoiding the personal
interest could be a moral action too.
b) Utilitarianism: The Utilitarianism theory holds that an action is good if it results
in maximum satisfaction for a large number of people  who are likely to get
affected by the action. Suppose a manager creates an annual employee vacation
schedule after soliciting the vacation time preferences from all the employees and
honor their preferences, then he would be acting in a way that shall maximize the
pleasure of all the employees.
c) Eudaimonism: Eudaimonism is a teleological theory which posits, that an action is
good if it results in the fulfillment of goals along with the welfare of the human
beings. In other words, the actions are said to be fruitful if it promotes or tends to
promote the fulfillment of goals constitutive of human nature and its happiness.
Suppose manager enforce employee training and knowledge standards at work, which
are natural components of human happiness.

1.6.2 Deontological Ethical Theories: The Deontological Ethical Theories hold that the

actions are morally right independent of their consequences.

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Types of Deontological Ethical Theories:

a) Negative and Positive Rights Theories: The negative rights theory asserts that an
action is right if it protects the individual from harm or unwarranted interference from
other people or the government while exercising his right. The positive rights theory
posits that an action is right if it provides or tends to provide an individual with
anything that he needs to exist.

b) Social Contract Theories: The social contract theories posit that people contract with
each other to abide by the moral and political obligations towards the society in which
they live.

c) Social Justice Theories: The social justice theories state that the action will be
considered right if it confirms the fairness in the distributive, retributive and
compensatory dimensions of cost and rewards.

1.6.3 Virtue Ethical Theories: The Virtue Ethical Theories hold that ethical value of an
individual is determined by his character. The character refers to the virtues,
inclinations and intentions that dispose of a person to be ready to act ethically.

Types of Virtue Ethical Theories:

a) Individual Character Ethics: The individual character ethics hold that the
identification and development of noble human traits help in determining both the
instrumental and intrinsic value of human ethical interactions. These noble traits
are courage, self-discipline, prudence, gratitude, wisdom, sincerity, understanding,
benevolence, etc.
b) Work Character Ethics: The identification and development of reflective,
practitioner, noble traits at works such as creativity, honesty, loyalty, honor,
trustworthiness, civility, dependability, shared work pride, empathy, etc.
determine the intrinsic and instrumental ethical quality of work life.

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 c) Professional Character Ethics: The professional character ethics hold that self-
regulation, loyalty, impartial judgment, altruism, truthfulness, public service
determine the intrinsic and instrumental ethical quality of an individual associated
with some communities.

1.6.4 The System Development Ethical Theories: System Development Ethical

Theories state that the extent to which organization system is sensitive to the need to
develop a work culture supportive of ethical conduct determines the ethical value of
actions.

Types of System Development Ethical Theories:

a) Personal Improvement Ethics: The personal improvement ethics posits that
the action is good if it is intended to promote the individual’s personal
responsibility for the continuous learning, improvement, holistic development
and moral excellence.
b) Organizational Ethics: The organizational ethics hold that the action is right
if it confirms the development of the formal and informal organizational
processes which in turn enhances the procedural outcomes, respectful caring,
innovation in ethical work culture and systematic justice.
c) Extra organizational Ethics: The extra organizational ethics asserts that the
action is right if it promotes or tends to promote the collaborative partnerships
and respect the global and domestic constituencies representing the diverse
political, economic, legal, social ecological and philanthropic concerns that
affect the firm.

1.7 Causes of Unethical Behavior

An unethical behavior as any behavior prohibited by law. In a dynamic business
environment, a ―large gray area‖ exists that makes it difficult and unclear to distinguish
what is ethical. An unethical behavior would therefore be defined as one that is not
morally honorable or one that is prohibited by the law. Many behaviors will fall in the
classification including corruption, mail and wire fraud, discrimination and harassment,
insider trading, conflicts of interest, improper use of company assets, bribery and
kickbacks, compliance procedures, ethical relations with others, disciplinary action,
fraud, illegal business donations, patent infringement and product liability.

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 a) No Code of Ethics: Employees are more likely to do wrong if they don’t
know what’s right. Without a code of ethics, they may be unscrupulous. A
code of ethics is a proactive approach to addressing unethical behavior. It
establishes an organization’s values and sets boundaries for adhering to
those values. Everyone is accountable.

b) Fear of Reprisal: When explaining why they don’t report ethical

misconduct that they witness, people often say it is because they worry
about the ramifications. They don’t want to damage their career or incur
the wrath of the offender. Or, sometimes, they let the infraction go because
they don’t know how to report it or they feel that their report may be
ignored.
c) Impact of Peer Influence: If everyone is doing it, it must be right.Too
often people lapse into the bad behavior of others. People behave
unethically because they tend to perceive questionable behaviors exhibited
by people who are similar to them — like their co-workers — to be more
acceptable than those exhibited by people who they perceive as dissimilar,
researchers say.
d) Misconduct: Misconduct starts small, such as the exaggeration of a
mileage report. But the longer it goes unchecked, the worse the offenses
become. The few extra dollars that came from the mileage report may
eventually be dwarfed by larger falsified expenses or perhaps even outright
embezzlement. People who are faced with growing opportunities to behave
unethically are more likely to rationalize their misconduct because
unethical behavior becomes habit.
e) Setting a Bad Example: Ethical behavior starts at the top. Employees
emulate their leaders, and the most significant factor in ethical leadership
is personal character. Corporate leaders who employees view as
demonstrating personal character are more likely to be perceived as setting
a strong tone, researchers say. If employees see the boss knocking off early
every day, they may do likewise.

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1.8 Ethical Abuses
Ethical abuse in simple terms could mean misuse of ethical standards. Ethical abuses
may be in the form of:
a) Creative accounting: Creative accounting consists of accounting practices that
follow required laws and regulations, but deviate from what those standards intend
to accomplish. Creative accounting capitalizes on loopholes in the accounting
standards to falsely portray a better image of the company. Although
creative accounting practices are legal, the loopholes they exploit are often reformed
to prevent such behaviors.
b) Earnings management: Earnings management is the use of accounting techniques
to produce financial statements that present an overly positive view of a company's
business activities and financial position. Many accounting rules and principles
require that a company's management make judgments in following these principles.
Earnings management takes advantage of how accounting rules are applied and
creates financial statements that inflate or "smooth" earnings.
c) Misleading Fianancial Analysis: Financial analysis of an organization is
misleading when it is used to misrepresent the organization, its situation or its
prospects. This type of deceit is sometimes used to obtain money by misdirecting
people to invest in a stock market bubble, profiting (or assisting others to profit)
from the increase in value, then removing funds before the bubble bursts.
d) Insider trading: Insider trading involves trading in a public company's stock by
someone who has non-public, material information about that stock for any reason.
Insider trading can be either illegal or legal depending on when the insider makes the
trade. It is illegal when the material information is still non-public, and this sort of
insider trading comes with harsh consequences.
e) Securities fraud: Securities fraud, also referred to as stock or investment fraud, is a
type of serious white-collar crime that can be committed in a variety of forms but
primarily involves misrepresenting information investors use to make decisions.
f) Bribery: Bribery is the act of giving money, goods, or other forms of
compensation to a recipient in exchange for an alteration of their behavior (to the
benefit/interest of the giver) that the recipient would otherwise not alter. Many types

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 of payments or favors can constitute bribes: tips, gifts, favors, discount, waived fees,
free foods, free advertising, free trips, free tickets, donations, campaign contribution,
sponsorship/backing, higher paying job, stock options, secret commission, or
promotions. The key to identifying bribery is that it is intended to alter the recipients
behavior.

1.9 Work ethics

Work ethic is an attitude of determination and dedication toward one’s job. Those with a
strong work ethic place a high value on their professional success. They exhibit moral
principles that make them outstanding employees in any position. If you have a strong
work ethic, you believe in the importance of your job and typically feel that hard work is
essential to maintaining a strong character.
Employees with a strong work ethic exhibit a particular set of values and behaviors.
These characteristics make them stand out as highly coveted team members and praise-
worthy employees.
a) Reliability: Employees with a strong work ethic are very reliable. You can expect
these individuals to be on time for shifts and meetings. They meet their deadlines
and offer quality work. A reliable coworker makes an excellent teammate because
they contribute fairly to projects.
b) Dedication: Part of a good work ethic is commitment and dedication to the job.
They know how to focus on the tasks without being distracted. These employees
usually work until they finish their duties. They stay with one company for long
periods of time.
c) Discipline: Discipline is an essential part of showing a good work ethic. Highly
disciplined employees show determination and commitment to the job. They strive
to meet or exceed expectations and seek opportunities to learn new skills and
improve their performance.
d) Productivity: A strong work ethic translates to outstanding productivity. Productive
employees often have a higher output than their counterparts. They complete
projects early and do more than the minimum requirements.
e) Cooperation: A good work ethic is something that employees often spread to those
around them by cooperating willingly on projects. They show good teamwork and
readily assist others when needed.

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 f) Integrity: Professional integrity means holding oneself to high moral principles.
Those with a strong work ethic also have outstanding integrity. They’re honest,
polite and fair to others.
g) Responsibility: Demonstrating strong work ethic requires a keen sense of
responsibility. Those who are ethical and responsible hold themselves accountable
for their actions. They will accept the blame for errors they’ve contributed to and
proactively work to fix these issues.
h) Professionalism: Employees with a good work ethic almost always maintain their
professionalism. They exhibit a professional attitude clear in the way they dress,
speak and carry themselves. They’re respectful, focused, organized and neat.

As we have seen, ethics are fundamentally the modus operandi of activity and any work
or task where one keeps in mind the synergy and harmony of coworkers involved which
is simply one’s demeanor with respect to others, and towards work.

References:

Ghosh B.N, Business Ethics and Corporate Governance, Tata McGraw-Hill

Business Ethics, Texts and Cases from the Indian Perspective, Das Gupta, Ananda

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 MODULE 2

PREPARING THE NEGOTIATION

Contents

2.1 Basic concepts on Negotiation

2.2 Negotiation - Definition , meaning , concepts

2.3 Negotiation vs other social interactions Aspects of negotiation research and practice

Aspects of negotiation

2.3.1 Key Factors in Negotiations

2.4 Goal-setting: identifying your goals, options and criteria of success

2.5 Identifying your BATNA (best alternative to a negotiated agreement) and ZOPA (zone of

possible agreement)

2.5.1 Importance of BATNA

2.5.2 Illustration of BATNA

2.5.3 Identifying Your BATNA

2.6 Assessing the other side, red-teaming

2.7 Learning about catalysts and barriers of successful collaboration

2.8 Designing& Creating a negotiation plan

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Introduction

Negotiation is a process in which two or more parties come together to discuss common and
conflicting interests to reach an agreement of mutual interest. This normally results in a win-
win situation for both the parties.
A negotiation is an age-old concept. Over the past few years, negotiation has been used
extensively in the business context. This has led to the emergence of understanding the
concept of negotiation in business. Business relationships are established and strengthened
through negotiation. Negotiation is important in international business, where people from
different economic, social and cultural backgrounds converge to do business. Therefore, it
becomes indispensable to have a sound knowledge of the negotiation process in an
international business environment.

2.1 Basic concepts of Negotiation

In the ever-evolving world some things have been the same for centuries. Picture the
following dialogue between Lord Krishna and Duryodhana, the crown prince of the Kaurava
clan, as written in the ancient epic, Bhagawad Gita.

“Krishna: My salutation to Duryodhana.

Duryodhana: What brings you here, Krishna?
Krishna: The Pandavas have returned from their exile and seek their share of the kingdom. I
represent them and seek justice for them as agreed upon in our initial agreement.
Duryodhana: The Kingdom belongs to the Kauravas and will remain with them alone.
Krishna: The punishment was only for fourteen years of exile.
Duryodhana: There will be no consideration on your plea.
Krishna: But all I am asking for is a small area of five villages.
Duryodhana: I will not be parting with a land enough for even a needle to be poked on it. If
they want any share in the kingdom, they will have to face my army in a war.
Krishna: Alright let it happen as destined.”
From the conversation above we can come across following observations:

• This is dialogue between the two characters.

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• Krishna is trying to convince Duryodhana on the basis of an agreement.

• Duryodhana clearly refuses the proposal.

• Krishna makes an offer, which Duryodhana refuses. Duryodhana in turn makes a counter
offer.

• Krishna accepts the counter offer.

• The above conversation and the succeeding observations speak about a basic and important
day-to-day activity, called Negotiation. It is a one-to-one interaction between two parties,
which can be individuals, organisations or even countries with the intention of understanding
each party’s motives and objectives and reaching a mutually agreed outcome.

2.2 Definition of Negotiation

Over the years, many researchers and scholars have defined negotiation. The Webster
dictionary defines negotiation as “a formal discussion between people who are trying to
reach an agreement”. In a negotiation, each party tries to persuade the other to agree to their
point of view.
Negotiation can be simply defined as, “A process of strategic discussions between two or
more individuals in an attempt to convince the other to accept one’s own objectives, opinions
and ideas to have an amicable solution for any issue or a business deal.”
Let us understand this with an example. You decide to buy a house and the seller is
quoting a price that is higher than the market price. The house the seller is quoting is ` 60
lakhs. Based on the research you have done, a fair price is 50 lakhs. This leads to negotiations
between the two parties. The seller is considering the prices of other houses in that locality,
while the buyer is trying to negotiate on fair price. When the negotiation involves two or
more parties and there is a conflict of interest between parties, negotiations result in a positive
outcome under following conditions:
 All parties are of the view that negotiation is required to achieve the objective
 All parties want to work together rather than have a conflict
For example, Ninja Corporation has a big factory in the east coast in US. Every five years, it
sends requests to paint the factory floor to vendors. When a suitable vendor is found, the two
parties negotiate the best price and service to complete the project.

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2.3 Negotiation vs other social interactions Aspects of negotiation research
and practice Aspects of negotiation

The Aspects of Negotiation are the seven main facets that help you understand negotiation in
principle.

1. Justification
2. Distributive Vs Integrative Negotiation
3. Customization
4. Non-linear Process with Uncertain Outcomes
5. Human Relations Issues in Negotiation
6. Organization for Negotiation
7. Ethics

They are the fundamental features that must be understood in order to relate and compare the
different forms of negotiation. The Aspects of Negotiation are the foundation of the
associated processes and can be applied to any type of negotiation. Before beginning the
processes described in this book, it is recommended that you develop a strong familiarity and
understanding of the Aspects of Negotiation.

2.3.1 Key Factors in Negotiations

When it comes to negotiation, there are some key elements or factors that come into play if
you're going to be successful:

 The Parties Involved: Who are the parties in the negotiation, and what are their
interests? What is the background of all involved, and how does that affect their
position in the discussion?

 Relationships: What is the relationship between the parties and their intermediaries in
the negotiation? How are the parties connected and what role does that play in the
terms of the negotiation process?

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  Communication: How will the needs of the parties involved be best communicated in
order to secure their agreements through negotiation? What is the most effective way
to convey the desired outcomes and needs? How can the parties be certain they are
being heard?

 Alternatives: Are there any alternatives to what either party initially wants? If a direct
agreement is not possible, will the parties need to seek substitute outcomes?

 Realistic Options: What options may be possible to achieve an outcome? Have the

parties expressed where there may be flexibility in their demands?

 Legitimate Claims: Are what each party requests and promises legitimate? What
evidence do the parties offer to substantiate their claims and show their demands are
valid? How will they guarantee they will follow through on the results of the
negotiation?

 Level of Commitment: What is the amount of commitment required to deliver the

outcome of the negotiations? What is at stake for each party, and do the negotiations
consider the effort that will need to be made to achieve the negotiated results?

2.4 Goal-setting: identifying your goals, options and criteria of success

What is Goal Setting?

Goal setting is a powerful motivator, the value of which has been recognized in an abundance
of clinical and real-world settings for over 35 years.

‘Goals,’ as defined by Latham & Locke (2002, p.705) are “the object or aim of an action, for
example, to attain a specific standard of proficiency, usually within a specified time limit.”
They are the level of competence that we wish to achieve and create a useful lens through
which we assess our current performance.

Goal setting is the process by which we achieve these goals. The importance of the goal-
setting process should not go unappreciated, according to Locke (2019) “Every person’s life

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depends on the process of choosing goals to pursue; if you remain passive you are not going
to thrive as a human being.”

More generally, goal setting helps you to identify what you want to accomplish and find a
way to do it. 5 qualities of effective Goals are S.M.A.R.T.

 SPECIFIC – The goal should be SPECIFIC enough so that we know exactly for what
we are striving.

 MEASURABLE – A goal must be MEASURABLE. It should have concrete facts.

You should be able to answer very specifically, when and how you will know you
attained your goal.

 ACTION ORIENTED – It declares positive activity that will produce results.

 REALISTIC – A goal might be REALISTIC. Challenging yourself is an important

part of goal setting. You want to aim high: however, you need to be realistic.

 TANGIBLE – It means concrete and not vague.

1. Set Goals - Identify what is important to you. What do you want to accomplish?
2. Identify possible strategies or objectives to reach each goal - Make a list of what
you feel are the best and most effective ways of reaching the goals you have already
identified.

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 3. Select the best strategies - Now that you have made a list of several ways to achieve
your goal, recognize which of these strategies will work best of you.
4. Outline specific plans to accomplish each strategy - Once you have narrowed down
your strategy list, you can begin to make very detailed and specific plans to
accomplish each strategy and ultimately reach your goal. Once we have a well-formed
Goal Statement we need some direction to follow to achieve this goal.

2.5 Identifying your BATNA (best alternative to a negotiated agreement)

and ZOPA (zone of possible agreement)

BATNA is an acronym that stands for Best Alternative To a Negotiation Agreement. It is

defined as the most advantageous alternative that a negotiating party can take if negotiations
fail and an agreement cannot be made. In other words, a party’s BATNA is what a party’s
alternative is if negotiations are unsuccessful. The term BATNA was originally used by
Roger Fisher and William Ury in their 1981 book entitled “Getting to yes: Negotiating
Without Giving In.”

2.5.1 Importance of BATNA

BATNA is often used in negotiating tactics and should always be considered before a
negotiation takes place. It is never wise to enter into a serious negotiation without knowing
your BATNA. The value of knowing you best alternative to a negotiated agreement is that:

1. It provides an alternative if negotiation falls through.

2. It provides negotiating power.
3. It determines your reservation point (the worst price you are willing to accept)

2.5.2 Illustration of BATNA

The following diagram illustrates each party’s best alternative to a negotiated agreement
(seller and buyer):

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Where:

ZOPA stands for “Zone Of Potential Agreement.” It is the overlap between the seller’s and
buyer’s settlement range.

Seller’s settlement range is a biddable range acceptable to the seller.

Buyer’s settlement range is a biddable range acceptable to the buyer.

Buyer’s/Seller’s worst case is the reservation point of the respective parties.

If:

Buyer offers a price that is lower than the seller’s worst case, and then the seller is better off
going with an alternative.

Seller offers a price that is higher than the buyer’s worst case, and then the buyer is better off
going with an alternative.

Example of BATNA

Colin needs a car and is negotiating with Tom to purchase his car. Tom offers to sell his car
to Colin for $10,000. Colin scours through Craigslist and finds a similar car to which he
assigns a dollar value of $7,500. Colin’s BATNA is $7,500 – if Tom does not offer a price
lower than $7,500, Colin will consider his best alternative to a negotiated agreement. Colin is
willing to pay up to $7,500 for the car but would ideally want to pay $5,000 only. The
relevant information is illustrated below:

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In the diagram above, if Tom demands a price higher than $7,500, Colin will take his
business elsewhere. In the example, we are not provided with Tom’s BATNA. If we assume
that Tom can sell his car to someone else for $8,000, then $8,000 is Tom’s BATNA. In such
a scenario, an agreement will not be made, as Tom is only willing to sell for a minimum of
$8,000, while Colin is only willing to purchase at a maximum of $7,500.

If Tom’s best alternative to the deal is selling the car to a dealership, which would offer him
$6,000, then both parties can come to an agreement because Tom’s reservation point would
be $6,000. In the situation described, the diagram would look as follows:

In this case, there is a zone of potential agreement - $6,000 to $7,500. Somewhere within this
range, the two parties should be able to come to an agreement.

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2.5.3 Identifying Your BATNA

As illustrated in the example above, having a best alternative to a negotiated agreement

before entering into negotiations is important. Had Colin not had a BATNA, Tom would have
had more bargaining power. Knowing Colin’s BATNA is at $7,500, the highest price that
Tom would be able to sell his car to Colin for is $7,500.

Here is a process developed by Harvard Law School to develop the best alternative to a
negotiated agreement:

1. List all alternative to the current negotiation – what could you do if negotiations fall
through?
2. Evaluated the value of each alternative – how much is each alternative worth to me?
3. Select the alternative that would provide the highest value to you (this is your best
alternative to a negotiated agreement).
4. After determining your BATNA, calculate the lowest-valued deal that you’re willing
to accept.

2.6Assessing the other side, red-teaming

A red team assessment is a goal-based adversarial activity that requires a big-picture, holistic
view of the organization from the perspective of an adversary. This assessment process is
designed to meet the needs of complex organizations handling a variety of sensitive assets
through technical, physical, or process-based means.

The purpose of conducting a red teaming assessment is to demonstrate how real world
attackers can combine seemingly unrelated exploits to achieve their goal. It is an effective
way to show that even the most sophisticated firewall in the world means very little if an
attacker can walk out of the data centre with an unencrypted hard drive. Instead of relying on
a single network appliance to secure sensitive data, it’s better to take a defence in depth
approach and continuously improve your people, process, and technology.

2.7Learning about catalysts and barriers of successful collaboration

What are the barriers to collaboration?

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Collaboration is one of those things we inherently feel is a good thing to do, and many of us
aspire to collaborate more. You find “collaboration” in the language of company values,
outcomes from team awaydays and personal development plans.

In practice we can find that there are often barriers to successful collaboration. Identifying
what these barriers are is usually the first step to removing any hurdles and driving easier
collaboration that has more impact.

There are a number of barriers to collaboration which commonly occur across different
organisations.

 Lack of time: Even though in many cases effective collaboration saves time,
ironically a lack of time is often a key reason why collaboration doesn’t happen. In-
house legal teams (and indeed most employees) are extremely busy and, simply don’t
have the time to set up the mechanisms for effective collaboration.

 Lack of scope and focus: It’s much easier to actually focus on a set goal, perhaps a
project or improving an inefficient process, and then have collaboration as a working
style or enabler to get that end goal. Having scope, focus and specific objectives gives
momentum to collaboration and generally leads to activity rather than vague
intentions.
 Organisational culture: Some organisational cultures lend themselves much better to
collaboration than others. There are a range of influences on culture which can make
collaboration more difficult. For example, where there is a strong risk culture, where
all time is recorded and non-chargeable time is (unofficially) frowned upon, and
where cost centres are encouraged to compete against each other, collaboration may
be less straightforward than it should be.

 People and politics: Sometimes it’s not the culture of your organisation, but an issue
with a function, a team, an individual or a relationship. Not everyone is up for
collaboration; personal preferences and office politics can also prove to be a barrier.

 Tools and facilities: Sometimes culture is not always the issue. There may be a real desire
to collaborate, but the tools you use or the facilities you have access to could be the culprit.

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 Perhaps you don’t have an effective meeting space to use, or your online collaboration
toolset is clunky, slow or so difficult to use that nobody really wants to use them? Usually if
the tool or facility is the barrier then there is usually at least a clear path to remedy the
issue.

 Confidentiality: The need for confidentiality, or concerns over confidentiality, is a real

barrier to collaboration, particularly when working with third parties or those external to
your organisation. Sometimes if it’s unclear or there is the potential for rules over
confidentiality to be broken, then people will be reluctant to collaborate. This is clearly a
major area for in-house legal teams where the majority of the work will be highly
confidential and sensitive.

 Proximity: It can be a challenge to collaborate across different locations and different time
zones. Although there are a lot of different tools which can help make remote collaboration
much easier, there are some people who still find virtual collaboration less successful than
face to face meetings and find the lack of proximity challenging.

2.8 Designing & Creating a negotiation plan

Here are nine steps to prepare for business negotiation:

1. Know Your Strategy: If your negotiation strategy isn’t clear to you, how can you
expect to enjoy results that benefit your company the most? If senior management
hasn’t made clear your strategy, which is sadly too often the case, make sure you ask.

2. Choose Your Negotiating Style: Will you lose the battle to win the war? Will you
compromise and meet in the middle? Might you compete to the bitter end? Make sure
to choose a style that best fits the circumstances.

3. Identify Goals: Do you want to maximize the short-term value or work to establish a
longer-term collaboration that grows in value over time? Is your goal to steal market
share at the expense of profit? Make sure to know what you want going in, instead of
settling for what you end up with.

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 4. Prepare A SWOT Analysis: A simple but often overlooked tool. Think of the real
external opportunities and threats as the walk-away positions on both sides. True
power in any negotiation is having developed a good walk-away alternative.
Understanding this point may not get you the deal you want, but it will prevent you
from agreeing to a lousy deal.

5. List Pre-Meeting Questions: I was once told while being trained by a mentor that
once you understand someone’s motivation, you are in control. In negotiations,
information is power. If you hope to get creative and stack the cards in your favor, it
pays to know everything you can about the other side’s decision-makers, underlying
interests, and walk-away position.

6. Compile Options/ Deal Design: Negotiations are an opportunity to get creative.

Work with your team and put together a comprehensive list of options to consider in
designing your deal. If you’re not comfortable with numbers, make sure someone on
your team is. Make sure to leverage your SWOT’s “Opportunities.”

7. Form A Trading Plan: Armed with information from your pre-meeting questions,
you are ready to start prioritizing your interests. What can you trade? What can you
get in return? Start with your most important interests or goals first. Our full Trading
Plan is too complex to explain in this article but is a very worthwhile read.

8. Set The Agenda: If you don’t set the negotiation agenda and take control early, the
other side likely will. Email your agenda before the meeting, and print a copy to use
during the talks. 

9. Build A Team: Avoid entering talks alone. Anyone who has ever been ganged up on
knows the dangers of feeling isolated. The same goes for preparing to negotiate. So,
it’s important to co-opt a colleague or two. Ensure that your negotiation team is clear
on your strategy and respective roles. Without clearly defining these aspects, you run
the risk of contradicting each other at the negotiating table and losing the upper hand.

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 MODULE 3

Tactics of Negotiation, Negotiation Stages & Phases

Contents

3.1Phases of actual negotiations: initial phase, exploratory phase and

finalization

3.2Rational and emotional elements of trust, cultural and psychological

differences of trusting people

3.2.1 4 Elements of Trust Needed for Successful Collaboration

3.2.2 Different Ways Of Building Trust Across Cultures

3.2.3 The psychology of trust 

3.3Tactics for promoting a constructive negotiation climate

3.3.1 Main negotiation tactics

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3.4Positions and interests in negotiations

3.4.1 Principles of Interest-Based Negotiation

3.4.2 Types of interests

3.5Negotiation scenarios: win-win, win-lose, lose-win, lose-lose

3.6The Thomas-Kilmann Conflict Mode Instrument in negotiations

3.7Leigh Thompson’s 5 negotiation mental models

3.1 The Negotiation Process

Negotiation process can be followed differently by different people at different situations.
The figure here describes the process in detail. Few processes may merge two or more steps
and represent them as one step whereas few other processes may break some step(s) into sub
steps.

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 Negotiation Process (Figure 1)

Stage 1
Planning the Negotiation (Pre-negotiation, Planning & Scheming, Agenda Setting)
This includes the pre-negotiation step in which the objectives are clearly set. Objectives will
include minimum expected outcomes, anticipated outcomes and the best possible outcomes.
The other party’s objective should also be considered before commencing the actual
negotiation. Planning is done in this step. A contingency plan will also be created at this stage
to overcome any unreasonable result. The risks associated with the success and failure of the
negotiation should also be considered. Multi-dimensional analyses of negotiations will lead to
stronger outcomes for both parties.

Stage 2
Exchanging of Information (Exchanging Offers, Matching and Reaching)
This step will reiterate the understanding of the other party’s goals clearly without ambiguity.
Clarity of objectives should be retained throughout the process. The concepts and ideas that
lead to the situation are exchanged. The origin of thought and expansion of concepts at this
stage will lead to the genesis of the process. This in turn will keep both the parties on the

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same page. Both the parties should consider the best possible concessions that could be
offered from
their sides. This will avoid a negotiation hitting a dead end. Alternative proposals can be
proposed in case the expectations of either party is not met. Usually this stage will make or
break the deal.
Stage 3
Closing the Negotiation (Ceasing Negotiation, Completing Activity, Post-negotiation)
In this concluding stage, the counter arguments will give way to closing the deal in a win–
win mode. Both parties will begin to stabilise their positions in the negotiation. Concessions
and agreements would be expressed clearly. This step calls for the final agreement to be in
written form in order to enhance the strength of the negotiation. If either party is completely
in disagreement during the negotiation process, it can be fully revisited from the pre-
negotiation stage.

3.2 Rational and emotional elements of trust, cultural and

psychological differences of trusting people
Rational trust is based on the process the customer follows to assess an organization’s
intention and ability to keep promises, by identifying guarantees in term of competencies, and
predictability of behaviors. Rational trust would include the following aspects: Knowledge,
Competence, Ability, Reliability, Predictability, Creditability and Dependability.

Emotional trust is based on the process the customer uses to evaluate a company according
to the qualities and characteristics that show concern and care as well as their willingness to
compromise beyond the profit motive. Emotional trust would include the following aspects:
Empathy, Feelings of security, Benevolence, Good will, Personal beliefs and Altruism.

Many sales and marketing executives have noted in non-published discussions that many
decisions are not rational. In fact, customer decisions probably consist of both rational and
emotional trust. A good example is the decision to purchase a car. The basic need is
transportation and yet the emotions often lead us (including me) to add many options that are
not easy to rationalize. The care of the salesman or the understanding of the service manager
will often play a significant role in supporting the trust. Thus, the trust developed during the
purchase of the car includes components of both rational trust (knowledge, reliability, etc.)

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demonstrated by the product and dealership and emotional trust (feelings of security,
empathy) provided by the salesman.

The bottom line is that trust is, as previously stated, the holy grail of relationship
management that every company seeks. We can call it customer satisfaction, loyalty, or any
of a number of names but it all boils down to trust. Do my customers trust me? That is the
real question we need to answer.

3.2.1 4 Elements of Trust Needed for Successful Collaboration

Trust creates a strong foundation in all relationships, whether business or personal in nature.
But when you look at the trust in each of your relationships, you may be surprised that the
central elements can be vastly different.

In a personal relationship, for example, compassion and understanding may be the most
important attributes of trust. While in a business relationship, competence may be at the top
of the list of must-haves in order to create a trusting relationship. The trust is the same, but
the precipitating factors can be vastly different.

When considering collaborative relationships, the four most common elements needed to
develop trust are competence, reliability, integrity and communication. Without any one of
these, it can be difficult to create the trust needed for a sustainable and successful
collaboration.

Competence – A collaborative relationship is doomed if there is a gross mismatch

of skills and experience that is brought to the table. All sides of a collaboration need
to have areas where they excel, and a general understanding of the rest. If one person

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 doesn’t have competence, it will become very difficult for the other person(s) to gain
trust in them and believe that they are a valuable addition to the collaboration.

Reliability – Although important in all relationships, reliability may play an even

bigger role in collaborative relationships. If one person in a collaboration repeatedly
falls short, misses deadlines or fails at following through, the others are likely to lose
trust in that person. Without having confidence that everyone is carrying his or her
own weight, it can be a challenge to maintain collaboration.

Integrity – Would you ever enter collaboration if there was a risk that someone was
going to swoop in, gather up all of the work, and present it as their sole project?
Neither would I.  If each person in collaboration doesn’t demonstrate integrity, there
will be a serious lack of trust that will make it impossible to work together.

Communication – Even if someone has demonstrated all of the other elements of

trust, if communication is missing, the rest doesn’t matter. Each side of collaboration
has to communicate often, clearly and honestly in order to develop mutual trust and
respect. Without communication, there can’t be a meeting of the minds, which is what
collaboration is based upon.

Measuring the trust in a relationship is a gauge of the potential that relationship has to
succeed, regardless of the elements that combine to create trust. In a collaboration where all
parties give equally and share in the victories, there must be mutual trust and understanding
of each other in order for the partnership to succeed.

3.2.2 Different Ways Of Building Trust Across Cultures

There are several fundamentally different ways that trust is built in different cultures, each
has its own methods and processes and they can be made to be compatible with careful
planning:

Transactional trust – In this form of trust building, the person building the trust will
think “This person is good at their job and has reliably delivered work for me in the
past, therefore I trust them” Essentially this person needs to have a working
relationship with their virtual colleagues, one where the colleagues can demonstrate

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 that they are capable and able to deliver the required work on time and to the right
quality. Only after that will the individual begin to trust their virtual partners.
Relational Trust – In this form of trust building, the person building the trust will
think “This is a nice person, I enjoyed working with them in the past, therefore I will
trust them” In this form of trust building, the individual needs to have a personal
relationship with their virtual colleagues, one that is built through spending time
together and getting to know one another, before they can start to trust that virtual
colleague in a working relationship.
“In Group” Trust – In this third form of trust building, the person building the trust
will think “This person comes from the same place as I do, we share a lot of common
experiences, language and history, therefore I will trust them”  In this form of trust
building, the individual feels at their most comfortable and trusting when they are
working with people who are like themselves, whether that is similar in terms of place
of birth, ethnicity, political perspective, socio-economic standing or whatever, once
they can identify someone as being like them, from the same “in group” they will
begin to trust them.

3.2.3 The psychology of trust 

How do psychologists and economists study trust? One of the most prevalent routes has been
via the trust game. In this game, two players sequentially send money to each other. The first
player can choose to place a large sum of money in the hands of the second player. Because
the second player is not obliged to reciprocate (and can keep all gains for herself), the
possibility of betrayal of the initial investment simulates many real-life situations involving
trust. The results of hundreds of studies with trust games have yielded fascinating insights
into the psychology and neurobiology of trust. For instance:

 The hormone and neurotransmitter oxytocin increases trust, likely by suppressing the

neural systems that regulate our fear of betrayal.

 When we feel negative emotions, we are less likely to trust others.

 We may base our decisions about whom to trust on their attractiveness, how much
they resemble our kin members, and their facial features. One study, for instance,
showed that males with relatively wider faces (a feature associated with testosterone)
were less likely to be trusted during the trust game.

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  Women tend to reciprocate their wealth in trust games more than men.

 People may have a “preconscious friend-or-foe mental mechanism” that helps them to

evaluate others during interactions (partners are trusted more than opponents).

 Genetic variation and heredity influence how people invest or reciprocate during trust
games.

 Trust in strangers increases from childhood to early adulthood, and then remains more

or less stable in adulthood.

 There are differences in levels of trust across cultures. For instance, Americans are
more trusting of others compared to the Japanese and the Germans during trust games.

3.3 Tactics for promoting a constructive negotiation climate

Negotiation tactics are purposely used or preliminary planned behaviour, directed to achieve
the main goals of negotiations. They are directed to:

Reinforce negotiating power

Gain some initial supremacy in negotiation
Collect not disclosable information
Make the other side emotionally disbalanced
Take control over the negotiation process

A constructive climate has four main attributes that you can deliberately work on to build a
situation where you can successfully work with others towards an agreeable conclusion.

1. Concerned – A basis of all negotiation is trust, and is particularly important in

constructive, collaborative negotiation. And perhaps the most under-rated yet powerful way
to trust is by showing active care and concern for the other person and their interests.

Concern starts with greetings, showing a genuine interest in the person. It continues during
the negotiation, seeking to understand and sympathize with their needs and constraints. It
does not mean that you become overly concessionary, giving in just because the other
person seems to need something more.

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2. Collaborative – Collaborative negotiation means working with the other person rather
than against them. It means being constructive, seeking to build rather than destroy. This is
in contrast with competitive methods that work on a zero sum, win-lose model. When you
work collaboratively with others, they are more likely to work collaboratively with you, both
now and in the future.

3. Brisk – Just because the negotiation is collaborative it does not mean discussions can
drift or delays be allowed to slow progress to a crawl. Always seek to keep things moving at
a steady pace, although without using this as a pressure technique.

Keep things brisk by breaking things down into bite-sized chunks and making note of each
success as it is achieved. This gives a shared sense of progress that feels good and creates a
desire to keep up the string of good feelings.

4. Focused – If you are moving briskly in the wrong direction then you will quickly get
nowhere. It is always important to keep your eye on the goal and move steadily in that
direction. This does not mean you cannot be social (which, done well, can be very helpful in
creating rapport).
To achieve focus, agree the overall purpose and specific goals of the meeting up-front, then
notice when the conversation is drifting and firmly but gently bring things back on topic.

3.3.1 Main negotiation tactics

The main tactics of negotiation are as follows:

1. To check the opponent resistant point/ reservation price/ maximum price

2. Aggressive
3. To gain positional advantage
4. To gain quantitative advantage (not equal exchange)
5. To dis-balance opponents emotionally

There are separate group of tactics, so called DIRTY or UNFAIR tactics often used in negotiations as
well.

1. To check the opponent resistance point/ reservation price/ maximum price:

a. Small steps – By adding a small improvement (step by step) to the first offer you are
reaching the maximum price of the other side they are willing to pay.

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 b. Best offer for the budget you have – Offer to disclose your budget/ maximum price:
“How much you can spend? We have the most suitable offer for you”.
c. Extreme position (Low ball/High ball) – Initial offer received is done in the manner and
under conditions to be unacceptable for the other side in order to provoke disclosure of
the other side real intentions (resistance point).
2. Aggressive:
a. First and Final offer (Ultimatum) – Requirement to accept the first offer (or second)
otherwise negotiation will be stopped.
b. Threat of termination – Requirement to accept offer or conditions under threatening to
terminate negotiations
c. “Best” offer (Tak it or leave it) – Explicit pressure not to enter into negotiations.
Statement that the best offer is done and there is nothing more to add to it
d. Attacks – Attacking you personally or attacking your company or your country. “Tell me,
why I usually enter into some problems when we have a meeting or I’m coming to your
country?”
3. To gain position advantage:
a. Hand over (“Hot potato) – To handover your problem to the oher side. “I have the
amount A but would like to have the thing B. Tell me, what I have to do?
b. Misleading (Snow ball) – Concentration on some not really important issues,
overloading the opponents with too much information.
c. Wrong target – Over evaluation of an argument or issue done on purpose to gain
concession in return. Not important concession is traded-off after hard bargaining.
d. Higher authority – Agreed issues or received offers have to be approved by the higher
management offer is done and here is nothing more to add to it.
e. Good cop/Bad cop – Deal with more sympathetic opponent while the other is absent or
excluded from negotiation.
f. Reluctance – Showing to the opponents that you are not interested or indifferent to
negotiated subject.
g. The sequence – Telling the other side that he or she has to do better in order to make
the other side to give concessions without getting something back. “Seems to be that
you are not eager to work on it. We’ve done a number of concessions and waiting for
your adequate move”.
4. To gain quantitative advantage (not equal exchange):

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 a. Split the difference – The split difference between initial proposals “has to be approved”
by one side’s higher authority. You set and split the lower difference again
b. Demand for reciprocity – Requirement to reciprocate by giving a concession or offer to
not important concessions made or offer given by the requesting side
c. Additional requirements – Not important requirements and arguments are exchanged
for important concessions. “If you can’t deliver the goods in 2 weeks than we need
additional discount of 2% to cover our stock management costs”.
d. Narrowing – Starting from easy to agree issues and narrowing the disagreement to the
most important one. “If we did all these, can’t we agree on this one?”
5. To dis-balance opponents emotionally:
a. Lost concentration (“Bus station”) – Permanently changes the environment through the
course of negotiations: changing negotiating team members, inviting numerous experts,
changing meeting places/rooms, stopping – starting negotiations because of different
“technical” reasons etc.
b. Overreaction – Not adequate emotional reaction to offers, concessions or arguments of
opponents. “You have to imagine me saying it to my boss. How I should explain such
your offer to him?”
c. Clarification – Permanently asking for clarification or additional substantiation of
position/argument/offer in order to minimize opponent explanatory power and increase
the chance of his mistakes.
d. Bad conditions – Disadvantageous seating arrangements (uncomfortable chairs,
opposite the windows etc.), very early/late meetings, noisy/disturbing environment etc.
e. Changing the agenda – Skipping some issues, jumping back and forth through agenda of
the meeting, including not agreed points to the agenda.
f. Overload – Overloading the other side with unnecessary, not important information,
(statistics, reports, presentations, site visits etc.) or hide piece of important information
in disproportional amount of non-important one. Send information on Friday afternoon
requiring an answer on Monday morning etc.

3.4 Positions and interests in negotiations

Negotiation is a communication process where you attempt to influence someone to give

you what you need or want in exchange for something you have that they need or want.
Negotiations are usually about situations or things that are tangible:

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 1. How people will get work done.
2. How people will be rewarded for their work.
3. The ground rules and norms people will establish in order to be able to work together.
4. The use of scarce resources like time, space, money, or equipment.

Interests and positions are not the same thing. A position denotes what each party
wants? from the negotiation. Interests are the underlying reasons why their demands are
important to them. Thus, a position may be a means to satisfy an interest, but a given
position is not necessarily the only, or even the best, way to do that. Put simply, positions
are negotiable; interests are not.

A position in a negotiation is a fixed idea, usually a demand that is the basis of the
conflict. Bargaining based on positions is thought of as win-lose because if you don't
walk away with what you wanted, you've lost. Whoever gets the biggest piece of the
mythical pie is the winner.
For example, in a negotiation between buyers and sellers, the buyers have a maximum
price they are willing to pay, and the sellers have a minimum price they are willing to
accept. These positions are usually inflexible unless another factor (i.e. delivery date) is
brought into the equation.

Interests in a negotiation are the underlying desires, needs, wants, and goals of a side. A
side's interests can be analyzed by asking, ''Why do you want that?''. Interests are so
crucial to a negotiation that there is even a style of negotiation called interest-based
negotiation. This style, also known as integrative bargaining, win-win, or principled
negotiation, was made popular by Roger Fisher and William Ury in their book Getting To
Yes. The goal of interest-based negotiation is to understand these underlying needs and
wants and find ways to build them into a resolution that helps both parties.
For example, in our purchase contract example, a few questions from the selling side
uncovers that the buyers need a quick delivery of the product due to an upcoming project.
There might be some flexibility in price or terms to compensate for receiving the goods
on the desired delivery date.

3.4.1 Principles of Interest-Based Negotiation

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 The primary principle of interest-based negotiations is to emerge or get a good
understanding of your and the other party’s interests and to develop or invent creative
options that will meet those interests. This approach increases the chance of establishing a
good relationship with the other party and achieving outcomes that are mutually
beneficial. Persuasive principles or criteria of fairness and legitimacy are used to establish
standards both parties can agree to. Having a good alternative to walk away from is
equally important. Finally, effective communication is absolutely critical.
Not every negotiation is successful. However, if you know that you have liveable
alternatives in the event the negotiation breaks down, you will have some “breathing
room” to enhance your confidence and competence in attempting to influence the other
party. Remember, that in interest-based negotiations power is used to influence and work
with people, not used against people. Our intention is to bring people their senses rather
than to their knees.
The interest-based negotiation model (Figure 2) begins with preparation, then leads to a
very specific process to reach a mutually beneficial solution. At any time conflict can
emerge either in the negotiation or in the preparation process as well. During preparation,
strong differences can lead to conflict with in your negotiation team. Obviously, it is
important to work out these internal differences before engaging in inter-team
negotiations. One of the most difficult and embarrassing situations a negotiator can
experience is sitting at the table with colleagues who disagree openly before the other
party.
Mutually Beneficial
Preparation Process
Solution

Conflict Resolution

Interest-Based Negotiation Model (Figure 2)

3.4.2 Types of interests

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“Interests” are the underlying reasons that a party in a negotiation may desire a certain
outcome as compared to the ultimate outcome which is generally referred to as a “position.”
Parties to a negotiation usually have multiple interests. Interests can be categorized as either:

Substantive interests
Process interests
Relationship interests
Interests in principals

1. Substantive interests – They are typically the items that are being negotiated.
Distribution of property, price, and raes are all examples of underlying interests of the
negotiation that can be classified as substantive.
2. Process interests – They are the parties desires to have a certain method or procedure
for deciding substantive issues. Some parties prefer collaborative bargaining and
desire a mutually beneficial agreement and some parties enjoy the competition of
distributive (win-lose) bargain. It is extremely important to select a process that will
facilitate the ultimate substantive, relational, and principle based interests. When
engaging in distributive bargaining a party may risk damaging a relationship.
Contrarily, when a party focus too much on soft negotiation they risk not achieving
the substantive interests.
3. Relationship interests – This involve one or more of the party having an interest in
the strength of the relationship. This is seen in negotiations between parties that are in
a personal relationship or family, but can also extend to the professional world where
parties will work together in the future. Often a symbiotic relationship exists where
the relationship is more important than the substantive interest. In this situation, both
parties want to refrain from distributive bargaining.
4. Interests in principals – The final type of interest involves interests in principals.
Many times an ultimate substantive interest is not as important as a person feeling like
they didn’t get taken advantage of. They value the deal being fair more than slanting
the outcome in their favour.

It is important in integrative bargaining to seek to identify both your interests and the
interests of the other parties through a free exchange of information. When the interests
are not known or understood, it becomes hard to seek solutions that will achieve the
interests of both parties.

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 3.5 Negotiation scenarios: win-win, win-lose, lose-lose

While many people think of negotiations as a competition where one side wins and the
other loses, in reality, negotiations involve a more complex mixture of winning and
losing. The outcome of almost all two party negotiations can be categorized as win-
lose (one party benefits to the detriment of the other), lose-lose (both parties are worse off
after the negotiation), or win-win (both parties come out ahead). If the negotiation fails,
no agreement has been reached and the parties are forced to seek alternative solutions.

Win-Lose

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 Frequently in a win-lose scenarios, both sides have attempted to win, without much regard
for the outcome of the other party. Both parties may have come into the the negotiation
with a desired goal and a "walk away" point. In a win-lose scenario, one party falls within
this target range (or even exceeds it) and the other party falls below their target range.

Notice that win-lose outcomes occur when the losing side can be pushed below their
“walk away” point. This can happen when the losing side doesn’t know what their best
alternative is to reaching an outcome in the negotiation, or where they keep negotiating
against their own interest. Many other factors, like coercion and asymmetric information
can also lead to win-lose outcomes.

Lose-Lose

In a Lose-Lose scenario either both parties concede bargaining positions outside their
target ranges. If the negotiators fail to reach an agreement, both parties may end up in
worse positions than when they started the negotiations, this is often included as a lose-
lose outcome.

If one or both parties can’t walk away from a negotiation, but are unwilling to make
concessions, both will be forced to deal with the poor consequences of not reaching an
agreement. Alternatively, both parties could be too quick to make concessions, reaching a
compromise that is fair, but detrimental to both sides. Likewise, if both parties are
mistaken about the benefits of what the other side is offering, they may reach an
agreement they later come to regret.

Win-Win

In a Win-Win scenario, both parties end up, at minimum, within their target ranges. This
could simply be reaching a fair middle ground that both parties benefit from, or it could
mean finding a creative new solution that improves the position of both parties.

If both parties come to the table with goals that are mutually compatible, there is a good
chance that the negotiation can result in a win for both sides. Of course, there is nothing
that prevents a negotiator from trying to press an advantage and push the other side into a
losing position, but there is a risk in that case that the other side will walk away from the
negotiation.
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 Win-win results are the most stable outcomes of negotiations; since both parties are happy
with the result, they have little reason to back out at a later time. Both parties have an
incentive to negotiate with each other again, laying the foundation for a mutually
beneficial working relationship.

3.6 The Thomas-Kilmann Conflict Mode Instrument in

negotiations
Dr. Kenneth W. Thomas and Dr. Ralph H. Kilmann on August 2015 introduced the
concept of TKI instrument in their book “The Joy of Having Created the TKI
Assessment!”
The Thomas-Kilmann Instrument is designed to measure a person’s behavior in conflict
situations. “Conflict situations” are those in which the concerns of two people appear to be
incompatible. Because no two individuals have exactly the same expectations and desires,
conflict is a natural part of our interactions with others. The TKI is an online assessment
that takes about fifteen minutes to complete. Interpretation and feedback materials help
you learn about the most appropriate uses for each conflict-handling mode.
One TKI Assessment Per person – Taking the TKI allows you to discover whether you
might be overusing or underusing one or more of five conflict-handling modes
(collaborating, competing, compromising, accommodating, and avoiding), so you can
improve how you manage conflict!
Two TKI Assessment’s Per Person – By taking one TKI specifically for INSIDE your
group and another TKI for OUTSIDE your group, you’ll discover how your leader, the
culture, and the reward system might be having undue influence on how conflict is being
managed in your group or team.
The Thomas-Kilmann Instrument has been the leader in conflict resolution assessment for
more than forty years. This instrument requires no special qualifications for
administration. It is used by Human Resources (HR) and Organizational Development
(OD) consultants as a catalyst to open discussions on difficult issues and facilitate learning
about how conflict-handling modes affect personal, group, and organizational dynamics.
The TKI is also extensively used by mediators, negotiators, and many practitioners in the
coaching profession (executive coaches, career coaches, business coaches, life coaches,
etc.).

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 In such conflict situations, we can describe an individual’s behavior along two
dimensions: (1) assertiveness, the extent to which the person attempts to satisfy his own
concerns, and (2) cooperativeness, the extent to which the person attempts to satisfy the
other person’s concerns.
These two underlying dimensions of human behavior (assertiveness and
cooperativeness) can then be used to define five different modes for responding to
conflict situations:

The Thomas‐Kilmann Conflict Mode Instrument (TKI) is a commonly used psychological

assessment tool. The TKI measures the five conflict management facets proposed by the
Dual Concerns Model: competing, collaborating, compromising, accommodating, and
avoiding.

1. Competing is assertive and uncooperative — an individual pursues his own concerns

at the other person’s expense. This is a power-oriented mode in which you use
whatever power seems appropriate to win your own position—your ability to argue,

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 your rank, or economic sanctions. Competing means “standing up for your rights,”
defending a position which you believe is correct, or simply trying to win.
2. Accommodating is unassertive and cooperative — the complete opposite of
competing. When accommodating, the individual neglects his own concerns to satisfy
the concerns of the other person; there is an element of self-sacrifice in this mode.
Accommodating might take the form of selfless generosity or charity, obeying another
person’s order when you would prefer not to, or yielding to another’s point of view.
3. Avoiding is unassertive and uncooperative — the person neither pursues his own
concerns nor those of the other individual. Thus he does not deal with the conflict.
Avoiding might take the form of diplomatically sidestepping an issue, postponing an
issue until a better time or simply withdrawing from a threatening situation.
4. Collaborating is both assertive and cooperative — the complete opposite of avoiding.
Collaborating involves an attempt to work with others to find some solution that fully
satisfies their concerns. It means digging into an issue to pinpoint the underlying
needs and wants of the two individuals. Collaborating between two persons might
take the form of exploring a disagreement to learn from each other’s insights or trying
to find a creative solution to an interpersonal problem.
5. Compromising is moderate in both assertiveness and cooperativeness. The objective
is to find some expedient, mutually acceptable solution that partially satisfies both
parties. It falls intermediate between competing and accommodating. Compromising
gives up more than competing but less than accommodating. Likewise, it addresses an
issue more directly than avoiding, but does not explore it in as much depth as
collaborating. In some situations, compromising might mean splitting the difference
between the two positions, exchanging concessions, or seeking a quick middle-ground
solution.
Each of us is capable of using all five conflict-handling modes. None of us can be
characterized as having a single style of dealing with conflict. But certain people use some
modes better than others and, therefore, tend to rely on those modes more heavily than
others—whether because of temperament or practice.
Your conflict behavior in the workplace is therefore a result of both your personal
predispositions and the requirements of the situation in which you find yourself. The
Thomas-Kilmann Instrument is designed to measure your use of conflict-handling modes
across a wide variety of group and organizational settings.

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3.7 Leigh Thompson’s 5 negotiation mental models

The negotiation did not begin with each party sizing up the other and presenting offers
accompanied by PowerPoint decks flanked by attorneys and senior executives. Quite the
opposite. Disney chief Bob Iger and 21st Century Fox chairman Rupert Murdoch were
drinking wine at Murdoch’s Moraga Estate winery in Bel Air, and discussing disruptive
internet trends impacting their respective television and film companies. In this meeting,
they realized that they shared much in common. A few weeks later, Iger called Murdoch to
explore a merger. Given how well the two had connected over wine, Murdoch was
interested. The two chiefs met in secret, without PowerPoint presentations, and teams of
senior executives at both companies were strategically left out of the loop. The negotiations,
like the wine get-together were smooth, cordial and informal. Two months later, Iger and
Murdoch stood arm-in-arm atop a London skyscraper to announce their intention to
construct a $52.4 billion acquisition deal.

Negotiation skills are increasingly important for managers. There are several reasons for this,
including: the knowledge economy, specialized expertise, information technology, and
globalization.

1. Knowledge Economy

Most businesses and industries today were not in existence 10–20 years prior. According to
the Bureau of Labor Statistics, more than 70,000 businesses have developed since 2010. In
the last five years, more than 15 startup companies, including Compass, Instacart, Carbon3D,
OpenDoor, Avant, and Blue Apron grew from nothing, and are now worth billions. Many
companies have disrupted traditional business models, spurring managers to reinvent
themselves as knowledge brokers in the information economy. Because the nature of
knowledge work changes rapidly, managers of all ages are continuously negotiating their
professional identity, acquiring new skills, and moving into new jobs, industries, and
markets. Most people do not stay in the same job that they take upon graduating from college
or receiving their MBA degree.

Millennials are the largest group of professionals in the workforce. A large-scale LinkedIn
study reported that millennials change jobs four times (churns) in their first decade out of

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college, compared to two job changes by Gen Xers in that same time period. LinkedIn
examined its 500 million users, and looking back 20 years, found that churn is accelerating,
especially in certain industries. A long-term study of baby boomers by the Bureau of Labor
Statistics revealed that people held an average of 11.7 jobs between age 18 and 48; 27% were
prone to “hop,” defined as having 15 or more jobs over a career; and 10% held 0–4 jobs.
What is changing is the stigma associated with job-hopping. Many career coaches encourage
millennials to change jobs every 3–4 years. The job-hopper is not simply in pursuit of higher
wages; they are willing to take pay cuts for the right job in a positive work culture and career
growth. Millennials are getting married and having children later than previous generations,
and thus, relocation is doable and often desirable.

2. Specialized Expertise

The advent of decentralized business structures and the absence of hierarchical decision
making provide opportunities for managers, but also pose some daunting challenges. People
must continually create possibilities, integrate their interests with others, and recognize the
inevitability of competition both within and between companies. Managers must be in a near-
constant mode of negotiating opportunities. Negotiation comes into play when people
participate in joint ventures, partnerships, product launches, reorganizations, and project
teams.

The increasing interdependence of people within organizations, both laterally and

hierarchically, implies that people need to know how to integrate their interests and work
across business units and functional areas.

For example, when Walmart realized that their hierarchical, lumbering internal culture did
not allow them to offer a responsive online retail presence, they recruited Jet.com founder
Marc Lore to run Walmart’s entire domestic e-commerce operation. Upon his arrival, a series
of internal negotiations began surrounding how Walmart could shift its business model, yet
still honor the founding principle of value to their customers. Lore recognized the
interdependence between the brick and mortar marketplace and the online marketplace and
integrated both sectors’ interests through creative internal negotiation.

The increasing degree of specialization and expertise held by businesspeople indicates that
people are more and more dependent on others. However, other people do not always have
similar incentive structures, so managers must know how to promote their own interests

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while simultaneously creating joint value for their organizations. This balance of cooperation
and competition requires negotiation. For example, Cheng Wei, founder and CEO of Didi
Chuxing, was in a cooperative relationship with legendary investor Masayoshi Son, when
Son wanted to invest in Wei’s company; but when Wei refused Son’s investment, thereby
creating a competitive situation in which Son threatened to instead invest in a rival company.
Ultimately, Wei relented and took the $5 billion investment for the tech startup.

3. Information Technology

Information technology also provides special opportunities and challenges for negotiators.
Information technology has created a culture of 24/7 availability. With technology that makes
it possible to communicate with people anywhere in the world, managers are expected to
negotiate at a moment’s notice. Because customers expect companies to be accessible to them
24/7, businesses have reimagined how to respond quickly. For example, in 2016, only 2
million businesses were on Instagram; in 2017, 25 million had accounts, and over 80% of
Instagram users voluntarily connect with these business accounts. Conversely, people who
are not online feel the pressure to perform when they finally do log back on. For example,
Arianna Huffington, founder of The Huffington Post, promised her daughter that during her
college tour she would not check her smartphone. Huffington kept her promise, not turning
on her smartphone during the tour, but while her daughter slept in the hotel room that night,
she admitted to staying up all night answering e-mails and making sure she didn’t miss
anything from the few hours she took off.

4. Globalization

Most managers must effectively cross cultural boundaries to do their jobs. Setting aside
obvious language and currency issues, globalization presents challenges in terms of different
norms of communication. Chip Starnes, cofounder of Specialty Medical Supplies, learned a
harrowing lesson in cultural fit when he showed up at his factory near Beijing, China, to
deliver severance payments for 30 workers laid off when Starnes moved a company division
to Mumbai, India. The remaining 100 employees, convinced the entire factory would be
closed, demanded severance and barricaded Starnes inside the plant for 6 days. Cases of
managers being held captive by dissatisfied workers, while police look the other way, is not a
rare circumstance in China, a cultural fact that Starnes certainly learned. After accepting the
workers’ demands—giving 97 workers 2 months’ salary and compensation, and rehiring the

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previously laid-off workers on new contracts—Starnes was released. Most notably, Starnes
was able to learn from his leadership failure and developed a new product to manufacture in
Shenzhen.

Managers need to develop negotiation skills that can be successfully employed with people of
different nationalities, backgrounds, and personalities. Consequently, a negotiator who has
developed a bargaining style that works only within a narrow subset of the business world
will suffer, unless they broaden their negotiation skills to effectively work with different
people across functional units, industries, and cultures.24 It is a challenge to develop
negotiation skills general enough to be used across different contexts, groups, and continents,
but specialized enough to provide meaningful behavioral strategies in a given situation.

MODULE 4

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 Negotiation Styles & Strategies
Contents

4.1 Persuasion techniques

4.2 Instruments of negotiations

4.2.1 Types of Negotiable Instruments

4.2.2 The Negotiable Instruments (Amendment) Bill, 2017

4.3 The role of outside actors in negotiations: the media and interest groups

4.4 Finalization: overcoming impasse

4.4.1 Proven Ways to Break an Impasse

4.5 Reaching an agreement, types of agreements

4.5.1 Types of Agreement

4.6 Negotiation strategies

4.7 Positional bargaining

4.7.1 Why is Positional Bargaining Important?

4.7.2 Can Positional Bargaining Be Good?

4.8 Principled negotiations by Roger Fisher and William Ury

4.8.1 Elements of Principled Negotiation

4.9 Mixed negotiating by Willem Mastenbroek

4.10 3-D Negotiation by David Lax and James Sebenius Interim assessment: colloquium

4.10.1 3D Audit and Strategy

4.1 Persuasion techniques

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There are 8 persuasion techniques that most successful people & famous businesses use.
These persuasion techniques work on the sub-consciousness, and can yield top-notch results,
if understood and used properly. 

1. Foot in the Door

Principle: The foot in the door principle means that prior to asking for a big favor, you
should ask for a smaller one. By first asking for something small, you’re making the
individual “committed” to helping you, and the larger request acts as a continuation of
something technically already agreed upon.

Real-life Application:
A tourist asks you for directions. As a follow-up, they say they might get lost and ask
you to walk them there. You’re more likely to agree to that, than if they straight-off
asked the second question.
You missed a class and asked your classmate for their notes. Subsequently, you admit
to have been a tad irresponsible this semester and ask for the notes for the entire
semester. By first asking for the small favor, you increase your chances of getting the
big one – namely, a free-ride on your classmate’s notes.
You just failed an important midterm and the professor doesn’t offer retakes. You
decide to ask for feedback on your work and why you failed, followed by a request
for a retake. You’re more likely to succeed in such a scenario, as opposed to directly
asking for a retake.

2. Door in the Face

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Principle: Say, would you mind running around the streets naked yelling how awesome
this article is? No? Well, could you at least share it with your friends on Facebook?
Door in the face is the opposite of the previously mentioned persuasion technique. First, you
ask for something huge they are not going to agree with, then ask for
something contrastingly easier.

Real-life Application:
You ask a classmate to tutor you on that upcoming midterm in Advanced Statistics.
Oh, and you haven’t studied at all up to now. The classmate apologizes, saying that
they just don’t have the time. And besides, they’ve never even seen you before. Your
follow-up request for their notes is, however, granted.
You ask your friend to lend you 100$. After the “No,” you ask “can I at least have
20$?”
A supermarket has a policy of asking for donations to a charitable cause before asking
the customer for payment. Most customers wouldn’t donate, but if the cashier asks
them to make a $100 donation and then asks “how about just 5$,” the number of
donations rises exponentially.

3. Anchoring

Principle: Anchoring is a cognitive bias present in most decision making. How do you know
what product is “good,” for example? You compare it to a similar product and make a
decision from there.
This technique has a lot of different uses, one of the most-used being pricing. Anchoring, if
used properly, can be a powerful persuasion technique.
Real-life Application:

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  You’re looking to buy a new car, and come across an OK deal for 10,000$. You
bargain with the salesman and manage to lower the cost to 7,000$. You go home
satisfied & contempt, thinking how much of a bargain it was. The actual value for the
car, however, was lower than 7,000$. The initial price of 10,000$ acts as an anchor,
so you’ll perceive anything lower than that as a “good deal.”
 You just got a new job offer, with an initial offer of 2,000$ per month. You negotiate
it to 2,200$. Again, as with the previous example, you may be getting low-balled.
While a 10% increase over the initial offer may seem attractive, it might still be lower
than your actual value.

4. Commitment & Consistency

Principle: People are prone to be consistent in their actions and beliefs. If you make a person
commit to something small, you could use the initial commitment to influence them into
doing more for you.

Real-life Application:
 Most of the time, you buy the same brands over and over. When was the last time you
tried a new snack or drink?
 “Can you do me a favor?” “Sure.” “Could you get me a beer from the store?” as
opposed to, “Hey could you etc.”
 You’ve probably heard of how goal setting can help with productivity. The concept is
something rarely ever left out of a self-help book. The reason why this is effective is

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 because of consistency: you’re more aware that this is what you want and
should strive for when you’ve written it down.
 Let’s say you work at an NGO and you’re collecting money for a certain cause.
Before asking for donations, you can ask the person whether they support the cause.
If the cause is just, they’ll most definitely answer positively. By asking such a
question first, you’re more likely to receive donations.

5. Social Proof

Principle: Most of your friends choose this article for persuasion-based advice. You should
too. “Everyone believes this, so it must be true.”
Social Proof is one of the most noticeable persuasion techniques. It doesn’t take much to
notice that in most social groups there is a high level of groupthink. Someone mentions an
idea, and everyone just goes with it – even if they all disagree with it. When making a
decision, people look at what their peers do, and act in a similar fashion.

Real-life Application:
 If you have an empty tip jar at your work, you might consider filling it up a bit before
beginning the shift. Customers are more likely to tip if they see a filled tip jar rather
than an empty one – other people tip, so I should probably do the same
 There is a greater chance you might like a Facebook post if it already has a lot of
likes, as opposed to a post with zero likes.
 The reason most people take up smoking is social proof. Everyone smokes, thus you
should smoke too – despite all the health concerns and horrendous taste it comes
with.

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 6. Authority

Principle:*Persuasion Experts* and 9 out of 10 Jedi think this article is the best source of
persuasion-related advice. People look up to authority in any field or subject, thus making
yourself seem as a source of authority can take you long way.

Real-life Application:
 Most start-ups or smaller companies put an “as seen on” logo on their landing pages,
if they’ve been featured on major media websites. If a company was
on Techcrunch, for example, then it means they’re kind of a big deal, as Techcrunch
don’t cover just anyone.
 Product X won the best iOS app for 2015
 9/10 dentists think that a specific brand of toothpaste is the best one out there. It also
provides clean drinking water to third world countries. And cures cancer.
 Agencies tend to mention their previous clients on their landing page. This is
especially true if they’ve worked with big companies

7. Scarcity

Principle: This article expires in the next five seconds, unless you share it on Facebook.
Scarcity is one of the most-used persuasion techniques used by salesmen and marketers.
People tend to want more of things which are in low supply. If you convince an individual
that something is only available for a limited time, or is in limited supply, they’re more
likely to want it.

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Real-life Application:
 Booking.com never fails to point out how there’s only 2-3 rooms left in that hotel, or
how 20 other people are also looking at the same hotel.
 Any product which is LIMITED TIME ONLY DISCOUNT GOING TO
CHANGE YOUR LIFE BUY IT NOW.
 Digital marketers use scarcity by offering their products once a year, for a specific
time period, while stressing on how the product is a limited time offer. In a similar
manner, offering a discount, but attaching a timer, or validity date to it. The more
you stress on how limited the product is, the higher the conversion rate.
 Let’s say you’re a door to door salesman. You can pretty much go wild with this
persuasion technique. For example, you could say that you’re only in the area for the
day or that you’re doing a special, never-to-be-seen-again promotion. Meaning, the
customer won’t be able to purchase the product at any other later date.

8. Reciprocation

Principle: People tend to feel obliged to return favors. Regardless of whether the person
likes the gift, they’re still inclined to give something in return. Having someone feel
indebted to you is something that will always be useful, raising your chances of receiving
something you want exponentially.

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Real-life Application:
 Let’s say you’re raising money to help orphans find a new home. Before looking for
potential donors, you could make a small event where the kids make bracelets out of
different materials (in a fun way, not the child-labor kinda way). Prior to asking for a
donation, you could give away the bracelet, making the potential donor feel
indebted.
 If I had asked you to share this article at the introduction, you probably wouldn’t do
it. Now that you’ve learned all sorts of useful persuasion techniques, as well as
different case studies, you’re more likely to do so. Right?

4.2 Instruments of negotiations

Negotiable Instruments are written contracts whose benefit could be passed on from its
original holder to a new holder. In other words, negotiable instruments are documents which
promise payment to the assignee (the person whom it is assigned to/given to) or a specified
person. These instruments are transferable signed documents which promise to pay the
bearer/holder the sum of money when demanded or at any time in the future.
As mentioned above, these instruments are transferable. The final holder takes the funds and
can use them as per his requirements. That means, once an instrument is transferred, holder of
such instrument obtains a full legal title to such instrument.
Acc. To Justice Willis, a negotiable instrument is “one in which the property is acquired by
anyone who takes it bonafide and for value not withstanding any defects of title in the person
from whom he took it.”

KEY TAKEAWAYS

 A negotiable instrument is a signed document that promises a sum of payment to a

specified person or the assignee.

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  Negotiable instruments are transferable in nature, allowing the holder to take the
funds as cash or use them in a manner appropriate for the transaction or according to
their preference.
 Common examples of negotiable instruments include checks, money orders, and
promissory notes.

4.2.1 Types of Negotiable Instruments

1. Promissory notes – A promissory note refers to a written promise to its holder by an

entity or an individual to pay a certain sum of money by a pre-decided date. In other
words, Promissory notes show the amount which someone owes to you or you owe to
someone together with the interest rate and also the date of payment.

Essential characteristics of the promissory note:

It is an instrument in writing.
It is a promise to pay.
The undertaking to pay is unconditional.
It should be signed by maker.
The maker must be certain

For example, A purchases from B INR 10,000 worth of goods. In case A is not able to pay
for the purchases in cash, or doesn’t want to do so, he could give B a promissory note. It is
A’s promise to pay B either on a specified date or on demand. In another possibility, A might
have a promissory note which is issued by C. He could endorse this note and give it to B and
clear of his dues this way.

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However, the seller isn’t bound to accept the promissory note. The reputation of a buyer is of
great importance to a seller in deciding whether to accept the promissory note or not.

2. Bill of exchange – Bills of exchange refer to a legally binding, written document

which instructs a party to pay a predetermined sum of money to the second (another)
party. Some of the bills might state that money is due on a specified date in the future,
or they might state that the payment is due on demand.

A bill of exchange is used in transactions pertaining to goods as well as services. It is signed

by a party who owes money (called the payer) and given to a party entitled to receive money
(called the payee or seller), and thus, this could be used for fulfilling the contract for
payment. However, a seller could also endorse a bill of exchange and give it to someone else,
thus passing such payment to some other party.

It is to be noted that when the bill of exchange is issued by the financial institutions, it’s
usually referred to as a bank draft. And if it is issued by an individual, it is usually referred to
as a trade draft.

A bill of exchange primarily acts as a promissory note in the international trade; the exporter
or seller, in the transaction addresses a bill of exchange to an importer or buyer. A third party,
usually the banks, is a party to several bills of exchange acting as a guarantee for these
payments. It helps in reducing any risk which is part and parcel of any transaction.

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 3. Cheques – A cheque refers to an instrument in writing which contains an
unconditional order, addressed to a banker and is signed by a person who has
deposited his money with the banker. This order requires the banker to pay a certain
sum of money on demand only to the bearer of cheque (person holding the cheque) or
to any other person who is specifically to be paid as per instructions given.

Cheques could be a good way of paying different kinds of bills. Although the usage of
cheques is declining over the years due to online banking, individuals still use cheques for
paying for loans, college fees, car EMIs, etc.  Cheques are also a good way of keeping track
of all the transactions on paper. On the other side, cheques are comparatively a slow method
of payment and might take some time to be processed.

4.2.2 The Negotiable Instruments (Amendment) Bill, 2017

The Negotiable Instruments (Amendment) Bill, 2017 has been introduced in the Lok Sabha
earlier this year on Jan 2nd, 2018.  The bill seeks for amending the existing Act. The bill
defines the promissory note, bill of exchange, and cheques. The bill also specifies the
penalties for dishonor of cheques and various other violations related to negotiable
instruments.

As per a recent circular, up to INR 10,000 along with interest at the rate of 6%-9% would
have to be paid by an individual for cheques being dishonored.

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The Bill also inserts a provision for allowing the court to order for an interim compensation
to people whose cheques have bounced due to a dishonouring party (individuals/entities at
fault). Such interim compensation won’t exceed 20 percent of the total cheque value.

4.3 The role of outside actors in negotiations: the media and

interest groups
4.4 Finalization: overcoming impasse
As negotiations proceed, Parties sometimes reach an impasse -- often not due to overt
conflict, but rather due to resistance to workable solutions or simply exhaustion of creativity.
While the impasse might signal that the dispute is unresolvable in mediation, the mediator
may believe that a workable agreement is still possible. Below are some techniques to get
negotiations moving.

Always remember: The goal isn't to overcome impasse per se, but to help the Parties analyse
and negotiate constructively. The Parties are free to stick with a position -- there may be a
legitimate reason for impasse, and it's not your job to pressure the Parties into a settlement!

1. Take a break. Often, things have a way of looking different when you return.

2. Ask the Parties if they agree to set the issue aside temporarily and go on to something else
- preferably an easier issue.

3. Ask the Parties to explain their perspectives on why they appear to be at an impasse.
Sometimes, the Parties need to feel and focus consciously on their deadlock.

4. Ask the Parties, "What would you like to do next?" and pause expectantly. Or, say
"frankly, it looks like we're really stuck on this issue. What do you think we should do?"
These questions help the Parties actively share the burden of the impasse.

5. Ask each Party to describe his/her fears (but don't appear condescending and don't make
them defensive).

6. Try a global summary of both Parties' sides and what they've said so far, "telescoping" the
case so that the Parties can see the part they're stuck on in overall context. Sometimes, the
impasse issue will then seem less important.

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7. Restate all the areas they have agreed to so far, praise them for their work and
accomplishments, and validate that they've come a long way. Then, ask something like: "do
you want to let all that get away from you?"

8. Ask the Parties to focus on the ideal future; for example, ask each: "where would you like
to be [concerning the matter in impasse] a year from now?" Follow the answers with
questions about how they might get there.

9. Suggest a trial period or plan; e.g., "sometimes, folks will agree to try an approach for six
months and then meet again to discuss how it's working."

10. Help the Parties define what they need by developing criteria for an acceptable outcome.
Say: "before we focus on the outcome itself, would you like to try to define the qualities that
any good outcome should have?"

11. Be a catalyst. Offer a "what if" that is only marginally realistic or even a little wild, just to
see if the Parties' reactions gets them unstuck.

12. Offer a model. Say: "sometimes, we see Parties to this kind of dispute agree to something
like the following . . . ."

13. Try role-reversal. Say: "if you were [the other Party], why do you think your proposal
wouldn't be workable?" or "if you were [the other Party], why would you accept your
proposal?"

14. Another role-reversal technique is to ask each Party to briefly assume the other's role and
then react to the impasse issue. You also can ask each Party to be a "devil’s advocate" and
argue against their own position.

15. Ask the Parties if they would like to try an exercise to ensure they understand each other's
position before mediation ends. Ask Party A to state his/her position and why, ask Party B to
repeat what B heard, and then ask A if B's repetition is accurate. Repeat for B. Listen and
look for opportunities to clarify.

16. Ask: "what would you be willing to offer if [the other Party] agreed to accept your
proposal?"

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17. Use reality-checking. For example, "what do you think will happen if this goes to court?"
Draw out the emotional, financial, and other costs of litigation and delay.

18. If all else fails, suggest (or threaten) ending the mediation. Parties who have invested in
the mediation often won't want it to fail, and may suddenly come unstuck. This approach is
useful where one Party may be hanging on because he/she enjoys the attention the process
provides, or enjoys the other Party's discomfort.

4.4.1 Proven Ways to Break an Impasse

The “trick” to breaking an impasse knows how to reopen talks gracefully, without loss of face
or bargaining power. Effective negotiation techniques appeal to the self – interest of both
parties, and allow them to find a way to continue a discussion involving new ideas and
solutions. The 5 proven ways to break an impasse are:

1. The Gradual Approach – One way to break an impasse when the differences
are very large is to do it by bit. Generally, parties find it easier to agree on one
thing rather than a large number of issues.

2. The Bookkeeping Technique – In the bookkeeping technique, a

“bookkeeper” writes down a complete “score” of both settled and unsettled
issues, starting with what issues have been agreed to, followed by what issues
are still open, and lastly what issues are in disagreement. This allows the
parties to focus their attention on what already has been accomplished, which
ultimately reduces the tension.
3. Move from the Sticky Issue – Shifting talks to other issues is a good way to
keep the momentum of a negotiation going. The more points the parties agree
on, the greater the chances of a settlement.
4. Use a Mediator – Bringing a third party to the negotiation table is a good way
for both sides to discover a face-saving way to resolve differences.
5. Changes the Negotiator – Sometimes breakdowns in negotiations occur due
to personality clashes – the negotiators just don’t like each other. By changing
the negotiator and/or the team, a new perspective can be brought to the table
and the talk can thus change direction.

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4.5 Reaching an agreement, Types of agreements
To achieve some accord, settlement, or compromise (with someone), especially after a period
of debate, argument, negotiation, etc.
Agreements are an integral part of the business. Every business will have several Types of
agreements in place for the smooth functioning of the organization and processes. These
Types of Agreements also help in dealing with scenarios of difficulty. Agreements are also
known as contracts in which there are two or more parties involved and they both are bound
by agreement enforced by law.
4.5.1 Types of Agreement
The 20 types of agreement are as follows:
1. Express agreement or Express contract – The agreement in which all the
terms and conditions of all the parties that are involved in winning clearly and
explicitly specified is called Express agreement. Express agreement or
contract is also termed as special agreement and all of the terms and
conditions are clearly stated in it.
2. Partnership agreement – It is an agreement in which two or more partners
spell out the relation and individual obligation along with their contributions
to the business which is mutually agreed upon. Partnership agreements are
very common in every organization.
3. Indemnity agreement – Indemnity literally translates to hold harmless.
Therefore, an agreement in which one party explicitly agrees to indemnify
another person or party or parties for damages that may result from an
agreement is called indemnity contract or indemnity agreement. An example
would be a pet store owner would ask the pet store workers to sign an
indemnity agreement to prevent legal problems if a pet bites the worker in any
case. The worker may still be covered with medical expenses from the
employer but this is to avoid the lawsuit of hurting the employee on purpose.
4. Non-disclosure agreement – A non-disclosure agreement empowers the
business owners with legal status if any of the parties involved in the
organization share any kind of proprietary or confidential trade information to
anyone or any party outside the organization. A non-disclosure agreement is
also signed by many employees working for various organizations.

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 5. Purchase order – It is a legal and forced agreement that ensures a business
owner or a company to purchase the said item in the given quantity for a price
which is mutually agreed upon with specific terms and conditions for the
delivery and payment. Purchase orders are common in sales and many
organizations issue a purchase order to avoid for the dispute. It is the job of the
sales team to get purchase orders from their customers. In some cases,
even customer service may help to get the purchase order.
6. Property and/or equipment lease – This agreement will ensure monthly
payment deposits and other terms and conditions for the disease of a building
a piece of land or an equipment. It is generally agreed upon that equipment
and properties is covers the maintenance charges with the party who has
leased the equipment.
7. Bill of sale – It is perhaps the most commonly used agreement
by people involved in businesses and non-businesses alike. It is a legal
document that transfers title of property or a product and serves as an evidence
for the terms of sale between the seller and the customer.
8. General employment contract – It is an agreement which jots down the
relation between the employer and the employee, the remuneration, the
benefits, terms and conditions, job description and any other issues that relate
the employee to the workplace. All the organizations have a gentle
employment contract to enrol any employee.
9. Security agreement – A security agreement is one which the borrower
pledges to keep an asset of any kind as collateral to get a loan from the lender.
It comes with the condition that in case the borrower is not able to pay the
principal amount, the lender may transfer the ownership of the asset
mentioned in the agreement, to him.
10. Independent contractor agreement – The supplements for people who are
working individually as a contractor. This agreement is between two people
one of which works as an individual and independent contractor who provides
a particular service to the other person. The agreement without terms and
conditions which delete both the hiring person and the individual contractor.
11. Non-compete agreement – This agreement specifies that for a specific period
of time, after leaving an organization the employee is prohibited in any way,
to compete with the organization getting involved with any such organization

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 that competes with the earlier organization. Usually, a General Employment
contract will have with Non-Compete Agreement and Non-disclosure
agreement together for employees.
12. Executor Agreement – An agreement drawn upon by two or more parties in
which the terms and conditions are agreed upon mutually and a date is decided
for the fulfilment is called executor contract. The contact and shows that both
the parties involved have obligations to complete the order for the contract to
fulfil the terms and conditions.
13. Bilateral agreement – It is an agreement in which there mutual understanding
between the parties that are involved is and each of them promises to
implement an action in exchange for other parties’ action.
14. Unilateral Agreement – Unilateral contract or agreement is when only one
party makes an un-asserted promise or ensures to fulfil
the performance without obtaining other exchanged agreement from the other
party. Only one party is exclusively involved in the unilateral agreement. The
promises are fulfilled without the involvement of the second party.
15. Unconscionable Agreement – A contract that is entirely based on one side of
the participating parties which in turn is unfair to the other party or parties and
therefore is unenforceable under the terms of law is called unconscionable
contract are agreement. This type of agreement is entirely uneven and does not
favor other parties in any way thus ensuring disagreement from the other
parties.
16. Adhesion agreement – When one participating party in the contract has all
the leverage along with additional bargaining power, and the agreement is
legally binding to all of the parties involved in it for executing of a specific
thing or process while it is used to create the contract to benefit all of them is
called Adhesion agreement.
17. Promissory Note – It is a legal record of the loan wherein the parties involved
agree that a certain amount is borrowed and is to be returned on an agreed
date. In other words, the promissory note is a legally enforced document
which says ‘I owe you’ a certain amount of money or services.
18. Stock Purchase Agreement – It is an agreement to sell a certain stock, in pre-
decided quantity by all the participating parties, to a specified individual. The
individual would owe the organization payment on agreed terms and agreed

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 price. Post completion of Stock Purchase Agreement, the parties may either
extend or terminate contract thereby taking back all the unsold stock, if any.
19. Transfer Agreement – They are also known as ‘transfer from a sole
proprietorship to a limited company transfer agreement’. These are usually
executed in order to transfer a business from an individual owner to a
company. Transfer agreements are extremely complicated owing to the
ownership and segregation of assets and liabilities.
20. Joint Venture Agreement – When two or more companies agree to pool and
share all the resources and profits at a pre-decided percentage is called a Joint
Venture Agreement. This agreement facilitates the mutual benefit of both the
parties involved. Joint venture pools resources and reduces risk while shares
challenges. Joint ventures are great when an organization is expanding in a
new country.

4.7 Positional bargaining

What is Positional Bargaining?

Positional bargaining is a negotiation strategy that involves holding on to a fixed idea, or
position, of what you want and arguing for it and it alone, regardless of any underlying
interests. The classic example of positional bargaining is the haggling that takes place
between proprietor and customer over the price of an item. The customer has a maximum
amount she will pay and the proprietor will only sell something over a certain minimum
amount. Each side starts with an extreme position, which in this case is a monetary value, and
proceeds from there to negotiate and make concessions. Eventually a compromise may be
reached. For example, a man offers a vendor at the flea market $10 for a rug he has for sale.
The vendor asks for $30, so the customer offers $15. The merchant then says he will accept
$25, but the customer says the highest he will go is $20. The vendor agrees that $20 is
acceptable and the sale is made at $20. So the customer pays $10 more than he originally
wanted and the vendor receives $10 less.

4.7.1 Why is Positional Bargaining Important?

Positional bargaining tends to be the first strategy people adopt when entering a negotiation.
This is often problematic, because as the negotiation advances, the negotiators become more
and more committed to their positions, continually restating and defending them. A strong

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commitment to defending a position usually leads to a lack of attention to both parties'
underlying interests. Therefore, any agreement that is reached will "probably reflect a
mechanical splitting of the difference between final positions rather than a solution carefully
crafted to meet the legitimate interests of the parties."

Therefore, positional bargaining is often considered a less constructive and less efficient
strategy for negotiation than integrative negotiation. Positional bargaining is less likely to
result in a win-win outcome and may also result in bad feelings between the parties, possibly
arising out of the adversarial, "you vs. me" approach or simply a result of one side not being
truly satisfied with their end of the outcome. Positional bargaining is inefficient in terms of
the number of decisions that must be made. The example above demonstrates the back-and-
forth nature of positional bargaining. The more extreme the opening positions are, the longer
it will take to reach a compromise.

4.7.2 Can Positional Bargaining Be Good?

Despite criticism of positional bargaining, supporters of this negotiation strategy do exist.

It has been argued that consideration of all underlying interests in a negotiation process is
unnecessary. In fact it may sometimes be counterproductive. This is because of the
distinction and relationship between issues and interests. Issues are universal; they are shared
between each party in a conflict. Interests, on the other hand, are specific to each party: what
the buyer of the rug in the market wants is a bargain, what the seller wants is profit. This
relationship is quite simple. The problem arises when the issue at hand stirs up dramatically
opposing interests between the parties, a situation in which it would be very difficult to bring
them into agreement. If this is the case, it may sometimes be better to negotiate in terms of
positions and go for a compromise.

For example, two nations are in a dispute over water rights. However, they also differ on
many other issues, including trade, immigration, religion, and politics. Broadening the debate
to include these underlying interests will only polarize the sides further. In this case it may be
much easier to reach agreement if the two sides focus on the smaller issue of water, and set
aside their other concerns. This involves negotiating in terms of positions. This may help the
sides reach a compromise without creating any larger, interest-based conflicts. So, for issues

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that involve extremely conflicting underlying interests, it may be best to just focus on
positions and aim for compromise.

4.8 Principled negotiations by Roger Fisher and William Ury

Roger Fisher and William Ury of Harvard wrote a seminal work on negotiation entitled
“Getting to yes: Negotiating Agreement without Giving In” In their book, they described
a “good” negotiation as one which:

Is more than just getting to “yes.” A good agreement is one which is wise and efficient, and
which improves relationships. Wise agreements satisfy both parties’ interests and are fair and
lasting. With most long-term clients, business partners and team members the quality of the
ongoing relationship is more important than the outcome of the particular negotiation. In
order to preserve and hopefully improve relationships how you get to “yes” matters.

Negotiation is conflict conducted in a civilised manner. And what Fisher and Ury tell us is
that you are always going to be more successful if you carry it out with strong moral
principles. They set out four powerful principles. But it is, perhaps, their solution to one of
the biggest problems that negotiators face, which is their biggest contribution to doing a good
deal.

Principled negotiation is an approach to conflict resolution outlined in the book, "Getting to

Yes." The book by Roger Fisher and William Ury was published in 1981 and includes four
fundamental principles of negotiation and three obstacles people might face in the process.
Principled negotiation, often referred to as creating a "win-win" deal can help you achieve
your business objectives and satisfy the other party’s expectations by taking the all-or-
nothing attitude out of the picture.

In ‘Getting to Yes‘, Fisher and Ury set out two overarching beliefs for Principled Negotiating:

1. Participants are problem solvers

2. The goal is a wise outcome reached efficiently and amicably

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They also set out four essential principles that make negotiations as effective as possible;
especially when both parties adhere to them:

1. Separate the people from the problem

2. Focus on interests, not positions
3. Invent options for mutual gain
4. Insist on using objective criteria

4.8.1 Elements of Principled Negotiation

In Getting to Yes, Fisher, Ury, and Patton describe the four main elements of principled
negotiation. By learning these elements, you can significantly improve your negotiation
skills.

1. Separate the people from the problem. Strong emotions can become

wrapped up with the substantive issues in a negotiation and complicate it even
further. In principled negotiation, negotiators work to deal with emotions and
personality issues separately from the issues at stake. For example, if two
department heads are locked in a heated battle over resources, they or their
leaders would confront the strong emotions underlying their dispute through
active listening and other communication techniques. The goal is not to “win,”
but to reach a better understanding of each party’s concerns. 
2. Focus on interests, not positions. Negotiators often waste time arguing over
who should get their way or, alternatively, trying to find a compromise point
in between the two firm positions they have staked. In principled negotiation,
negotiators look beyond such hard-and-fast positions to try to identify
underlying interests—their basic needs, wants, and motivations.

Imagine that two siblings disagree about where to host their parents’ anniversary party. One
wants to have it at a restaurant, while the other wants to have it in her home. They only make
headway when they identify their deeper interests: the former doesn’t have a lot of time to
devote to preparation, while the other is concerned about the cost. Armed with this
understanding of each other’s interests, they do some research and decide to host the party at
a relatively inexpensive restaurant. This type of interest-based bargaining can enable
solutions that meet each party’s needs. 

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 3. Invent options for mutual gain. Negotiators often settle for the first
agreement they reach, relieved to have hit upon an outcome that both sides can
live with. In principled negotiation, negotiators devote significant time to
brainstorming a wide range of possible options before choosing the best one.
In negotiation, options refer to any available choices parties might consider to
satisfy their interests, including conditions, contingencies, and trades. For
example, imagine a job negotiation where the candidate values a higher salary,
while the hiring organization is concerned about being fully staffed. If so, the
job seeker might be willing to make a concession on vacation days in return
for the promise of a higher salary.
4. Insist on using objective criteria. It’s common in negotiation for parties to
argue back and forth about whose “facts” are correct. This type of argument is
likely to end in either impasse or an inefficient compromise. A better way? In
principled negotiation, negotiators rely on objective criteria—a fair,
independent standard—to settle their differences. For example, they might
agree to abide by standards such as market value, expert opinion, industry
protocol, or law. Importantly, parties should agree in advance about which
objective criteria to consult and agree to abide by the outcome.

4.9 Mixed negotiating by Willem Mastenbroek

Unique are the insights and practical suggestions to deal with emotions. Negotiating is seen
as a mix of rational choice and emotional drives. An approach of negotiating which brings
together win-win and win-lose tactics. Power games, manipulations, deadlock and stubborn
constituencies are part of the game. Tactics and do's and don'ts are tied together in a
transparent framework which offers you a better grasp on the whole negotiating process. We
are not born as skilled negotiators.

The name ‘diplomatic’ is perhaps not completely accurate – inter-state or ‘inter-nation’ might
be more precise – but it seems to make good sense to use ‘diplomatic’ as the term commonly
understood for international negotiations in the public sector, playing a pivotal role in
peaceful conflict resolution.

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The term international negotiation in the sense of diplomatic negotiation – that is, inter-state
negotiation processes between sovereign states in and outside international organizations,
being tied to the intra-state processes in which the national positions are determined. As the
term ‘international negotiation’ is the most common terminology to be used by those who
deal with diplomatic negotiation processes, the two terms are used interchangeably.
Diplomatic negotiation as an exchange of concessions and compensations in a framework of
international order accepted by sovereign entities. Such a peaceful process will only be
successful if there is enough common ground between the adversaries.

4.10 3-D Negotiation by David Lax and James Sebenius Interim

assessment: colloquium

Lax and Sebenius contend that "by establishing and maintaining multiple perspectives on a
bargaining process, you will be a far more successful negotiator." To do so they developed a
cognitive frame and a comprehensive set of processes referred to as "3D negotiation".
According to 3D negotiation, there are three dimensions of any negotiation, but most
negotiators pay attention to only one. This dimension is referred to as the "first dimension"
and consists of the tactics "at the table". The two other, often ignored, dimensions include
deal design (the "second dimension") and the pre-negotiation set up (the "third dimension").
Taken together these three dimensions provide the broad perspective necessary to
successfully achieve your negotiation goals.
Stuck in a "win-win versus win-lose" mind-set, most negotiators focus on the face-to-face
process at the table. In 3-D Negotiation, David Lax and James Sebenius urge bargainers to
look beyond tactics at the table. Persuasive tactics are only the "first dimension" of the
authors' path-breaking approach, developed from their decades of doing deals and analysing
great dealmakers. Through moves in the "second dimension", deal design, 3-D negotiators
know how to unlock economic and noneconomic value by systematically envisioning and
creatively structuring agreements.
But what really sets the 3-D approach apart, is its "third dimension", and is setup. Before
showing up at a bargaining session, 3-D negotiators "set the table" by arranging the most
promising possible situation - laying the groundwork for adroit tactical interplay later. Acting
away from the table, the bargainers ensure that the right parties have been approached in the
right sequence, to deal with the right issues, engaging the right set of interests, at the right

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table, at the right time, under the right expectations, and facing the right no-deal options. This
new arsenal of moves away from the table often exerts the greatest impact on the negotiated
outcome.
Packed with practical steps and engaging examples, 3-D Negotiation enables you to reach
remarkable agreements once you arrive at the table - deals that would be unattainable by
standard tactics, no matter how skilful.

The "Third Dimension:" Set Up

The set up happens "away from the table" before negotiation begins and consists of the scope,
sequence, and process of the negotiation. The scope refers to the whom and what of the
negotiation. To set up the scope of a negotiation, the 3-D negotiator develops an "all party
map". This map consists of a full set of the parties to the negotiation, both potential and
actual. The map should also include the interests of the parties, their relationship to each
other, and the minimum benefits and maximum costs each party is willing to accept (also
referred to as their deal/no-deal options). This map should then be used to analyse a proper
sequence of, and process for, the negotiation. In the analysis of the sequence, it is important
to consider whether negotiations should be held publicly or in private, and whether all parties
should be immediately included. For example, it may be beneficial to start with private talks
with various individual parties before bringing everyone together for public negotiations, or it
may be better to immediately begin negotiation with all stakeholders. When developing the
process, it is important to consider the role of third parties, special procedures and specific
negotiation systems. This will likely require an understanding of the cultural norms and
individual personalities of the parties involved. Further important considerations relevant to
the process include how the process is to be determined and how it could be modified. The
set up essentially ensures that the scope, sequence and process of a negotiation are consistent
with your desired outcome for the negotiation. Lax and Sebenius summarize the set up as
"acting to ensure that the right parties have been involved, in the right sequence, to deal with
the right issues, that engage the right set of interests, at the right table or tables, at the right
time, under the right expectations, facing the right consequences of walking away if there is
no deal." This third dimension literally sets the stage for successful (or unsuccessful)
negotiation and the 3-D negotiator knows that "a bad setup makes tactics at the table more or
less irrelevant".

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The "Second Dimension": Deal Design
Even if properly set up, a poor deal design can doom negotiations before they start. While the
set up happens "away from the table" and tactics are used "at the table", the deal is designed
both at and away from the table. Lax and Sebenius introduce three essential aspects of a
properly designed deal: moving northeast, making lasting deals, and negotiating in the spirit
of the deal. Moving northeast is a reference to the desired direction a deal would move on a
two axis graph in which the x-axis represents the value of a deal for one party (increasing
from left to right) and the y-axis represents the value of the same deal for another party
(increasing from bottom to top). Thus, by moving "north east" (or up and to the right) value is
increased for both parties, the pie expands and value is created (as opposed to claimed). To
move northeast, negotiators should probe behind positions to uncover interests. There is an
abundance of literature on this point, but the basic idea is that interests are the things parties
want out of negotiation, while positions are the stand parties take in relation to the issues at
hand. Because positions can be changed without changing the interests they represent,
incompatible positions can be transformed into compatible ones. Dovetailing is another
technique used to aid parties in moving northeast and involves combining differing interests
that are "relatively easy for one side to give and relatively valuable for the other side to get..."
Thus, dovetailing entails looking carefully at the interests of the parties and creatively
identifying high-benefit moves for one side that are also low-cost for the other side to
concede. When combined with a mutual desire to maximize the pie, dovetailing can use
differences in interests to create more mutual value. In addition to moving northeast, it is
important to make lasting deals, since your interests will likely not be met by a deal that
doesn't last. In order to make deals last, it is important to design accommodations for
predicable change into your agreements. When you know attitudes or contexts are likely to
change over the course of the agreement, you need to take this into account. Additionally, it
may be helpful to include other parties which increase the chance that everyone's interests can
be met. It also adds to the coercive power of the agreement (because there are more resources
and interests involved). Deals are also unlikely to last when negotiations ignore the spirit of
the deal. As Lax and Sebenius put it, "while parties can agree to the same terms on paper,
they may actually have very different expectations as to how those terms will be met. And
because they fail to achieve a true meeting of the minds, the deal they've signed may well fall
apart." Thus, it is essential that the "what" (underlying social contract) and the "how" (on-
going social contract) of the negotiations are clear to all parties. Even if you are in the right

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according to the actual wording of the agreement, if you violate the spirit of the deal you are
likely to run into problems during its implementation or in future negotiations.

First Dimension Tactics

Once the negotiation has been properly set up and the deal adequately designed, the
negotiations can begin "at the table". At this point tactics come into play, and the 3D
negotiator employs tactics that "both create and claim value, ideally on a long-term basis." In
general, tactics should first aim to create value through joint problem solving, and then focus
on claiming value in the expanded pie. To create value, the 3-D negotiator should ask, listen,
and learn from the other parties. When divulging information, she should do so strategically
and with a persuasive style. Further, an appealing process should be fostered, which is
perceived as fair by both sides. As soon as the pie has been expanded as far as possible, the 3-
D negotiator will begin to claim value. To do so effectively, the negotiator must first learn as
much as possible about the true ZOPA (Zone of Potential Agreement). The ZOPA is the area
between the point where each side will walk away from an agreement (the deal/no-deal
options), and is thus the range of possible agreement. Once the negotiator has as much
information on the ZOPA as possible, she should begin to shape the other parties perceptions
of the ZOPA. In doing so, she is attempting to make the other parties give up as much as
possible (within the range of the ZOPA), because they think she can and will walk away from
a lesser agreement. Shaping ZOPA perceptions is done primarily by anchoring. Anchoring is
essentially presenting the baseline for discussion, by making the first offer. Studies have
shown that ZOPAs tend to pull toward the initial offer, or anchor, as long as it's realistic.
Such anchoring can be done with specific offers or with general problem definitions and
cognitive frames (the latter is referred to as meta-anchoring), but anchors are only effective as
long as they are perceived as realistic. Thus when one lacks adequate information regarding
the ZOPA, it may be beneficial to let the other parties make the first offer. This prevents
anchoring an agreement too low or to such an extreme that it is viewed as unrealistic. Further,
when other party's present anchors that are extreme it is important to dismiss them explicitly
and immediately so they don't become the basis for the negotiation.

4.10.1 3D Audit and Strategy

The pragmatic application of the concepts of 3D negotiation is embodied by what Lax and
Sebenius call the "3D barriers audit" and the "3D strategy to overcome barriers". A 3D

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barriers audit is a systematic assessment of the situation in terms of its set up (third
dimension), deal design (second dimension), and tactics (first dimension). It is meant to
uncover potential barriers to your ideal agreement. Once a 3D barriers audit has been
performed, a 3D strategy is developed, aligning a combination of tactics, deal design and set
up. Essentially the audit is an analysis and the strategy is a set of solutions to the problems
identified by the audit. To perform a 3D audit and develop its corresponding 3D solution, a
negotiator must first have a clear sense of her ideal agreement. Then, using this ideal end
point as the beginning, she should "map backwards" identifying the tactical, design and set up
barriers and solutions to achieving her ideal agreement. In doing so it is also essential to think
in the long term because the negotiator may have to deal with the parties again, and even if
she doesn't, the other parties have to live up to their end of the deal in order the her interests
to be met. Additionally a negotiator's reputation for future negotiations may be effected by
the way she negotiates this agreement.

Conclusion
3D negotiation calls for a continual process of auditing and strategy development across three
dimensions: tactics (the first dimension), deal design (the second dimension) and set up (the
third dimension). While, for analytical purposes, the three dimensions have been presented
here as distinctly separate, this is not representative of the reality of negotiation. In the real
world, the boundaries between the three dimensions are much fuzzier and a problem in one
dimension may call for a solution in another. In this way, 3D negotiation expands the way
negotiation is thought about, allowing negotiators to recognize that problems they run into
during the course of a negotiation and the solutions to them may not be limited to "at the
table" tactics. Further, 3D negotiation moves beyond the first dimensional "win-win" and
"win-lose" approaches by advocating a mastery and balance of both value creating and value
claiming approaches across all three dimensions. Such ideas and pragmatic practices are
presented in 3D Negotiation to ensure the reader's negotiations are not limited to a single
dimension in a three dimensional world.

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