Negotiation

[ni-gō-shē-ā-shan] – A discussion aimed at reaching an agreement.

The word ‘negotiate’ derives from the Latin ‘negotiatus’ means to ‘carry on business’. Negotiation just like that.
Something which is a necessary part of business. Not something which is distasteful.

# RULES & TACTICS OF NEGOTITATION

Research / Do your homework -

Always be willing to walk - You can want, but you can’t need. Know when to walk. Walk when you should. Many
people are scared of having to walk away from a negotiation. This makes them more likely to take a bad deal rather
than have no deal at all.

Have the Harvey Mindset - Always have the embodiment of the winning mindset. Winning is his Number 1 priority.
Remember the time when he tells Mike “I’m not about caring, I’m about winning”? Your client wants you to bring in
the winner’s mindset to the negotiation table. He doesn’t want you giving into the opposite party’s demands,
without gaining what you need throughout the discussions. It’s not always important to have the upper-hand in the
negotiation (although it sure helps), it’s about how you ensure that you’re winning without giving away more than
you’re willing to

Play hard to get - This is very much the rule of negotiation in cases where you already have an upper hand. When
the other party offers you something that may even be to your benefit, or wants a certain kind of help or
coordination from you, make them work for it. They will ultimately value what they’re getting even more. However,
remember not to overdo it. It’s wise to use this as an upper hand and negotiate what you want. The idea is to keep
your calm, stick to your strategy, and improvise when it’s not working. Be polite, firm, and of course, play hard to get
when it’s necessary.

Defense in Depth - Several layers of decision-making authority is used to allow further concessions each time the
agreement goes through a different level of authority. In other words, each time the offer goes to a decision-maker,
that decision maker asks to add another concession to close the deal.

Good Cop/Bad Cop - oftentimes positive and unpleasant tasks are divided between two negotiators on the same
negotiation side or unpleasant tasks or decisions are allocated to a (real or fictitious) outsider. The good guy
supports the conclusion of the contract and emphasizes positive aspects of the negotiation (mutual interests). The
bad guy criticizes negative aspects (opposing interests). The division of the two roles allows for more consistent
behavior and credibility of the individual negotiators. As the good guy promotes the contract, he/she can build trust
with the other side.

Highball/Low-ball - Depending on whether selling or buying, sellers or buyers use a ridiculously high, or ridiculously
low opening offer that is not achievable. The theory is that the extreme offer makes the other party reevaluate their
opening offer and move close to the resistance point (as far as you are willing to go to reach an agreement).
A danger of this tactic is that the opposite party may think negotiating is a waste of time.

Do not get into Framing battles -

Trade, Don’t Cave - Always trade for value, don’t drop price in a vacuum. Don’t get bullied.

Effect Emotions - Inspire their emotions, Control your emotions.

As the great Harvey Specter says “I’m against having emotions, not (against) using them.”

Lead the negotiation /Make the First Offer- Set the Agenda. Go first. Don’t let other party take control. The starting
number sets the tone for the rest of the negotiation. Being the first to state a number puts you in control of the
negotiation process. This practice is called anchoring. Even if your number is extremely high or extremely low, now
you can steer the negotiation conversation in the direction of your choice.
Alternatively never show all of the cards that you are holding. It’s vital to keep your adversary guessing. Keep them
wondering what advantages you hold and what end result you will settle for.

Don’t back down - Winners don’t retreat. They keep fighting. They never give up until their journey is complete.
They may sometimes find themselves with their backs against the wall and still negotiate to their advantage.
As the great Harvey Specter puts it, “What are your choices when someone puts a gun to your head? You take the
shot, or you pull out a bigger gun. Or, you call their bluff. Or, you do any one of 146 other things.”

Float the Trial balloon - tentatively announce in order to test public opinion.

Keep the tension low - Don’t put people into corners: it will lead to lose/lose outcomes. What does a snake do when
it is cornered? It attacks because it feels threatened. If you raise the tension in a negotiation with the other party,
expect them to either reciprocate or flee. In that environment it will be hard-if not impossible - to create a trusting
and mutually beneficial long term outcome - or any outcome at all. Continually poke and deny the other party and
expect the same back.

As the great Harvey Specter had said “When you’re backed against the wall, break the goddamn thing down.”

Don’t be desperate (or at least don’t show it)

Use the Framing Method - Frame this solution so both the parties win.

Rank Your Priorities / Priority List - There are things you absolutely need to have in order to enter a profitable
agreement. Then, some things may be “good-to-have,” but aren’t a necessity.

Prepare for Compromise -This isn’t always a bad thing. All relationships require some level of compromise.
You can’t entirely prevent it but you can prepare for it.

Win-Lose or Win-Win

Because of differences in culture, personality, or both, business persons appear to approach deal making with one of
two basic attitudes: that a negotiation is either a process in which both can gain (win-win) or a struggle in which, of
necessity, one side wins and the other side loses (win-lose). Win-win negotiators see deal making as a collaborative,
problem-solving process; win-lose negotiators view it as confrontational. As you enter negotiations, it is important to
know which type of negotiator is sitting across the table from you.

Don’t underestimate the importance of likability. People are going to fight for you only if they like you. Anything
you do in a negotiation that makes you less likable reduces the chances that the other side will work to get you a
better offer. This is about more than being polite; it’s about managing some inevitable tensions in negotiation, such
as asking for what you deserve without seeming greedy, pointing out deficiencies in the offer without seeming petty,
and being persistent without being a nuisance
 Nonverbal Communication & Body Language during negotiations

First impression: Begin the negotiation with positive gestures and enthusiasm. Look the person in the eye with
sincerity. If you cannot maintain eye contact, the other person might think you are hiding something or that you are
insincere.

Perfect the Handshake: Always use your right hand, it’s customary to do so! So make sure your hands aren’t laden
with notebooks, laptops or anything else that will disrupt a smooth handshake.

One shake is enough! You might well be enthusiastic, but it’s crucial to remain poised and professional.

Firm handshakes are ideal, especially when you keep them brief. However, if you tend to be a little heavy-handed, be
mindful that you’re not crushing your prospect’s hand. Otherwise, how will they sign off on the deal?

Eye contact while shaking is crucial to showing you’re present – throw in your best smile and you’ll put your prospect
at ease in your company.

Don’t cover the handshake with your other hand unless you know this prospect on a personal level; it’s more of an
endearing action. You don’t want to invade their personal space so early into the negotiation.

Active Listening: helps people feel heard and understood. This can help build a good rapport, which can turn into a
good deal.

1) Encourage - a) ‘’Uh-huh….’’ b) ‘Keep Going….’’ c) ‘‘Okay…’’

2) Restate - a) ‘’So you feel that….’’ b) ‘’It sounds like you believe…’’ c) ‘If I understand your saying that…’’
3) Clarify - a) ‘’Would it be accurate to say that….’’ b) ‘‘What do you mean when you said….’’ c) ‘‘Noted…’’

Flinching: Flinching is showing a strong negative physical reaction to a proposal. Common examples of flinching are
gasping for air or a visible expression of surprise or shock. The flinch signals to the opposite party that you think the
offer or proposal is absurd in hopes the other party will lower their aspirations.

Personal space: The person at the head of the table is the apparent symbol of power. Negotiators can negate this
strategic advantage by positioning allies in the room to surround that individual

Below Hidden Anchors

A real estate agent shows you the most All other homes seems fairly priced by
expensive house first. comparison
A price tag shows an original price of $150 , You’ll consider the item a bargain, regardless of
now reduced to $80 its true worth.
A Salesman asks if you think the car is worth Your estimate will be close to $50K
more or less than $50000

Best Alternative To a Negotiated Agreement or BATNA

It is defined as the most advantageous alternative that a negotiating party can take if negotiations fail and an
agreement cannot be made

Zone Of Possible Agreement (ZOPA)

Not a physical place, the zone of possible agreement or bargaining range is considered an area where two or more
negotiating parties may find common ground. It is this area where parties will often compromise and strike a deal.

Split the Pie

In the lower left quadrant, the first strategy is “splitting the pie.” This style is effective when your relationship with
the other party is unimportant. You’re not going to see this person in the future and the relationship doesn’t really
matter. The outcome of the negotiation should also be unimportant when using this style. It’s not a big deal if you
win the negotiation. For example: let’s say you’re a buying a souvenir from a street vendor when you’re on vacation.
In this situation, you should consider the fact that you won’t see this person again, and it’s not a big deal if you get
the best deal on your souvenir. So split the pie. Just find the middle point where both of you are happy and move on
with your vacation.

Serve the Pie

When you have a much higher importance of the relationship, but the outcome is still low in terms of its importance.
We call this style “serving the pie.” You want to maintain the relationship. For example: let’s say you’re negotiating
over payment terms. You want to get paid in 30 days and the customer wants to pay you in 60. This isn’t a big point
economically and you could ruin the relationship if
you fight over this disagreement. So in this
situation, serve the pie. Give your negotiating
partner what they want in the interest of
maintaining or even strengthening your
relationship.

Take the Pie

This style to use is “take the pie.” So the

relationship has low value, but the importance of
the outcome is high. In this situation, you want to extract as much value as you can and you’re not worried about the
ongoing relationship. For example: let’s say you’re buying a car. That’s a high-dollar purchase and you’re probably
not going to see the sales representative again in the future. So here, you should try to take the pie. Get as much
value as you can out of that particular negotiation and don’t worry about the relationship.

Expand the Pie

This style to use is “expand the pie.” The relationship is valuable, and you want to maintain and strengthen it.
There’s value on the table and the importance of the outcome is high, so you should try to create new opportunities
for both of you. This way, you can both get more value from the partnership. For example: if you’re purchasing a
large IT system from a strategic vendor, you don’t want to ruin that long-term relationship since they’re going to give
your ongoing support for the system. So find ways that you can add new features and give more value to your
negotiating partner in exchange for them making more concessions for you. If you can put more revenue in their
pocket, perhaps you’ll get a lower total price.
 HOW TO NEGOTIATE WITH A SHARK

Should you ever swim up against a ruthless “shark-like” negotiator, protect yourself by spotting their tactics, and bite
back with these counter-measures.

The Anchoring Shark

What is it: Opens with an aggressive low/high offer.
Why it works: You are strongly influenced by the first offer you focus on
Counter: Do your homework, and know market value. Before counter-offering, let the person know that you
are oceans apart, then provide a response of your own
The Nibbling Shark
What is it: Makes a final request right before or after an agreement has been reached.
Why it works: You have invested a lot of time and resources and do not want the agreement to fail.
Counter: In the beginning of the negotiation, agree to put all the issues for negotiation on the table. If they
ask for “one last thing,” call it out: Alternatively, you could offer a nibble of your own - “I agree to
adding X if you agree to adding Y.
The Bogey Shark
What is it: Pretends a topic is really important (when it’s not) before conceding.
Why it works: You feel you need to reciprocate a big concession.
Counter: Ask open-ended questions designed to understand why some topics or issues are important or why
they suddenly reversed positions.
The Double-Talking Shark
What is it: Talks fast and with technical terms intended to confuse
Why it works: You do not want to look stupid, so you don’t ask questions
Counter: Do your homework. When in doubt, ask deblurring questions: “What does X mean to you?” If
needed, bring in an expert of your own.
The Ultimatum Shark
What is it: Loves ‘take it or leave it’ offers.
Why it works: You hate losing
Counter: Ignore the claim - doing so allows them to save face. If they persist, remind your partner that you
too have alternatives and that it’s in both of your interests to come to a mutually satisfying
agreement.
Good Shark/Bad Shark
What is it: Creates contrast between a negotiator who seems reasonable, and one who does not
Why it works: You feel indebted to the good shark for saving you from the bad one
Counter: Call out the tactic: “Not the old good shark/bad shark routine!” Alternatively, bring your own bad
shark into the waters.
The Powerless Shark
What is it: Claims to have limited authority and can’t give you what you are asking for.
Why it works: You are already in the middle of a negotiation and want to be done.
Counter: Ask early in the negotiation if your partner has the authority to negotiate. If they do not, politely
ask to speak with someone who does.
The Emotional Shark
What is it: Uses exaggerated emotions to influence negotiation
Why it works: You feel sympathetic, guilty, or intimidated, and make concessions to get rid of the negative
feelings.
Counter: Ignore the emotional display and just keep going. Alternatively, label the emotions - “It sounds like
you are frustrated with X” and offer to take a break. Ask empathic questions like “I understand this
is difficult, but how would you deal with it if you were in my shoes?”

NEGOTIATION AS A TEAM
 ENVIRONMENT

Negotiating at your place. Like athletes seeking the home-field advantage, most people prefer to negotiate on their
own territory. Meeting at your office offers many perceived benefits. First, you gain the advantage of familiarity with
the negotiating environment. Negotiating at home also allows you to control the negotiation environment, including
the selection and arrangement of the meeting room, the seating of participants at the bargaining table You know
where everything is located, Your counterpart, on the other hand, runs the risk of unfamiliarity. Playing host gives
you the opportunity to impress the other team with your company’s resources. Finally, negotiating at home is
cheaper, eliminating travel costs and saving executive time.

Negotiating at your counterpart’s place. Negotiating on your counterpart’s turf can offer disadvantages: travel can
be costly; the negotiation environment is unfamiliar and uncontrollable. On the other hand, when you’re the seller,
often the only way to bring your product or service to the other side’s attention is to show up at his office. The
choice of a negotiating site also has symbolic value. By entering your counterpart’s territory, you show your serious
intent and strong desire to make a deal-factors that can be invaluable in persuading him to sign a contract. A vital
purpose of any business negotiation is to allow both sides to learn about each other, their businesses, and the
conditions in which they must operate. In this respect, the home field doesn’t hold an advantage.

GOOD COP BAD COP: In a good cop, bad cop negotiation, two individuals or parties, working as a team, extend a
series of rewards and punishments with the goal of gaining an advantage over their counterpart. A well-known
interrogation room technique in law enforcement, the good cop, bad cop negotiation strategy in the business world
involves one “cop” acting in a “threatening, hostile, and abusive manner,” while the other adopts a “non-
threatening, friendly and sympathetic manner,” writes Curtis H. Martin in the Nonproliferation Review. The “nice”
negotiator aims to gain the target’s trust and win a concession, lest the target is stuck with the unappealing offer of
the tough negotiator

1. Sequential good cop, bad cop: The classic strategy in which the good cop and bad cop take turns interacting with their
target.
2. Simultaneous good cop, bad cop: The good cop and bad cop argue with each other over how good of a deal to offer
the target.
3. One person as both good cop and bad cop: A solo negotiator uses a mixture of good cop and bad cop techniques, such
as switching from friendly to impatient or being indecisive about what to offer.
4. Good cop warning about a future bad cop: A negotiator might warn that he’s giving you the best deal possible and that
if you come back tomorrow, you should expect to get a worse deal from his boss

LINKS

https://iveybusinessjournal.com/publication/negotiating-the-top-ten-ways-that-culture-can-affect-your-negotiation/

The Analyst / Technical Expert: Does all the research, homework regarding the
deal/negotiations

The Leader: From the beginning on it’s important to establish the leader of the