Basics of Negotiation

By: Carlo Senica

 Negotiation is a process by which people deal with their differences.

To negotiate is to seek a mutual agreement through dialogue.

Outcome will be either win-win or win-lose.

It can be a formal or a non-formal affair.

Dealing with
Differences
 Types of Negotiation

Characteristics DISTRIBUTIVE INTEGRATIVE

Outcome Win - Lose Win - Win

Motivation Individual gain Joint gain

Interests Opposed Congruent

Relationship Short-term Long-term

Issues involved Single Multiple

Ability to make trade-offs Not flexible Flexible

Solution Not creative Creative

 Four Key Concepts in
Negotiation

1. BATNA or Best Alternative To a Negotiated Agreement

2. Reservation Price or “Walk Away Price”

3. ZOPA or Zone Of Possible Agreement

4. Value Creation Through Trades

BATNA

Your BATNA is your preferred

course of action in the absence
of a deal.

It is critical to know your BATNA

before entering into any
negotiation.

It determines the point at which

you can say NO to an
unfavorable proposal.
 Reservation Price

The least favorable point at

which you would accept a deal.

Should be derived from your

BATNA, but not necessarily the
same thing.
 ZOPA

ZOPA is a range in which a deal can take place.

Each party’s reservation price determines the end of the ZOPA. ZOPA exists
between the parties’ reservation price.
Value Creation Through
Trades

The idea that negotiating parties

can improve their positions by
trading the values at their
disposal.

It occurs in the context of win-

win negotiation.

Each party gets something what

it wants in return of something
it values much less.
 Steps in Negotiation

1. Determine satisfactory outcomes

2. Identify opportunities to create value

3. Identify your BATNA and reservation price

4. Improve your BATNA

5. Assess who has authority

6. Study the other side

7. Prepare for flexibility in the process

8. Gather objective criteria to establish fairness

9. Alter the process in your favor

 Barriers to Agreement

1. Lack of trust

2. Potential saboteurs of a good deal

3. Differences in gender

4. Diferences in culture

5. Difficulties in communication

6. Die-hard bargainers