A combined process of ascertaining a shared acceptable solution to a complicated conflict is referred to as negotiation. It is useful under following conditions.
- Conflict of interest between the groups
- Two or more groups
- Rather than to give in, fight openly, take the dispute to higher authority or break off contact groups prefer to work together
- Parties are willing to negotiate
See Also: Endorsement of Negotiable Instrument
Approaches to Negotiation
There are two approaches to negotiation and which are as follow.
1 – Distributive Bargaining
- Purchasing a car is an example of distributive bargaining.
You leave the house to view the car. It is great and you demand it.
The asking price is told by the owner to you. You are not agreeing to pay that amount.
You and owner then negotiate over car price.
- It operates under zero-sum conditions, which is its most identifying feature. Any advantage i create is at your expense, and vice versa.
- Labor-management negotiations over wages are the most widely cited example of distributive bargaining.
Two negotiators are represented by parties A and B.
A target point is possessed by each party that specifies what she or he would like to accomplish.
A resistance point is also possessed by each party which points the lowest outcome that is acceptable.
Each one’s aspiration range is made up of the area between these two points.
There exists a settlement range where each one’s aspirations can be met as long as there are some aspiration ranges.
- One’s tactics concentrate on struggling to acquire one’s opponent to agree to one’s particular target point or to acquire as close to it as possible, when engaged in distributive bargaining.
2 – Integrative bargaining
- An Example: In the order, a sales rep is called and is informed that the organization cannot sanction credit to this customer because of past slow-pay record.
The next day, in order to discuss the problem, the sales rep and organization’s credit manager meet. They do not want to stick with bad debt, instead they want to make the sale.
The options are openly review by both.
A solution is agreed by them which meet both their needs, after considerable discussion. The bank will ensure that it will pay the amount of the sale if not paid in 60 days.
- This example functions under the supposition that there are present one or more settlements that can make win-win solution.
- All things being equal in terms of intra-organizational behavior, distributive bargaining is not preferable to integrative bargaining.
- Integrative bargaining bonds negotiators & allow each to leave the bargaining table feeling victorious because it builds long term relationships and facilitates working together in the future.
- On the other hand, distributive bargaining leaves one party a loser. It deepens divisions and tends to develop animosities.
Process of Negotiation
Process of negotiation contains the 5 steps you need to know. Let’s discuss them below one by one in detail.
1 – Preparation and Planning
- Do your homework. What is conflict’s nature? What is the story guided to this negotiation? What are the perceptions of the conflict and who is involved? What do you demand from the negotiation? What are your objectives?
- You too require to ready a judgment of what you consider the other group to your negotiation’s objectives are
You are effectively equipped to counter your opponent’s arguments with the figures and facts that assist your position when the position of your opponent is anticipated by you.
See Also: Stages of Business Buying Decision Process
- Use the information to develop a strategy, once you have gathered your information.
- Best Alternative to a Negotiated Agreement (BATNA) is determined by you and the other sides.
The lowest value acceptable to you for a negotiated agreement is determined by your BATNA.
Any offer you get that is more than your BATNA is suitable than your impasse.
2 – Definition of Ground Rules
- Where will negotiation take place? Who will do it? What time restraints will apply, if any?
- To what problems will negotiation be confined? If impasse is reached, will there be a particular procedure to follow?
- The initial demands or proposals will also be reached by the parties during this phase.
3 – Clarification and Justification
- Amplify, clarify, bolster and justify your original demands, when initial positions have been exchanged.
- This require not be confrontational.
- In order to help support your position, you want to give the other party with any documentation.
4 – Bargaining and Problem Solving
- In trying to hash out an agreement, the essence of the negotiation process is actual give and take.
- By both parties, concessions will undoubtedly require to be made.
5 – Closure and Implementation
- In the final step, the agreement that has been worked out is formalized along with building any procedures that are essential for monitoring and implementation.
- Main negotiations will need hammering out the particulars in a formal contract.
- However, negotiation process’s closure is only a hand shake in most of the cases.
