Theme 3. Negotiations – an integral part of successful business

1.What negotiation is and why it is important

2.Types of negotiations and main negotiating process approaches

3.The phases of negotiations

4.Planning negotiations

5.Opening negotiations

1.What negotiation is and why it is important

Introduction

Taking note of the media coverage of union 'negotiating', you are likely to get the impression that negotiating is another way of saying 'engaging in conflict. Yet the Oxford Dictionary defines 'negotiate' as: 'confer with another person with a view to compromise or agreement to arrange or bring about.'

In other words, negotiating means taking action in order to achieve a situation acceptable to both parties. It occurs when the interests of a person or group are dependent upon the actions of another person or group who also have interests to pursue and whose respective interests are pursued by co-operative means.

A negotiation is a meeting between two parties, and the objective is to reach an agreement over issues which:

• are important in both parties' views

• may involve conflict between the parties

• need both parties to work together to achieve their objective

In a work context, negotiations constantly occur between employers and employees (wages, conditions of service); between sales representatives and buyers on prices and contracts; between departments on resource allocation. Negotiations need not have a winner and a loser: in every negotiation there are opportunities to be creative in using social skills and effective communication to bring both parties together towards a positive outcome that is in their mutual interest

As George Bernard Shaw said: “We must not stay as we are, doing always what was done last time, or we shall stick in the mud”.

Shaw's statement very aptly sets the scene which should be the basis for all negotiating - the provision of attitudes and an environment which will enable the issues to be discussed positively and constructively and with a view to resolution.

As the negotiator, your aim should be actively to achieve the desired result or in simpler words - to do business! The essence of negotiating effectively lies in careful preparation, establishing a collaborative climate, and using skills of interpersonal communication, critical thinking and analysis. If negotiators can achieve satisfaction of their own personal needs in the negotiating situation, if they can equate these with achieving the best outcome for their party, there is a basis for success.

Like so many aspects of communication, the success of negotiation can be substantially enhanced by approaching it from the correct point of view, and the following sections will lay down the appropriate guidelines under the following headings:

• The subject under negotiation

• Preparing for negotiation

• Achieving the right climate

• Negotiating styles

• Finding solutions

• Fall-back situations

• Behaviour in negotiation

Negotiation: can be defined as a process of bargaining by which agreement is reached between 2 or more parties. We all negotiate every day in a wide range of work and social situations. It is important to know how to negotiate for a number of reasons:

Effect on Profits

During the negotiation course, we will explore why negotiating skills are important for you to be successful in business and in life. The importance of negotiation to your business is vital and the impact of good or bad negotiating can be shown as follows:

COMPANY A COMPANY B

SALES £10m £10m

COSTS 8m 8m

PROFITS £2m £2m

Assume Company A has sales people and buyers who by improved negotiating

techniques increase sales by 5% and reduce costs by 5%.

COMPANY A COMPANY B

SALES £10.5m £10m

COSTS 7.6m 8m

PROFITS £2.9m £2m

By achieving relatively modest improvements in buyers and sellers performance, the effect is an increase in profits of £0.9m. This represents a 45% increase over the previous profit figure.