Individual work 1 Negotiation: Theory and Practice TABLE OF CONTENTS Topic Pages Introduction 3 Perceptual position 3 Type of Negotiation 4 Seven Elements of Negotiation 4 The Three Win-Win Negotiations 6 Value creation process 7 Unconditional Constructive Behavior 7 Inter-Better-Off-Ness 8 Conclusion 8 References 10 INTRODUCTION “Negotiation is a process that happens whenever at least one person is trying to get another to do or not do something for him or her”(Falcon, 2010). Recently, I came across a negotiation that eventuated between my father and his close friend (named Mr. B) who is also an established businessman. Initially, my father was conducting a research in the market to locate a productive business opportunity to enhance his business. In the meantime a businessman named Mr. S, came with a proposal of making a commercial building in a partnership with my father. His proposal was quiet good but not up to the mark of what my father was looking for. An idea got struck into my father’s mind that it would be an extraordinary opportunity to get into a partnership with the person whose land was already next to my father’s office building and that person was my father’s friend, Mr. B rather than Mr. S’s land whose land was completely opposite. In any case, Mr. B does not agree with the consideration and refuses to accept the proposal then my father had an alternative plan with Mr. S as mentioned above. Thereafter, my father kept the proposal on his (Mr. B) Table and both parties negotiated on the pros and cons of the project. Their mutual goal was to build an infrastructure in order to generate profit. The following were the considerations of the project: Mr. B had a land but he did not had enough money to invest on the project that my father was planning to invest on and also due to his age factor and health issues, he did not want to take any business pressures so he was planning to sale the land. On the other hand, my father was financially strong to invest on the project and more over with the help of constructing office building on that land, this would join and expand our existing market (wherein offices are made and renting to small business holders) The capital used in the construction would be equal to the price of the land that would be beneficial for both the parties in future. The common utilization of resources will help reduce the cost of the project. According to these considerations, the parties agreed into a 50/50 partnership contributed different resources to the business and each partner would share equally in any profit and loss generated from the business. PERCEPTUAL POSITION To analyze any negotiation, it becomes very significant to examine it from the three perceptual positions i.e. the first position (my father), the second position (Mr. B) and the third position (an external observer). First position: In the above negotiation, if I look into this case from my father’s perspective this deal helped him expand his business, profit generating in future, build good relations with Mr. B for future business deals. Second position: If I step into Mr. B’s shoes, this deal was not less than any valuable outcome for him, as he would get equal benefits without any pains as his business partner was all ready to take the burden of the project and moreover the value of his land will increase that would become a source of his future income. Third position: From a third party perspective, I feel both were gaining profit from the project and they were dependent on each other for land and capital and also after the completion of the project both would get equal benefits. This is an ultimate step for value creation and so all in all it is a great deal. It is well said by Gregory Bateson, “wisdom comes from multiple perspectives”. These positions provide us with a systematic framework that reflects completely different understanding of the negotiation, which will help us to get a desired and fair outcome. TYPE OF NEGOTIATION Integrative negotiation: Integrative negotiation means joining hands between to parties to achieve something together. The similar situation happened in our case, as both the parties adopted a cooperative approach by forming a long-term relationship to create mutual gain, which represents a win-win scenario. INTEGRATIVE NEGOTIATION BASICS Sharing: Sharing of as much information as possible is essential to understand each other’s interest. My father made the proposal as clear as water on the table and also made Mr. B participate as well through which they could learn one another’s perspective. Building the bridge: My father and Mr. B made an effort to build a bridge by gaining trust and communicating with each other to reach to a value-creating outcome. SEVEN ELEMENTS OF NEGOTIATION Relationship: Building a strong relationship is the foundation of negotiation, which helps in solving joint problems, leading to value creation and mutual benefits. Relationships provide the necessary associations and connections through which we communicate and negotiate (Lewicki, Saunders & Minton: 1997), so as my father tried to build a healthy bond between himself and Mr. B so that he could create a conductive environment wherein negotiation is independent of trust and ensures a true long lasting relation without any false beliefs. My father tried to build the negotiation bridge so that he may be able to make efficient and effective value negotiation. Communication: Communication is the backbone and two-way process without which negotiation cannot proceed. In our negotiation, there was a complete transparency of goals and objectives of the project from both sides. My father and Mr. B became active participants as speaker as well as listeners, clearing their queries about the uncertainty of the project that may come forth in future and also to minimize information asymmetry. Interest: Prioritizing, identifying and clarifying interest rather than position is a crucial constituent in negotiation. For instance, my father represented a diverse range of interest involved in negotiation and also insisted Mr. B to put forward his interest in order to reach to value creating solutions, which would satisfy the demands and needs of both the parties involved. The basic interest was efficient use of resources i.e., Mr. B would provide us with a piece of land and my father will invest money on that land. Internally Mr. B was showing his interest in the project but he was hesitant of not being able to take the pressure of business due to his age factor. So my father gave him a sign of surety that he would take up the whole responsibility of the project with his (Mr. B) consent. Options: For a successful negotiation, it is very essential to come up with every possible proposals and recommendations that meets the interest of both the parties. In our negotiation, my father presented a package of different options to persuade Mr. B’s interest towards the proposal. Constructing a common elevator in between the new and the existing office building. Sharing of electricity generators already existing in the adjoining office building. Share of infrastructure shall be divided in 60/40 Half of the land would get registered on my father’s name instantly. Counterparty’s interest was as follows: Rent of offices shall be divided equally between both parties. Tax, electricity bills & water supply shall be divided equally Half of the land would be transferred after the completion of construction. Legitimacy: Legitimacy is the basis for any argument that is fair for both the parties, as none of the parties would want their option to be “ripped-off’’. In our case, there might have been few issues that wouldn’t be fair for both the parties for example the share of infrastructure and the registration of the land. So both the parties worked together to find the legitimate argument that will satisfy them both. - Mr. B raised an objection on instant transfer of land on my father’s name and instead put forth his perspective that he would register the land on my father’s name after the completion of the project. Both of them argued and my father put forth his recommendation that 1/4th of the land shall be registered on his name in the beginning of the project and the rest after the completion of the project. -Mr. B also opposed the division of 60/40 share of infrastructure and raised a question that “where does the number come from?” He did not agree to the division and rather proposed 50/50 share division on which both the parties had a long discussion over it. At last, both the parties reached to a fair and appropriate decision by agreeing upon each other’s recommendations. Commitment: A well-planned commitment is very important in negotiation because it is the last step to reach a great deal. All the terms & condition, goals & objectives of the negotiation were made clear and transparent by both the parties to avoid ambiguous situation. All the issues and considerations were given equal importance and the interests of both the parties were met and they accepted the deal. Alternatives (BATNA): In a great deal, it is important to come prepared with our BATNA, an alternative plan waiting in the wing, because before coming to an agreement during the negotiation it is helpful to compare the deal to our BATNA to come to an advantage. The potential deal was better than the BATNA prepared by my father and we accepted the deal. THE THREE WIN-WIN NEGOTIATION Win-win is the best outcome achieved, when the parties involved in the negotiation walk away with a positive feeling of achieving their goals. In value negotiation process, relationship, communication and substance negotiations are the most significant elements. The substance negotiation is likely to fail in the absence of relationship and communication, and so they are interdependent (Falcao, 2010) .My father and Mr. B built a trustworthy relationship with each other without any manipulation and had a clear two-way communication by knowing their interests in order to create a value. VALUE CREATION PROCESS Interdependence: In our negotiation, my father and Mr. B were tied together in such a way that if one is attaining its goal, then the fulfillment of other party’s goal is assured. Trust: The whole negotiation was based on trust. In the absence of this element, our negotiation would be ineffective. Dialogue pattern: My father did not represent his recommendations only during the negotiation but he also observed to Mr. B and listened to his interests as well and both the parties believed in proactive positive reciprocation. Three-way communication: Both the parties clarified each other’s queries and confusions. Value discovery: After communicating with each other, both my father and Mr. B were able to understand clearly and discover their interests. Value Creation: After building the bridge and discovering value, my father transformed the available resources into options to satisfy Mr. B. My father introduced more options that would bring advantages to Mr. B and also combination of available resources would bring cost cutting in the project. After value creation, both the parties discussed and distributed the value among them and reached to the best possible solution i.e. 50/50 of share infrastructure. UNCONDITIONAL CONSTRUCTIVE BEHAVIOUR (UCB) This strategy explains that whatever we do in negotiation, it must be good for the relationship between both the parties. My father reached to the best possible outcome in his negotiation and he also fulfilled the six guidelines of UCB such as: Be Rational: My father and Mr. B were successful in controlling and balancing their emotions, as they freely communicated their feelings with each other. Understand: Both of them were trying to understand each other’s point of view regarding the project. Communicate: To avoid confusions and misunderstandings my father as well as Mr. B became active participants. They also cleared their queries and consulted each other before coming to a decision. Be Trustworthy: Trust was the foremost element without which our negotiation would not have been possible and my father and Mr. B both kept as well as delivered their promise to each other. Their relation became stronger as they both trusted each other’s in the matter of money and land without any betrayal. Persuade: My father has better communication skills and convincing power on the based of his resources that’s why he was able to convince Mr. B though initially he was showing hesitation on the substance negotiation. Accept: By accepting the decision of the negotiation, both the parties gave each other the right to think, feel or just be different. INTER-BETTER-OFF-NESS This approach ensures all sides of the negotiation are viewed in detail to make both the parties better off and bring legitimacy. My father and Mr. B both followed an ethical negotiation following this approach, as they were successful in the deal and were better off in their own perspective. My father was better off as he got the land wherein he could expand his business, reduce cost and in case of Mr. B he got a partner who was ready to invest on his land and he was better off as he would get an additional income in the coming future and would share resources with my father. Thus, the deal was legitimate for both the parties as they would enjoy mutual benefits and it is “inter-better-off-ness”. CONCLUSION For any negotiation, seven elements of negotiation is the most important framework to reach to a best possible outcome. According to my perspective, my father tried to put all his efforts to follow the seven elements framework in his negotiation. Now, as I have better understood this framework, in future I would also help my father in his business negotiations and suggest him to be more systematical and be more convincing by using this framework step by step. It is important to understand the ongoing negotiation from everyone’s viewpoint by knowing their interests and opinions as, it is recommended to view things from different perspectives by using the three perceptual positions in order to reach to a valuable outcome. My father and Mr. B joined hands together to reach to a common ground (integrative approach) by building a bridge so that they may win trust over each other and maintain their long-term relationship. Besides this, I have learnt how to negotiate using different frameworks and approaches in different situations, which would help me to tackle different conditions in future. By following these steps, I will put all my efforts to maximize the values and be a great negotiator. Trust was the most important and valuable element in the negotiation because, mistrust would have led to “no deal” or betrayal. REFERENCES Falcao, H. (2010). Value negotiation: how to finally get the win-win right.Singapore: Prentice Hall/Pearson Education South Asia. Falcao, H. (2010). Fisher, R. and Brown, S. (1989). Getting Together: Building As We Negotiate. New York: Penguin Books. PON - Program on Negotiation at Harvard Law School. (2016). BATNA: Negotiation Skills and Negotiation Tactics Using Negotiation Examples from Real Life - PON - Program on Negotiation at Harvard Law School.[online] Available at: http://www.pon.harvard.edu/daily/batna/negotiation-skills-and-the-hidden hazards- of-batna- development [Accessed 24 Aug. 2016]. Fisher, R. and Try, W. (2008). SEVEN ELEMENTS OF EFFECTIVE NEGOTIATIONS.[Pdf] Availablat: https://hms.harvard.edu/.../HMS.HHSD_.HSPH_.OmbudsOffice.SEVEN%20ELEME... [Accessed 24 Aug. 2016]. Negotiations.com. (2016). Types of Negotiations | Negotiation Experts. [Online] Available at: http://www.negotiations.com/articles/negotiation-types/ [Accessed 24 Aug. 2016].