Negotiation is and activity that every individual caries out in his everyday life. We are constantly negotiation with ourselves, our family, friends, business, etc. Every activity that happens is the result of a negotiation – “Pros and Cons”. And thus negotiation can be defined as;
“The means by which people deal with their differences”
Negotiation is a continuous and an evolving process especially in a supply chain environment. A company cannot meet the expectation of its customers or shareholders single handed and thus there is lot of negotiation is involved and it is a continuous process. It is a process that emerges when there is a difference and it cannot be settled single handed without a negotiation.
Negotiation is not necessarily a win-loose process, but a good negotiation process is where both parties accept a mutually beneficial or amicable solution.
A Negotiation can be distributive or integrative depending on how it been conducted. A negotiation which involves hard bargaining and is mostly concentrated on one topic where usually the winner takes all is a distributive negotiation. There is little or no attention paid to relationship, consideration or sharing of information and are very aggressive. On the contrary an integrative negotiation is a process in which all parties cooperate to maximize the benefit to all parties and is commonly referred to as expanding the pie. There is lot of understanding among the parties and importance is paid to how more value can be generated in a continuing partnership.
Sometimes depending on the topic a negotiation can get very complex. It could get into a Multi Phase Negotiation stage where one negotiation could lead into another negotiation with the complexity increasing at each stage. It could also get into a Multiparty Negotiation where the needs and want of other parties will require to be explored and will be included into further negotiations.
Though there are many types or causes of negotiation, it is always important for an effective negotiation to underline once BATNA (Best Alternative To A Negotiated Agreement) and their Reservation Point. A BATNA is something which every negotiator should have, and is completely under his control. With this he should be able to set up his reservation point, something beyond which he should not negotiate. Once these are clearly understood and negotiated up on, we can at most of the time identify the ZOPA (Zone of Potential Agreement), which in most of the times overlaps both parties’ reservation points.
Apart from the above other main elements that plays an important role in a negotiation and the most important is listening. Both parties should pay attention, listen and acknowledge the other parties BATNA and Reservation Points. This will not only improve relationships and achieve in establishing a ZOPA, but could also be beneficial to other departments or other entities that could have connection with your unit or industry. There should also be lot of preparation involved prior to a negotiation and preparation should focus on all areas. While a negotiation can be very effective, it could have several barriers. Therefore it is always important that some level of effort is put in in prior and during the negotiation. It is important to respect all parties and acknowledge their interests and concerns. Finding areas of common interests and sharing same, providing a comfort zone for negotiation, talking about past experiences, etc., are some of the few ways to unwind before going into a negotiation process directly.
Similarly it is important that during negotiation a process is clearly followed. The point around which discussion is taking places is well identifies and not deviated from and a clear time line is established. It is also important that the right persons are involved during the negotiation and the points negotiated upon is justifiable There should be room for flexibility...