FUNDAMENTAL CONCEPTS IN BUSINESS NEGOTIATION · discuss about negotiation power, differences in negotiation skills and be able to predict use power in business negotiations and classify,

FUNDAMENTAL CONCEPTS IN

BUSINESS NEGOTIATION

Associate Professor Tomislav Galović, PhD

Faculty of Economics and Business in Rijeka

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LEARNING OUTCOMES

• Upon completion of the course, the student will be

able to:

1. Specify and define the basic concepts and elements of the

business negotiation process, identify the of negotiation sub-

processes, recognize the context of negotiations and

determine relationships in negotiation and define, compare

and differentiate the principles and techniques of business

negotiation

2. Identify the basic characteristics of the negotiation situation

and identify obstacles in negotiation and negotiating skills,

discuss about negotiation power, differences in negotiation

skills and be able to predict use power in business negotiations

and classify, properly define and implement business

negotiations strategies

LEARNING OBJECTIVES

• Differ business negotiation and internationalnegotiation;

• Identify fundamental elements of businessnegotiation;

• Define fundamental stages of businessnegotiation;

• Specify business negotiation parties andtheir obbligations;

Let’s indetify the meaning

Business negotiation includesinteractional process of communicationwhere one side has something that otherside wants and upside-down

International negotiation includes interactional process of communication where one stranger has something that other stranger wants and upside-down

Negotiation

Business

Negotiation

Business

manners

International

Negotiation

Business

manners

Cultural

customs

National, subnational, local levelRegional, international,

intercontinental/ global level

International

negotiation

1 2 3

Interests

Options

Standards

People

Alternative (BATNA)

BUSINESS NEGOTIATION

WORKSHOPS

WHEN DID WE START WITH NEGOTIATIONS?

With the first breath of air....

• Each and every one of us have started with

negotiations with the first breath of air. We

negotiated with people around us telling them that

we need safety, food, warmth and what we offer in

return is a sweet little baby.

• While growing up,we have become experienced

negotiators

• Everyday, (consciously or unconsciously) we

negotiate with other people (over the phone, on

the bus, talking to friends, parents, colleagues) but

also with ourself (I will have breakfast, I will not, I will

get up, I will not, I will do this, I will not).

Who are the best negotiators?

Children...

• Children-the best negotiators

• They do not have feelings of responsability and

guilt, unlike their parents and due to that they

triumph in negotiations

• But they are loosing that while growing up, because

other people are not so emotionaly attached to

them

PARTICIPANTS OF NEGOTIATION PROCESS

Leader of negotiating team

• Organizes and coordinates negotiating team

• In real negotiations,he is the one who determines the assignments and decides which team member,when and how will perform.

LEADER OF NEGOTIATING TEAM

CHARACTERISTICS OF NEGOTIATING TEAM LEADER:

• tolerance

• Ability of listening to other team members

• Respects opinions of all team members

• Must not impose authority

• Encourage individuals to present different opinions

NEGOTIATING TEAM

• There are 3 levels of negotiating: negotiating within a team,negotiating with the management,negotiating with other side

• “Team spirit” – create common goals,support each other

• Joint preparation

NEGOTIATING

PREPARATION

• Informations,organization, people, communication, personal and other people´s interests

• Define variables of negotiations eg. Price, terms of payment, discounts, help with financing, delivery etc.

• Negotiation when the goal is achieving better results of negotiation

• Make a list of all client´s demands before the begining of negotiations

• Set high goals“Be realistic- search for impossible”

PREPARATION

• Important principal: COMPROMISE FOR

COMPROMISE BUT TACTICALLY! (if...than...)

• Establish the best position,the worst and

acceptable middle for variable!

• Example:VARIABLE BEST ACCEPTABLE WORST PRICE OF

COMPROMISE

Discount Eithout

discount

2% for 2 tons

4% for 4 tons

5% for 4

tons

3% per

ton

PLANNING

• Finding solutions

• Defining the most important questions

• Criteria for deciding on options

DISCUSSION

• Communication, approach to solution, understanding of each other, team work

• Aim high

• Find out demands from partners

• Have in mind offer as a whole

• Search for changing elements

(variables)

• Have in mind communication,perception and presentation

TEAM GOALS

GOALS:

• Find goals and priorities which you want to

achieve

STRATEGY:

• Find the way toward achieving goals

• Choose strategy which you will use

TACTICS:

• Usual trics: reference about competition, ,80/20, reference about quantities, Good boy-bad boy, take it or leave it etc.

DO NOT FORGET

HAVE IN MIND CHANGING ELEMENTS!

DO NOT FORGET

DO NOT MAKE EMOTIONAL AND RASHLY DECISIONS!

DO NOT FORGET

STAY NEUTRAL,WHILE INTERLOCUTOR IS TALKING!

What we have learned?

• What is difference between businessnegotiation and international negotiation;

• What are fundamental elements of businessnegotiation;

• How to approach fundamental stages ofbusiness negotiation;

• Who are business negotiation parties andtheir obbligations.

Good luck!

Questions?