Tuesday, January 4, 2011


Realising or not, most of the time in our lives, we negotiate for something. With the parents, we negotiate to ask something while with our friend, we negotiate for activities that we want to do together. Actually, there are two primary kind of negotiation, distributive and integrative negotiation. The condition where the parties compete over distribution of a fixed sum of value is called as distributive negotiation. For example, the sales of cloth. The seller and the buyer both negotiate to get the best price. In this deal, relationship and reputation does not really matter.Compared with integrative negotiation, both parties corporate to achieve maximum benefits. The supplier negotiate to get the desired price while the buyer negotiate to settle for more flexible credit term. In the deal, it is a win-win situation. Both relationship and reputation are important for a long term.

To be a skilled negotiator, there are four fundamental concept that you should master. First, know your BATNA (Best Alternatives To Negotiated Agreement). BATNA is a backup plan in the absence of deal. So, if the negotiation fails you have something to fall back. For example, you ask for a car from your parentbut they refuse to give you because it is too expensive, you still can tolerate to have a motorbike. That is your BATNA. Second, is reservation price, the least favorable point at which one will accept deal. For example, you wont buy the cloth for RM40 if your reservation price is RM30. Sometimes, reservation price can be same with BATNA. Third, is ZOPA (Zone Of Potential Agreement). It is the set of agreement that potentially satisfy both parties. Usually, the end  of ZOPA of a person is their reservation price. Lastly, the value. By including the value in the trades both side will gain greatly.

How to make a deal? First, think about the good outcome would be for both parties. Then, identify the value opportunities, BATNA and reservation price also for both side.This is important to checking for relevant potential and opportunities. Also, anticipate the authority issue to strenghten the process. Besides that, learn all about the other side people and their culture, their goal and how they have framed the issue. So, we will not touch on their sensitivity. Also, be flexible in the process.Gather Internal Standard and Criteria Relevant to Fairness and lastly, alter your process in your favour. TQ..   

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