Hi all, we have some negotiation tips to share. But firstly, what is negotiation? Put it simple: Negotiation is a bargaining process; A tug of war between demands and offers. Before we begin our quest to be successful negotiators, let's examine the different negotiation outcomes: Win-lose SituationWhen one side won, while the other party lose, we have a win-lose situation. This type of negotiation is known as distributive bargaining. The loser won't voluntarily accept this outcome, so there will be no true cooperation. Win-Win SituationThis is the best outcome of a negotiation. As both parties have won, both parties will, of course, truthfully accept the outcome. They will be willing to cooperate with each other and therefore a greater benefit can be achieved. This type of negotiation that aims for a win-win outcome is known as the integrative bargaining. Lose-Lose SituationThis might seem as if both parties don't see eye-to-eye. Yes, this could be a case where both parties fall out totally. However, these lose-lose situations can also happen when both parties willingly want to share the losses fairly. In this case, a cooperation pact is still formed between both parties, which is still considered a desirable outcome.
What if negotiation failed?We can't guarantee that we will fully get what we want or the other party will just accept our offers as it is. We need to be prepared for the worst scenario and get ready our backup plan, a bottom line agreement that we are willing to accept. This backup plan, our bottom line agreement, is called the Best Alternative To a Negotiated Agreement (BATNA). What is Best Alternative To a Negotiated Agreement (BATNA)1. This is the backup plan when negotiations fail. 2. The baseline of our demands and offers 3. It is an alternative agreement if our request fails 4. It gives us a clear direction for bargaining during negotiations 5. The stronger our BANTA is, the smaller the room for discussion. Points to Take Note in negotiation1. Begin by asking the 5W-1H diagnostic question (Who, What, When, Where, Why, and How). 2. Rather than trying to win it all, aim for a win-win situation. 3. Always keep in mind your BANTA and, if necessary, make changes. 4. When a discussion fails, we may reveal our BANTA in order for the other party to consider making a concession. Be truthful about your BANTA as it is unethical to lie, and if the other party finds out, there goes the trust. 5. Do not agree to the other party's counter offer right away. An immediate acceptance of the counter offer may imply that we had initially treated the other party unfairly or that we could be taken advantage of. 6. Make a counter offer to the other party's offer to test the other party's base line. 7. Appear to accept the other party's offer as a sign of good faith. Take this chance to ask for something in return. 8. Learn to make reasonable concessions. But do not keep making concessions or larger concessions.
To better understand the win-lose situation (also known as zero-sum), we will look at the following example: Nash Equilibrium - The Prisoner's dilemma. Nash Equilibrium - The Prisoner's dilemmaTwo robbers, A and B are arrested for robbery. The police only have circumstantial evidence to arrest at least one of them. The police officer then offered them a term. These two robbers have no way of communicating with each other. As a result, they had to make their own decisions without consulting each other. Here are what the officer had offered them:
So, thinking on behalf of Robber A, should he admit? Remember, he doesn't know the other suspect's decision. 1. If he admits and the other robber admits too, he will serve 1 year in jail. 2. If he admits, while the other robber deny, he will serve a 4 years jail term. 3. If he will to deny, while the other robber admitted it, he will be set free. 4. If both of them deny, both of them will locked up in jail for 2 years each. From individual's point of view, he will choose to deny, as he wishes to be set free. However, it is unlikely he will be set free. In fact, both of them will imprisoned for 2 years each. Why? Because, thinking from their own perspective, both of them will deny it, and so both of them will be locked up for 2 years each (See condition 3 above). Now let's view this jail term as a group, instead of as an individual: 1. Both to admit, the total jail term is 2 years 2. One to admit, while the other doesn't, the total jail term is 4 years 3. Both of them deny, the total jail term is 4 years The optimal choice is scenario 1, where both of them admit it. This will be the group's shortest jail term, with a total of two years in prison. Each of them will be imprisoned for a year. Though this is just an illustration, not present in real life, we can see that cooperation between the 2 robbers will produce a more favourable outcome than thinking as an individual. When thinking as an individual, naturally one will hope for the best outcome for himself or herself, but most likely it won't come truth. In real life situations, there is more room for discussion (various types of scenarios/conditions), so why not think about it and cooperate? Contradict theory - Mind GameWhat if one of the robbers thinks from his own (individual) perspective, while the other thinks from the perspective of the group? The robber who thinks from his own perspective will choose to deny, whereas the robber who thinks from the group perspective will choose to admit. Isn't it safer to deny, as there are still chances of being released? As I mention, this is just an illustration, not present in real life. This example is just to show that cooperation will produce a more favourable outcome for the group. Editor's Note:
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