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Transcript of Lesson 3 - FINAL - May 27th
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2011 IBEC Co., Ltd. - Lesson 3 Identifying Issues 1
Identifying Issues
1. Student-Lead Discussion Based on Pre-Reading (30 min.)
1. Pre-Reading
Pre-Reading Goals
After reading this chapter, you should be able to understand:
Opening Negotiations Identifying Issues Identifying Issues Clarifying Questioning Confirming Setting the Agenda Collaborative Negotiations Creating Win-Win Outcomes Focusing in Interests, not Positions
Lesson Objectives
After this lesson, you will be able to:
1) Understand principled negotiation2) Focus on interests, not positions3) Create win-win negotiations4) Open negotiations effectively5) Identify issues
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1.
Getting to YES
1.1 O
w
Made fam ! " s by the 1981 bestselling book on negotiation,Getting to YES, which many consider
to be the ultimate negotiation guidebook, the concept of principled negotiations means to
negotiate based on principles based on objective facts and merits rather than through a
drawn-out haggling process focused on what each side says they will and will not do. Developed
at the Harvard Negotiation Project, it explains the importance of looking for mutual gains
wherever possible and insisting on using fair standards independent of either partys demands.
Principled negotiation is hard on meritsand soft on people, stressing fairness above all.
1.2 Getting to YESSu# #
$ %y Article
y Read the following article.
In the classic textGettingtoYES, Fisher and & ry describe their four principles for effective
negotiation.
Their four principles are:
1. Separate the people from the problem2. Focus on interests rather than positions3. Generate a variety of options before settling on an agreement4. Insist that the agreement be based on objective criteria
Separatin ' People an ( Issues
Fisher and ) ry's first principle is to separate the people from the issues. People tend to become
personally involved with the issues and with their side's positions. And so they will tend to take
responses to those issues and positions as personal attacks. Separating the people from the
issues allows the parties to address the issues without damaging their relationship. It also helps
them to get a clearer view of the substantive problem.
The authors identify three basicsorts of people problems. First are differences on perception
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among the parties. Since most conflicts are based in differing interpretations of the facts, it is
crucial for both sides to understand the other's viewpoint. The partiesshould try to put
themselves in the other's place. The partiesshould not simply assume that their worst fears will
become the actions of the other party. Nor should one side blame the other for the problem.
Each side should try to make proposals which would be appealing to the other side. The more
that the parties are involved in the process, the more likely they are to be involved in and to
support the outcome.
Emotions are a second source of people problems. Negotiation can be a frustrating process.
People often react with fear or anger when they feel that their interests are threatened. The first
step in dealing with emotions is to acknowledge them, and to try to understand their source.
The partiesmust acknowledge the fact that certain emotions are present, even when they don't
see those feelings as reasonable. Dismissing another's feelings as unreasonable is likely to
provoke an even more intense emotional response. The partiesmust allow the other side to
express their emotions. They must not react emotionally to emotional outbursts. Symbolic
gesturessuch as apologies or an expression ofsympathy can help to defusestrong emotions.
Communication is the third main source of people problems. Negotiatorsmay not be speaking
to each other, but may simply be grandstanding for their respective constituencies. The parties
may not be listening to each other, but may instead be planning their own responses. Even
when the parties are speaking to each other and are listening, misunderstandingsmay occur.
To combat these problems, the partiesshould employ active listening. The listenersshould give
the speaker their full attention, occasionally summarizing the speaker's points to confirm their
understanding. It is important to remember that understanding the other'scase does not mean
agreeing with it. Speakersshould direct their speech toward the other parties and keep focused
on what they are trying to communicate. Each side should avoid blaming or attacking the other,
and should speak about themselves.
Generally the best way to deal with people problems is to prevent them from arising. People
problems are less likely to come up if the parties have a good relationship, and think of each
other as partners in negotiation rather than as adversaries.
Focus on Interests
Good agreements focus on the parties' interests, rather than their positions. As Fisher and 0 ry
explain, "Your position issomething you have decided upon. Your interests are what caused you
to so decide. "Defining a problem in terms of positionsmeans that at least one party will "lose"
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the dispute. When a problem is defined in terms of the parties' underlying interests it is often
possible to find a solution which satisfies both parties' interests.
The first step is to identify the parties' interests regarding the issue at hand. Thiscan be done
by asking why they hold the positions they do, and by considering why they don't hold some
other possible position. Each party usually has a number of different interests underlying their
positions. And interestsmay differ somewhat among the individual members of each side.
However, all people will share certain basic interests or needs, such as the need for security and
economic well-being.
1 nce the parties have identified their interests, they must discuss them together. If a party
wants the other side to take their interests into account, that party must explain their interests
clearly. The other side will be more motivated to take those interests into account if the firstparty shows that they are paying attention to the other side's interests. Discussionsshould look
forward to the desired solution, rather than focusing on past events. Partiesshould keep a clear
focus on their interests, but remain open to different proposals and positions.
Generate Options
Fisher and 2 ry identify four obstacles to generating creative options for solving a problem.
Partiesmay decide prematurely on an option and so fail to consider alternatives. The parties
may be intent on narrowing their options to find the single answer. The partiesmay define the
problem in win-lose terms, assuming that the only options are for one side to win and the other
to lose. 3 r a party may decide that it is up to the other side to come up with a solution to the
problem.
The authors also suggest four techniques for overcoming these obstacles and generating
creative options. First it is important to separate the invention process from the evaluation
stage. The partiesshould come together in an informal atmosphere and brainstorm for all
possible solutions to the problem. Wild and creative proposals are encouraged. Brainstorming
sessionscan be made more creative and productive by encouraging the parties to shift between
four types of thinking:stating the problem, analyzing the problem, considering general
approaches, and considering specific actions. Partiesmay suggest partial solutions to the
problem. 3 nly after a variety of proposals have been made should the group turn to evaluating
the ideas. Evaluation should start with the most promising proposals. The partiesmay also
refine and improve proposals at this point.
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Participantscan avoid falling into a win-lose mentality by focusing on shared interests. When
the parties' interests differ, they should seek options in which those differencescan be made
compatible or even complementary. The key to reconciling different interests is to "look for
items that are of low cost to you and high benefit to them, and vice versa."[p. 79] Each side
should try to make proposals that are appealing to the other side, and that the other side would
find easy to agree to. To do this it is important to identify the decision makers and target
proposals directly toward them. Proposals are easier to agree to when they seem legitimate, or
when they are supported by precedent. Threats are usually less effective at motivating
agreement than are beneficial offers.
Use O45
ective Criteria
When interests are directly opposed, the partiesshould use objective criteria to resolve their
differences. Allowing such differences to spark a battle of wills will destroy relationships, is
inefficient, and is not likely to produce wise agreements. Decisions based on reasonable
standardsmake it easier for the parties to agree and preserve their positive relationship.
The first step is to develop objective criteria. 6 sually there are a number of different criteria
which could be used. The partiesmust agree which criteria is best for their situation. Criteria
should be both legitimate and practical. Scientific findings, professional standards, or legal
precedent are possible sources of objective criteria. 7 ne way to test for objectivity is to ask if
both sides would agree to be bound by those standards. Rather than agreeing in substantive
criteria, the partiesmay create a fair procedure for resolving their dispute. For example,
children may fairly divide a piece ofcake by having one child cut it, and the other choose their
piece.
There are three points to keep in mind when using objective criteria. First each issue should be
approached as a shared search for objective criteria. Ask for the reasoning behind the other
party'ssuggestions. 6 sing the other parties' reasoning to support your own position can be a
powerful way to negotiate. Second, each party must keep an open mind. They must be
reasonable, and be willing to reconsider their positions when there is reason to. Third, while
they should be reasonable, negotiatorsmust never give in to pressure, threats, or bribes. When
the other party stubbornly refuses to be reasonable, the first party may shift the discussion
from a search for substantive criteria to a search for procedural criteria.
2. 0 Openin8
Negotiations When opening any negotiation, it is essential that each party has a clear understanding of the
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issues to be discussed, and that each side clarifies and confirm these issues.
2.1 Presenting Overall O9 @
ectives
It iscritical to identify both overall objectives and specific points before a negotiation begins, as
this helps to move the discussion along as efficiently as possible. To begin, it is important to
make a general statement regarding the meetings overall objectives. Thiscomment does not
need to be specific in nature, but rather a broad declaration of the main idea(s).
Key Phrases
The purpose of our meeting today is to discussthe price pointofournewproduct. We are here today to talk abouthowwecan reduceouroverheadnextquarter. Today we are here to look into the option of expandingour productline-up.
2.2 Identifying Specific Points
After making a general statement, it is important to identify specific points which will be
addressed in the meeting. This allows everybody to be aware of the individual topics and thus
helps the discussion to move forward smoothly.
Key Phrases
In particular, we need to address theissueofpricing. Specifically, we should talk abouttheimportanceofon-time delivery. In detail, it is important that we discuss the final quantity and price.
Sample Dialogue
A: The purpose of our meeting today is to talk about the possibility of our becoming your
exclusive distributor in Japan.
B: Yes, thats right. In detail, it is important that we discuss the pricing, quantity and
payment terms. These issues are the top priorities for us.
A: I see. In particular, we need to address the issue of pricing, I think.
B: I agree with you. Taking the timing into consideration, we should try to agree on as
many points as possible during our meeting today.
A: I think so, too. As I mentioned in my e-mail yesterday, our target is 1,500 per unit. Would
it be possible for you to meet that price?
2. A Clarifying Issues
In order ensure a smooth flow to the negotiation, each party should ask for clarification of the
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othersspecific position on the variousmatters.
Key Phrases
In other words, do you mean that most important issue for you is price? IfIunderstand you correctly, you said your top priority is to discuss the quantity? Please let me clarify one other point: stable supply ismost important, right?
Sample Dialogue
A: Based on your comments before, let me check my understanding.In other words, do you
mean that the most important issue for you is price?
B: Yes, thats correct, since market conditions remain very weak at the moment. If I
understand you correctly, you said your top priority is to discuss the quantity?
A: Absolutely. The minimum quantity you order is a major issue for us, ofcourse.Please let
me clarify one other point: stable supply ismost important for you, right?
B: Oh, it is very important, since we need to ensure that we can meet our clients delivery
demandsconsistently. Ofcourse, the price is also a critical issue.
A: I understand your position, and Imsure we can offer a satisfactory delivery schedule.
2.4 Confirming Issues
At this point of the negotiation opening, each party should confirm once more to avoid any
possible confusion. This helps to ensure that the discussionscan move forward without any
information gaps holding back a positive outcome.
Key Phrases
Its clear to me that your number one priority is price. Correct? I think you said that we can discussthe quantityfurther, basedonthe price, right? Please let me confirm: stablesupplyisoneofthemostimportantareas.
Sample Dialogue
A: Judging from what you said, its clear to me that your number one priority is price.
Correct?
B: Yes, thats exactly right, since we need to be careful based on the economy.Ithink you said
that we can discuss the quantity further, based on the price, right?
A: Yes, I think we can. Please let me confirm: stable supply is nearly as important for you as
the price. Do I understand correctly?
B: Yes, you do. We have had some trouble in that area with previoussuppliers.
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A: Imsorry to hear that and understand the situation. We will do everything possible to meet
your supply needs, I promise.
2.5 Setting the Agenda
After clarifying and confirming the issues that need to be discussed, the next stage is to set the
agenda. You need to agree on the order in which to discuss the issues.
Key Phrases
If you agree, Iwould like to open with yourannual quantity requirements. After that, we should discussprice details. We can then move on and talk aboutleadtime, paymenttermsandservice. As we have limited time, Isuggest we concentrate on quantityand price.
Sample Dialogue
A: I think we have covered everything, but, if possible, we would like to hear about the
quality of your steel and the stability of your supply first. After that, we should discuss
price details.
B: I understand, and I can explain that, ofcourse.As we have limited time, Isuggest we
concentrate on your expected quantity and price.
A: I see. Well, where do you think we should start?
B:If you agree, Iwould like to open withyour annual quantity requirements.
2.6 Noting the Time Frames
After setting the agenda, it is a good idea to set some kind of time frame in which the
negotiation should be completed.
Key Phrases
Given the urgency of the situation, we have to finish by3pm. Taking the timing into consideration, we should try to wrap up bynoon. If possible, we would like to reach an agreement no later thanthe end of the day.
2.7 Starting the Negotiation
The last stage isstarting the negotiation..
Key Phrases
With your agreement, Iwould like to start bydiscussing the price.
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If there are no questions, let me begin by addressing the issue ofshipping costs. If everyone is ready, please allow me to bring up the subject ofqualitycontrol.
3. 0 Collaborative Negotiations
Collaborative negotiations are those in which the negotiating parties have goals which are
clearly related to the positive outcome. They tend to be long-term in focus, with the parties
intending to work together in the future; therefore they involve a spirit of trust, openness,
active listening and jointly exploring possible alternatives during the negotiation.
3.1 Creating Win B WinOutcomes
To reach decisions which satisfy the interests of both sides in a negotiation, partiesmust be
predictable and flexible, share information honestly and treat each other with respect. They
should use logic, creativity and a constructive attitude to achieve the desired outcome, always
asking What are the best ways to positively address the interests of all parties involved?
Key Phrases
Icompletely understand your interest in buyingatthe lowestpossible price. Your concern about the quantity seems reasonable basedon yourwarehousespace. Icertainly see your point regarding the delivery date duetothemanufacturingtime.
Sample Dialogue
A: Icompletely understand your interest inbuying at the lowest possible price, since you
think that the market will remain weak.
B: Thank you. Im glad you can see our long-terms interests on this issue. We must be very
sensitive about the price point.
A: I know. Your concern about the quantity seems reasonable, too,based on your
warehouse space.
B: I appreciate your understanding. As for the delivery schedule,Icertainly see your point
regarding the date based on the manufacturing lead time. I hope we can work this out.
A:I do, too, and I will certainly try my best.
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3.2 Focusing on Interests, not Positions
This is one of the most important elements in the book Getting ToYES, and essential means
that a skilled negotiator must focus on their counterparts interests instead of simply the
persons positions. According to the book, the fundamental problems which arise in a
negotiation stem not fromconflicting positions but rather fromconflicts between the parties in
terms of their individual needs, desires, concerns and fears; these four areas define the
personsinterests, which in turn lead the person to taking a concrete position.
Key Phrases
It seems that you want a lower price since youthinkthatthemarketwill remainweak. I think your concern about the quantity is because yourwarehousespaceis limited. Your comment regarding the delivery dateseemsto be duetothemanufacturingtime.
Sample Dialogue
A: It seems that you want a lower price since you think that the market will remain weak.
B: Yes, that is correct. Our primary interest is in maintaining positive cash flow since the
economy is not improving quickly. Price is a major concern.
A: I understand. I think your concern about the order quantity is because your
warehouse space is limited. Is that accurate?
B: Thats true. We have only one small warehouse in Saitama, so we must be cautious about our
stock levels at all times. Your comment regarding the delivery date seems to be due to
the required manufacturing lead time.
A:Right. Frankly speaking, I am not sure that delivery in early December is realistic in thiscase.
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4.0 Mitsui & Co. Application
Lets focus on your own negotiation at Mitsui &Co. the Challenging Negotiation that you wrote
down in the table fromPre-Reading 2, Exercise 4.0
1. List your interests in this negotiation.2. List the other parties interests in this negotiation3. Indicate whether these interests are shared, differing, or conflicting4. Indicate the priority level of these interests.5. Be prepared to present these interests to your fellow classmates in the beginning of the
class.
Interest Type Priority
Your Interests
Their Interests
Type: S=Shared, D=Differing, C=Conflicting
Priority: H=High, M=Medium, L=Low
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Pre-Class Reading Worksheet
Check your Understanding
1. Do you understand why you should separate people from the problem?Yes /No
2. Do you understand why you should focus on interests not positions? Yes /No
3. Do you understand why you must generate a variety of issues before settling on a
agreement? Yes /No
4. Do you understand why you should insist that agreement be based on objective
criteria? Yes /No
5. Are you confident that you know how to open a negotiation effectively?Yes /No
Points Requiring Clarification
1.
2.
3.
Points for Discussion
1.
2.
3.
Points to Expand Upon
1.
2.
3.
Points of Personal Interest
1.
2.
3.
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Discussion Questions
Topic: Principled Negotiations
Warm-up question
Think about one of your recent experiencesnegotiating for Mitsui &Co.
Discuss one specific example ofstrategies/actions you used using to achieve mutual benefits for
both sides in these negotiations
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
Discussion questions
1. Discuss a specific example of how you can focus on the interests and not the positions in
negotiations.
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
2. Discuss how you can find out more about the other party's interests in the negotiations.
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
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Application
C . Application of Pre-Reading (30 min.)
1.0 The Interests of your Challenging Negotiation
TASK 1
Lets focus on your own negotiation at Mitsui & Co.
y Present the interests of your challenging negotiations to your classmates (fromExerc
D
se4.0, MD
E s FD
& Co. ApplD
cG
E
D
on, H re- I eading 3.)
What are your interests in this negotiation? What are the other partys interests in this negotiation? Explain whether these interests are shared, differing, or conflicting Explain the priority level of these interests.
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2.0 Opening a Negotiation
TASK 2
1. Work with a partner and match the stage of the negotiation with the correct phrase.2. Number the stages in the correct order.
Opening Negotiations
1. Setting the Agenda A. Please let me clarify one other point: stable supply ismost important, right?
2. Identifying Specific
Points
B. Please let me confirm: stablesupplyisoneofthemostimportantareas.
3. Confirming issues C. We can then move on and talk aboutleadtime,paymenttermsandservice.
4. Starting the
Negotiation
D. Specifically, we should talk abouttheimportanceofon-time delivery.
5. Clarifying Issues E. The purpose of our meeting today is to discusstheprice pointofournewproduct.
6. Presenting Overall
Objectives
F. If everyone is ready, please allow me to bring upthe subject ofquality control.
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Key Phrases Opening Negotiations
Presenting
Overall
Objectives
The purpose of our meeting today is to discussthe price pointofournewproduct.
We are here today to talk abouthowwecan reduceouroverheadnextquarter.
Today we are here to look into the option of expanding our products.Identifying
Specific Points
In particular, we need to address theissueofpricing. Specifically, we should talk abouttheimportanceofon-time delivery. In detail, it is important that we discuss thefinal quantityand price.
Clarifying Issues In other words, do you mean that most important issue for you isprice?
IfIunderstand you correctly, you said your top priority is to discussthe quantity?
Please let me clarify one other point: stable supply ismost important,right?
Confirming
issues
Its clear to me that your number one priority is price. Correct? I think you said that we can discussthe quantityfurther, basedonthe
price, right?
Please let me confirm: stablesupplyisoneofthemostimportantareas.Setting the
Agenda
If you agree, Iwould like to open with yourannual quantityrequirements.
After that, we should discussprice details. We can then move on and talk aboutleadtime, paymenttermsand
service.
As we have limited time, Isuggest we concentrate on quantity andprice.
Noting the Time
Frame
Given the urgency of the situation, we have to finish by3pm. Taking the timing into consideration, we should try to wrap up by
noon.
If possible, we would like to reach an agreement no later than theend of the day.
Starting the
Negotiation
With your agreement, Iwould like to start bydiscussing the price. If there are no questions, let me begin by addressing the issue of
shipping costs.
If everyone is ready, please allow me to bring up the subject ofquality control.
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3.0 Identifying Issues
a. Shall we begin?b. Actually, our standard policy is to c. Two of our top priorities are d. I hope we can come to terms.e. Well, we only have an 90minutes today, so f. The purpose of our meeting today is tog. I can understand why h. One of our top priorities is i. In addition, it is important that we discussj. Are there any other major discussion points for you?
TASK
Working with a partner, use the phrases from box above to fill in the spaces in the conversation
below.
A: 1. __________________ talk about the possibility of our company becoming the
exclusive distributor of your new software in Japan.
B: Yes, and that sounds very interesting to us.2. _________________ the pricing and your
annual order volume. These issues are most important for us.
A: I see. 3._________________ the payment terms.
B: I understand. 4.______________we should try to agree on asmany points as possible
during our meeting. 5._____________ the contract term for this deal, if we are able
reach agreement on other issues. 6.______________________?
B: Yes, actually, the shipping costs are a big factor.
B: How do you deal with the shipping costs with your other software vendors?
A: 7._________________split the costs 50/50.By doing so, we can offer competitive
prices at the retail level, which iscritical for volume, ofcourse.
B: Yes, I see and 8.________________ that particular issue is important.
A: I appreciate that. 9.__________________.
B: So do I. Well, as I said, we dont have much time today, so 10.__________________
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Key Phrases for Identifying Interests
Icompletely understand your interest in buyingatthe lowestpossible price. Your concern about the quantity seems reasonable basedon yourwarehousespace. Icertainly see your point regarding the delivery date duetothemanufacturingtime. It seems that you want a lower price since youthinkthatthemarketwill remainweak. I think your concern about the quantity is because yourwarehousespaceis limited. Your comment regarding the delivery dateseemsto be duetothemanufacturingtime.
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3. Mitsui-Related Case Study - Negotiation Role Play (P
Q min.)
Negotiation practice
Mitsui de MexicoSubsidiary ofMitsui in Mexico
Jalisco Farmers AssociationAssociation representing the growers of blue agaveplant in Mexico
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Background information
Mitsui de Mexico wants to purchase blue agave plants from the Jalisco Farmers Association.
Blue agave is a plant that is an important economic product of the region of Jalisco, Mexico.
Blue agaves are plants with spiky, fleshy leaves that can reach over two meters in height. The
heart of the plant is also very large, normally weighing between 35~90 kg.
Jalisco Farmers Association represents the local farmers in Jalisco who grow the blue agave.
It is important to note that Jalisco is the only region in Mexico where it is allowed to grow blue
agave, and the Jalisco Farmers Association controls the entire supplychain.
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Negotiation Preparation Sheet
1. ________________________________________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________
2. _______________________________________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________________
3. _______________________________________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________
4. _______________________________________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________
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Negotiation Tips
You should remember the tips below both before and during anynegotiation,
as theywill help you achieve the most positive results.
Separate the people from the problem.If you focus only on the individual rather thanthe issues at hand during the negotiation, it can cause negative emotions, which usually
will damage the outcome of the negotiation.
Focus on interests rather than positions.Focusing on positions only threatens tobreak down negotiations, as each party with tend to stop listening closely to the other.
Alwaysconcentrate on you and the other partysinterests in order to reach agreement.
Generate a variety ofoptions before settling on an agreement.A successful
negotiator must be creative, always exploring new options with which their counterpart
may agree.
Insist that the agreement be based on objective criteria.A talented negotiator willuse logic to support their interests, based on facts and data. Not doing so means that your
reasoning is unsupported.
3