How to negotiate in business

Negotiation is not a game intended to defeat the other side; rather it is about cooperating to achieve a mutually-beneficial win-win situation.

WOU’s School of Business and Administration (SBA) Deputy Dean, Assoc Prof Dr Anbalagan Krishnan, was speaking at an online seminar on “Business Negotiation: Yay and Nay”, organised by WOU Academy on 23 May 2023 under the National Training Week.

Insights into the art of business negotiation.

He described negotiation as a process in which one pursues favourable terms and conditions from those who seek something in return. Additionally, negotiation serves as a means to resolve conflicts by reaching an agreeable compromise.

He offered tips in negotiating, such as learning to read the other person’s body language, including hand gestures, facial expressions, and how they speak or move their body.

“Remain calm, even when confronting destructive behaviour. Do not match or react to such behaviour,” he said, stressing that the goal is to achieve a win-win situation that satisfies the interests of all the parties involved, while maintaining the relationship.

Explaining what negotiation is.

Dr Anbalagan also talked about the power of silence and understanding culture as techniques in negotiation. By aligning one’s behaviour with the acceptable cultural norms, it is possible to gain the other party’s confidence and trust.

He outlined the four stages of a business negotiation: Preparation, Debate, Proposal and Bargaining.  For effective preparation, he suggested, “Do your homework, gather information. Be clear of what you want, and keep these objectives in mind as you enter into the negotiation.”

The next is Debate, which involves uncovering what the other side wants. “Ask questions. The more questions you ask, the more insights you gain about the other party.”

Negotiation skills can be learned.

After Debate, follows the Proposal.  “Stress the conditions first before presenting what you can offer them.” He said this approach will allow the other side to clarify what they can offer in return and the accompanying conditions.

Lastly, the Bargaining takes place. “You want to conclude the deal, or finalise the negotiated items, such as pricing or project completion timelines,” he said.

According to Dr Anbalagan, negotiators are categorised into two types: ‘red’ and ‘blue’. Red negotiators are aggressive and competitive, resorting to ploys and tactics as they want to “win everything”. Blue negotiators are kinder, accommodating and cooperative, willing to modify their demands.

Dr Anbalagan is the Deputy Dean of SBA.

He said that achieving a compromise requires one to be willing to adapt. “While one may adopt a red mindset at the outset of the negotiation, but through discussion, both sides should ideally reach blue-blue for a win-win situation,” he added.

He highlighted two common terms in negotiation: BATNA, the best alternative to a negotiated agreement, which refers to a backup option a side has if negotiation fails; and WATNA, the worst alternative to a negotiated agreement. He said it is important to understand the best and worst alternatives during the preparation stage, in case negotiations become deadlocked.

Essential skills for negotiation.

He also identified five essential skills in negotiation: leadership, communication, persuasion, conflict handling, and decision-making. He said leadership here involves traits like beliefs, values, ethics, character, knowledge, and skills.

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