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Need and Importance of Negotiation

Negotiation is an interpersonal process that takes place between representatives of parties in order to resolve differences and reach agreement. It involves modifying demands to find a mutually acceptable compromise. Key reasons that illustrate the importance of negotiation skills include the dynamic nature of business, interdependence between parties, competition, the information age, and globalization. For negotiation to occur, there must be at least two parties with a conflict of interest or disagreement, interdependence so that the outcome satisfies all, and an agreement must be reached within a reasonable time frame. Pre-negotiation planning is important, including understanding one's own personality and the other party.

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Anukrati Bagherwal
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39 views

Need and Importance of Negotiation

Negotiation is an interpersonal process that takes place between representatives of parties in order to resolve differences and reach agreement. It involves modifying demands to find a mutually acceptable compromise. Key reasons that illustrate the importance of negotiation skills include the dynamic nature of business, interdependence between parties, competition, the information age, and globalization. For negotiation to occur, there must be at least two parties with a conflict of interest or disagreement, interdependence so that the outcome satisfies all, and an agreement must be reached within a reasonable time frame. Pre-negotiation planning is important, including understanding one's own personality and the other party.

Uploaded by

Anukrati Bagherwal
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Negotiation is an interpersonal decision-making process necessary whenever we cannot achieve our

objectives single-handedly. term negotiation as described by Micael Salamon as “the interpersonal


process used by representatives of management and employees/unions, within the various
institutional arrangements of collective bargaining, in order to resolve their differences and reach
agreement. Negation is a process for resolving conflict between two or more parties whereby both
or all modify their demands to achieve a mutually acceptable compromise.

Negotiation can be characterized as:


1. an explicit and deliberate event;
2. it takes place between the representatives of parties concerned;
3. the process which intends to settle the disputes/differences between the parties involved;
4. the outcome of the negotiation is dependent (party) on the relative power relationship between
the parties involved.

Need and Importance of Negotiation


Following are the five key reasons that illustrate the importance of negotiation skills
(1) the dynamic nature of business,
(2) interdependence,
(3) competition
(4) the information age, and
(5) globalisation.

The dynamic nature of business,


The dynamic, changing nature of business means that people must negotiate and renegotiate their
existence in
organisations throughout the duration of their careers.
Interdependence
The increasing interdependence of people within organizations, both laterally and hierarchically,
implies that people need to know how to integrate their interests and work together across business
units and functional areas.
Competition
Business is increasingly competitive. This means that companies must be experts in competitive
environments. Managers not only need to function as advocates for their products and services, but
they must also recognise the competition that is inevitable between companies and, in some cases,
between units within a company. Understanding how to navigate this competitive environment is
essential for successful negotiation.
Information Age
The information age also provides special opportunities and challenges for the manager as
negotiator.
Globalization
Most managers must effectively cross cultural boundaries in order to do their jobs. Setting aside
obvious language and currency issues, globalisation presents challenges in terms of different norms
of communication. Managers need to develop negotiation skills that can be successfully employed
with people of different nationalities, backgrounds, and styles of communication.

Preconditions for Negotiations


1. There must be two or more parties which have either conflict or disagreement.
2. There must be a perceived conflict of needs, positions and interests.
3. There must be interdependence so that the outcome must be satisfying to all parties.
4. Agreement must be required to be reached within reasonable time, so that it becomes beneficial
to parties.
5. The success of negotiation depends on the facts that:
(i) The issue is negotiable.
(ii) The negotiators are not only taking but giving also.
(iii) The negotiator’s parties must trust each other to some extent.
(iv) There is a fear that failure may lead to crisis.

Elements of Negotiation
1. People generally do not negotiate with themselves. All negotiations involve transaction
between a minimum of two individuals/groups. However, in some situations, it could more than
two individuals/groups. For example, in India, differences between labour and management are
often resolved with the involvement of the Government.
2. For negotiation to take place, there must exist a conflict of interest between two
individuals/parties. When they come to negotiate, they would like to find a solution that would
satisfy the individual interests of both the parties.
3. The reason why two individuals/groups opt for negotiation is because their relationship is
interdependent. One depends on the other for the satisfaction of his interests, which cannot be
taken care of by another individual or group. For instance, the union depends on the management
and the management is dependent on the workers who are represented by the unions.
4. The process of negotiation begins by presentation of an initial demand/proposal which is
followed by a counter proposal by the other party. If this is followed by several proposals and
counter proposal, negotiation does not take place. Saying yes or no as opening move, or tossing a
coin and sticking to it does not constitute negotiation.
5. In all negotiations the concern is either for division and/or exchange of specific resources The
first is a fixed pie situation where negotiation takes place for a share of the pie. The second is
simply a barter situation, where negotiation takes place as a process of give and
take.
6. Very often people negotiate on behalf of another person, organisation, or even a country called
constituents.
7.All negotiations do not always end up in a mutually satisfying memorandum of agreement.
Sometimes the negotiators get so involved with the issues that they are not able to go beyond
them.
Pre-negotiation Planning

This is the most important stage of negotiation. The success or failure of negotiation depends on how well the homework has been done
before one is in a face-to-face actual negotiation situation. Pre-negotiation planning requires consideration of the following factors:
1. Know thyself: One of the most significant factors is the knowledge about one’s own personality and predispositions. Some people are
good in bargaining while others get confused and irritated more easily. As a result, they either give away some very useful
information or block the process of negotiation. Evidence shows that people who have lesser tolerance for ambiguity tend to be losers in
negotiation.

2. Know the adversary: Knowing one’s self is not enough. It is also necessary to do a
background check on the individual/party, one is going to negotiate with, particularly if
it is a first-time interaction. By and large it has been seen that parties belonging to the
same background (ethnic, religious, caste, etc.) and subscribing to the same ideology
(political or otherwise) tend to cooperate with each other. Early evidence has suggested
that women tend to be more conciliatory than men

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