TYPES OF NEGOTIATION AND HOW TO PREPARE A NEGOTIATION

TYPES OF NEGOTIATION

There are 7 types of negotiations. It's important to consider which type you're facing — each demands a different strategy. 

1. Win-Lose Negotiations

In game theory they call a win-lose negotiation a zero-sum game. 
The vast majority of games are zero-sum. 
A common analogy for a zero-sum game is dividing a pie. The pie doesn't get smaller or bigger — the players play a game to decide who gets the bigger slice.
If you're facing a win-lose negotiation focus your strategy on determining the other party's minimum requirements (e.g. bottom price). 

2. Win-Win Negotiations

Win-win negotiations involve expanding the pie. For example, if two people decide to go into business together: their partnership negotiations are win-win. One partner may win and the other may lose. However, a win-win outcome is possible because they hope to make money on their investment (expand the pie). Salary negotiations and business-to-business sales can usually be considered win-win. Win-win negotiations may be just as focused on building a bigger pie as dividing the pie fairly. Every effort should be made to keep negotiations friendly and constructive. 

3. Lose-Lose

Lose-Lose negotiations involve a situation in which everyone is going to lose. 
Lawsuits are often lose-lose. Let's say you leave your jacket at a restaurant coat-check and they lose it. Your negotiations for compensation with the restaurant's manager are lose-lose. Your not likely to get more money than the coat was worth. The restaurant also loses. 
Lose-lose negotiations can quickly turn bitter and adversarial. Despite the fact that both parties will lose it's important to try to maintain a collaborative approach. 

4. Adversarial Negotiations

Adversarial negotiations are highly competitive in nature. 
Win-lose and lose-lose negotiations are most likely to be adversarial. Nobody wants to lose, this tends to drive intense competition. 
In some cases, win-win negotiations are also adversarial. For example, high stakes business-to-business sales negotiations often become adversarial (customer vs seller). In extreme cases, negotiations are adversarial because the parties involved intensely dislike each other. In such cases, negotiators may not be interested in winning. Instead, they may seek to maximize the losses of the other party. Negotiations between political rivals may turn destructive in this way. Adversarial negotiations require battle strategies. 

5. Collaborative Negotiations

Collaborative negotiations are creative and friendly. For example, business partnership negotiations are often collaborative. Win-win negotiations that are expected to yield big wins tend to be collaborative. Collaborative negotiations rely on persuasive techniques, optimism and creativity. 

6. Multi-Party Negotiations

Multi-Party negotiations are complex negotiations between two or more parties. They can be extremely challenging and may take years to complete. International treaties between nations are often multi-party. 
Multi-party negotiations require advanced diplomatic techniques. 

7. Bad Faith Negotiation

Bad faith negotiation occurs when a party makes commitments that they have no intention of keeping. Bad faith negotiation is often used as a delay or diversionary tactic. For example, a country may sign an environmental treaty with no intention of implementing it just to relieve political pressure from its citizens. If you suspect that the other side is negotiating in bad faith, it's time to start thinking about penalties in your agreement. 

HOW TO PREPARE NEGOTIATION

While many individuals feel as if successful negotiations are simply the product of natural skill, the key behind reaching an optimal agreement is preparation - know the issue, know yourself, and know your party. Preparation includes knowing your needs and limits, understanding what the other party wants and anticipating their limits, asking the right questions, and being creative in your proposed solutions. Good preparation allows you to strategize and to think on your feet in the negotiation room.

First, consider both your interests and the other party's interests. Interests are not positions. Interests are merely the reasons behind a position. Your interests in reaching an agreement may be readily apparent to you. However, the other party's interests may not. Try to put yourself in their shoes. Why did they agree to sit down at the table with you? What will they get out of this agreement? After you devise a list of interests, circle the common interests. You will highlight these shared interests at the negotiation. Starting off a negotiation on the same page creates a foundation for agreement down the road. It also creates a sense of mutual understanding at the table and opens lines of communication. A good agreement fulfills interests, not positions.

Second, brainstorm options for the agreement. Not every agreement involves just a black-and-white agreement on a monetary amount. How can you create value? What options create value for both parties? For example, if you are negotiating an employment contract with a new employee, think outside salary. Options can include benefits such as health care and paid time off, training, trade association memberships, telecommuting, and more. Options create value and help fulfill even more shared interests.

Third, consider how you can add legitimacy to these options. What objective criteria or standards create a sense of fairness in the transaction? This dissolves a sense of arbitrariness from negotiations. For instance, if you are negotiating on a real estate purchase, you can use property appraisals or recent sales as objective criteria.

Fourth, think about the alternatives for both parties. What alternatives do you have if you do not reach agreement? What alternatives might the other party have? The BATNA is the Best Alternative to a Negotiated Agreement. This is your plan B. If you have a great BATNA, you know you can walk away from negotiations if your interests aren't being met or if things become hostile. This puts the value the agreement creates in perspective. Never forget that the other side might have other competitive offers.

Fifth, focus on keeping lines of communication open. Ask about the other side's alternatives. Ask about their interests. Before going into the negotiation room, write out a list of questions that you need to ask. Also strategize on the most effective way of framing your interests and how to communicate shared interests to the other party.

Sixth, assess your relationship with the other party. Where is it now? Where would you like it to be? Why is it like that? How can you improve it? Transparency, active listening, and empathy are great ways to improve negotiations and subsequently, relationships.

Finally, consider the commitments at stake. What level of authority do you have - can you execute a final agreement at the negotiating table or do you need to have your Board vote on a proposal? What level of authority might the other party have? What steps do you (or they) need to take in order to get a final agreement? Writing down your answers and information for each element and bringing that information with you to the negotiation room will prove to be invaluable.

There are several different formats and styles of negotiations, and which one you use depends on a host of factors such as the strength of the relationship, the urgency of the situation, the complexity of the issues, and the content of the negotiation. Each format and style has its own strengths and weaknesses and can be strategically used in various types of situations. While positioned bargaining may be adequate for quick and informal negotiations such as price haggling, principled negotiations provide a sound backdrop for successful agreements that add value to both parties by fulfilling mutual interests. In addition, the five different negotiation styles (competing, accommodating, avoiding, compromising, and collaborating) are appropriate in different situations, though the collaborative style is universally recommended for principled negotiation as it helps increase value. Finally, preparation is a key element of a successful negotiation, and specifically the Seven Elements can serve as a strong foundation for comprehensive preparation and strategizing.

SOURCE :

http://www.acc.com/legalresources/quickcounsel/ensp.cfm

http://training.simplicable.com/training/new/7-types-of-negotiation-and-1-big-myth