Negotiation is the process of reaching a common agreement generally involving two or more parties avoiding any sort of dispute. Negotiation is the skill of an individual to attain his personal aim or the aim of an organization without compromising any part from the main demand.
The following assignment is based on a negotiation that the investigator has prepared based on an experience of selling an insurance product to a customer. It was a tough experience for the investigator as he had to make the last ditch effort to ultimately sell the product.
It was just a few days ago when the investigator was appointed as a sales executive of a renowned Insurance Company. The task was not that easy as the job role clearly mentioned that the target of the employee was to sell at least eight insurance products to different customers. He was able to sell four insurance products within two weeks and was sure to exceed the target of eight within a month. On the start of the third week he fixed an appointment with one of his father’s friend who was keen to buy an insurance product.
The service provider offered the service buyer with a lifetime insurance which ensured an all round protection of his family before and after his death. The particular insurance was one of the premium quality products of the organization and provided benefits up to $60,000. The product was an instant hit with the customer but the problem started once the premium price was revealed. The price of the particular product exceeded the budget that was considered by the customer. The insurance premium was slated to be paid for a period of ten years. The seller offered the customer the option to not pay the premium for the last two months. The customer showed no signs of improvement as he refused to take the offer and asked the seller to just lower the price. It was a tough call for the seller as it was beyond his reach to lower the price. Both the parties negotiated for a long time and finally they came to a mutual agreement which ensured no disagreement. The seller offered the buyer an additional renewal benefit of two years. The customer also received an additional benefit of non-payment of premium for the last four months. The above example illustrates a perfect example of negotiation.
The negotiation example as mentioned in the background of the assignment is a type of Distributive Negotiation (West & Turner, 2013). This type of process generally undertakes between two individuals who are not known to each other but comes forward in one case. The process by which the insurance product was sold or bought here is the perfect case of such a negotiation.
There are some special features related to the distributive bargaining,
Relationship is the main pillars to the success of a negotiation. It helps to create a positive environment within which arguments and disputes are solved (Pruitt, 2013). Building a perfect relationship helps to solve any complex problems that arises among two parties (Lee, 2016). The buyer of the insurance is a long time associate of the seller’s father. As because his father shares a good relationship with the concerned person he has no problem to establish a good rapport with the person. While selling the product to the customer he engages in building a mutual understanding and trust which is supposed to have a long term benefit. The negotiation was possible only because of the good relationship between the two parties.
Communication is the process by which an individual connects to the outside world. It helps to understand what people are trying to covey. Sharing of ideas help to come to a common understanding between the concerned parties (Agndal, Åge & Eklinder Frick, 2017). Absence of communication in a negotiation process leads to its failure (Bala, Vij & Mukhopadhyay, 2015). The insurance product was sold to the customer after a long round of interaction with the seller. Both of them carefully listened to their personal viewpoints and ideas and counter ideas were discussed. The healthy discussion helped to avoid any sort of disputes and solved all the queries related to the transaction.
The bargaining which took place before selling the insurance product to the end user came up with a lot of proposals and a variety in demands from both the parties. The seller tried to convince the buyer with a variety of offers while the buyer in turn came up with some different ideas. The negotiation was successful in the end just because of such proposals. (Steele & Beasor, 2017) The customer though keen to buy the product was unwilling to buy it because of its price tag which did not meet the highest price he could offer. The negotiation helped the buyer to get additional insurance cover of two year and also paying fewer premiums. The seller in turn was able to gain a profitable margin because he met his target of selling the product at the same price and also would gain from the extension of the product timeline (Geiger, 2017).
Having a particular aim and a key interest in transaction is another main factor that determines negotiation. The positive interest of the service provider as well as the service user must be present to overcome any conflict (Gratch et al. 2015). The insurance provider has the interest to sell the product while on the other hand the user is keen to buy the product. These interest creation leads to a smooth negotiation process.
Interest of both parties must be maintained in the negotiation process as both the parties must ensure that both of them reach a fair agreement. The particular case as mentioned in this assignment is a good example of mutual agreement between both the parties.
The buyer wanted to get the product in the same price and had no intention of over exceeding the budget. He ultimately bought it at the price of the seller but ensured an extension of two more years.
The seller wanted to sell the product at no price less than the fixed one. He was successful to sell the product finally at the same price which was beneficial for the company.
Commitment is the particular quality of an individual or any business organization to keep the promise which was mentioned at the time of entering into an agreement. Every particular detail on the deal or product must be made clear to the concerned people so that no discrepancies occur.
Every person who will be entering into a negotiation must have adequate alternative plans to offer so that if any one of the plans fails the alternative should be instantly ready. The seller here had a variety of options which he offered to the customer as he was quite sure that the customer would surely negotiate while buying the lifetime product
Negotiation or bargaining is not an easy process to follow and generally involves some steps,
Negotiation Type: The type of negotiation must be clear. Before starting the negotiation it should be made very clear about what particular kind of negotiation is being taking place. It can vary from a competitive to a highly competitive one (Helms & Oliver, 2015).
The particular time when the concerned party comes face to face with each other. The opening phase carries special importance as because this is the first time when the individual party comes face to face (Kriesberg, 2015).
The negotiation phase is the actual phase when the objectives are discussed. The terms and conditions, views of both the parties are discussed and demands of both are listened in details (Reyes, 2015). The parties are involved in convincing one another with their personal demands.
This is the last step of the total process of negotiation. This particular period determines the work done in the past sessions. The deal is closed in this phase. Both the parties jointly come to an agreement which is supposed to be favorable for both of them (Weiss, 2016). The settlement between the parties is done in such a way that no party feels that they have been cheated.
Unconditional constructive behavior is the set of six rules that determines a good relationship between both the negotiators.
Conclusion
The assignment has been one of the perfect examples of negotiation management. The seven frameworks of negotiation that has been provided here have been the main determinants of the negotiation process. The frameworks correctly apply to the example where the seller and the buyer both enter into an agreement for the insurance product. Analyzing the whole report it can be assessed that trust stands out to be one of the main issue while negotiation takes place. Building a healthy relationship, having trust, understanding the person, engaging in healthy conversation are some of the key features of negotiation. It can be inferred that negotiation is a process of mutual understanding that helps to avoid conflicts in the workplace and helps in the growth of a long lasting relationship. To conclude the assignment it can be asserted that negotiation stands out as an effective skill that one must possess to achieve success.
References
West, R., & Turner, L. H. (2013). Introducing Communication Theory: Analysis and Application (2013 Ed.).
Pruitt, D. G. (2013). Negotiation behavior. Academic Press.
Lee, S. H. M. (2016). Learning beyond Negotiation Tactics: The Sales Marketplace. Journal for Advancement of Marketing Education, 24(1).
Bala, M. I., Vij, S., & Mukhopadhyay, D. (2015). Automated negotiation with behaviour prediction. International Journal of Internet Protocol Technology, 9(1), 44-50.
Steele, P. T., & Beasor, T. (2017). Business negotiation: A practical workbook. Routledge.
Geiger, I. (2017). A model of negotiation issue–based tactics in business-to-business sales negotiations. Industrial Marketing Management.
Agndal, H., Åge, L. J., & Eklinder Frick, J. (2017). Two decades of business negotiation research: an overview and suggestions for future studies. Journal of Business & Industrial Marketing, 32(4).
Gratch, J., DeVault, D., Lucas, G. M., & Marsella, S. (2015, August). Negotiation as a challenge problem for virtual humans. In International Conference on Intelligent Virtual Agents (pp. 201-215). Springer International Publishing.
Reyes, V. M. (2015). The False Promise of Principled Negotiations. Journal of Global Initiatives: Policy, Pedagogy, Perspective, 9(2), 3.
Weiss, J. (2016). HBR Guide to Negotiating (HBR Guide Series). Harvard Business Press.
Kriesberg, L. (2015). Negotiating Conflict Transformations. In Handbook of International Negotiation (pp. 109-122). Springer International Publishing.
Malhotra, D. (2016). Negotiating the Impossible: How to Break Deadlocks and Resolve Ugly Conflicts (without Money Or Muscle). Berrett-Koehler Publishers.
Jensen, K. (2013). The Trust Factor: Negotiating in SMARTnership. Palgrave Macmillan.
Halevy, N., & Phillips, L. T. (2015). Conflict Templates in Negotiations, Disputes, Joint Decisions, and Tournaments. Social Psychological and Personality Science, 6(1), 13-22.
Asher, M. (2013). Conflict and cooperation in macro theory and practice.
Helms, W. S., & Oliver, C. (2015). Radical settlements to conflict: Conflict management and its implications for institutional change. Journal of Management & Organization, 21(04), 471-494.
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