Birmingham City University 2010/11 MBA FT

Section - 1 A. B. Negotiation Environmental Analysis

To Mr David Smith

From Yogesh Bhujbal Student ID: 10497122 17 December 2010

Negotiation
Definition Bargaining (give and take) process between two or more parties (each with its own aims, needs, and viewpoints) seeking to discover a common ground and reach an agreement to settle a matter of mutual concern or resolve a conflict. [Business dictionary] [2010]

Introduction

Negotiate takes place every time to get the solution for the tasks we have to perform on. No business can survive without negotiation. For instance, we have to negotiate with clients, suppliers, buyers to get the tasks on track or to put it on production floor. Negotiation can be state that compromising or settling things at right place for the benefit an organisation and customers. Communication is a mean of negotiation which used to negotiate face-toface conversation, arguments, issue, Email, Telephone etc. It involves numbers of members from one or more organisations and parties and the people from external groups such as buyers, suppliers and customers etc. [Biz Help] [2010]

Characteristics of Negotiation

Negotiation takes place where two or more parties come together to achieve common desired goals. Parties start communicating with variety of opinion on desired goals. However, they come with flexible options and objectives which can later alter by negotiation. If there are differences in opinion and goals parties make effort to win negotiation by offering new proposal or compromise on some issues to benefit mutual agreements. Parties think negotiation is the best way to benefit business. Even though there might be differences in opinions or an agreements parties make sure they come up with positive outcome. It is important for both parties to achieve wining negotiation if one party is gaining little from negotiation it would have little benefit for second party. Negotiation involved combination of communication by telephone, email, face to face conversation, letters etc. We cannot deny personal or emotional attachment while negotiation. After all it is interaction between people. All matter is attitude towards business progress. [Ezine articles] [2010]

Why Negotiate? There are several reasons why we need to have negotiation along with there are thousand paths to approach it. If the reason for negotiation is defeating the opposition it is known as Distributive negotiation. This way you should prepare to be tactic so that you can turn someone on your way of approaching but you many not end up with maximum benefits. This is because your approaches are not following common outcome, which should benefit both parties, and at the same time both parties are looking for different results. Your negotiation is more constructive when both parties agreed towards common pact, it is known as Integrative negotiation. Many times this way we can come to an outcome where both parties can benefit highly. In business activity negotiation can be utilized to reach common desired agreements, such as buying, selling, supplying, acquiring new customers, transaction, employee services (e. g. contracts, appraisal), and borrowing (e. g. loans). At the end, we have to achieve win-win situation where both parties have to benefit from agreements. If one party is not satisfied (even at certain level) with the outcome of the negotiation it will lead to destruction in future business transactions also I want to conclude that this will create bad image for an organization. However, it will not give right message to the present and prospective shareholders. [Biz Help 24] [2010]

Preparing for a successful negotiation Agreements and disagreements co-exist while negotiating. It is necessary to prepare well enough to lead constructive negotiation. However, some negotiation can be destructive in many different ways. For instance, sometime it can be boost your position and at the same time, it can weaken other party, at some points it has been consider manipulative and time consuming as well. Points to be taken into consideration before you start negotiation: Goals: What you can achieve from negotiation? Moreover, at the same time what other party is expecting? Trades: What you and other party is going to trade? What are the products you and other party have for trading? What can be compromise by each other to reach successful negotiation? Alternatives: What alternatives you and other party have if there are signs of failing negotiation? How much it can matter to the Business. Does failure is leading your organization to refrain from further opportunities. Relationships: We have to take number of things into consideration such as how old is the relationship with a particular company? Were there any hidden policies in the past, which had created adverse impact on further

negotiation? What are the strategies that can be implemented to process successful negotiation? Expected outcome: What outcome people should expect from negotiation? What are the new principles have been set? How it can influence an organization? The consequences: What are the consequences negotiations will bring out? What impact it can have on an organization? Power: If negotiation could not reach to the desired expectation, what power other parties have to put most out of least? Moreover, who is losing most? Possible solution: From all of the above considerations what compromises you can bring forward to achieve win-win situation? [Mind Tools] [2010]

Stages of Negotiation

Stage 1 Evaluate and selection of a strategy for a problem solving. Finding possible ways to approach negotiation is by intermediation, reviewing legal issue, arbitration and facilitation. Select an approach. Stage 2 Contact and build trust with other parties. Make initial contact with via telephone or person to person meeting. Explain your plan for desired negotiation and co-operation approaches. Build trust, credibility, relationship and rapport among negotiator. Promote commitment procedures and legitimacy recognition on important issue. Create strategy to handle delicate or emotional issue. Stage 3 Collect and analyse past information of negotiation. Collecting data about people, issues and steps involved in problems. Verify previous documents or data to reduce inaccuracy in further negotiation. Point out partys main considerable interests.

Stage 4 Design plan for Negotiation. Figure out strategies and tactics, these will steps toward common interest of both parties. Find response for a particular issue which can eventually lead to the positive way. Stage 5 Initiate Negotiation. Introduce all parties. Exchange thoughts that are going to be put forward for consideration. Collect important data to analysis. Stage 6 Set an agenda and define issues. Point out topics that are going to be discussed. Set a sequence of an agenda. Initiate or explain how you see a particular situation and encourage other members present their viewpoint. Stage 7 Focus on hidden interest. Scrutinise agenda and issues that are main causes for the disputes. Elaborate needs and interests of other party to make wining negotiation. Stage 8 Create options for settlement. Develop required options to create final settlement. Generate options mutually or individually. Allow private

discussion for members so that they can have option to discuss their agenda privately. Stage 9 Assess options for settlements and final Bargaining. Find how parties interest can meet from the available options. Assess cost and benefits from the selected options. Once alternatives have been selected then parties push up for incremental concession. Alternatives later tailored into desired solution. Parties then reach to sustentative agreement. Stage 10 Make a formal agreement of settlement. Agreement then written in the form of memorandum or legal contract. [Ezine Articles] [2010]

Winning Strategies Ask for smart questions

Many times we tend to assume other partys interest, intentions and priorities. It is very important to ask questions for the better understanding of the aim of other party. The more we know about each other we will have more opportunities to put thoughts together for settlement. We have to make sure we utilise as much resources as possible to benefit both parties.

Play fair

We have to make healthy environment by creating cooperative mood to enhance mutual interaction. This is the only way we can progress to find fact and generate options. Our counterparts are generally a mirror of our own behaviour. We should not put all cards together at a time better trade one on one by setting frame of reciprocation at the beginning. It will be a bad idea to open up best alternatives of negotiation agreement at the initial stage.

Present multiple offers

Multiple offers tend to stimulate communication among negotiators. On the other side single proposal or option does not encourage our counterparts. Negotiation will be more enthusiastic and constructive when numbers of

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options are there on place. This way we can move towards possible and creative solutions then it would otherwise have been possible.

Third Party assistance

Neutral third party negotiation expert can help to increase resources effectively. Third party can bring number of assisting proposals or suggestions that no party have been thought of. Often parties does not share companys secret policies but with the help of third party negotiators parties can have options to handle sensitive data with each other. This prevents one side of wining; generate proper growth for creative process and also reduce risks.

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Summary

We have to make all possible efforts to generate win-win outcome in our negotiation. Boundaries, skills set and attitude these are the circumstances which keeps us in bound what we see as possible. Win-win deals are most likely achieved by using framing, research and building relationship at the right levels. If the approaches are up to the mark it is vital to follow win-win agreement by both parties.

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References 1. (Businessdictionary, 2010), Accessed date: 21 Nov. 2010 [Page:2] 2. (Biz help 24, 2010), [Accessed date: 23 Nov. 2010] [page:2] 3. (Ezine Articles, 2010), [Accessed date: 24 November 2010] [page:2,3] 4. (Negotiation , 2010), [Accessed: 23 Nov. 2010] [page:3] 5. (Mind Tools, 2010), [Accessed date: 23 November 2010] [Page:4] 6. (Ezine Articles, 2010), [Accessed date: 23 November 2010] [Pages:5,6] . (Negotiations, 2010), [Accessed on 24 November 2010] [Pages:7,8]

[Words Count: 1547]

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Environmental Analysis
Definition: Evaluation of the possible effects of external forces and conditions on an organization's survival and growth strategies. (Business Dictionary, 2010)

Organisations Environments:

[Boddy] [2005]
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Why Environmental Analysis? Environment analysis helps to evaluate internal and external factors affecting an organizations growth and it guides to improve organizational strategies. (1000 ventures, 2010)

Two types of evaluation tools: STEEPLE and SWOT Analysis. STEEPLE stands for Socio-cultural, Technological, Economical, Environmental, Political, Legal, and Ethical SWOT stands for Strength, Weakness, Opportunity, and Threat

STEEPLE Analysis: The purpose of STEEPLE analysis is to understand organisations position in competitive business environment and to develop strategies for the future development which can lead organisation towards growth. STEEPLE analysis helps to make understand business operation environments. With the help of strategic STEEPLE analysis organisation can increase their opportunity and decrease the threats and also can plan for broad and long term trends in business environments. (CIPD UK, 2010)

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There are following sub-category of STEEPLE Analysis.

Socio-Cultural:

Social and cultural surrounding does influence our attitude, interests and opinions. For example, family, friends, colleagues and different media channels. These are the forces shape our attitude, the way we behave, which eventually have impacts on business. For instance, people are changing their mind towards the food they eat. They are now more conscious for health and diet regime. As a result many people now days are joining health and fitness centres. There is huge demand for organic food as well. Products such as Wii-Fit video game trying to deal with societys concern about childrens less interest in exercise. Changes in population structure do have impacts on many different industries. It can affect supply and demand of goods and services in the economy. Falling rate of younger population will have huge impact on goods and services that are directly related to such groups of people. In recent years since there is a shortage of food economists have come to concluded that there is huge need for investment in food production industry. Some African countries such as Uganda are giving a thought for their rejection of genetically modified foods.

An organisation should meet the peoples requirements for products and services that are designed to benefit their lifestyle and behavior. If the
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organisation does not adapt to the changes in society, it will have no demand for their goods and services. (Learn Marketing, 2010)

Technological:

Technological innovation has greatly contributed to the way we operate business. Many companies are using technology in many ways such as-

Internet, email, telephone, mobile phones, computers photocopier data machine which sends and receives information.

Softwares which are incorporated with business process are helping to manage business efficiently.

Technological awareness has increased overall rate at which information is exchanged among stakeholders. It has created a revolution in the world of business. Businesses are now able to give prompt reactions to the changes within organisation as they can now use fastest methods for information exchange. However, due to this advancement business are now expected meet their targets within very short period of time. For instance, the internet is having a profound impact on the marketing mix strategy of organisations. Customers now can shop 24/7 a day from their

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homes or from their offices even with the help of 3G technology in phones they can access shop and access products from anywhere. Technology has been used by all age of groups of people. Children are exposed to technology from their childhood and new technology savvy people (pensioner) have emerged. Technology will keep on having impact on consumers behaviors. (Learn Marketing, 2010)

Economical:

The economy goes through many ups and down with general booms and glooms in the economic activity. An economy going under recession will result in high unemployment, less spending power in people. On the other hand growing economy will have lower unemployment; more spending capability also it will have high confidence in share market. Other changes can have economical impact such as rate of inflation, bank interest rate, and level of increasing price of commodity. Business will be more optimistic to take bigger risks when economic circumstances are accurate. Labor force from developing countries can affect viability of products from developed nations. An boost in interest rate in US will have impact on share price in the UKs share market and unfavorable weather conditions in India might influence price of tea in the UK. A real economist must have
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knowledge of economic conditions of all important nations in the world which can eventually make certain guarantees of strategies that shelter and encourage its economic circumstances right trough the world.

(The Times100, 2010) (Learn Marketing, 2010)

Environmental:

Environmental factors are the weather and changes in climate. Changes in temperature can have influence in many companies such as tourism, insurance, and farming. The growing climates changes are taking place are because of global warming and with the help of better environmental alternatives this exterior factor is becoming a noteworthy issue for firms to consider. Growing awareness to protect environment will have impact on industries such as travel and transport industries. For instance, more taxes to be found at air travel and crossbreed cars). This move is affecting demand for products and can have loopholes for creating business opportunities.

(OUP, 2010)

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Political: Political factors refer to governments policy such as the extent of involvement in the economy. What are the governments initiatives for the business supports? What are the services governments wants to provide? Governments position to back up firms financially? Political decisions can crash with many ways on different business. For instance, peoples health, training for workforce and quality of infrastructure of a country like road and rail network.

(OUP, 2010)

Legal: These factors are associated with the legal background in which organisation work. In many ways UK has affected due to the changes in legal requirements For instance, age and disability discrimination law, minimum wages law, wastes recycle requirements etc. These are the recent requirements have an impact on business in the UK. Legal changes can cost money to a firm. For instance new software or system has to be installed. There are many different laws such as consumer laws which protect consumer from fake or misled products. Employment law which prevent employee from dismissal, uneven wages & working hours and abuse by
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mangers. Health and safety law which help employee to practice or work in safe and pleasant environments.

(OUP, 2010)

Ethical:

Ethics refers moral ideology overriding the good and bad human conduct. It is about the principals of right and wrong accepted by individuals. The rules of ethical principals guide the action of individual and the group. Ethical actions are doing what is right. Some actions might be legal and benifitial to the business However are considered to be unethical. There are given activities considered legal but might be unethical for an individual. For instance, gambling, goods made by using child labor, fur trading and experiment on animal.

(Ttutor 2u, 2010)

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Advantages of STEEPLE Analysis:

It is simple and only cost time. It might point out threats to the project. It present business environment at large. It can help organisation to mark further opportunity. It can help organisation to tackle further complication.

Disadvantages of STEEPLE Analysis:

It is very simple list and not a decisive evaluation. The critical evaluation might be mere a guess which can be baseless. Fast changes in the society make it difficult to foresee evaluation that might have impact on an organisation. Some factors can not justified by themselves they need combine support of other factors. Huge amount of information might confuse to anticipate actual ground.

(Project Smart, 2010)

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SWOT analysis

SWOT analysis used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in the business context. It helps to identify internal and external factors which believe to be favorable for the business. SWOT analysis first starts with analyzing critical aspects of business intention and should achieve desired results at the end. SWOT analysis used to develop strategy on the following subject of research.

Strengths are those which earn further benefits and goodwill to the business. Weaknesses are right opposite to the strengths. They can take organisation at backward. Opportunities might increase due favorable external factors. Such as boost in economy, reputation of product. Threats in the external environments could harm the organisation.

Internal and external factors:

The main purpose of the SWOT analysis is to classify the important internal and external factors which are crucial in the organisations growth. These factors come within the organisation and they are divided into two main groups internal factors and external factors. The strength and weakness are

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internal factors where as opportunity and threats are external factors. External factors might directly impact to the internal factors. For instance, changes in laws, technological changes microeconomics.

(Answers, 2010)

The use of SWOT analysis is not restricted to mere profit-seeking organizations. SWOT analysis possibly will be used in any decision making circumstance when a preferred end state has been position. For instance, nonprofit making companies, legislative unit, and individuals. SWOT analysis may also be used in pre emergency planning and defensive calamity management.

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References:
1. http://www.businessdictionary.com/definition/environmental-

analysis.html [Accessed Date: 4-12-10]

2. http://www.1000ventures.com/business_guide/mgmt_strategic_enviro

nmental_analysis.html [Accessed Date: 4-12-10]

3. http://www.cipd.co.uk/subjects/corpstrtgy/general/pestle-

analysis.htm [Accessed date: 04 December 2010]

4. http://www.learnmarketing.net/pestanalysis.htm Access date: 11 Dec.

2010
5. http://www.learnmarketing.net/pestanalysis.htm Access date: 11 Dec.

2010
6. http://www.thetimes100.co.uk/theory/theory--pest-analysis--166.php

Accessed Date: 11 Dec 2010

7. http://www.learnmarketing.net/pestanalysis.htm Access Date: 11Dec.

2010
8. http://www.oup.com/uk/orc/bin/9780199296378/01student/additional

/page_12.htm Access Date: 11Dec. 2010

9. http://www.oup.com/uk/orc/bin/9780199296378/01student/additional

/page_12.htm Access Date: 11Dec. 2010

10. http://www.oup.com/uk/orc/bin/9780199296378/01student/additional

/page_12.htm Access Date: 11Dec. 2010

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11. http://tutor2u.net/business/strategy/business-ethics-introduction.html

Access Date: 12Dec. 2010

12. http://www.projectsmart.co.uk/pest-analysis.html

Accessed date: 11 Dec 2010

[Word count: 1515]

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