University of Turin Advanced Business Administration

1. University of TurinAdvanced Business Administration Negotiation and conflict management Associate Professor Christine Burton

2. Aims of this lecture • Definition of conflict • Identify sources of conflict • Tools for managing conflict • Negotiation

4. Definition of Conflict • Conflict is ‘ …a process of social interaction involving a struggle over claims to resources, power and status, beliefs and other preferences and desires. The aims of the parties in conflict may extend from simply attempting to gain acceptance of a preference, or securing a resource advantage, to the extremes of injuring or eliminating opponents.’ (Bisno,1988, cited in Rahim, 1992)

5. Sources of Conflict • Scarce resources • Communication variables • Perceived differences • Environmental factors • Robbins identifies these as • Communication differences • Structural differences • Personal differences

6. Classifying Conflict • Affective conflict • Cognitive conflict • Goal conflict • Substantive conflict • Realistic vs. non-realistic conflict

7. Functional and Dysfunctional Conflict • Affective –associated with dysfunctional conflict • Cognitive –associated with functional conflict • Mutuality and Openness • Past performance of organisations

8. Responses to Interpersonal Conflict • Integrating • Issues are complex • Synthesis of ideas needed to come up with better solutions • Time is available for problem-solving • One party cannot solve the problem • Resources possessed by different parties are needed to resolve their common problem • Need for commitment from all parties

9. Obliging • Wiling to give up something for a future benefit • You are operating from a position of weakness • Issue more important to the other party • You believe you may be wrong • Dominating • Speedy decision needed • Issue relatively trivial • Subordinates lack expertise in situation • Show of strength to assertive subordinates

10. Avoiding • Issue is trivial • Likely to cause dysfunctional effect if resolution is pushed • Cooling off period needed • Compromising • Goals of parties are mutually exclusive • Parties are equally powerful • Consensus cannot be reached • Integrating or dominating style not successful • Temporary solution to a complex problem is needed

11. Tools for managing conflict or coming to agreements: Negotiation • Negotiation is the means by which business people create synergies and resolve differences

12. Essential types of negotiation • Negotiation • Distributive – gain at the other’s expense • Integrative – both parties get what they want

13. Tactics in Distributive Negotiation • Control the ‘anchor point’ • Share information shrewdly • Learn about the other party • Don’t overshoot

14. Tactics in Integrative Negotiation Create as much value for yourself and the other party • Provide significant information about your circumstances • Explain why you want to make the deal • Talk about your real interests or business constraints • Reveal and explain in general terms your preferences among issues or options Claim value for yourself • Consider and reveal any additional capabilities or resources that might meet the other side’s interests to add to the deal • Use what you learn to find creative options that will meet the interests of both parties

15. Multiparty negotiations • Involves more than two parties • Coalitions can form • Natural coalition • Single issue coalition • Managing Coalitions

16. Key Concepts in Negotiation • BATNA (Best alternative to a negotiated agreement) • Reservation price (position or walk-away) • ZOPA (Zone of possible agreement) • Value creation through trades

17. Negotiator’s Dilemma • A situation faced by people who enter any type of bargaining situation must determine whether to aggressively claim the value currently on the table (and possibly come out the loser) or work with the other side to create even better opportunities that both parties can share

18. Re-cap Negotiation

19. Let’s see how this works in our case study • Lily and Serena case Study