CHAPTER 1 The Nature of Negotiation

1. CHAPTER 1 The Nature of Negotiation

2. Learning objectives (LO) • Understand the nature of negotiation and characteristics of a negotiation situation • Appreciate elements essential to a negotiation situation. • Extend and apply the fundamentals of negotiation to the nature of business negotiation (Biz Negotiation) and IB Negotiation. • Blueprint your course ends and means

3. The Titles (headings) • A Few Words about our Style & Approach to Negotiation. • Joe and Sue Carter. • Characteristics of a Negotiation Situation. • Interdependence. • Mutual Adjustment. • Value Claiming and Value Creation. • Conflict. • Effective Conflict Management. • Overview of the whole book &Chapter Summary.

4. Opening question for you to consider: The authors explicitly state that their insights into negotiation are drawn from three sources: experience, media, the wealth of social science research (p.4). What are the implications for you as a learner of negotiation?

5. A story about a husband and wife. • In a not-so-atypical day, they faced the challenges of many negotiations, major and minor. • The Carter story (anecdote) used to highlight something important (definition, characteristics of a negotiation, and so on). • Definition of negotiation: Any generalizations? • What do you think about a negotiation situation? • What about bargaining and negotiation(p.4)?

6. SOME PRACTICAL DEFINITIONS: 1/2 1. Whenever we attempt to influence another person through an exchange of ideas, or something of material value, we are negotiating. Negotiation is the process we use to satisfy our needs when someone else controls what we want. Every wish we would like to fulfill, every need we feel compelled to satisfy, are potential situations for negotiation.

7. SOME PRACTICAL DEFINITIONS: 2/2 2. Negotiation between companies, groups or individuals normally occurs because one has something the other wants and is willing to bargain to get it.

8. 3. Characteristics of a Negotiation Situation (pp. 5-9) (1) There are two or more parties. (2) There is a conflict of needs and desires between two or more parties. (3) The parties negotiate by choice. (see Box 1.1 for examples of when not to negotiate, p.8) (4) When we negotiate we expect a “give and take ” process. (see Box 1.2, p. 9) (5) The parties prefer to negotiate and search for agreement. (6) Successful negotiation involves the management of tangibles & also the resolution of intangibles (see Box 1.3 about the dangerous role of ego in negotiation, p. 9).

9. Four Key elements of the negotiation process

10. 4. Interdependence (pp.9-13) • When the parties depend on each other to achieve their own preferred outcome they are interdependent (p.10). • Most relationships between parties may be characterized in one of three ways: independent, dependent, or interdependent. • Note that having interdependent goals do not mean that everyone wants or needs exactly the same thing. (See Box 1.4 for a perspective on interdependence and the importance of intangibles from a famous agent, p. 10)

11. 4. Interdependence (pp.9-13) • Types of interdependence affect outcomes (p. 12). “To the degree that one person achieves his or her goal, the other’s goals are not necessarily blocked, and may in fact be significantly enhanced.” • Alternatives shape interdependence. (p. 12) “whether you should or should not agree on something in a negotiation depends entirely upon the attractiveness to you of the best available alternative” (Fisher et al. 1991: 105) See Box 1.5 for a lesson on how one party manipulates the perception of his possible BATNA to get the other to agree. (p. 13)

12. 5. Mutual Adjustment (pp. 13-16) When parties are interdependent, they have to find a way to resolve their differences.(p.13) But how? Through influence (power, leverage) It is important to recognize that negotiation is a process that transforms over time, and mutual adjustment is one of the key causes of the changes that occur during a negotiation. (p.13)

13. 5. Mutual Adjustment (pp. 13-16) • Mutual adjustment and concession making. When one party agrees to make a change in his or her position, a concession has been made. Concessions restrict the range of options, with which a solution or agreement will be reached; when a party makes a concession, the bargaining range is further constrained.

14. 5. Mutual Adjustment (pp. 13-16) • Two dilemmas in mutual adjustment. (p.14) First, the dilemma of honesty, concerns how much of the truth to tell? Second, the dilemma of trust, how much should the negotiators believe what the other party tells them? See Box 1.6 The importance of aligning perceptions (p.16)

15. 6. Value Claiming and Value Creation-1 (pp.16-18) • Identify two types of interdependent situations — zero-sum and non-zero-sum. • The structure of interdependence shapes the strategies and tactics that negotiators employ. • In distributive situations negotiators are motivated to win the competition and beat the other party to gain the largest piece of the fixed resource that they can. • In integrative situations the negotiators should employ win-win strategies and tactics.

16. 6. Value Claiming and Value Creation-2 Unfortunately, most actual negotiations are combination of claiming and creating value processes. (p.17) • The implications for this are significant: (1) Negotiators must be able to recognize situations that require more of one approach than the other. (2) Negotiators must be versatile in their comfort and use of both major strategic approaches. (3) Negotiator perceptions of situations tend to be biased toward seeing problems as more distributive/competitive than they really are. (p.17)

17. 6. Value Claiming and Value Creation-3 Value may be created in numerous ways, and the heart of process lies in exploiting the differences that exist between the negotiators.(p.18) The key differences among negotiators include these: (1) Differences in interests. (2) Differences in judgments about the future. (3) Differences in risk tolerance. (4) Differences in time preference. While value is often created by exploiting common interests, differences can also serve as the basis for creating value. The heart of negotiation is exploring both common and different interests to create this value and employing such interests as the foundation for a strong and lasting agreement. (p.18)

18. 7. Conflict (pp.19-25) • A potential consequence of interdependent relationships is conflict. Conflict can result from the strongly divergent needs of the two parties or from misperception and misunderstanding. • Conflict can occur when two parties are working toward the same goal and generally want the same outcome or when both parties want very different outcomes. • Regardless of the cause of the conflict, negotiation can play an important role in resolving it effectively.

19. 7.1 Definitions (p.19) • Conflict may be defined as a “sharp disagreement or opposition, as of interest, ideas, etc”, and includes “the perceived divergence of interest, or belief that the parties’ current aspirations cannot be achieved simultaneously”. • Conflict results from “the interaction of interdependent people who perceived incompatible goals and interference from each other in achieving those goals.”

20. 7.2 Levels of Conflict (p.19) Four levels of conflict are commonly identified: • Intrapersonal or intrapsychic conflict. • Interpersonal conflict. • Intragroup conflict. • Intergroup conflict.

21. 7.3 Function and Dysfunctions of Conflict Productive aspects of conflict (see Figure 1.1 Functions and Benefits of conflict, p.21) Elements that contribute to conflict’s destructive image: • Competitive, win-lose goals. • Misperception and bias. • Emotionality. • Decreased communication. • Blurred issues. • Rigid commitments. • Magnified differences and minimized similarities. • Escalation of conflict.

22. 7.4 Factors that Make Conflict Easy or Difficult to Manage • Figure 1.2 (p.21) presents a conflict diagnostic model. This model offers some useful dimensions for analyzing any dispute and determine how easy or difficult it will be to resolve. • Conflicts with more of the characteristics in the “difficult to resolve” column will be harder to settle, while those that have more characteristics in the “easy to resolve” column will be settled quicker.

23. 8. Effective Conflict Management (p.23-25) • Figure 1.3The dual concerns model (p.23) Concern about other’s outcomes Problem solving (collaborating, integrating Yielding (accommodating, Obliging) (compromising) Contending (competing, dominating Inaction (avoiding) Concern about own outcomes (assertive)

24. 8. Effective Conflict Management • Figure 1.4 Style of handling interpersonal conflict and situations where they are appropriate or inappropriate (p.26)

25. 9. Overview of the whole book (pp.25-30)

26. Teaching Objectives (p.3) • After reading this book, we hope you will be thoroughly prepared to recognize negotiation situations; understand how negotiation works; know how to plan, implement, and complete successful negotiations; and most importantly, be able to maximize your results.

27. Chapter Summary (p.30) • In this chapter, we have set the groundwork for a thorough and detailed examination of the negotiation process. • We used examples to introduce the variety of negotiations that occur daily and to discuss how we present material in this book. • We turned to the extended example of a day in life of Joe and Sue and showed how negotiations permeate daily experience. We also use this example to help define the key parameters of a negotiation situation. • And we explore four key elements of the negotiation process.

28. Exercises • A self-assessment test: my reaction to disagreement and conflict

29. my reaction to disagreement and conflict a 10-point scale: strong agreement→ mild agreement Following are several statements about personal reactions to disagreement and conflict. Circle the number that best describes you. The higher the number, the more you agree with the statement. When you finish, total the numbers you circled and write it in the space provided.

30. It doesn’t bother me to question a price or seek a more favorable exchange than offered. I have nothing to lose in seeking a better deal if I do it in a reasonable way. Conflict is positive because it makes me examine my ideas carefully. In resolving conflict, I try to consider the needs of the other person. Conflict often produces better solutions to problems. Conflict stimulates my thinking and sharpens my judgment. Working with conflict has taught me that compromise is not a sign of weakness. Satisfactorily resolved, conflict often strengthens relationship. Conflict is a way to test one’s own point of view.

31. It doesn’t bother me to question a price or seek a more favorable exchange than offered. I have nothing to lose in seeking a better deal if I do it in a reasonable way. Conflict is positive because it makes me examine my ideas carefully. In resolving conflict, I try to consider the needs of the other person. (TBCed)

32. Conflict often produces better solutions to problems. Conflict stimulates my thinking and sharpens my judgment. Working with conflict has taught me that compromise is not a sign of weakness. Satisfactorily resolved, conflict often strengthens relationship. Conflict is a way to test one’s own point of view. Total: ?

33. my reaction to disagreement and conflict If you score 80 or above you have a realistic attitude toward conflict, and seem willing to work to resolve it. If you scored between 50 and 79 you appear to be dealing fairly well with conflict, but need to work toward a more positive approach. If your score was below 50, you need to first understand why, and then work hard to learn techniques of conflict resolution. (Maddux, Rober B. Successful Negotiation: Effective “win-win” strategies and tactics. Boston, MA. USA: Course Technology Crisp, 1995, p.11.)

34. Ex • Fill-ins: why negotiate

35. A negotiation is a way of reaching an agreement by means of discussion and (1). Each side has something the other wants and both sides are trying to reach an agreement. Negotiators bargain with each other as they make (2 ) (“We will … if you …?”) and ask for (3) (“If we …, will you …?”). Negotiators don’t enter a negotiation expecting to get everything they want, they know they’ll have to (4). If they don’t, there will be ( 5 ) and the negotiation will break down. The purpose of every negotiation is to reach an agreement. Usually both sides are meeting because they have something to (6). In a sales negotiation, the seller wants to sell the goods or services and the buyer wants to buy them. In a pay negotiation, the employer wants the workers to work and the workers want to work. Both sides want to reach an (7), but they have different (8).

36. Suggested answer Fill-ins: why negotiate 1 bargaining 2 offers 3 concessions 4 compromise 5 a deadlock 6 gain 7 agreement 8 priorities

37. References • Kathleen M. O’Connor and Ann A. Adams. What novices think about negotiation: a content analysis of scripts, Negotiation Journal, April 1999