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What are the key steps you should take in planning/preparing for any negotiation?
Within a negotiation, you must first determine the conflict of needs and desires between two or more parties. Additionally, you must keep in mind whether the relationship between parties must be fostered or if it is irrelevant to the negotiation. Upon doing so, you are able to determine whether you need to be cooperative or competitive to obtain the greatest benefit from the negotiation. This allows you to identify reasonable resistance and target prices as well as your best alternative to the negotiated agreement.
What is the method of principled negotiation outlined in Getting to Yes? Briefly describe the 4 principles of this method.
Principled negotiation is focused on building and nurturing the relationship within the negotiation by focusing on the issue rather than the people, with the four principles being: separate the people from the problem, focus on interests not positions, invest multiple options looking for mutual gains before deciding what to do, and insist the the results be based on some objective standard. In following these four principles you are to separate the people from the problem, providing for a greater outcome by understanding individual interests.
What is the difference between distributive and integrative bargaining? Explain each concept.
Distributive bargaining focuses on winning the competition and beating the other party or to gain the largest piece of the fixed resource that they can. In order to accomplish this, win-lose strategies are utilized, in which it is accepted that there will only be one winner.
Integrative bargaining, on the other hand, focuses on communication and compromise in order to allow both parties to do well and achieve their goals. The goal of integrative bargaining should be to create value for all parties involved by either identifying more resources or finding unique ways to share and coordinate the use of existing resources.
What are the techniques for claiming value in a negotiation (distributive bargaining)? For creating value in a negotiation (integrative bargaining)?
With distributive bargaining, the buyer and seller should each make an initial offer that is better than their target point to create room for making concessions. This results in the buyer making an initial offer that is lower than their target point and the seller making an initial offer that is higher than their target point. In order to claim the most value, you most exude confidence to determine the other party’s resistance point. If the other party seems eager to reach an agreement quickly, then you are able to set a more demanding resistance point. However, you want to present yourself as not being in a rush with the negotiation and act as though you have other offers in order for the other party to feel the need to adjust their resistance point for you.
In order to create value in a negotiation, you must pursue the others thinking and logic to determine the factors that motivated them to arrive at their goals. To determine what is of value to the other party, you can ask probing questions, such as “what are your goals and interests,” as well as paying attention to their emotions and language to understand what they are passionate about. In order to understand what is of value to both you and the other party, you can utilize logrolling, in which you both establish which issues are at stake and then decide your individual priorities on these issues.
Interests, issues and positions each have separate roles in a negotiation. Why do we make the distinction? Explain each concept and its role in claiming or creating value. List some techniques for uncovering interests in a negotiation.
Interests are the underlying needs, concerns, desires, or fears that motivate a negotiator to take a particular position. Understanding interests allows for you to invent solutions that solve both parties issues. In order to uncover interests, you must ask probing questions about why and what they are looking for within the negotiation.
Issues are the problems that must be addressed and solved within the negotiation. Issues are crucial to understand in determining how to create the greatest amount of value for all parties. In order to do so, approaches such as logrolling, modifying the resource pie, superordination, compromise, and finding a bridge solution can be utilized. All of the approaches provide for the ability to reinforce the issues under discussion and develop more information, leading to alternative solutions that can address the issues.
Positions are your attitudes, interests, and desires regarding the issue at hand. In creating value, each side's position must be validated and accepted by the other in order to incorporate both viewpoints into the definition of the problem and attend to it to uncover mutually acceptable alternatives. If both parties are able to understand the others perspective, they have the ability to make stronger agreements.
A friend is thinking about an upcoming negotiation and asks your advice about the wisdom of making the first offer. What are the advantages and disadvantages of making the first offer?
Making the first offer provides the possibility of you being able to anchor the negotiation, especially if you have a better ‘best alternative to the negotiated agreement’ because then you are able to give a higher first offer. However, if you are aware that the other party has a strong BATNA, it could be wise to not make the first offer, as you could end up making it too conservative. By making a counteroffer, you have the ability to gauge the other party’s position and confidence, providing you with the upper hand if you are confident and firm in your position.
In class we discussed four signs that a negotiation has win-win potential. Describe each sign and explain when that sign would and would not represent win-win potential.
A negotiation has win-win potential if it meets any of the following criteria: contains more than one issue, other issues can be brought in, side deals can be made, and parties have preferences across negotiation issues. If there is more than one issue, the parties can either compromise on both issues or each party can have the upper hand on one of the issues, providing for a greater outcome. If other issues can be brought in, negotiators are able to understand each other's priorities and generate a deal that fits all priorities. Side deals provide for the opportunity to bring in a deal(s) that adds benefit to the negotiation, developing a stronger relationship between the parties. If parties have preferences across negotiation issues, the negotiation is able to be favorable for both parties by attending to each other’s preferences. None of these signs represent win-win potential if neither of the parties are willing to budge and compromise to fit the needs and preferences of the other.
A colleague observes, “I hate negotiations, someone always loses!” How would you respond to that comment?
I would respond by saying that if this has been a typical experience within your negotiations, then both parties enter with a win-lose mindset, not willing to observe interests or generate alternatives. In order to have a cordial and satisfactory negotiation, you must first understand your interests, issues, and position, then come to understand those of the other party by asking questions and listening to the requests to determine their interests and needs.
What are the three ways that active listening help you negotiate more effectively?
Active listening can allow you to uncover common interests with other parties, allowing you to focus on the principles of liking and reciprocity by utilizing the uncovered interests to cater your offer to their preferences. Active listening also allows you to search for differences in interests and priorities which can be beneficial in generating alternative negotiation solutions, such as through logrolling. Lastly, active listening allows you to develop an understanding of your counterpart’s interests, priorities, and issues, which can in hand provide you with an understanding of their BATNA and target deal and price.
What are the 5 steps to effective listening (from lecture...not covered in much detail in book)?
The five steps to effective listening are: suspending judgement, observing emotion, following the discussion, activating curiosity, and reflecting on your understanding. Consistently repeating this process will provide you with a greater understanding of the other side’s perspective by paying attention to their emotion in relation to topics and putting yourself in their shoes to truly try to understand where they are coming from. As a result, you will develop a greater relationship with the other side by catering your deal(s) to fit their needs and vise-versa.
What are the advantages and disadvantages of making a first offer in a negotiation. Why? What are the key concepts responsible for these effects?
Making the first offer provides the possibility of you being able to anchor the negotiation, especially if you have a better ‘best alternative to the negotiated agreement’ because then you are able to give a higher first offer. However, if you are aware that the other party has a strong BATNA, it could be wise to not make the first offer, as you could end up making it too conservative. By making a counteroffer, you have the ability to gauge the other party’s position and confidence, providing you with the upper hand if you are confident and firm in your position.
Explain the relationship between a BATNA and a reservation price (also called a resistance point or a bottom line).
Uncovering the other party’s BATNA allows you to understand their resistance point and how much it can be influenced. Your BATNA allows you to determine what your resistance point should be by making sure that it is not lower than your alternative offer to allow you to obtain the best possible deal. The strength of your BATNA impacts your confidence within the negotiation - if you have a strong BATNA, you are able to leverage it against the other party to obtain greater value from the negotiation. On the other hand, if you have a weak BATNA and the other party discovers it, then you could end up lowering your reservation price to obtain the product at hand in the negotiation.
What are Cialdini’s principles of ethical influence? Describe each.
Cialdini’s principles of ethical influence are liking, reciprocity, social proof, consistency, authority and scarcity. Liking focuses on the theory that people like those who like them, therefore, if you uncover real similarities and offer genuine praise, the other party will have a stronger affection for you. Reciprocity focuses on how people pay in kindness based on what they would prefer to receive. Social proof states that people are easily persuaded when peer power is used. Consistency focuses on how choices that are made actively, public, and voluntary are likely to direct someone’s future and how they align themselves. Authority highlights that people defer to experts, with your expertise being developed through personal relationships. Lastly, scarcity highlights people's desire to have more of what they have less of, making unique benefits and exclusive information valuable,
What are the 5 different bargaining styles identified by Shell and discussed in class? Describe
Each.
The five bargaining styles are accommodating, compromising, avoiding, collaborating, and competing. Accommodators have strong relationship-building skills and are sensitive to others emotional states, body language, and verbal signals, however, they can sometimes be too focused on the relationship, taking away from the negotiation at hand. Compromisers are eager to close deals quickly and are often relationship-friendly, however, oftentimes they rush the negotiation, making concessions too quickly. Avoiders are skilled at dodging and reducing conflict, however, they pass up opportunities to build relationships with others as a result. Collaborators are strong at interacting to discover interests and issues, however, they can needlessly create problems by overanalyzing problems. Competitors can hold their ground and understand how to have leverage, open, and close a negotiation, however, due to their tendency to make the negotiation a game, they are unable to build meaningful relationships.
What is power? What are the major sources/groupings of power? What tactics can you employ when you are in a relatively less powerful position than your counterpart?
Power is the capabilities that negotiators can assemble to give themselves an advantage or increase the probability of achieving their objectives. Sources of power come from when a negotiator feels as though they have less power than the other party, so they seek to offset or counterbalance the other’s advantage. Power also comes from when a negotiator believes they need power to increase the probability of their desired outcome or to sustain their advantage. If you are in a less powerful position, you can obtain power by presenting strong data and facts that back up your position, providing for legitimacy. You can also obtain power by gaining respect from the other party through Cialdini’s principle of liking, where if you uncover similarities and develop a relationship with the other party, they will have a greater liking towards you.
What are some key benefits to striking a contingent agreement?
Contingent agreements are beneficial to both parties because they allow for a difference of opinion to be accepted and by having a contingency, risk is reduced. This allows for the parties to remain friendly with each other and allow future events to play out, allowing for the determination of a civil agreement. Additionally, they motivate parties to fulfill their part of the agreement, with deceitful dealings being uncovered otherwise.
When/how does the presence of multiple issues in a negotiation help create opportunity for the negotiator to create value? When does it not?
The presence of multiple issues creates value by providing the opportunity for each party’s preferred issues to be addressed and met. With multiple deals on the table, the parties have the ability to compromise between issues to allow each party to receive a greater deal on the issue that is deemed most important to them. As a result, the negotiation can produce an overall greater net value.
However, if the parties don’t have thorough communication, then they will fail to realize which side has the best deals for each issue, leaving them with an agreement that is in neither party’s favor. Additionally, if one party is competitive and one is too willing to compromise, then the presence of multiple issues could create a greater advantage for the competitive party, leaving the compromisable party with a significantly lower value from the negotiation, and the negotiation as a whole with a lower net value then if both parties communicated.
What is logrolling?
Logrolling is an alternative solution to a problem in which parties agree to trade off among conflicting issues to allow each to achieve a highly preferred outcome on their most preferred issue if possible. This solution allows for all parties to compromise from obtaining their preferred outcome for all issues in order for both parties to obtain their preferred outcome for the issue that is most vital to them, leaving both parties satisfied.
What are cognitive biases? Which cognitive biases play a role in negotiations?
Cognitive biases are systematic errors or beliefs in processing information that impede on a negotiator’s performance. A popular cognitive bias in negotiation is the fixed-pie belief, being the tendency to see negotiation as a zero-sum or win-lose situation with parties interests directly opposed. Another cognitive bias is issue framing and risk in which people are disproportionately influenced by the positive or negative frame through which risks are perceived. For example, negatively framed problems elicit risky responses that people deem as being worse than positively framed problems that elicit more sure responses, when in actuality both problems are stating the same facts. As a result of this framing cognitive bias, it is revealed that we are much more likely to make concessions and try to compromise when we are negotiating over how to allocate gains.
What are hardball tactics? What are the risks of using such tactics? What strategies can you use to overcome such tactics?
Hardball tactics are a negotiation method designed to pressure negotiators to do things they would not otherwise do, with the user taking on a distributive bargaining approach. Hardball tactics are very risky because they harm your reputation by overshooting your needs and being harsh on the other side, and they result in the other party being vengeful for the users dishonesty and harsh stance. In order to overcome hardball tactics, you can either discuss or ignore them. In explicitly acknowledging that you are aware the other party is using hardball tactics, you can suggest to shift the negotiation to be more productive by separating the people from the problem and focusing the harshness on the problem. Ignoring the tactic, could however be powerful, by focusing your energy on satisfying your needs rather than on the tactic, you can deflate the threat. You can also overcome these tactics by utilizing the “kill them with kindness” approach in that you try to befriend them and not act frustrated or bothered by their tactic, allowing the liking principle to come into effect.