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UNIVERSITY OF MICHIGAN

SUCCESSFUL NEGOTIATION: ESSENTIAL


STRATEGIES AND SKILLS
ABOUT THIS COURSE
We all negotiate on a daily basis. On a personal level, we negotiate with friends, family, landlords, car
sellers and employers, among others. Negotiation is also the key to business success. No business can
survive without profitable contracts. Within a company, negotiation skills can lead to your career
advancement.
In this course, youll learn about and practice the four steps to a successful negotiation, with one
module for each step:
(1) Prepare: Plan Your Negotiation Strategy
(2) Negotiate: Use Key Tactics for Success
(3) Close: Create a Contract
(4) Perform and Evaluate: The End Game
To successfully complete this course and improve your ability to negotiate, youll need to complete the
following three steps:
(1) Watch the short videos (ranging from 5 to 20 minutes) for the each module. The videos are
interactive and they include questions to test your understanding of negotiation strategy and skills.
Videos can be sped up or slowed down to match your preferred pace for listening. Depending on your
schedule, you can watch the videos over a few weeks or you can binge watch them. A student who
binge-watched the course concluded that Its as good as Breaking Bad.
(2) Test your negotiation skills by completing the negotiation in Module 6. You can negotiate with a local
friend or use Discussions to find a partner from another part of the world. Your negotiation partner will
give you feedback on your negotiation skills. Along the way you may find it helpful to use this free
mobile app that is related to the course and contains many negotiation planning tools:
http://negotiationplanner.com/
(3) Take the final exam. To successfully complete the course, you must answer 80% of the questions
correctly. The exam is a Mastery Exam, which means that you can take it as many times as you want
until you master the material.
8.5 hours of videos

MODULE 1
FOCUSES ON THE FIRST STEP IN THE NEGOTIATION PROCESSPLANNING FOR A
NEGOTIATION.
AFTER COMPLETING THIS MODULE, YOU WILL BE ABLE TO:
(1) Decide if a negotiation is position-based or interest-based
(2) Decide if a negotiation is dispute-resolution or deal-making
(3) Complete a negotiation analysis, including: setting a reservation price and stretch goal, identifying
alternatives to a deal, and finding the zone of potential agreement
(4) Use a decision tree to determine your BATNA
(5) Conduct cross-cultural negotiations
(6) Resolve ethical issues in negotiations
(7) Decide if you should use an agent in a negotiation
ASSESSING YOUR NEGOTIATING STYLE
To assess your negotiation style while preparing for negotiations, complete the following three steps:
1. Complete the attachment to assess and understand your negotiating style.
2. Use the assessment to assess the style of the other side. This is especially important in crosscultural negotiations. Remember that there can be considerable variation in negotiation style within
a culture.
3. Do a gap analysis. Locate the major gaps between your style and the style of the other side. Focus
on these gaps when preparing for the negotiation.
Additional tip: After completing the gap analysis, try a role reversal exercise where you use the style of
the other side. This will enable you to better understand the other sides style.
Instructions: Listed below are ten important traits of a persons negotiating style and approach. Each
trait demonstrates a wide range of variations, which can be organized along a continuum, as has been
done below. With respect to each trait, indicate
with an X where your own negotiating style and approach in business negotiation falls along each
continuum:
1. Goal: What is your goal in business negotiations: a binding contract or the creation of a relationship?
2. Attitudes: What is your attitude toward negotiation: win/lose or win/win?
3. Personal Styles: During negotiations, is your personal style informal or formal?
4. Communications: Is your communication style in negotiation direct (for instance, clear and definite
proposals and answers) or indirect (for instance, vague, evasive answers)?
5. Time Sensitivity: In the negotiation process, is your sensitivity to time high (for instance, you want to
make a deal quickly) or low (you negotiate slowly)?
6. Emotionalism: During negotiations, is your emotionalism high (that is, you have a tendency to
display your emotions) or low (you hide your feelings)?
7. Agreement Form: Do you prefer agreements that are specific (that is, detailed) or general?
8.Agreement Building: Do you view negotiation as bottom up (reach agreement on details first) or top
down (begin with agreement on general principle)?
9. Team Organization: As a member of a negotiating team, do you prefer having one leader who has
authority to make a decision or decision making by consensus?
10. Risk Taking: Is your tendency to take risks during negotiations high (for instance, your opening offer
to sell is extremely high) or low?
CHECKLIST OF ETHICAL STANDARDS AND GUIDELINES
Perhaps more than any other human activity, negotiations raise challenging ethical dilemmas. Some
ethical standards are required by law; others are voluntary. Select one or more of the voluntary
standards or guidelines before you begin a negotiation.
- Required by Law:
1. No Fraud. (Do not lie.)
2. Uphold your fiduciary duty. (If there is a fiduciary relationship with the other side, you owe the
highest duty of trust and loyalty.)
3. Dont act in an unconscionable manner. (When you are in a dominant position of power, try to
reach an agreement that is fair to the other side.)

- Voluntary Ethical Standards and Guidelines:


1. Organizational standards. (If your employer has a Code of Conduct, does it provide standards for
your negotiations?)
2. Someone you admire. (What would someone you admire do in your situation?)
3. Family test. (How would you feel when describing to your family what you did during a negotiation?)
4. Newspaper test. (How would you feel if a newspaper article in the local paper described what you did
during a negotiation?)
5. Golden Rule. (Treat others as you want to be treated. Keep in mind that fairness is very important to
the other side.)

MODULE 2
FOCUSES ON TWO ESPECIALLY IMPORTANT TOOLS IN NEGOTIATION: POWER AND
PSYCHOLOGICAL TOOLS

AFTER COMPLETING THIS MODULE, YOU WILL BE ABLE TO:


(1) Recognize your source of power in negotiations
(2) Use and increase your power in negotiations
(3) Employ psychological tools during a negotiation
(4) Avoid psychological traps in a negotiation
(5) Use psychological tools when making leadership and financial decisions
This will be done by focusing on two especially important tools in negotiation: power and psychological
tools.

DEVELOPING YOUR NEGOTIATING POWER


Your Best Alternative to a Negotiated Agreement (BATNA) is your source of power during a negotiation.
Your BATNA gives you leverage to walk away if the other side doesnt give you a better deal than your
best alternative.
To develop your power, answer the following questions:
1. What is my BATNA? (This should be the first question that you ask yourself when preparing for
negotiations. If your BATNA is better than what the other side can offer, walk away from the
negotiation.)
2. Should I disclose my BATNA to the other side during negotiations? (As a general rule, you will want to
disclose a strong BATNA because that signals your strength and you will want to hide a weak
BATNA.)
3. If I have a weak BATNA, should I lie about my alternatives? (Lying is never recommended and in this
situation it is especially dangerous because courts have held that lying about BATNAs can be
considered fraud. See Chapter 4, Decide How to Answer Ethical Questions, in Negotiating for
Success.
4. Do I know what the other sides BATNA is? How can I find their BATNA? (This is the way that you will
determine the strength of the other side. Decide what questions to ask during the negotiation to find
the other sides BATNA.)
5. How can I weaken the other sides BATNA? (In other words, how can you weaken the other sides
power? Before the negotiation, try to predict their BATNA and think about how you can weaken it.)
6. How can I strengthen my BATNA? (In other words, how can you strengthen your power during the
negotiation?)

CHECKLIST OF PSYCHOLOGICAL TOOLS

The psychological tools are also traps that you want to avoid when they are used by the other side.
Some of these tools are useful beyond negotiation when making leadership decisions and financial
decisions.

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9.

This checklist of psychological tools you can use during future negotiations (remember that these tools
can become traps when the other side uses them):
Dont assume that you are negotiating over a fixed pie (and avoid reactive devaluation).
Use anchoring in developing a first offer strategy.
Avoid overconfidence when making negotiation decisions.
Frame the other sides choices to your advantage.
Look beyond easily available information.
Look at all negotiations from the other sides perspective.
Encourage reciprocity from the other side.
Use the contrast principle.
Dont lose sight of the big picturethe gorilla in the room.

MODULE 3
FOCUSES ON THE NEGOTIATION THAT TAKES PLACE IN A BUSINESS DEAL AFTER
REACHING AN INITIAL AGREEMENT THE NEGOTIATION TO CREATE A BINDING
CONTRACT.
AFTER COMPLETING THIS MODULE, YOU WILL BE ABLE TO:
(1) Decide if you need a lawyer, or can act as your own lawyer*, for contract creation
(2) Use a checklist of key contract issues in negotiations
(3) Handle contract negotiations, which are often longer and more adversarial than the initial
negotiation to create an agreement
*The legal principles are generalizations and there might be variations within certain countries. The
videos should not be construed as providing legal advice.
CONTRACT LAW CHECKLIST
Negotiations take place within the shadow of the law. Even when hiring an attorney to review your
final contract, you should use the following checklist during negotiations to ensure that you your
agreement will be enforceable.
1. Are you using a preliminary document? (If you are using a preliminary documentoften called a
letter of intent, memorandum of understanding or agreement in principlestate in the
document that it is for negotiating purposes only and not a final contract.)
2. Have you reached a final agreement? (After the other side makes an offer, be careful when
adding terms to your acceptance. A counteroffer can terminate their offer.)
3. Have both sides given up something? (This is the consideration requirement. Be especially
careful to meet this requirement when you are amending a contract.)
4. Is the agreement legal? (Remember that legality requirements extend beyond violation of
criminal law and can include violations of public policy.)
5. Is the agreement in writing? (Even when not required by law, it is sound practice to put all your
agreementsincluding contract modificationsin writing.)
6. Does your written contract include all the terms that you negotiated? (Although the law varies
from country to country, there is a risk that courts will not enforce agreements that are not part
of the written contract.)
7. Are there any implied terms that are not part of the written contract? (In addition to implied
terms, courts might also review your courts might look at your past dealings with the other side
when interpreting the contract.)

MODULE 4
THIS MODULE FOCUSES ON PERFORMING AND EVALUATING YOUR AGREEMENT.
If both parties perform as expected, there is no problem. But if they fail to perform, the dispute
resolution processes that we cover in this module is important - especially mediation and arbitration.

AFTER COMPLETING THIS MODULE, YOU WILL BE ABLE TO:


(1) Use techniques for dispute prevention
(2) Understand practical concepts and tools you use use when resolving disputes
(3) Decide when to use arbitration or mediation to resolve disputes
As an additional bonus, the mediation lesson provides a great example of interest-based negotiation
during dispute resolution. One challenge for those of you from the US: the video is from the UK, so you
might have difficulty understanding the language!

LIFE GOALS ANALYSIS


When you are preparing for a serious negotiation, try to take a big-picture perspective called a life
goals analysis. A life goals analysis is especially recommended for dispute-resolution negotiations, but
is also useful when preparing for deal-making negotiations.
To complete this analysis, ask yourself: How does this dispute (or deal) relate to my goals in life? When
preparing your list of life goals, consider the following possibilities:
1. Family goals. Do you want to spend more time with your family? How will you spend that time?
2. Leisure goals. What do you enjoy doing when you arent at work?
3. Retirement goals. When do you plan to retire and what will you do during retirement?
4. Financial goals. What are your financial plans and how will you achieve them?

5. Business and career goals. Do you have any plans to start a business or move to a new job?
6. Relationship goals. Do you anticipate any changes in your personal relationships?
7. Service goals. Any plans to increase your community service?