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Chapter 1 - Summary Essentials of Negotiation

Negotiation (University of Regina)

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BUS301
Chapter 1
The Nature of Negotiation

- Reasons why negotiations occur:

 To agree on how to share/divide a limited resource, such as land/property/time
 To create something new that neither party could do on their own
 To resolve a problem/dispute between the parties
- Becoming a Better Negotiator
 Insights into recognition are drawn from three sources:
o Our experience as negotiators ourselves
o The media
o The wealth of social science research conducted on numerous aspects of
negotiation
 Many of the most important factors that shape negotiations do not occur during
the negotiation; the occur before the parties start to negotiate
- Characteristics of a Negotiation Situation
 Negotiation: decision-making situations in which two or more interdependent
parties attempt to reach agreement
 We negotiate whenever we cannot achieve our objectives single-handedly
 Involve 2+ parties; a process between individuals, within groups, and between
groups
 A conflict of needs and desires between 2+ parties
 Parties negotiate by choice; both sides think they can do better by working
together
 A “give-and-take” process
 Occurs when the parties prefer to invent their own solution for resolving the
conflict, when there is no established set of rules/procedures to resolve the
conflict, or when they choose to bypass the rules
 Involves the management of tangibles and the resolution of intangibles
(underlying psychological motivations influencing the parties)
o Examples of intangibles:
 The need to “win”
 The need to “look good”
 The need to defend an important principle/precedent
 The need to appear “fair” to protect one’s reputation
o Intangibles affect our judgment about what is fair/right/appropriate
- Managing Interdependence
 Key characteristic of negotiation = parties need each other to achieve their
preferred objectives/outcomes
 Three ways to categorize relationships between parties:
o Independent: able to meet their own needs without the help and
assistance of others
o Dependent: must rely on others for what they need
o Interdependent: when parties depend on each other to achieve their
own preferred outcome; interlocking goals

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BUS301
Chapter 1
The Nature of Negotiation

 Types of Interdependence Affect Outcomes

o Distributive Situation: when the goals of 2+ people are zero-sum so that
one can gain only at the other’s expense
o Integrative Situation: when parties’ goals are linked, but not zero-sum,
so that one person’s goal achievement does not block the goal
achievement of another (value-creating)
 Alternatives Shape Interdependence
o Depends heavily on the desirability of alternatives to work together
o BATNA (Best Alternative To a Negotiated Agreement): the best
alternative to a negotiated agreement, which may be saying no and
walking away
 May offer independence, dependence, or interdependence with
someone else
 Negotiators must understand their own, as well as the other
party’s
- Making Concessions
 Mutual adjustments is one of the key causes of the changes that occur during a
negotiation
 Effective negotiator = understand how one will adjust and readjust, how
negotiations twist and turn based on their moves and the other party’s response
 Mutual Adjustment and Concession Making
o Negotiations begin with statements of opening positions; if initial offer
not readily accepted = defend the proposal and critique the other’s
proposal
o Concession: when one party agrees to make a change in a position
 Restrict the range of options within which a solution/agreement
will be reached
o Two dilemmas all negotiators face:
 Dilemma of Honesty: how much of the truth to tell the other
party
 Dilemma of Trust: how much of what the other party tells them
should negotiators believe?
o Could be taking advantage of you if you believe everything
o Difficulty reaching agreement if you believe nothing
o Two efforts help create trust and beliefs:
 Perceptions of outcomes
o Can be shaped by managing how the receiver views the
proposed result
 Perceptions of the process
o When people make a concession, they trust the other party and the
process far more if a concession is returned

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BUS301
Chapter 1
The Nature of Negotiation

o Satisfaction with negotiation is determined both by the process through

which the agreement is reached and the actual outcome obtained
o Attempting to destroy the give-and-take may destroy the basis for trust
and any possibility of achieving mutual satisfaction
- Value Claiming and Value Creating
 Distributive situations = negotiators motivated to win and gain the largest piece
of fixed resource they can
o To achieve = employ win-lose strategies and tactics
o Called distributive bargaining
o Purpose is to claim value – do whatever necessary to claim the reward
o Ex: purchasing a used car when the only negotiable issue is the price
 Integrative situations = negotiators employ win-win strategies and tactics
o Attempts to find solutions so both parties can do well and achieve their
goals
o Purpose is to create value – find a way for all parties to meet their
objectives
o Ex: planning a wedding so that everyone is satisfied, and the guests have
a good time
 Most negotiations are a combo of value-claiming and value-creating
o Recognize situations that require more of one approach than the other
o Be versatile in their comfort and use of both strategic approaches
 Must adapt to the situation
o Perceptions of situations tend to be biased toward seeing problems as
more distributive (competitive) than they really are
 Successful coordination of interdependence has the potential to lead to synergy;
“the whole is greater than the sum of its parts”
 Heart of negotiation = exploring common and different interests to create value
and employ interests as the foundation for a strong and lasting agreement
- Conflict: a sharp disagreement/opposition, as of interests, ideas, etc.
 Includes the perceived divergence of interest/a belief that the parties’ current
aspirations cannot be achieved simultaneously
 A potential consequence of interdependent relationships
 Can result from the divergent needs of the two parties or from misperceptions
and misunderstandings
 Effective Conflict Management
o Dual Concerns Model
 Postulates the people in conflict have two independent types of
concern:
o Concern about their own outcomes (horizontal)
 AKA Assertiveness dimension
o Concern about the other’s outcomes (vertical)
 AKA Cooperativeness dimension

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BUS301
Chapter 1
The Nature of Negotiation

 Identifies five major strategies for conflict management:

o Contending
 AKA Competing/Dominating
 Lower right-hand corner
 Pursue their own outcomes strongly and show little
concern for the other
 Threats, punishment, intimidation and unilateral
action
o Yielding
 AKA Accommodating/Obliging
 Upper left-hand corner
 Show little interest/concern in attaining their own
outcomes, interested in the other party attaining
theirs
 “Letting the other win” by lowering aspirations
o Inaction
 AKA Avoiding
 Lower left-hand corner
 Show little interest in attaining their own outcomes
as well as the other parties
 Withdrawal/passivity, retreat, silent, do nothing
o Problem Solving
 AKA Collaborating/Integrating
 Upper right-hand corner
 High concern for own outcomes as well as other
party’s
 Pursue approaches to maximize their joint
outcome
 The preferred approach
o Compromising
 Middle
 Moderate effort for one’s own outcomes as well as
the other party’s
 “Lazy problem solving”

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