SESSION 4.

2 : Strategy of Influence & Value Creating/ Claiming

Mr. Ta Wei CHAO

Former Executive Director of ESSEC IRENE Asia-Pacific
E-mail: chao@essec.edu

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 Strategy of Influence

Source : Malhotra & Bazerman (2007)

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Leverage the Power
of Loss Aversion

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Leverage the Power
of Extreme Opening
Offers
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Leverage the Power
of the Status Quo

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Leverage the Power
of Token, Unilateral
Concessions
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Aggregate Losses and
Disaggregate Gains

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Leverage the Power
of Social Proof

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Use Reference Points
to Shape Value
Perceptions
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 VALUE CREATION

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 FACTORS HELPING JOINT GAINS

• COOPERATIVE ORIENTATION
• UNDERSTANDING OF EACH OTHER’S PRIORITIES AND
PREFERENCES BY INFORMATION SHARING
• TRIAL AND ERROR,
– Asking questions and be willing to share risks
– Making offers and asking for offers
– Making multiple equivalent offers
– Searching for other solutions
• AVOIDING THREATS & POWER FOCUS
• AVOIDING PREMATURE CLOSURE (post-settlement settlement)

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 BUILDING OFF DIFFERENCES

• DIFFERENCES IN VALUATIONS
(high value for one/low value for other)
• DIFFERENCES IN TIME PREFERENCES
(needs for immediate cash or late payment)
• DIFFERENCES IN RISK PREFERENCES
(risk aversion or seeking)

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 OTHER SOURCES OF VALUE

• ECONOMIES OF SCALES
• ECONOMIES OF SCOPE
• REDUCTION OF TRANSACTION COSTS
• FOCUS ON CAUSES OF CONFLICTS
• FOCUS ON ORGANIZATION CHANGES AND PROCESS

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 PROCESSING
INFORMATION EXCHANGE:
“The Artichoke”

Alain PEKAR LEMPEREUR

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 THE ARTICHOKE ?
Needs & Dangers
• RISK IF YOU DO NOT THIN ITS LEAVES OFF:
– You may not reach an agreement
– You may reach a mediocre one
– Thus NEED to disclose information
• RISK IF YOU ARE ALONE TO THIN THEM OFF:
– You may be exploited
– The agreement may me mediocre for you
– Thus DANGER of UNILATERAL disclosure
• SUGGESTION : “MUTUAL THINNING”
– Reveal leaf after leaf to the core
– Ask the other person to do the same
– Apply the RECIPROCITY principle
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 DISTRIBUTIVE TACTICS

Know them.
Know how to counter them.
And if you use them, know the risks.

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 HARD BARGAINING TACTICS (1)

HARD BARGAINING TACTICS RESPONSES

Unrealistic anchoring
Making someone bet against
oneself
Large concessions demanded
in exchange for small
ones
Adding non-related issues
(linkage)
Lying and bluffing
• Ask the other negotiator to justify his/her figure
• Counter his/her figure with an equally extreme anchor
• If you have a good BATNA, why not negotiate elsewhere
?
• Invoke the principle of reciprocity and insist on a counter
offer for each one that you provide
• Explicitly name the tactic and note that the principle of
reciprocity applies to the effort made by each party and
not simply the number of concessions
• Do not hesitate to label some demands as outside the
purview of the discussion and return to the topic at land
• Suggest a separate set of negotiations to address the
unrelated matter
• Scrutinize carefully what appears to be a lie and ask for
additional information on the subject rather than
denounce directly the statement

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 HARD BARGAINING TACTICS (2)
HARD BARGAINING TACTICS
A favour in the name of the
relationship
“Good cop, bad cop”
“My hands are tied”
The ultimatum
“The cherry on top of the
cake”
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RESPONSES
• Note the following principle : separate the subject matter from
questions about the people at the table
• Stop the negotiations and tell the two parties that once they
coordinate their positions, you will return to the table
• Offer your help in putting together an argument that they can
take back to their firm in order to present the agreement that is
available
• Suggest to continue the negotiations with the other party’s
superior
• If you have a good SAFT, why not negotiate elsewhere ?
• If you have a poor SAFT, seek the other’s justification criteria
• and make a counter offer on which they may seek to begin to
negotiate
• Explain that this final request has come too late in the process
and that the issue is already closed
• If it is of great importance, say it will have to come in to play in
future arrangements or trigger the review of the entirety of the
agreement
HARD BARGAINING TACTICS (3)

HARD BARGAINING TACTICS RESPONSES

• Reinforce the notion of reciprocity : if they
Escalating bids seek a concession, insist that they offer
one in return
• Ask the other party to explain their
motivations in depth
• If the other insists, say that it is possible
“The red herring” that such demands can be met but at the
cost of other considerations that are in
play
• Tell the other party that you will remain
One foot out the door available and look forward to returning to
the negotiation when they are ready

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