CHAPTER 1 The Nature of Negotiation

Learning objectives (LO)
• Understand the nature of negotiation (as a tool of managing conflict, a basic human activity) • Appreciate characteristics of a negotiation situation • Know elements fundamental to the negotiation: process: managing interdependence, engaging in mutual adjustment, creating or claiming value, and managing conflict. Each of these elements is foundational to understanding how negotiation works. AND • Ponder on the nature and complexity business negotiation (BizNeg) and In’tl BizNeg. • Improve (Business) English learning

The Titles (headings)
1. A Few Words about our Style & Approach to Negotiation. 2. Joe and Sue Carter. 3. Characteristics of a Negotiation Situation. 4. Interdependence. 5. Mutual Adjustment. 6. Value Claiming and Value Creation. 7. Conflict. 8. Effective Conflict Management. 9. Overview of the whole book &Chapter Summary.

• Negotiation is a very complex social process. • Our insights into negotiation drawn from three sources (experience. what are the implications for you as a learner of negotiation? .4).4). the wealth of social science research) (p. Then. media.A Few Words about our Style & Approach to Negotiation • Be careful about how bargaining and negotiation are used here (p. or shape the context around the negotiation (p. many of the most important factors that shape a negotiation result do not occur during the negotiation. they occur before the parties start to negotiate.4).

• The Carter story (anecdote) used to highlight something important (definition. • In a not-so-atypical day. • Definition of negotiation: Any generalizations? . and so on). they faced the challenges of many negotiations. characteristics of a negotiation.2.5-7) • A story about a husband and wife. Joe and Sue Carter (pp. major and minor.

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

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

(3) The parties negotiate by choice.3. (see Box 1. . (6) Successful negotiation involves the management of tangibles & also the resolution of intangibles (see Box 1. (2) There is a conflict of needs and desires between two or more parties. p. 9).2.1 for examples of when not to negotiate. 5-9) (1) There are two or more parties. p.3 about the dangerous role of ego in negotiation. p. Characteristics of a Negotiation Situation (pp. 9) (5) The parties prefer to negotiate and search for agreement. (see Box 1.8) (4) When we negotiate we expect a “give and take ” process.

• Four Key elements of the negotiation process .

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

 Alternatives shape interdependence. 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. and may in fact be significantly enhanced. 12).4.9-13)  Types of interdependence affect outcomes (p. 13) . (p. Interdependence (pp. the other’s goals are not necessarily blocked. 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. (p. Translate into Chinese: To the degree that one person achieves his or her goal.

Mutual Adjustment (pp. 13-16) When parties are interdependent.13) But how? Through influence (power.5.13) (Watch the film “The Negotiators”) . they have to find a way to resolve their differences.(p. leverage) It is important to recognize that negotiation is a process that transforms over time. (p. and mutual adjustment is one of the key causes of the changes that occur during a negotiation.

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

the dilemma of trust. 13-16) • Two dilemmas in mutual adjustment.16) . (p. concerns how much of the truth to tell? Second. the dilemma of honesty. how much should the negotiators believe what the other party tells them? See Box 1.14) First.6 The importance of aligning perceptions (p. Mutual Adjustment (pp.5.

16-18) • Identify two types of interdependent situations — zero-sum and non-zero-sum. Value Claiming and Value Creation-1 (pp. • In integrative situations the negotiators should employ win-win strategies and tactics. • 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. .6. • The structure of interdependence shapes the strategies and tactics that negotiators employ.

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

While value is often created by exploiting common interests.18) The key differences among negotiators include these: (1) Differences in interests. (3) Differences in risk tolerance. 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.6.(p. (p.18) . (4) Differences in time preference. differences can also serve as the basis for creating value. (2) Differences in judgments about the future. and the heart of process lies in exploiting the differences that exist between the negotiators. Value Claiming and Value Creation-3 Value may be created in numerous ways.

Conflict can result from the strongly divergent needs of the two parties or from misperception and misunderstanding.19-25) • A potential consequence of interdependent relationships is conflict.7. Conflict (pp. • Regardless of the cause of the conflict. . • 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. negotiation can play an important role in resolving it effectively.

and includes “the perceived divergence of interest.19) • Conflict may be defined as a “sharp disagreement or opposition. ideas.1 Definitions (p.7.” . • Conflict results from “the interaction of interdependent people who perceived incompatible goals and interference from each other in achieving those goals. as of interest. or belief that the parties’ current aspirations cannot be achieved simultaneously”. etc”.

19) Four levels of conflict are commonly identified: • Intrapersonal or intrapsychic conflict.2 Levels of Conflict (p.7. . • Intergroup conflict. • Interpersonal conflict. • Intragroup conflict.

Emotionality. 5.1 Functions and Benefits of conflict. 6. Rigid commitments. Escalation of conflict. win-lose goals.3 Function and Dysfunctions of Conflict Productive aspects of conflict (see Figure 1. . Blurred issues. p. Competitive. Misperception and bias. Decreased communication. 4.21) Elements that contribute to conflict’s destructive image: 1. Magnified differences and minimized similarities. 7.7. 2. 8. 3.

. • Conflicts with more of the characteristics in the “difficult to resolve” column will be harder to settle.4 Factors that Make Conflict Easy or Difficult to Manage • Figure 1.2 (p.21) presents a conflict diagnostic model. while those that have more characteristics in the “easy to resolve ” column will be settled quicker.7. This model offers some useful dimensions for analyzing any dispute and determine how easy or difficult it will be to resolve.

3 Concern about other’s outcomes The dual concerns model (p. Effective Conflict Management (p.23-25) • Figure 1. dominating Concern about own outcomes (assertive) . integrating (compromising) Inaction (avoiding) Contending (competing.8. Obliging) Problem solving (collaborating.23) Yielding (accommodating.

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

Overview of the whole book (pp.25-30) Part 1 Part 2 Part 3 Part 4 Part 5 Negotiation Fundamentals (1-4) Negotiation Subprocesses (5-9) Negotiation Across Cultures (10) Resolving Differences (11-13) Concluding Comments (14) .9.

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

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

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

total the numbers you circled and write it in the space provided. Circle the number that best describes you. . the more you agree with the statement. When you finish. The higher the number.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.

9. I try to consider the needs of the other person. 3.1. Conflict often produces better solutions to problems. I have nothing to lose in seeking a better deal if I do it in a reasonable way. . Conflict is a way to test one’s own point of view. 2. 7. 5. Working with conflict has taught me that compromise is not a sign of weakness. 4. Conflict is positive because it makes me examine my ideas carefully. In resolving conflict. 6. 8. It doesn’t bother me to question a price or seek a more favorable exchange than offered. Satisfactorily resolved. Conflict stimulates my thinking and sharpens my judgment. conflict often strengthens relationship.

I try to consider the needs of the other person.1. I have nothing to lose in seeking a better deal if I do it in a reasonable way. In resolving conflict. It doesn’t bother me to question a price or seek a more favorable exchange than offered. (TBCed) . Conflict is positive because it makes me examine my ideas carefully. 2. 3. 4.

Conflict stimulates my thinking and sharpens my judgment. conflict often strengthens relationship.5. 7. 9. Satisfactorily resolved. Conflict often produces better solutions to problems. Total: ? . Working with conflict has taught me that compromise is not a sign of weakness. 6. Conflict is a way to test one’s own point of view. 8.

and then work hard to learn techniques of conflict resolution. If your score was below 50.My reaction to disagreement and conflict If you score 80 or above you have a realistic attitude toward conflict. . 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. you need to first understand why. and seem willing to work to resolve it.

Ex • Fill-ins: why negotiate .

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

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