Negotiation (Bargaining)

• A negotiation is a strategic discussion that involves two or

more parties that resolves an issue in a way that each party
finds acceptable.
 A process in which two or more parties exchange goods or
services and attempt to agree on the exchange rate for them
 Two General Approaches:
 Distributive Bargaining
▪ Negotiation that seeks to divide up a fixed amount of
resources; a win-lose situation
 Integrative Bargaining
▪ Negotiation that seeks one or more settlements that can
create a win-win solution
14-1
United Auto Workers officials (left)
and Ford Motor Company officials
shake hands during news conference
for the start of national negotiations
in July 2011. Both UAW and
Ford say that they are committed
to integrative bargaining in finding
mutually acceptable solutions
to create a win-win settlement that
will help boost their competitiveness
with other automakers in the
United States and abroad.

14-2
Bargaining Characteristic Distributive
Integrative Bargaining
Bargaining
Goal Get all the pie you can Expand the pie
Motivation Win-Lose Win-Win
Focus Positions Interests
Information Sharing Low High
Duration of Relationships Short-Term Long-Term

Integrative

Distributive

14-3
 Research shows that when you’re engaged
in distributive bargaining, one of the best
things you can do is make the first offer,
and make it an aggressive one.
 Shows power.
 Establishes an anchoring bias.
 Another distributive bargaining tactic is
revealing a deadline.
14-27
 Why don’t we see more integrative
bargaining in organizations?
 The answer lies in the conditions necessary for
this type of negotiation to succeed.
▪ Parties who are open with information and candid
about their concerns.
▪ A sensitivity by both parties to the other’s needs.
▪ The ability to trust one another.
▪ A willingness by both parties to maintain
flexibility. 14-28

 These conditions seldom exist in

organizations.
 Compromise might be your worst enemy in
negotiating a win-win agreement.
 The reason is that compromising reduces
the pressure to bargain integratively.

14-29
 BATNA
 The Best Alternative To
a Negotiated
Agreement
 The lowest acceptable
value (outcome) to an
individual for a
negotiated agreement

14-7
 Before you start negotiating, you need to do
your
homework.
 What’s the nature of the conflict?
 What do you want from the negotiation?
 What are your goals?
 You also want to assess what you think are
the other party’s goals.

14-8
 Once you’ve done your planning and
developed a strategy, you’re ready to begin
defining with the other party the ground rules
and procedures of the negotiation itself.
 Who will do the negotiating?
 Where will it take place?

14-9
 When you have exchanged initial positions,
both you and the other party will explain,
amplify, clarify, bolster, and justify your
original demands.
 Provide the other party with any
documentation that helps support your
position.

14-10
 The essence of the negotiation process is the
actual give-and-take in trying to hash out an
agreement. This is where both parties will
undoubtedly need to make concessions.

14-11
 The final step in the negotiation process is
formalizing the agreement you have worked
out and developing any procedures necessary
for implementing and monitoring it.
 For most cases, however, closure of the
negotiation process is nothing more formal
than a handshake.

14-12
 In May 2012, Apple CEO Tim Cook and Samsung
CEO Gee-Sung Choi met with a judge in the U.S.
District Court of Northern California in an attempt
to reach a settlement in a high-profile U.S. patent
case.
 Back in April 2011, Apple had filed a lawsuit accusing
Samsung of copying the “look and feel” of
the iPhone when the Korean company created its
Galaxy line of phones.

14-
36
 The Role of Mood & Personality Traits in
Negotiation
 Positive moods positively affect negotiations
 Traits do not appear to have a significantly direct
effect on the outcomes of either bargaining or
negotiating processes (except extraversion, which
is bad for negotiation effectiveness)
 Women negotiate no differently from men,
although men apparently negotiate slightly better
outcomes.
 Men and women with similar power bases use the
same negotiating styles.
 Women’s attitudes toward negotiation and their
success as negotiators are less favorable than
men’s.

14-15
 Cultural Differences in Negotiations
 Multiple cross-cultural studies on negotiation
styles, for instance:
▪ American negotiators are more likely than Japanese
bargainers to make a first offer
▪ North Americans use facts to persuade; Arabs use
emotion; and Russians use asserted ideals
▪ Brazilians say “no” more often than Americans or
Japanese

14-16
In this photo, Japanese labor union
leader Hidekazu Kitagawa (right)
presents the group’s annual wage
and benefits demands to Ikuo Mori,
president of Fuji Heavy Industries,
Ltd., the manufacturer of Subaru
automobiles. Studies on how negotiating
styles vary across national
cultures reveal that the generally
conflict-avoidant Japanese negotiators
tend to communicate indirectly
and use a more polite conversational
style. Their style of interaction
is less aggressive than other
Cultures.

15-17
 Personality Traits
 Extroverts and agreeable people are weaker at
distributive negotiation; disagreeable introverts are
best
 Intelligence is a weak indicator of effectiveness
 Mood and Emotion
 Ability to show anger helps in distributive
bargaining
 Positive moods and emotions help integrative
bargaining
 Gender
 Men and women negotiate the same way, but may
experience different outcomes
14-18
 Four Basic Third-Party Roles
 Mediator
▪ A neutral third party who facilitates a negotiated solution by using
reasoning, persuasion, and suggestions for alternatives
 Arbitrator
▪ A third party to a negotiation who has the authority to dictate an
agreement.
 Conciliator
▪ A trusted third party who provides an informal communication link
between the negotiator and the opponent
 Consultant
▪ An impartial third party, skilled in conflict management, who attempts
to facilitate creative problem solving through communication and
analysis

14-19
 Choose an authoritarian management style
 Be certain to communicate with logic
 Seek integrative solutions
 Avoid an issue when it is trivial
 Build trust by accommodating others
 Consider compromising when goals
are important
 Try to find creative ways to achieve
the objectives of both parties
14-20
 Conflict is a reality that crosses all organizational boundaries 
to affect individuals, groups and disciplines.
 Administrators must recognize that conflict exists and bring 
it out into the open so that the issue can be effectively dealt 
with.
 Understanding conflict will enable administrators to deal 
more effectively.
 Handled properly through an appropriate conflict 
management style.
 "it is to be hoped that ... we shall always have conflict, the 
kind which leads to invention, to the emergence of new 
values“ (Marry Parker)

14-21