Negotiation Exam 1

What are the key reasons why effective negotiation skills are increasingly important in the business world?

(DIIGE) 1. Dynamic nature of business - ppl must constantly renegotiate their place in organizations 2. Interdependence - integrate their interests and work across business units and functional areas 3. Information technology - 24/7 culture - managers expected to negotiate at a moment's notice 4. Globalization - Must be able to negotiate across cultural boundaries with different norms of communication 5. Economic forces - operate in uncertain environments (e.g. recession, unemployment)

Why is BATNA the most important source of power in negotiation? Why should a negotiator constantly cultivate and improve his or her BATNA prior to negotiating?

- This means you have alternatives for each issue and you will have alternatives prepared that benefit you. - The more alternatives you have, the more power you have. - A negotiator should cultivate their BATNA prior to negotiate so they are prepared and do not settle for something less than they want/deserve

Why should negotiators break down the issues in a negotiation in multiple uses, rather than engage in a single-issue negotiation?

1. Create more opportunities for win-win trade offs 2. Prevents negotiators from being completely positional 3. Forces negotiators to prioritize their values and preferences 4. May lead to more creative outcomes 5. Reveals multiple issues from what appears to be a single-issue negotiation

What are some of the most common errors made by negotiators who are attempting to expand the pie of resources?

1. False Conflict - df: belief that their interests are incompatible when they aren't - lose-lose effect = failure to capitalize on compatible interests 2. Fixed-pie perception - belief that other party's interest are directly and completely opposed to one's own interests - focus on pie slicing instead, bc assumes incompatible interests and likelihood of impasse - gains of one party DONT equal losses of another

What are the most prevalent myths about negotiation, and how do these myths hamper people's ability to learn effective negotiation skills?

1. Negotiations are fixed-sum - cooperation can create more value, but also compete to claim a share of the surplus. - incentives to cooperate and compete 2. You need to be either Tough or Soft - good negotiators are principled - must be cooperative but also leverage own power and strengths 3. Good negotiators are born - skills can be learned and taught - Don't always get to learn in a disciplined fashion 4. Life experience is a great teacher - experience w/o feedback is useless 5. Good negotiators take risks - e.g. "Take it or leave it" = tough style and is rarely effective 6. Good negotiators rely on intuition - Good negotiation requires preparation and are proactive

What are the most important factors to consider when making concessions in negotiation (so as to maximize your share of the bargaining zone)?

1. Pattern - fewer + smaller = max slice of pie - don't offer more than one at a time 2. Magnitude - don't make ones consistently bigger than the other party - GRIT model based on reciprocity 3. Timing - Immediate, gradual, or delayed? - Immediate concessions = bad Gradual = good

Why is creativity often downplayed or ignored in the process of negotiation?

1. Too focused on competitive aspect of negotiation - driven by fixed-pie perception - focus on pie slicing instead of expanding the pie

What are some of the advantages and disadvantages to negotiations between businesspeople, and how do they differ from purely personal negotiation?

ADVANTAGES: 1. more likely to expand pie and create value - personal settle too quickly 2. Aren't concern with the following, as friends are: - Internal value conflict - need for acceptance - Myopia - friends are reluctent to more beyond own networks and patterns of behavior - Emotional potential higher w/ friends 3. Business ppl use market pricing to value a deal 4. Business ppl are more likely to use an exchange norm DISADVANTAGES: 1. We choose our friends, but not our coworkers 2. Business relationships often have status and rank issues 3. Trust needs to be built quickly, unlike w/ friends where trust has been built overtime

What are the fundamental differences between tough and soft negotiators?

Differences: 1. TOUGH: -incredibly unflinching when debating - set high demands - make small and few concessions - hold out until the very end, -reject offers that are within the bargaining zone. 2. SOFT: - concerned w/ other party's feelings, so give away too much of bargaining zone - too many concessions - reveal reservation point to be cooperative

Disadvantages of being either a Touch or Soft negotiator?

TOUGH: 1. walking away from potentially favorable agreements 2. bad reputation SOFT: 1. agree too easily to the other party's terms 2. fail to reap much of the bargaining surplus

Address some of the misperceptions about the meaning of win-win negotiation. Why do these misperceptions contribute to leaving money on the table in negotiation situations?

Win-win negotiations are NOT: 1. Compromise - df: reaching a middle ground - Win-win NOT about pie slicing but pie expansion 2. Even split - df: how bargaining zone is split - doesn't represent true interests - orange example 3. Satisfaction - no guarantee that money and resources haven't been wasted--many "happy" negotiators don't expand the pie 4. Building a relationship - important but may prevent creative thinking - too much investment in the others interests prevents integrative solutions