Business Negotiation Exam 1

What two dimensions underly the Dual Concerns Model (Figure 4.2)

- Collaboration - substantive + relational - Competitive - substantive, not relational - Accommodation - relational, not substantive ^ (engagement strategies) - Avoidance - neither

Describe unilateral versus bilateral approaches to strategy

unilateral : made without active involvement of the other party - problematic

Contrast negotiation and bargaining

Usually bargaining is more informal than negotiation Negotiation is not used in connection with price alone, whereas bargaining is Negotiation aims for a win-win situation where both parties benefit from a decision

How is value created through differences?

Value may be created in numerous ways, and the heart of the process lies in exploiting the differences between the negotiators Differences in interests. Differences in judgments about the future. Differences in risk tolerance. Differences in time preference.

Discuss the key takeaways regarding final offers.

indicates there is no room for movement they may choose to let the absence of concessions be the signal A personalized concession also signals the last concession

What are two routes for learning about the other party's position, resistance point, etc.?

indirect assessment Direct assessment

How can you modify others' perceptions of their own position?

making outcomes less attractive or costs higher One approach is to interpret for the other party what the outcomes of their proposal will be conceal information

Discuss the key takeaways regarding the opening offer and stance.

making the first offer is advantageous as it can anchor a negotiation An opening stance is the attitude a negotiator will adopt at the start of the negotiation

How are arguments assessed?

- arguments are assessed in terms of their objective outcomes and subjective values -these two metrics are used to assess both integrative and distributive agreements

Cut the costs for compliance

- designed to minimize the other party's costs for agreeing to a specific solution =requires more intimate knowledge of the other party's real needs and preferences

Step 3: recognize there are various techniques for generating alternative solutions, define logrolling

- requires parties to find more than one issue in conflict and to have different priorities for those issues -tradeoff among issues -joint outcomes are higher -frequently done as a trial and error

Electronic brainstorming

- responses to a series of questions is anonymously entered int a networked device that aggregates and displays these entries to a group as a whole -good for integrative negotiations with many parties

Expand the pie

-adding resources in a way that both sides can achieve their objectives -sometimes expensive and can be problematic for stakeholders

Describe the consequences of unethical conduct

-relationship suffers, targets of deception gets angry

List seven factors that facilitate a successful integrative negotiation

1 The presence of a mutual goal (common goal, shared goal, or joint goal) 2. Faith in your own problem-solving ability. 3. A belief in the validity of the other party's position. 4. The motivation and commitment to work together. 5. Trust. 6. Clear and accurate communication. 7. An understanding of the dynamics of integrative negotiation.

List and describe the six characteristics of a negotiation situation

1 Two or more parties, individuals, groups, or organizations. 2.There is a conflict of needs and parties search for a resolution. 3.Parties think they can get a better deal by negotiating. 4.In negotiation, a give-and-take is expected. 5. The parties prefer to negotiate and search for an agreement. 6. Successful negotiation manages tangibles and resolves intangibles.

4 rules for brainstorming

1 avoid judging or evaluating solutions 2 separate people from the problem 3 be exhaustive in the brainstorming process 4 ask outsiders

Step 1: List the five points summarized on slide six for identifying and defining the problem

1. Define the problem in a way that is mutually acceptable to both sides - separate from efforts to generate or choose alternatives. 2. State the problem with an eye toward practicality and comprehensiveness and a focus on solving the core problem(s). 3. State the problem as a goal and identify the obstacles to attaining this goal - can obstacles be corrected by negotiators? 4. Depersonalize the problem, allowing both sides to approach the issue as a problem external to the individuals at the table. 5. Separate the problem definition from the search for solutions.

Step 4: be able to list and describe the ten steps for evaluating and selecting alternatives

1. Narrow the Range of Solution Options 2. Evaluate Solutions on the Basis of Quality, Standards, and Acceptability 3. Agree to the Criteria in Advance of Evaluating Options 4. Be Willing to Justify Personal Preferences 5. Be Alert to the Influence of Intangibles in Selecting Options 6. Use Subgroups to Evaluate Complex Options 7. Take Time Out to Cool Off 8. Explore Different Ways to Logroll (i.e., risk, expectations & time preferences) 9. Keep Decisions Tentative and Conditional until All Aspects of the Final Proposal Are Complete 10. Minimize Formality and Record keeping until Final Agreements Are Closed

Discuss four ways that goals directly affect negotiation

1. Wishes are not goals, especially in negotiation. 2. A negotiator's goals may be linked to the other party's goals. 3. There are limits to what realistic goals can be. 4. Effective goals must be concrete, specific, and measurable.

Discuss BATNA and WATNA (make sure you know what each acronym stands for).

Best alternative for negotiated agreement Worst alternative for negotiated agreement

Discuss four contextual elements that are required during integrative negotiation (i.e., listed on slide 4).

Create a free flow of information. Attempt to understand the other negotiator's needs and objectives. Emphasize things that the parties have in common. Search for solutions that meet the goals/objectives of both parties.

Compare distributive and integrative negotiation

Distributive : one-time deal, targets opening offers and resistance points, strong opening offer plus few concessions, strong BATNA's varies from pleasant but firm to hard-nosed Integrative : ongoing relationship, identifying problems, surfacing interests, generating solutions, evaluating alternatives, common goals, focus on creating ideal solutions, hard on the problem, soft on the people

Contrast zero-sum versus non-zero sum & Contrast distributive versus integrative

Distributive: A zero-sum , or a Distributive situation is competitive with one winner. Integrative : A non-zero-sum, or Integrative situation is a mutual-gains situation.

List three common mistakes of integrative negotiation

Failure to negotiate when they should Negotiating when they should not Negotiating when they should but choosing an inappropriate strategy

Define strategy (general definition and specific to negotiation)

General definition: the pattern or plan that integrates an organization's targets, policies, and action sequences into a cohesive whole. •Applied to negotiation: the overall plan to accomplish one's goals in a negotiation and the action sequences that will lead to the accomplishment of those goals.

Describe the dilemmas of honesty and trust

Honesty: Concerns how much of the truth to tell the other Party. Telling the other party everything may allow them to take advantage of you. Not telling the other party about your needs may lead to a stalemate Trust : Concerns how much to believe what the other party tells you. If you believe everything, you may be taken advantage of. If you believe nothing, you may not reach an Agreement. Current trust depends on: Their reputation. Their past treatment of you. Their current pressures.

What is information asymmetry?

Imbalance between the negotiator's knowledge of the other party's position - not common knowledge

Recognize that a relationship between two parties can be characterized in one of three ways: interdependent, independent, and dependent. Be able to describe and provide an example of each.

Independent : parties are able to meet their own needs without the assistance of others; they can be relatively detached, indifferent, and uninvolved with others Interdependent : Interdependent parties, how-ever, are characterized by interlocking goals—the parties need each other in order to accom-plish their objectives and hence have the potential to influence each other. Dependent : Dependent parties must rely on others for what they need; because they need the help, benevolence, or cooperation of the other, the dependent party must accept and accommodate that provider's whims and idiosyncrasies.

Step 2: Discuss surface needs and interests.

Key to an integrative agreement is understanding and satisfying each other's interests Interests are the underlying concerns, needs, desires, or fears that motivate a negotiator to take a particular position. Pursuing positional bargaining allows only one victor at outcome.

Define the terms mutual adjustment and concession

Mutual adjustment : When parties are interdependent, they have to find a way to resolve their differences. Both parties can influence the other's outcomes and decisions, and their own outcomes and deci-sions can be influenced by the other. Concession : When one party agrees to make a change in his or her position, a concession has been made (Pruitt, 1981). Concessions restrict the range of options within which a solution or an agreement will be reached; when a party makes a concession, the bargaining range (the range of possible agreements between the two parties' minimally acceptable settlements) is further constrained.

Most actual negotiations are a combination of claiming and creating value. List the 3 implications

Negotiators must be able to recognize situations that require more of one approach than the other Negotiators must be versatile in their comfort with and use of both major strategic approaches Negotiator perceptions of situations tend to be biased toward seeing problems as more distributive/competitive than they really are.

Define prudent, practical, and legal

Prudent : wise, based on trying to understand the efficiency of the tactic and the consequences it might have on the relationship with the other -Practical : what a negotiator can actually make happen in a given situation (whats feasible, what can work) -Legal : what the law defines as acceptable practice Recognize those terms are not interchangeable with ethics.

Define bargaining mix

The package of issue for negotiation

Describe how negotiation is complex

Time constraints, monetary motivation, conflicting interests of involved parties, cultural differences

Why is planning important

With effective planning and goal setting, most negotiators can achieve their objectives; without them, results occur more by chance than by negotiator effort. Regrettably, systematic planning is not something that most negotiators do willingly. - devoting insufficient time to planning is one major weakness that may cause negotiators to fail.

Which two strategies of the dual concerns model is associated with distributive bargaining

accommodation + competitive

Define ethics :

broadly applied social standards for what is right or wrong in a situation, or a process for setting those standards -different from morals (personal beliefs), ethics grow out of philosophy -not any different in negotiation -social context (cultures)

Which strategy of the dual concerns model is associated with integrative negotiation

collaboration but only when BOTH parties commit to collaboration

Compromising

compromises are not considered to be a good integrative strategy except for circumstances where parties are very entrenched and it is unlikely that a more comprehensive agreement is possible

What are some ways to manage the other party's impression of your position?

concealment is the most general screening activity When using a representative, calculated incompetence may be used Channel communication through a spokesperson for group negotiations Present many items for negotiation, only a few of which are important

Discuss the role of concessions

concessions are central to negotiation Parties feel better about a settlement when the negotiation involved a progression of concessions rather than not

Pareto efficient frontier

contains a point where there is no agreement that would make any party better off without decreasing the outcomes to any other party

Discuss the key takeaways regarding initial concessions

conveys a message of how you will proceed Communicate intentions Flexibility keeps the negotiation proceeding

Be able to list the four common characteristics of integrative negotiators

great listening skills - understand one's key concerns and perspectives (body language/emotions), don't get locked down to one's own preferences "abundance mentality" - "win-win"/ creating value mentality personal character and integrity - the strongest way to build trust with the other is to demonstrate that a negotiator will tell the truth and keep his word personal maturity - defend reputation/preferences while recognizing the other's perspective

List the four key steps in the integrative negotiation process

identify and define the problem (creates value) surface interests and needs (creates value) generate alternative solutions (creates value) evaluate and select alternatives (claiming value)

Distributive situations usually lead to zero-sum outcomes while integrative situations lead more to _____________

non-zero sum outcomes

Describe deception by omission versus commission

omission: failing to disclose information (passive) commission: lying (active)

Indirect Assessment

online information, observations, publications

The fundamental process of distributive bargaining is to ...

reach a settlement point within a positive bargaining range

How can one party influence the other party's resistance point?

reduce the other party's estimate of your cost of delay or impasse Increase the other party's estimate of their own cost of delay or impasse Reduce the other party's perception of the value of an issue Increase the other party's perception that you value an issue

Recognize the importance of goals in the planning process.

setting goals is the 1 st step - negotiators must anticipate what goals they want to achieve in a negotiation and focus on how to achieve those goals - specific and clear

Brainstorming

small groups of people work to generate as many possible solutions to the problem as they can

Direct Assessment

spying, provoke outbursts, calculated incompetence

Modifying the resource pie

starting a new service or technology to its traditional business consulting

Define the following three types of goals: substantive, intangible, and procedural

substantive: the ability to secure tangible resources/something measurable that we desire intangible : goals for internal change that are required to reach tangible goals procedural : a set of plans for achieving a goal

Define tactics and describe how tactics relate to strategy

tactics are subordinate to strategy; they are structured, directed, and driven by strategic considerations

Define the following terms relating to distributive bargaining: target point, resistance point, and asking price

target point: negotiator's optimal goal, the negotiator's aspiration Resistance point: negotiator's bottom line, also called the reservation price Asking price: initial price set by a seller

Subordination

the differences in interest that gave rise to the conflict are supervised or replaced by other interests

What's the value of discovering the other party's resistance point?

the more you can learn about the other party's target, resistance point, motives, and so on, the more likely you will settle favorably

Define bargaining range (aka, spread between resistance points). What does a positive bargaining range imply?

the spread between resistance points When a buyer's resistance point is ABOVE the sellers resistant point (Negative bargaining range is when a seller's resistance point is above the buyers - likely to stalemate)

Nonspecific compensation

when compensation is not directly related to the substantive issues being discussed -the person doing the compensating needs to know what is valuable to the other person

Pareto optimum state

when no additional changes can make one party better without making one party worse

Finding a bridge solution

when parties are able to invent new options that meet all their respective needs

What can be learned by the pattern of concession making?

when successive concessions get smaller, the obvious message is that the concession maker's position is getting firmer