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Negotiation
Weeks 8, 9 & 10
PowerPoint Summary of:Key Negotiation Concepts
Announcements & Reminders:
No class this Thursday—good time to work on group projects!!!
Draft group projects are due November 4, finals are due Nov. 11.
PowerPoint Summary of:Key Negotiation Concepts
Negotiation
1. How would you define it?
PowerPoint Summary of:Key Negotiation Concepts
Negotiation – My DefinitionA discussion between two or more disputants
who are trying to work out a solution to their problem.
2. When is it done?
PowerPoint Summary of:Key Negotiation Concepts
It is done when…
…neither side can get what he/she wants on its own.
3. What is the purpose of negotiation?
There are two possible answers.
PowerPoint Summary of:Key Negotiation Concepts
Purpose of Negotiation To win. (Competitive) To reach a good agreement. (Cooperative)
4. How would you define a GOOD agreement?
PowerPoint Summary of:Key Negotiation Concepts
What is a good agreement?Fisher and Ury argue that a good agreement is: wise
satisfy the parties' interests is fair is lasting.
efficient Cost effective, Time conserving
improves parties' relationship.
PowerPoint Summary of:Key Negotiation Concepts
Negotiation… Can be cooperative or competitive.
PowerPoint Summary of:Key Negotiation Concepts
Term Confusion
Competitive Negotiation
Win-lose Zero sum Positional Distributive Hard
Cooperative Negotiation
Win-win Positive sum Interest-based Integrative Principled
Benefits & Costs There are benefits – and costs – of each
approach.
PowerPoint Summary of:Key Negotiation Concepts
5. What are the characteristics of competitive negotiation?
6. What are the benefits?
7. What are the costs?
PowerPoint Summary of:Key Negotiation Concepts
Competitive Negotiation…8. Based on your knowledge of conflict styles
…when do you think competitive negotiation is best used?
PowerPoint Summary of:Key Negotiation Concepts
Competitive Negotiation is best used when…
Situation is short term and not repeating. The agenda is more important than the
relationship, You HAVE to win The other party is expecting you to be
competitive. The primary issues are tangible and/or
splittable—money, time, dates, etc.
PowerPoint Summary of:Key Negotiation Concepts
A classic competitive situation: Buying a car
Who has recently bought a car?
Describe the negotiation…how did it go?
Who started the negotiation? Did they get what they asked for initially?
PowerPoint Summary of:Key Negotiation Concepts
Competitive Negotiation…Starts with the solution.
Parties propose solutions to one another and
Make offers and counter-offers until
They find a solution that is acceptable to both (it falls within their ZOPA or “bargaining range.” )
PowerPoint Summary of:Key Negotiation Concepts
PowerPoint Summary of:Key Negotiation Concepts
ZOPAs
= Zone of Possible Agreement Otherwise known as “bargaining range” Tells you whether or not an agreement is
possible. B below = buyer; S below = seller OO = opening offer; WAP = walkaway pt
B - OO $10,000
S- WAP $12,000
B-WAP $12,500
S - OO $15,000
Competitive Negotiation…Or, if they can’t find a ZOPA, they consider
whether they’d be better of exercising their “BATNA”.
BATNA is the
Best ALTERNATIVE TO a Negotiated Agreement
PowerPoint Summary of:Key Negotiation Concepts
BATNA Is your “plan B”
It is what you do when the other side tells you to go “jump in a lake!”
or they insist on a ridiculous agreement.
PowerPoint Summary of:Key Negotiation Concepts
Why do you care about BATNAs?
PowerPoint Summary of:Key Negotiation Concepts
Why do you care about BATNAs?
They tell you what you should agree to and what you should walk away from. They also give you negotiating power.
PowerPoint Summary of:Key Negotiation Concepts
Often confused:
BATNA and WAP (Walk-away point) What’s the difference? Your walk-away point is the offer the other
side makes that is so low (or so high) that you WALK AWAY from the negotiation, and
Go with your BATNA instead!
PowerPoint Summary of:Key Negotiation Concepts
For instance
You want a Jeep, but your parents will let you have their old Toyota for $5,000.
You decide that if you can get a used Jeep for $7500 or less, you’ll go with that.
If you can’t, you’ll go with your parents’ Toyota.
What is your WAP? What is your BATNA?
They are
related…but
they are not the
same!
Competitive negotiation—typical attitudes
The “pie” is limited—my goal is to get the biggest piece.
A win for me = a loss for you Negotiators are opponents or enemies There is one right solution—mine!
PowerPoint Summary of:Key Negotiation Concepts
Competitive negotiation -typical strategy:
Extreme opening position Argue for its “fairness” or why it is “right” Intend to give in a little, but try to give in as
little as possible.
PowerPoint Summary of:Key Negotiation Concepts
Positional negotiation—typical strategy
Stay on the offensive Avoid concessions whenever possible—they
are a sign of weakness. Avoid compromise If you must compromise, give in as little as
possible.
PowerPoint Summary of:Key Negotiation Concepts
Typical tactics of competitive negotiation:
Bluffing Wearing down the other side Devaluing other sides’ offers Threatening Softening them up, then squeezing them
PowerPoint Summary of:Key Negotiation Concepts
Let’s try it!
Buying…and selling a used car.
PowerPoint Summary of:Key Negotiation Concepts
Debrief
Buying…and selling a used car.
PowerPoint Summary of:Key Negotiation Concepts
Try again!
Negotiating over Prunes!
PowerPoint Summary of:Key Negotiation Concepts
Debrief
PowerPoint Summary of:Key Negotiation Concepts
Cooperative Negotiation(Also called integrative or principled)
PowerPoint Summary of:Key Negotiation Concepts
The “Principles” of Principled Negotiation
1. Separate the People from the Problema. Focus first on the relationship and identity
issues
b. Then on the topic issue issues
PowerPoint Summary of:Key Negotiation Concepts
The “Principles” of Principled Negotiation
2. Attend to the communication issuesa. Acknowledge and manage emotionsb. Avoid the blame gamec. Listend. Use I-messages, active listening, etc.
PowerPoint Summary of:Key Negotiation Concepts
The “Principles” of Principled Negotiation
3. Focus on Interests, not PositionsPositions: Simple statements about what you want. No reasons, no subtlety, no justification. Just a demand:
I want the orange!
Interests: The reasons underlying the position
—what you really want or need
—the answer to the question WHY. I need the rind to bake a cake.
I'm hungry. I want to eat the orange.
Interest-based Strategy
Considers alternative routes to the goal.
Positional Political Framing
If time..
Consider the positions and interests in the D’s and R’s debate about … (you fill in)
What are the positions? What are the interests? Why does it matter?
The “Principles” of Principled Negotiation
4. Generate many options & look for Options for Mutual Gain
Brainstorm options by listing all possibilities first,
Evaluating options second. Look for ways to meet
everyone's interests at the same time.
PowerPoint Summary of:Key Negotiation Concepts
The “Principles” of Principled Negotiation
5. Find Legitimate Criteria to Guide Decisions What's been done before? What's “fair”
PowerPoint Summary of:Key Negotiation Concepts
The “Principles” of Principled Negotiation
6. Analyze the Best Alternative to a Negotiated Agreement (BATNA)
BATNA = Walk Away Point—when you tell the other person you are not interested in their offer because you can do better in another way.
PowerPoint Summary of:Key Negotiation Concepts
The “Principles” of Principled Negotiation
7. Work with Fair and Realistic Commitements
Is agreementReasonable?Doable?Face-saving?Practical?
PowerPoint Summary of:Key Negotiation Concepts
So…to review…The “Principles” of Principled Negotiation
1. Separate the people from the problem & deal with “people problems” first.
2. Attend to communication issues
3. Focus on interests, not positions
4. Generate lots of options; focus on mutual gain
5. Identify objective criteria
6. Compare with your BATNA (better deal elsewhere, walk-away point)
7. Assess quality of the decision in terms of fairness, implementability.
PowerPoint Summary of:Key Negotiation Concepts
PowerPoint Summary of:Key Negotiation Concepts
Negotiation – Exercise 3 – The Print Shop Scenario
PowerPoint Summary of:Key Negotiation Concepts
When to use what?
Integrative bargaining is best when: There is a possibility of “expanding the pie.” When the agenda and the relationship are
important. When this is a recurring relationship or event. When you don’t have a good “BATNA.” But keep in mind….
PowerPoint Summary of:Key Negotiation Concepts
When to use what?
Distributive bargaining is best when: There is no possibility of “expanding the pie.” When you need to get your way/as much as
possible. When the agenda is much more important than
the relationship. When this is a one-time event. When you have a good “BATNA.”
Slide 3:
Distributive and Integrative Bargaining
Are not mutually exclusive!
• Eventually even expanded pies have to be divided
• A form of distributive bargaining is the last step of an integrative approach
PowerPoint Summary of: Distributive Bargaining
Hard, Soft, Principled Negotiation I
Be soft on the people, hard on the problem
Be hard on the people and the problem
Be soft on the people and the problem
Separate the people from the problem
Demand concessions as a condition of the
relationship
Make concessions to cultivate the relationship
The goal is a wise outcome reached
efficiently and amicably
The goal is victoryThe goal is agreement
Participants are problem-solvers
Participants are adversaries
Participants are friends
PrincipledHard Soft
ProblemPositional Bargaining:
which Game Should You Play?
SolutionChange the Game-
Negotiate on the Merits
Hard, Soft, Principled Negotiation II
Proceed independent of others
Distrust othersTrust others
Insist on using objective criteria
Insist on your positionInsist on agreement
Develop multiple options to choose from; decide
later
Search for the single answer: the one you will
accept
Search for the single answer: the one they will
accept
Invest options for mutual gain
Demand one-sided gains as the price of
agreement
Accept one-sided losses to reach agreement
Avoid having a bottom line
Mislead as your bottom line
Disclose your bottom line
Explore interestsMake threatsMake offers
Focus on interests, not positions
Dig into your positionChange your position easily
PrincipledHardSoft
Hard, Soft, Principled Negotiation III
Try to reach a result based on standards of
independent will
Try to win a contest of will
Try to avoid a contest of will
Reason and be open to reasons; yield to
principle, not pressure
Apply pressure Yield to pressure
PrincipledHardSoft
Source: Getting to Yes