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Essentials of Negotiation

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1a. Negotiation (def.): a form of decision making in which two or more parties talk with on another in an effort to resolve their opposing interests (p. 3). Bargaining: describes competitive, win-lose situations

Negotiation: refers to win-win situations
A process that transforms over time due to mutual adjustment 1b. Key elements of a negotiation process: Interdependence, mutual adjustment, 1c. Types of Negotiation:

2. How people use negotiation to manage situations of interdependence.

3. Negotiation within the broader perspective of processes for conflict management.

1. to agree on how to share or divide a limited resource
2. to create something new that neither party could do on his or her own 3. to resolve a problem or dispute between parties

When to avoid negotiating:
1. risk of losing everything
2. running at capacity (raise prices)
3. don’t care (everything to lose and nothing to gain)
4. no time (risk of settling for less)
5. no trust in counterparts (negotiation is of little or no value) 6. waiting will improve position
7. not prepared

Characteristics of a Negotiation Situation:
1. Two or more parties ( a process between individuals).
2. Conflict of needs and desires
3. Voluntary process
4. Expect ‘give-and-take’/compromise
5. Avoid public argument, domination of one side/capitulation of the other, burning bridges, or consulting a higher authority
6. Management of tangibles and resolution of intangibles (often rooted in personal values and emotions).

Competitive dynamics and bad decisions:
1. Rivalry
2. Time pressure
3. The spotlight
4. The presence of attorneys

Interdependent: occurs when two parties depend on each other to achieve their own preferred outcome. Interlocking goals – need each other to accomplish objectives. Independent: parties who can meet their own needs without help and assistance of others. Dependent: occurs when parties must rely on other for what they need. Must accept and accommodate to provider’s whims and idiosyncrasies.

A. Types of Interdependence Affect Outcomes
1. Zero-sum / Distributive – competitive, negative correlation between goal attainments
2. Mutual-gains / non zero-sum / integrative – positive correlation between goal attainments

B. Alternatives Shape Interdependence
1. BATNA (Best Alternative to a Negotiated Agreement)
Determinant on whether to agree or disagree
Need to know one’s own and opposite party’s BATNA
Mutual Adjustment
Both parties can influence each other’s outcomes and decisions. Continues throughout negotiation
Exchanges information, attempt to influence, problem solve
Work towards solution taking each other’s req’s into account, optimize outcome for both A. Mutual Adjustment and Concession Making

1. Concession Making – when one party agrees to make a change in his or her position. a. restrict range of options within which a solution or agreement will be made. 2. Bargaining Range – the difference between the preferred acceptable settlements. a. further constrained when a concession is made.

B. Two Dilemmas in Mutual Adjustment
Dilemmas faced by negotiators identified by Harold Kelley
Dilemma of Honesty – Concerns how much of the truth to tell the other party. Dilemma of trust – How much should negotiators believe what the other party tells them? Factors: reputation, past personal relation, understanding of pressures on other party in the present circumstance, etc. Optimal solution aided by trust and perception of fair and honest treatment (p. 14 ¶ 3). Two efforts that promote trust and beliefs

Perceptions of Outcome – can be shaped by managing how the receiver views the proposed result. Perceptions of Process – can be enhanced by conveying images that signal fairness and reciprocity in proposals and concessions. Rejected proposals = feelings of mistreatment = failed negotiation Concession making = builds trust in party and process ‘give-and-take’ internationally expected characteristic of negotiation; essential also to joint problem solving in most interdependent relationships.

The Importance of Aligning Perceptions
Information about negotiating partner is vital for success
Faulty information can lead to lack of seriousness
Satisfaction with negotiation is as much determined by the process through which an agreement is reached as with the actual outcome obtained. (p. 15, box 1.5)

Value Claiming and Value Creation
Structure of interdependent relationship shapes strategies and tactics. Distributive situations: negotiators motivated to win over other party. Distributive Bargaining – win-lose strategies and tactics; accepts the fact that there can only be one winner in given situation and pursues a course of action to be the victor. Purpose: to claim value – do whatever is necessary to claim winnings. Most appropriate when time and resources are limited, likeliness of competitive counterparts, no likelihood of future interaction between parties. Integrative situations: employs win-win strategies and tactics. Integrative negotiation – attempts to find solutions so both parties can do well and achieve goals. Purpose of negotiation is to create value.

Best approach when not faced with situations mentioned in ‘distributive bargaining.’ Most negotiations are a combination of claiming and creating value processes. Implications: a.1. Ability to recognize situations that require more of one than the other. a.2. Versatile negotiators comfortable with employing both major strategic approaches. No ‘best,’ ‘preferred,’ or ‘right’ way; adaptation to situation. a.3. Biased perceptions toward seeing problems as more distributive/competitive than they are in reality. Affected by past experience, personality, moods, habits and beliefs regarding negotiating. …[T]endency to assume a negotiation problem is more zero-sum than it may be and overuse distributive strategies… (p. 16 ¶ 4). Tendency to overestimate competitiveness = underuse of integrative, creating-value processes = suboptimal outcomes. Successful coordination of interdependence can potentially lead to synergy (“the whole is greater than the sums of its parts”). Value creation depends on exploiting differences between negotiators. Key differences among negotiators:

a.1. Differences in interests. Finding compatibility can often create value.
a.2. Differences in judgments about the future.
a.3. Differences in risk tolerance.
a.4. Differences in time preference.

Value is often created by exploiting common interests, but can also be created by differences. A. Conflict
Can stem from: strongly divergent needs, misperceptions, misunderstandings. Conflict – “’sharp disagreement or opposition, as of interests, ideas, etc.’ and includes ‘the perceived divergence of interest, or belief that the parties’ current aspirations cannot be achieved simultaneously.’” “…results from ‘the interaction of interdependent people who perceived incompatible goals and interference from each other in achieving those goals’” (p. 18 ¶ 2).

Indication of something wrong or dysfunctional

Creates largely destructive consequences
Levels of Conflict
Intrapersonal or Intrapsychic Conflict – occurs within individual. a.1. Interpersonal Conflict – between individuals.
a.2. Intragroup Conflict – among team and work group members, etc. Affects decision-making, productivity, resolving issues, etc. a.3. Intergroup Conflict – between two separate parties.
Intricate level of conflict due to numbers and multitudinous interaction. Negotiation most complex.
Functions and Dysfunctions of Conflict. Elements that lead to conflicts’ destructive image:

a.1. Competitive, Win-Lose goals. Goals in contention and cannot simultaneously be fulfilled. = competitive processes to attain goal.
a.2. Misperception and Bias. For or against attitude; thinking becomes stereotypical and biased; endorse supporters, reject opponents.
a.3. Emotionality. Emotionally charged; increases irrationality.
a.4. Decreased Communication. Productive communication declines; communicate less with those in disagreement, more with those who do. What little communication that takes places is negative.
a.5. Blurred Issues.
a.6. Rigid Commitments. Locked positions.
a.7. Magnified Differences, Minimized Similarities.
a.8. Escalation of the Conflict.
Objective: not to eliminate conflict, but to manage it to control destructive elements.

Factors That Make Conflict Easy or Difficult to Manage
P. 21: Fig. 1.2 Conflict Diagnostic Model
P. 20: Fig. 1.1 Functions and Benefits of Conflict
B. Effective Conflict Management
Dual Concerns Model (p. 22: Fig. 1.3)
Developed by Dean Pruitt, Jeffrey Rubin, and S.H. Kim
X-axis: concern about own outcomes
Aka assertiveness dimension
Y-axis: concern about other’s outcomes
Aka cooperative dimension
5 major strategies:
a.i.1. Contending (aka competing, dominating). Lower-right-hand corner. a.i.2. Yielding (aka accommodating, obliging). Upper left-hand. a.i.3. Inaction (aka avoiding). Lower left-hand.
a.i.4. Problem Solving (aka collaborating, integrating). Upper right-hand. a.i.5. Compromising. Middle.
P. 25: Fig. 1.4 Styles of Handling Interpersonal Conflict and Situations…

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