Business Negotiation

202020

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Getting what you want at a price
that is acceptable to you
Everything is negotiation:

Marriage, Children, job, school

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Most Negotiations are based on:

1. Best Price
2. Best terms of contract
3. Time Period
4. Warranty
5. If things go wrong, remedy
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 Chapter 1

THE NATURE OF NEGOTIATION

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 INTRODUCTION

Negotiation is something
that everyone does,
almost daily

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 NEGOTIATIONS
Negotiations occur for several reasons:
• To agree on how to share or divide a limited
resource
• To create something new that neither party
could attain on his or her own
• To resolve a problem or dispute between the
parties

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 APPROACH TO THE SUBJECT
Most people think bargaining and negotiation
mean the same thing; however, we will be
distinctive about the way we use these two
words:
• Bargaining: describes the competitive, win–
lose situation
• Negotiation: refers to win–win situations such
as those that occur when parties try to find a
mutually acceptable solution to a complex
conflict

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 CHARACTERISTICS OF A
NEGOTIATION SITUATION
• There are two or more parties
• There is a conflict of needs and desires
between two or more parties
• Parties negotiate because they think they can
get a better deal than by simply accepting what
the other side offers them
• Parties expect a “give-and-take” process

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 CHARACTERISTICS OF A
NEGOTIATION SITUATION
• Parties search for Agreement rather than:
 Fight openly
 Capitulate (give up)
 Break off contact permanently
 Take their dispute to a third party
• Successful negotiation involves:
 Management of tangibles (e.g., the price or the terms of
agreement)
 Resolution of intangibles (the underlying psychological
motivations) such as the need to win, avoid losing, need to
look good, etc.
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 INTERDEPENDENCE
In negotiation, parties need each other to
achieve their preferred outcomes or objectives.

• This mutual dependency is called

• Interdependent goals are an important aspect

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 INTERDEPENDENCE
• Interdependent parties are characterized by
interlocking goals
• Having interdependent goals does not mean
that everyone wants or needs exactly the same
thing
• A mix of convergent and conflicting goals
characterizes many interdependent
relationships

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 TYPES OF INTERDEPENDENCE
AFFECT OUTCOMES
• Interdependence and the structure of the situation shape
processes and outcomes

 Zero-sum or distributive – one winner ( horse race, other sports competition)

 Non-zero-sum or integrative – mutual gains situation-when one person

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ALTERNATIVES SHAPE INTERDEPENDENCE
• Evaluating interdependence depends heavily on the
alternatives to working together
Whether you should or should not agree on something
depends upon the attractiveness to you of the best
available alternative.
• Best available alternative: BATNA (acronym for Best
Alternative to a Negotiated Agreement)
• The desirability to work together is better for outcomes

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 MUTUAL ADJUSTMENT
• Continues throughout the negotiation as both
parties act to influence the other
• One of the key causes of the changes that
occur during a negotiation
• The effective negotiator needs to understand
how people will adjust and readjust and how
the negotiations might twist and turn, based
on one’s own moves and the other’s responses

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 MUTUAL ADJUSTMENT AND
CONCESSION MAKING
• When one party agrees to make a change in
his/her position, a concession has been made
• Concessions restrict the range of options
• When a concession is made, the bargaining
range is further constrained
 Example: Abdulla expects a starting salary of 80K
but scales down to 75K. Eliminated all possible
options above 75K.

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 TWO DILEMMAS IN
MUTUAL ADJUSTMENT
• Dilemma of honesty
 Concern about how much of the truth to tell the
other party

• Dilemma of trust
 Concern about how much should negotiators believe
what the other party tells them

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 CONFLICT
Conflict may be defined as a:
“sharp disagreement or opposition” and
includes “the perceived divergence of interest,
or a belief that the parties’ current
aspirations/goals cannot be achieved
simultaneously”

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 LEVELS OF CONFLICT
• Intrapersonal or intrapsychic conflict  
 Conflict that occurs within an individual
 We want an ice cream cone badly, but we know that ice
cream is very fattening

• Interpersonal conflict  
 Conflict is between individuals
 Conflict between bosses and subordinates, spouses, siblings,
roommates, neighbors, etc.

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 LEVELS OF CONFLICT
• Intragroup Conflict  
 Conflict is within a group
 Among team and committee members, within families,
classes etc.

• Intergroup Conflict  
 Conflict can occur between organizations, ethnic
groups, warring nations, feuding families, or within
fragmented communities
 These negotiations are the most complex

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 QUESTION

Is conflict a bad thing?

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 DYSFUNCTIONS OF CONFLICT
Elements that make conflict bad:
1. Competitive, win–lose goals
2. Misperception and bias
3. Emotionality
4. Decreased communication
5. Blurred issues
6. Rigid commitments
7. Magnified differences, minimized similarities
8. Escalation of conflict

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 FUNCTIONS OF CONFLICT
1. Makes organizational members more aware and
able to cope with problems through discussion.
2. Promises organizational change and adaptation.
3. Strengthens relationships and heightens morale.
4. Promotes awareness of self and others.
5. Enhances personal development.
6. Encourages psychological development—it helps
people become more accurate and realistic in
their self-appraisals.
7. Can be stimulating and fun.

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FIGURE 1.3 THE DUAL CONCERNS MODEL

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 STYLES OF CONFLICT MANAGEMENT
1. Contending (also called competing or
dominating)
 Actors pursue own outcomes strongly, show little concern
for other party obtaining their desired outcomes
2. Yielding (also called accommodating or obliging)
 Actors show little interest in whether they attain own
outcomes, but are quite interested in whether the other
party attains their outcomes
3. Inaction (also called avoiding)
 Actors show little interest in whether they attain own
outcomes, and little concern about whether the other party
obtains their outcomes

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 STYLES OF CONFLICT MANAGEMENT
4. Problem solving (also called collaborating or
integrating)
 Actors show high concern in obtaining own outcomes, as
well as high concern for the other party obtaining their
outcomes
5. Compromising
 Actors show moderate concern in obtaining own
outcomes, as well as moderate concern for the other
party obtaining their outcomes

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