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 Definition A 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 Problem a. 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 issues a. Acknowledge and manage emotions b. Avoid the blame game c. Listen d. Use I-messages, active listening, etc. PowerPoint Summary of: Key Negotiation Concepts

The “Principles” of Principled Negotiation 3. Focus on Interests, not Positions Positions: 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 agreement Reasonable? Doable? Face-saving? Practical? PowerPoint Summary of: Key Negotiation Concepts

So…to review…The “Principles” of Principled Negotiation  Separate the people from the problem & deal with “people problems” first.  Attend to communication issues  Focus on interests, not positions  Generate lots of options; focus on mutual gain  Identify objective criteria  Compare with your BATNA (better deal elsewhere, walk-away point)  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 PrincipledHardSoft Problem Positional Bargaining: which Game Should You Play? Solution Change 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