1. Business Management 12 Ms. Melbourne
NEGOTIATION SKILLS
Business Management 12
Ms. Melbourne

2. What is negotiation?
Managers spend a great deal of time negotiating. Some examples:
salaries for employees
making deals
working out differences with peers
resolving conflicts with employees
Negotiation is a process in which two or more parties who have different preferences must make a joint decision and come to an agreement.
Both parties typically use a bargaining strategy.

3. Bargaining Strategies
There are two general approaches to negotiation:
distributive bargaining
integrative bargaining

4. Example
You see a used car advertised for sale in the newspaper. It appears to be just what you’ve been looking for. You go out to see the car. It’s great and you want it. The owner tells you the asking price. You don’t want to pay that much. The two of you then negotiate over the price. This negotiating process is called distributive bargaining.

5. Distributive Bargaining
Negotiation in which any gain made by one party involves a loss to the other party
Every dollar you can get the seller to cut from the price of the used car is a dollar you save.
Every dollar the seller can get from you comes at your expense.

6. Distributive Bargaining
the essence is negotiating over who gets what share of a fixed pie
widely used in labour-management negotiations over wages and benefits
each party has a target point that defines what he/she would like to achieve
each party has a resistance point that marks the lowest outcome that’s acceptable
the area between these points is the settlement range
the tactic should focus on trying to get your opponent to agree to your specific target point or to get as close to it as possible

7. Distributive Bargaining
Settlement range
Party A’s target point (buyer)
Party B’s resistance point
Party A’s resistance point
Party B’s target point (seller)
$1000
$1100
$1150
$1200

8. Integrative Bargaining
Negotiation in which there is at least one settlement that involves no loss to either party.
Integrative bargaining is preferable to distributive bargaining because it builds long-term relationships and facilitates working together in the future.
We see more integrative bargaining in organizations because of the conditions necessary for this type of negotiation to succeed.

9. Bargaining Strategies
Distributive
leaves one party a loser
builds animosities and divisions between people who may have to work together
Integrative
creates win-win situations
bonds negotiators and each feels he/she has achieved a victory

10. How do you develop effective negotiation skills?
Research your opponent. Acquire as much information as you can about his interests and goals.
Begin with a positive offer — a small concession.
Address problems, not personalities. Avoid the tendency to attack your opponent. Separate the person from the problem.

11. How do you develop effective negotiation skills?
Pay little attention to initial offers. Treat an initial offer as merely a starting point.
Emphasize win-win solutions. Present options in terms of your opponent’s interests.
Be open to accepting third-party assistance. When stalemates are reached, consider the use of a neutral third party.

12. Neutral third parties
Mediators can help parties come to an agreement, but they don’t impose a settlement.
Arbitrators hear both sides of the dispute, then impose a solution.
Conciliators are more informal and pass along information between the parties, interpret messages and clarify misunderstandings.