1. Chapter 1 The Nature of negotiation
Book: Negotiation
Author: Roy J. Lewicki; David M Saunders and Bruce Barry
6th Edition
INB 350 Lecture
By Ms. Adina Malik (ALK)

2. Learning objectives
What is negotiation? How is it different from Bargaining?
What are the characteristics of negotiation?
When do negotiation occur?
What are the negotiation skills required for the negotiation process?
How does interdependence affect the negotiation process?
What is the difference between ‘creating value’ and ‘claiming value’ through negotiation?
What are the types of conflict in negotiation and how do they affect negotiation?
The dual concern model

3. Introduction
Negotiation is something that everyone does, almost daily.

4. Approach to the Subject
Bargaining: describes the competitive, win-lose situation, for example; haggling over price that happens in shops.
Negotiation: Negotiation occurs when parties try to find a mutually acceptable solution to a complex situation. It is cooperative and win-win.
Negotiation is an interpersonal decision-making process necessary whenever we cannot achieve our objectives single-handedly.
In the business world, people negotiate at multiple levels and contexts—within departmental or business units, between departments, between companies, and even across industries.
Bargaining is about focusing on who is right. It is competitive and win-lose. 
Negotiation is about focusing on what is right. It is cooperative and win-win.

5. Negotiations Negotiations occur for several reasons:
Resources are scarce and it helps to share or divide a limited resources.
To create something new that neither party could attain on his or her own.
To resolve a problem or dispute between the parties.

6. 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
There are several characteristics common to all negotiation situations
People negotiate at multiple levels and contexts
Marketing department wants to promote where as finance department want to save!!
They believe that they can improve their outcomes rather than simply accepting the deal
The fundamental of negotiation is based on it. it is expected that both sides will modify or move away from their opening statements, requests or demands. Although at first they will be critical about each others position however consequentially both parties usually modify their opening position to reach an agreement. This is known as “compromise”. Sometimes however truly creative negotiation may not require it, parties might invent solution that meets the objectives of all parties.

7. Characteristics of a Negotiation Situation
Parties search for agreement rather than:
Fight openly
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 winning, losing, saving face). Intangibles are often rooted in personal values and emotions.
Intangible factors are the underlying psychological motivations that may directly or indirectly influence the parties during a negotiation. For example: (1) the need to win or beat the other party or avoid losing to the other party (2) the need to look good, tough and competent to the people you represent (3) the need to appear ‘fair’ or ‘honorable’ or to protect one’s reputation (4) the need to defend an important principle in a negotiation .
Intangibles affect our judgment about what is fair or right or appropriate in the resolution of the tangibles.

8. Negotiation Skills
There are ten best practices to improve negotiation skills:
Be prepared
Diagnose the fundamental structure of the negotiation
Work the BATNA (Best Alternative To a Negotiated Agreement)
Be willing to walk away
Remember the intangibles
Actively manage coalition
Savor and protect your reputation
Remember that rationality and fairness are relative
Continue to learn from experience
Master the key paradoxes
BATNA- Best Alternative to a Negotiated Agreement
The negotiators need to understand their own BATNA and the other party’s BATNA.
The value of a person’s BATNA is always relative to the possible settlements available in a current negotiation.
A BATNA may offer independence, dependence or interdependence.
For e.g. student who is a month away from graduation has one job offer as alternative to two job offers.
A coalition is a group of people who join together for a common cause.

9. Negotiation Skills Master the key paradoxes:
Claiming vs. creating value
Sticking by principle vs. being resilient to the flow
Sticking with the strategy vs. opportunistic pursuit of new option
Honest and open vs. closed and opaque
Trust vs. distrust
Claim Value: to do whatever is necessary to claim the reward, gain the lion’s share, or gain the largest piece possible. (Lax & Sebenius, 1986). Distributive bargaining- win-lose strategies and tactics.
Creating Value: to find a way for all parties to meet their objectives, either by identifying more resources or finding unique ways to share and coordinate the use of existing resources. (Integrative situations: win-win strategies and tactics)

10. Interdependence
In negotiation, parties need each other to achieve their preferred outcomes or objectives
This mutual dependency is called interdependence
Interdependent goals are an important aspect of negotiation
Win-lose: I win, you lose
Win-win: Opportunities for both parties to gain
Example: project management team.
Parties coordinate with each other or work together because the possible outcome is better than working independently.
Parties have interlocking goals-the parties need each other to accomplish their objectives. For example, project management team. Interdependent goals does not mean that everyone wants or needs exactly the same thing, however they must work together for each to accomplish their goals.

11. 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. Example: Project Management Team.
The parties need each other in order to accomplish their objectives. For example, in a project management team, no single person can complete the project given the constraints with respect to time, resources, skills, knowledge, etc. That however does not mean that all team members will have the same desire or need, or they want the same thing. The team members may have conflicting needs/goals, but they need to synchronize their efforts and work together to accomplish their goals.
Project management team is another good example where no single person could complete a complex project the reasons might be -the time limit is too short , or no individuals has all the skills or knowledge to complete it. So to accomplish the goal each person needs to rely on one another for the successful completion of the project.
So managers need to know how to promote their own interests while simultaneously creating joint value for their organizations. This task requires negotiation.

12. Types of Interdependence Affect Outcomes
Interdependence & The Structure of the Situation shape processes and outcomes
Zero-sum or distributive – one winner
For Example: Two people are running a race so the situation is competitive.
So there is a negative correlation between the two’s goal attainment.
Non-zero-sum or integrative – mutual gains situation
For Example: The combination of Musician & Lyric writer.
Distributive: to the degree that one person achieves his or her goal, the other’s goal attainment is blocked.
Integrative: to the degree that one person achieves his or her goal, the other’s goals are not necessarily blocked, and may in fact be significantly enhanced. For e.g. The music and the lyrics may be good separately, but together they may be fantastic.

13. Mutual Adjustment
Continues throughout the negotiation as both parties act to influence the other
Negotiation is a process that transforms over time & mutual adjustment is 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.

14. 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: Sarah would prefer to get a salary of $65,000, but she scales her request down to $60,000 (eliminating all possible salary options above $60,000).
Concessions restrict the range of options within which a solution or an agreement will be reached.
Bargaining range is the difference between the preferred acceptable settlements.

15. 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 negotiators should believe what the other party tells them
If u expose more they might take advantage of u.

16. Value Claiming and Value Creation
Negotiators face two related tasks, value claiming and value creation (Lax & Sebenius 1985).
Opportunities to “win” or share resources
Claiming value: result of zero-sum or distributive situations where the object is to gain largest piece of resource and is often described as `increasing the size of the pie'.
Example: Haggling over the price of a rug at a foreign bazaar.
Example: Two brothers fighting over the only pizza in the house.
Claim Value: to do whatever is necessary to claim the reward, gain the lion’s share, or gain the largest piece possible. (Lax & Sebenius, 1986). Distributive bargaining- win-lose strategies and tactics.
Zero-sum or distributive situations are the ones where there can be only one winner. Here, negotiators are motivated to win the competition and beat the other party or gain the largest piece of the fixed resource that they can. In order to achieve these objectives, they usually employ win-lose strategy and tactics.

17. Value Claiming and Value Creation
Creating value: result of non-zero-sum or integrative situation where object is to have both parties do well and is often described as Expanding the Pie .  
Value creation offers several benefits to negotiators, including the identification of all available resources, the ability to meet the aspirations of both parties and the creation of more stable and enduring agreements (Pruitt 1983)
Example: Planning a wedding so that the bride, groom and both families are happy and satisfied, while the guests have a wonderful time.
Example: Kids exchanging their tiffin.
Creating Value: to find a way for all parties to meet their objectives, either by identifying more resources or finding unique ways to share and coordinate the use of existing resources. (Integrative situations: win-win strategies and tactics)
E.g.: Kids exchanging tiffin (sandwiches for noodles); You value the bread you buy more than the money, while the baker values the money more than the bread, so both are better off than no deal. Adding together the amount of your betterment with the amount the baker is enhanced equals the total value created by the deal.

18. Conflict Conflict may be defined as a:
“An expressed struggle between at least two interdependent parties who perceive incompatible goals, scare resources and interference from others in achieving their goals” (Wilmot & Hocker, 2001, p. 41)
Conflict occurs whenever:
– Disagreements exist in a social situation over issues of substance.
– Emotional antagonisms cause frictions between individuals or groups.
Conflicts can result from strongly divergent needs of the two parties or from misperceptions and misunderstandings.
Conflicts can occur when two parties are working towards the same goal and generally want the same outcome or when both parties want very different outcomes.

19. Types of Conflict Substantive conflict:
A fundamental disagreement over ends or goals to be pursued and the means for their accomplishment. (task oriented-dealing with organizational goals, products, services and systems)
Emotional conflict:
Interpersonal difficulties that arise over feelings of anger, mistrust, dislike, fear, resentment, etc. (clash of personalities)
The substantive conflict can be dealt with by addressing the specific problem that is the subject of the conflict. For example, Lucy can not complete her report until John gets all of the numbers to her. Lucy believes that John procrastinates until the last minute, forcing her to do a rushed job which increases her stress and makes her fear that she will look bad to the boss. John feels like Lucy puts too much pressure on both of them, and sets unrealistic deadlines. As the conflict increases, the productivity and efficiency decrease. Both employees feel bad about this, but are lost as to how to overcome the problem. This is where the parties may need to have a manager intervene and mediate the dispute.   Another example is when two employees must use the same printer. When one has a big printing job and ties up the printer, the other employee is sometimes delayed and can't get a promised document out on time. In this case, the two parties can be trained how to mediate the dispute themselves. Any problem resolved by and between the two employees can only serve to empower them and to anchor effective conflict resolution techniques that can be used at work and at home.

20. Levels of Conflict Intrapersonal or intra-psychic 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, etc.

21. Levels of Conflict Intra-group Conflict Conflict is within a group
Among team and committee members, within families, classes etc.
Intergroup Conflict  
Conflict is intergroup
Conflict can occur between organizations, warring nations, feuding families, or within splintered, fragmented communities. These negotiations are the most complex.

22. Levels of Conflict Inter-organizational conflict
Occurs in the competition and rivalry that characterize firms operating in the same markets.
Occurs between unions and organizations employing their members.
Occurs between government regulatory agencies and organizations subject to their surveillance.
Occurs between organizations and suppliers of raw materials.

23. Dysfunctions of Conflict
Competitive, win-lose goals
Misperception and bias
Emotionality
Decreased communication
Blurred issues
Rigid commitments
Magnified differences, minimized similarities
Escalation of conflict
Parties compete against each other because they believe that there interdependence is such that goals are in opposition and both cannot simultaneously achieve their objectives.
As conflict intensifies, perception becomes distorted. Thinking tends to become stereotypical and biased. They tend to view things consistently from their own perspective, interpret people and event as either with them (supports them) or against them (out rightly rejects those).
Conflicts tend to become emotionally charged as parties become anxious, irritated, annoyed, angry or frustrated. Emotions overwhelm clear thinking and leads to irrational decision making.
Productive communication declines with conflict. Parties communicate less with those who disagree, and more with those who agree. Such communication may occur as an attempt to defeat, demean or debunk the other’s views, while strengthen one’s own prior arguments.
The central issue becomes blurred and less well-defined. The parties become less clear as to how the dispute started and what is it really about.
Parties become more committed to their point of views and locked into positions, less willing to back down for fear of losing face and looking foolish, thinking process becomes rigid.
As no 6 happens, they tend to see each other as polar opposites. Similarities that they share becomes oversimplified and factors that distinguish and separate them becomes highlighted and emphasized. This distortion lead parties to work less hard to found common grounds.
As the conflict progresses, each side becomes more rigid in their views, less tolerant, more defensive, less communicative and more emotional. They both want to win and defeat the other and in the process, they will destroy their ability to resolve the conflict or be able to deal with each other again.

24. Functions of Conflict
Makes organizational members more aware and able to cope with problems through discussion.
Promises organizational change and adaptation.
Strengthens relationships and heightens morale.
Promotes awareness of self and others.
Enhances personal development.
Encourages psychological development—it helps people become more accurate and realistic in their self- appraisals.
Can be stimulating and fun.
2. Procedures, assignments, budget allocation and other organizational practices are challenged. Conflict draws attention to those issues.
3. Employees realize that their relationships are strong enough to withstand the conflict. They can release their tension through discussion and problem solving.
4. Through conflict, people learn what makes them angry, frustrated, frightened and what is important to them.
5. Managers learn how their style affects their subordinates and workers learn what technical and interpersonal skills do they need to update themselves.
6. Through conflict, people takes others’ perspectives and become less egocentric. People simply do not need to endure hostility and frustration, but they can act to improve their lives.
7. People feel alive, aroused and involved in a conflict. It invites employees to appreciate the intricacies of their relationships.

25. Styles of Conflict Management
Although conflicts can be managed in a variety of ways, individuals’ CMS are typically based on a two-dimensional typology, the so called “dual concern model”: concern for self (assertiveness dimension) and concern for other’s interests and outcomes (cooperative dimension) (Pruitt & Rubin, 1986).

26. The Dual Concerns Model
Five major strategies for conflict management has been identified in this model
The model or framework suggests that people in conflict have two independent types of concern: concern about their own outcome (horizontal dimension referred to as the assertiveness dimension; and concern about other’s outcome (vertical dimension referred to as the cooperativeness dimension).
These concerns can be represented at any point from none (very low concern) to high (very high concern).
The stronger their concern for their own outcomes, the more likely people will be to pursue strategies located on the right side of the figure; the weaker their concern for their own outcomes, the more likely people will be to pursue strategies located on the left side of the figure.

27. Problem Solving
Actors show high concern in obtaining own outcomes, as well as high concern for the other party obtaining their outcomes
Negotiators pursue this approach when-
Issues are complex
Time is available
Working together will facilitate maximizing joint outcome: resources
Synthesis of ideas are needed to provide better solution

28. Problem Solving
Problem solving approach is also known as collaborating or Integrating approach
Main aim of this approach is to -
Seeking the satisfaction of everyone’s Concerns by working through differences
Finding and solving problems so everyone gains as a result.
The advantage of problem solving approach is that they yield the best outcomes.
Mutually beneficial outcomes are more likely to last, to improve the parties relationship, and to benefit the wider society.

29. Contending
Actors pursue own outcomes strongly, show little concern for other party obtaining their desired outcomes.
Contending approach is also known as Dominating or Competing approach.
Contention seeks to persuade the other party to agree to a solution that favors one's own interests.
Negotiators pursue this approach when issue is important to you, speedy decisions are needed, unfavourable decision may be costly to you, or you are not looking for a long term relationship with the other party.

30. Yielding
Actors show little interest in whether they attain own outcomes, are quite interested in whether the other party attains their outcomes.
Yielding approach is also known as Accommodating or Obliging Strategy
Yielding involves lowering one’s own aspirations and to ‘let the other win’ and gain what he/she wants.
Yielding is an effective way to close negotiations when issues are unimportant and time pressures are high. You are willing to give up something in exchange for something from the other party in future.
Preserving relation is important.
It seems to be a strange strategy.

31. Inaction
Actors show little interest in whether they attain own outcomes, little concern about whether the other party obtains their outcomes.
Also known as ‘Avoiding Strategy’.
Negotiators pursue this approach when-
Issue is trivial.
The strategy of inaction is usually used to increase time pressure on the other party.
Inaction is often synonymous with withdrawal or passivity. The party prefers to retreat, be silent, or do nothing.

32. Compromising
Actors show moderate concern in obtaining own outcomes, as well as moderate concern for the other party obtaining their outcomes.
Negotiators pursue this approach when-
Goals of parties are mutually exclusive
Parties are equally powerful
Integrating and dominating styles are not successful
Temporary solution
Mutually Exclusive: two events cannot happen at the same time.

33. Compromising In compromising approach, parties:
work toward partial satisfaction of everyone’s concerns.
Seek acceptable rather than optimal solutions so that no one totally wins or loses.
Pruitt and Rubin (1986) do not identify compromising as a viable strategy. According to them:
Parties are going for lazy problem solving involving a half- hearted attempt to satisfy the two parties interest.
Yielding approach pursued by both the parties.

34. The Dual Concern Model

35. Conclusion
These four processes are central to any negotiation. More recent writing, although still strongly committed to problem solving, has been careful to stress that each conflict management approaches has its advantages and disadvantages and can be more or less appropriate to use given the type of interdependence and conflict context.