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BA225 Week three chapter 4 ppt
- 1. Because learning changes everything.®
Essentials of
Negotiation
Part 01: Fundamentals of
Negotiation
Chapter 04: Negotiation: Strategy and
Planning
© McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom.
No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
- 2. © McGraw-Hill Education 2
Negotiation: Strategy and Planning
With effective planning and goal setting, most negotiators can achieve
their objectives.
Without them, results occur more by chance than by effort.
Although the model suggests a linear relationship, many begin midway in
the sequence and work backward or forward until the steps are aligned.
- 3. © McGraw-Hill Education 3
Goals – The Focus That Drives a Negotiation Strategy
To determine your goals, consider the following.
• Substantive goals – money.
• Intangible goals – winning.
• Procedural goals – shaping the agenda.
Effective preparation requires negotiators do the following.
• List all goals they wish to achieve.
• Determine the priority among these goals.
• Identify potential multi-goal packages.
• Evaluate possible trade-offs among multiple goals.
- 4. © McGraw-Hill Education 4
Direct Effects of Goals on Choice of Strategy
Wishes are not goals, especially in negotiation.
A negotiator’s goals may be linked to the other party’s goals.
There are limits to what realistic goals can be.
Effective goals must be concrete, specific, and measurable.
• If not, it will be hard to communicate what you want, understand what
the other party wants, and determine if an offer satisfies your goals.
Goals can be intangible or procedural.
• Intangible goals might include maintaining a
reputation, or establishing a precedent.
• A procedural goal might be that the other
negotiator must make at least two concessions
to convince you of their sincerity.
Criteria used to
determine goals
depend on your
objectives and your
priorities among
multiple goals.
- 5. © McGraw-Hill Education 5
Indirect Effects of Goals on Choice of Strategy
Short-term thinking affects our choice of strategy.
We may ignore the present or future relationship with the other party in a
concern for achieving a substantive outcome only.
Goals requiring a substantial change in the other
party’s attitude may require a long-range plan.
• Progress may be incremental and require a
strong relationship with the other party.
• Relationship-oriented goals should motive the
negotiator toward a strategy valuing the
relationship as much as the outcome.
Relational goals
tend to support the
choice of a
collaborative or
integrative strategy.
- 6. © McGraw-Hill Education 6
Strategy versus Tactics
How are strategy and tactics related?
• One major difference is that of scale, perspective, or immediacy.
• Tactics are short-term, adaptive moves designed to enact broad
strategies.
• Which in turn, provide stability, continuity, and direction for tactical
behaviors.
• Tactics are subordinated to strategy.
• They are structured, directed, and driven by strategic considerations.
- 7. © McGraw-Hill Education 7
Accommodation, Competition, and Collaboration
Accommodation is as much a win-lose strategy as competition.
• The imbalance is in the opposite direction – I lose, you win.
• Used to build or strengthen a relationship.
• They expect a future “tit for tat” accommodation from the other.
• Reciprocity may be the glue holding social groups together.
• For a long-term relationship, consider accommodative moves early
to build trust and to be able to ask for “reciprocity” in the future.
- 8. © McGraw-Hill Education 8
Table 4.1: Characteristics of Different Engagement Strategies
Aspect Competition Collaboration Accommodation
Payoff structure Fixed Variable Fixed
Goal pursuit Your own Joint goals Others’
Relationships Short-term Long-term Either
Primary motivation Your outcomes Joint outcomes Others’ outcomes
Trust and openness Secret, closed Trusting, open One party is open
Know the needs Neither knows Both know Repress your own
Predictability Unpredictable Predictable One is predictable
Aggressiveness Threats, bluffs Respectful One gives up
Solution search Committed Mutual One-sided
Success measures Other looks bad The issues The other wins
Unhealthy extreme Zero-sum game Common good wins Abdication
Key attitude I win, you lose Win-win I lose, you win
If a breakdown Mediator Facilitator One is bankrupt
Source: Adapted and expanded from Robert W. Johnston, “Negotiation Strategies: Different Strokes for Different Folks,” Personnel 59 (March–April 1982), pp. 38–39.
- 9. © McGraw-Hill Education 9
Drawbacks: Accommodation, Competition, and Collaboration
Consequences if applied blindly, thoughtlessly, or inflexibly.
• Distributive strategies create “we-they” patterns, leading to the following.
• Distortions in judgment about the other’s contributions and efforts.
• Distortions in perceptions of the other’s motives, needs, positions.
• Integrative negotiators may be taken advantage of.
• They may forget constituencies in favor of the process for its own sake.
• Accommodative strategies set a pattern of avoiding conflict.
• A precedent that is hard to break.
• Efforts to restore balance may be met with resentment.
Remember, it is difficult to follow any “pure” strategy.
- 10. © McGraw-Hill Education 10
Getting Ready to Implement the Strategy: The Planning
Process
1. Define the negotiating goal.
2. Define the major issues
related to achieving the goal.
3. Assemble the issues, ranking
their importance, and define
the bargaining mix.
4. Define the interests.
5. Know your alternatives
(BATNAs).
6. Know your limits, including a
resistance point.
7. Analyze and understand the
other’s goals, issues, and
resistance points.
8. Set your own targets and
opening bids.
9. Assess the social context of
the negotiation.
10. Present the issues to the other
party – substance and
process.
Assumptions.
• One process can be used for
both distributive and integrative.
• Factors beyond the table may
affect strategizing.
• Negotiations will be one-to-one.
• The steps are linear.
- 11. © McGraw-Hill Education 11
Step 1. Defining the Negotiating Goal
Goals can be
substantive
(tangible).
Goals can be
psychological
(intangible).
Goals can be
procedural
(how we get to
agreement)
Goals can have both
direct and indirect
effects on the choice
of strategy.
Knowing your goals is
the most important step
in developing a
strategy and executing
a negotiation.
- 12. © McGraw-Hill Education 12
Step 2. Defining the Major Issue Related to Achieving the
Goal
Figure 4.2: How Issues Affect the Choice
between Distributive and Integrative Strategy
Single-issues dictate
distributive negotiations.
Multiple-issues tend more
to integrative negotiations.
The choice of pursuing
claiming-value or creating-
value strategy is the
“negotiator’s dilemma.”
Single-issues can be
made integrative and
multiple-issues may
remain distributive.Access text alternative for this image.
Sources: After Lax and Sebenius, 1986; Raiffa, 1982; Watkins, 2002.
- 13. © McGraw-Hill Education 13
Step 3. Assembling the Issues, Ranking Their Importance,
and Defining the Bargaining Mix
Assemble all the issues into a comprehensive list.
The combination of lists from both sides is the bargaining mix.
Prioritization includes two steps.
• Determine which issues are most important and which less important.
• A simple way is to use rank-order or group issues into categories.
• Another way is to weight issues by importance.
• Set priorities for both tangible and intangible issues.
• Specify a bargaining range for each issue in the mix.
• Determine whether the issues are linked or separate.
• If separate, they can be easily added or subtracted.
• If connected, settlement on one is linked to settlement on the others.
- 14. © McGraw-Hill Education 14
Step 4. Defining the Interests
Positions are what a negotiator wants – interests are why they want them.
• Asking “why” questions helps surface values, needs, or principles.
• Like goals, interests may be:
• Substantive – directly related to the focal issues under negotiation.
• Process-based – related to how the negotiators behave.
• Relationship-based – tied to the current or desired future relationship.
• Interests may also be based on intangibles of negotiation.
• Surfacing interests may be essential to understanding another side’s
position.
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Step 5. Knowing Your Alternatives (BATNAs)
Good preparation requires you establish two clear points.
• Your alternatives if this deal cannot be successfully completed.
• And your limits – the least acceptable offer that you will still agree to.
BATNAs are other agreements negotiators could achieve and still meet
their needs.
• Alternatives are very important because they define whether the
current outcome is better than another possibility.
• The better the alternatives, the more power you have to walk away
from the current deal and still have your needs and interests met.
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Step 6. Knowing Your Limits, Including a Resistance Point
A resistance point is where you stop negotiations as any settlement
beyond this point is not minimally acceptable.
• A seller’s resistance point is the least they will take for an item.
• A buyer’s resistance point is the most they will pay for an item.
Clear resistance points help keep people from agreeing to deals that they
later realize weren’t very smart.
- 17. © McGraw-Hill Education 17
Step 7. Analyzing and Understanding the Other Party’s Goals,
Issues, and Resistance Points
Find a way to see the negotiation from the other party’s eyes.
The goal is to understand their approach to the negotiation and what they
are likely to want – then compare against your own.
• Attempt to understand if the other party has the same goals as you.
• The more you learn about the other party’s issues, and what they
bring to the table, the better you can predict how the likely process.
• Get information about their current interests and needs through
discussion, anticipating, asking, or researching.
• Understand the other party’s limits to give you an idea of how far you
can “push” them.
In distributive negotiation, the other party may not disclose information
and/or misrepresent their limits and alternatives in order to pressure you
into a deal that is better for them.
- 18. © McGraw-Hill Education 18
Step 8. Setting One’s Own Targets and Opening Bids
There are many ways to set a target but keep these principles in mind.
• Targets should be specific, difficult but achievable, and verifiable.
• Target setting requires proactive thinking about your own objectives.
• Target setting may require considering how to package several issues
and objectives.
• Target setting requires an understanding of trade-offs and
throwaways.
Similarly, there are numerous ways to set an initial asking price.
• It may be the best possible outcome, an ideal solution, something
even better than was achieved last time.
• It is easy to get overly confident and set an opening so unrealistic that
the other party laughs, gets angry, or walks away before responding.
- 19. © McGraw-Hill Education 19
Step 9. Assessing the Social Context of a Negotiation
When people negotiate in a professional context, there may be more than
two parties.
• There may be more than two negotiators at the table.
• Multiple parties often lead to the formation of coalitions.
• Negotiators may also have constituents who will evaluate and critique
them.
• There may be observers who watch and critique the negotiation.
• Negotiation occurs in a context of rules.
• A social system of laws, customs, common business practices,
cultural norms, and political cross-pressures.
- 20. © McGraw-Hill Education 20
Figure 4.3: A Field Analysis of Negotiation
One way to assess all the key parties in a negotiation is to complete a
“field analysis.”
Image you are the captain of a soccer team, envision the field and assess
all the parties who are in the soccer stadium.
Access the text alternative for this image.
- 21. © McGraw-Hill Education 21
Step 10. Presenting Issues to the Other Party: Substance and
Process
Presenting and Framing the Issues.
• Consider how you will present your case to the other negotiator.
• What facts support my point of view?
• How can I present the facts so they are most convincing?
Planning the Process and Structuring the Context.
• What agenda should we follow?
• Consider scope, sequence, framing, packaging, and formula.
• Where should we negotiate?
• What is the time period of the negotiation?
• What might be done if negotiation fails?
• How will we keep track of what is agreed to?
• Have we created a mechanism for modifying the deal if necessary?
- 22. Because learning changes everything.®
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© McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom.
No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.