Unit iii negotiat

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Negotiation

Section 01:
Negotiation Fundamentals

Chapter 04:
Negotiation: Strategy and
Planning

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Goals

The first step in a negotiation strategy is to determine your goals.

Substantive, intangible, or procedural goals.

There are four direct ways that goals affect negotiation.

Wishes are not goals, especially in negotiation.

There are limits to what realistic goals can be.

Effective goals must be concrete, specific, and measurable.

Indirectly, short-term thinking affects our choice of strategy.

We may lose sight of the relationship in favor of the outcome.

Difficult or complex goals may require a long-range plan for goal
attainment.

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Strategy The Plan to Achieve Your Goals

After negotiators articulate goals, they move to the second
element in the sequence.

Selecting and developing a strategy.

This is how business strategy experts define strategy.

and action sequences into a cohesive whole.

Here is the definition for strategy as applied to negotiation.

action sequences that will lead to the accomplishment of those goals.

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Strategy versus Tactics

A major difference between strategy and tactics is that of
scale, perspective, or immediacy.

Tactics are short-term, adaptive moves designed to enact strategies.

Tactics are subordinate to strategy.

A unilateral choice is made without active involvement of the
other party.

Here, a dual concerns model asks two questions of a

How much concern does the negotiator have for achieving the
substantive outcomes at stake in this negotiation?

How much concern does the negotiator have for the current and future
quality of the relationship with the other party?

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Figure 4.2: The Dual Concerns Model

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The Academy of Management Executive. Briarcliff Manor, NY: Academy of
Management, 1989.

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Alternative Situational Strategies

There are at least four different types of strategies.

A strong interest in only substantive outcomes supports a competitive
(distributive) strategy.

A strong interest in only the relationship goals suggests and
accommodation strategy.

If both substance and relationship are important, pursue a
collaborative (integrative) strategy.

If neither outcomes is important, consider avoiding negotiation.

Each approach has implications for negotiation planning and
preparation.

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The Nonengagement Strategy: Avoidance

There are reasons to choose not to negotiate.

If you can meet your own needs, avoid negotiating.

It may not be worth the time and effort.

Attractive alternatives provide a reason to avoid negotiation.

A negotiator with strong alternatives has considerable power.

It can influence the decision about whether to avoid negotiation,
strictly on efficiency grounds.

But having a weak alternative may also suggest avoiding
negotiation.

Negotiators may accept poor outcomes when the alternative is poor.

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Active-Engagement Strategies

Accommodation is as much a win-lose strategy as competition.

Its imbalance is the other direction I lose, you win.

Used to build relationships.

Each of the three active-engagement strategies accommodation,
competition, and collaboration have drawbacks.

needs, and position.

manipulate and exploit the collaborator, and take advantage.

Accommodative strategies may generate a pattern of giving in to keep the
other happy or avoid a fight.

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The Flow of Negotiation: Stages and Phases

Research studies the flow of negotiation through stages or phases.

One model relevant to integrative negotiation suggests seven key
steps to an ideal negotiation process.

Preparation.

Relationship building.

Information gathering.

Information using.

Bidding.

Closing the deal.

Implementing the agreement.

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The Planning Process

1. Defining the negotiating
goal.

2. Defining the major issues
related to achieving that
goal.

3. Assembling the issues,
ranking their importance,
and defining the
bargaining mix.

4. Defining the interest.

5. Knowing your alternatives
(BATNAs).

6. Knowing your limits,
including resistance points.

7. Analyzing and
understanding the other

resistance points.

8. Setting your own targets
and opening bids.

9. Assessing the social context
of negotiation.

10. Presenting the issues to the
other party: substance and
process.

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Defining the Negotiating Goal

Remember that goals can be:

Substantive or tangible.

Psychological or intangible.

Procedural or how to get to an agreement.

Goals can have both direct and indirect effects on the choice
of strategy.

Knowing your own goals is the first and most important step
in developing a strategy and executing a negotiation.

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Defining the Major Issue for Achieving the Goal

Single-issue negotiations tend to end in distributive negotiations.

Multiple-issue negotiations tend to be more integrative.

The choice between a claiming-value or creating-value strategy is

While the number of issues affects strategy, it does not mean
single-issue negotiations cannot be made integrative, or that
multiple-issue negotiations will remain distributive.

A list of issues is best derived from these sources.

An analysis of all possible issues that need to be decided.

Previous experience in similar negotiations.

Research conducted to gather information.

Consultation with experts in that industry.

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Figure 4.4: How Issues Affect the Choice between
Distributive and Integrative Strategy

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Sources: Lax, David, and Sebenius, James, Manager as Negotiator. New York, NY: Simon & Schuster, 1986; Watkins, Michael, Breakthrough
Business Negotiation: A Toolbox for Managers. New York, NY: John Wiley & Sons, Inc., 2002.

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Issue Importance and the Bargaining Mix

Assemble all the issues into a comprehensive list and combine the
lists from both sides to determine the bargaining mix.

Prioritize the issues in three steps.

Determine which issues are most important and less important.

Rank-order, group, or assign points in proportion to importance.

Intangibles are difficult to prioritize, but try.

Determine whether the issues are linked or separate.

Separate issues are easily added or subtracted.

Concessions on connected issues tie into other issues.

Create incentives to motivate the other toward your high-priority issues and
disincentives to motivate them away from your low-priority issues.

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Defining the Interests

After defining the issues, negotiators proceed to define the
underlying interests and needs.

Positions are what a negotiator wants.

Interests are why they want them.

Like goals, interests fall into three groups.

Substantive directly related to the focal issues under negotiation.

Process-based how the negotiators behave as they negotiate.

Relationship-based tied to the current or future relationship.

Interests may also be based on the intangibles of
negotiation.

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Knowing Your Alternatives BATNAs

Good preparation requires you establish two clear points.

Your alternatives if this deal cannot be successfully completed.

Your limits the least acceptable offer you will sign.

BATNAs are other agreements negotiators could achieve
and still meet their needs.

Alternatives are important in both distributive and integrative
processes as they define whether the current outcome is best.

The better the alternatives, the more power you have as you can walk
away from the current deal and still meet your needs and interests.

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Know Your Limits, Including a Resistance Point

A resistance point is the place you should stop negotiations.

Any settlement beyond this point is not minimally acceptable.

Setting resistance points is a critical part of planning.

Clear resistance points help keep people from agreeing to
deals that they later realize where not very smart.

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Gathering information about the other party is a critical step.

The goal is to understand how the other party is approaching the
negotiation and what they are likely to want.

If impossible before deliberations, collect information during
the opening stages.

Try to understand if the other party has the same goals as you.

Get a sense of their issues and bargaining mix using business history,
financial data, and inventories visit, or ask questions of others.

Uncovering their interests and needs may require a meeting.

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Setting Your Targets and Opening Bids

When setting targets, keep these principles in mind.

Targets should be specific, difficult but achievable, and verifiable.

Target setting requires proactive thinking about your own objectives.

Consider how to package several issues and objectives.

Understand trade-offs and throwaways.

An opening bid may be the best possible outcome, an ideal
solution, or something even better than achieved last time.

Beware over confidence do not set an opening that is so unrealistic
the other party gets angry, or walks away before responding.

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Assessing the Social Context of Negotiation

When people negotiation in a professional context, there may be
more than two parties.

Who is on the other side of the field?

Who is on the sidelines and can affect the play of the game?

Who is in the stands?

What is going on in the broader environment in which the negotiation
takes place?

A number of other context issues can affect negotiation.

relationship they desire in the future, deadlines, or even rules.

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Presenting Issues: Substance and Process

Presenting and framing the issues.

Consider how to present your case to the other negotiator, providing
facts and counterarguments to refute their anticipated arguments.

Planning the process and structuring the context by which
information is presented consider these elements.

What agenda should we follow?

Where should we negotiate?

How should we begin?

What is the time period of the negotiation?

How will we keep track of what is agreed to?

Have we created a mechanism for modifying the deal if necessary?

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End of Chapter 04.

© 2019 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.