Chapter 4 - Negotiation, Strategy and Planning
Chapter 4 - Negotiation Strategy & Planning * the first step in developing and negotiating a strategy is to determine one’s goals. Direct Effects of Goals on Choice of Strategy 1. Goals are Linked to the other Party's Goals a. I.E. My goals = get the car cheaply, dealer's goal = sell at the highest possible price, thus the "issue" is the price I will pay for the goals. 2. Goals have Boundaries/Limits - If what we want EXCEEDS these limits, (what the other party is capable of or willing to give), then we must either change our goals or end the negotiation. a. I.E. If the dealer won't sell the car "any cheaper" than your goal, you either have to change your goal by finding another car to buy, or another dealer. 3. Effective Goals must be = Concrete, Specific, Measurable - The less concrete and measurable our goals are, the harder it is to: a. Communicate to the other party what we want b. Understand what the other party wants c. Determine whether an offer on the table satisfies our goals Indirect Effects of Goals on Choice of Strategy 1. Short-Term thinking affects our choice of strategy, and we may ignore present/future relationship with the other party in favor for a simplistic concern for a substantive outcome. Strategy - The overall plan to accomplish one's goals in a negotiation and the action sequences that will lead to the accomplishment of those goals. Strategy vs. Tactics - Strategy = Big picture large scale, that direct tactical behavior. Unilateral (1 party, one sided) vs. Bilateral (2 Parties) Approaches to Strategy Dual Concerns Model - takes into account the importance of relationship outcome and importance of substantive outcome. 1. Avoidance [Nonengagement Strategy] [No Relationship, No Substantive Outcome] a. Those who can meet their needs without negotiation at all. b. Not worth the time & effort to negotiate. c. Alternatives can be achieved if negotiations don't work out. 2. Accommodation [Yes Relationship, No Substantive Outcome] / [I Lose, You Win] - When the negotiator considers the relationship outcome MORE important than the substantive outcome. The hope is that in a long-term relationship, the other party may reciprocate accommodation for the other negotiator in the future.
a. Drawback: Accommodative strategies may generate a pattern of giving in to avoid a fight, which sets a precedent that is hard to break, and relationship can be met with surprise/resentment should accommodation cease.
Understanding the Flow of Negotiations Phases: 1. Preparation - Deciding what is important, defining goals, thinking ahead how to work together with the other party. 2. Relationship Building -Building commitment toward achieving mutually beneficial set of outcomes 3. Information Gathering - Learning what you need to know about the issues, about the other party and their needs. a. Feasibility of possible settlements, and what might happen if you fail to reach an agreement. 4. Information Using - Assemble the case they want to make for their preferred outcomes/settlement. 5. Bidding - when each party states their "opening offer" and then makes moves in that offer toward middle ground. 6. Closing the Deal - Both parties have to assure themselves they have reached a deal they can be happy with or can at least accept. 7. Implementing the Agreement - Determining who needs to do WHAT once the agreement is reached. Getting Ready to Implement the Strategy: The Planning Process 1. Defining the Issues - Primarily Deciding whether the relationship requires: a. Distributive [single negotiation] or Integrative [multiple] strategies. 2. Assembling the Issues and Defining the Bargaining Mix a. Large Bargaining Mix = Many more possible arrangements for settlement, increasing the chances that a particular package will meet both parties' needs. 3. Defining Interests – Positions = opening bid/target point, are what a negotiator wants. - Interests are WHY she wants them. - I.E. Position/Target = $200,000 for a condo, - Interest = "to pay a fair market price, and one I can afford, for that 2bedroom" 4. Knowing Limits [Resistance Points] – Resistance point- is the place where you decide that you should absolutely stop the negotiation. 5. Knowing Alternatives – Alternatives are agreements negotiators could achieve and still meet their needs.
6. Setting Targets and Asking Prices – Targets should be Specific, Difficult but Achievable & Verifiable – Goals need to be specific, and not general. a. Target setting often Requires Considering how to PACKAGE several issues/objectives b. Target setting requires an understanding of Trade-offs & Throwaways i. You have to evaluate the bargaining mix's worth and how they can be traded-off. 7. Assessing constituents and the social context of the negotiation. 8. Analyzing the Other Party – Learning the other party's issues, preferences, priorities, interests, alternatives, and constraints is almost as important as determining one's own. a. One can begin to define areas where there may be strong conflict b. Key Items of other Party: Resources, issues, and Bargaining Mix. i. Interests/needs, Resistance points, and alternatives ii. Likely strategy and tactics. iii. Other Party's Reputation/Negotiation Style [Based on Past, can change] c. Targets, opening bids – We often use OUR OWN targets and values as a benchmark and assume the other party are likely themselves and want similar things. i. I.E. Manager who is always after bigger paycheck, may be surprised when his subordinates are more interested in a challenging job/flexibility than inc in salary. 9. Presenting Issues to the Other Party - Making a clear case that provides ample supporting facts and arguments; another is to refute the other party's arguments with counter arguments. 10.What Protocol Needs to be Followed in this Negotiation? – forces negotiators to think through their positions and decide on objectives. IN CLASS NOTES SMART: Specific Measurable Achievable Realistic Timely BATNA: determine before negotiation Best Alternative To this Negotiated
Agreement Seller vs. Buyer: Resistance Reservation point ZOPA Zone Of Possible Agreement MESO Multiple Equivalent Simultaneous Offers