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Introduction to Business Negotiation

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Marina Arnaut

on 3 September 2012

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Transcript of Introduction to Business Negotiation

Business Negotiations Definition of Negotiations Understand the Nature of Negotiations The key elements of a negotiation process. Distinct types of negotiation. Situations of Interdependence What is Negotiation? Types of Conflict How negotiation fits
within conflict management? Different conflict situations Why to Negotiate? Third Parties
Parent intervening when children fight
May invoke any number of procedures to resolve the dispute
Civil court system
Bound to follow procedures set out by the system. Conflict Management: Other Parties Types of Conflict Contending (Competing Or Dominating)
Pursue own outcomes, little concern for the other party.
Threats, punishment, and intimidation.
Yielding (Accommodating)
Little concern for obtaining own outcomes. Conflict Management: Parties Themselves Blurred Issues
Central issues of dispute are less defined.
New issues are drawn in.
Rigid Commitments
Parties become locked into positions.
Magnified differences/Minimized Similarities
Escalation Of Conflict Function/Dysfunction Competitive Process
Parties believe goals are in opposition and that they cannot achieve their objectives.
Interpret people as being “for or against”.
Decreased Communication
Parties communicate less with those who disagree with them. Conflict Function/Dysfunction Intrapersonal or Intrapsychic occurs within an individual:
Ideas, thoughts, emotions, values, predispositions etc.
Interpersonal occurs between individuals: co-workers, spouses, siblings, room-mates, neighbors etc.
Intragroup occurs within a group: among team and work group members, families, classes, living units, tribes etc.
Intergroup occurs between organizations, ethnic groups, warring nations, feuding families or within splintered fragmented communities. Levels of Conflict Conflict means perceived divergence of interest, or a belief that the parties' current aspirations cannot be achieved simultaneously. Pruitt and Rubin 1986 
Conflict is the interaction of interdependent people who perceive incompatible goals and interference from each other in achieving those goals. Folger, Poole, and Stutman 1997 Definitions:
Conflict is a process in which two or more parties attempt to frustrate the other's goal attainment . . . the factors underlying conflict are threefold: interdependence, differences in goals, and differences in perceptions.
Wall 1985 Conflict Interests
Judgments about the future
Risk tolerance
Time preference
The heart of negotiations is exploring both common and different interests to create value and employing such interests as the foundation for a strong and lasting agreement. Differences among Negotiators Effective Negotiators Distributive bargaining claims value: gain the lion’s share; to gain the largest piece possible.
Integrative negotiation creates value: to find a way for all parties to meet their objectives.
Negotiations are a combination of claiming and creating value process. Value Claiming and Value Creation Alternatives
Mutual adjustments
Mutual adjustments and concession making
Two dilemmas: 1) dilemma of honesty;
2) dilemma of trust. When the parties depend on each other to achieve their own preferred outcome they are interdependent.

Independent parties are able to meet their own needs without assistance of others.

Dependent parties must rely on others for what they need. Interdependence Rivalry
Time Pressure
The Pressure of Attorneys Tangible items is a term used in business when appraising the overall value of a company;
Tangible items are those that have a physical existence;
Typical examples of tangible items include office equipment, such as photocopiers and computers, land, share certificates or bank deposits.
Successful negotiations involves management of intangibles: psychological motivations, competitive dynamics: Management of Intangibles Two or more people negotiate with themselves ( debates between individuals)
Conflict of needs and desires between two or more parties;
Parties negotiate by choice
Give-Take process: movement to the middle- compromise;
Negotiate rather than to fight openly (courts, arbitrations) Characteristics of Negotiation Situation The term bargaining is used to describe the competitive win-lose situations;

The term negotiations is used to describe win-win situations (in complex conflict) “Negotiations is the form of decision making in which two or more parties talk with one another in an effort to resolve their opposing interests” Negotiations vs Bargaining Understanding the priority of the relationship;
Understanding the interests of the parties;
Knowing your own -- and the other side's -- BATNA (Best Alternative To a Negotiated Agreement);
Being creative with bargaining chips;
Behaving fairly;
Knowing whether commitment has been achieved and how to monitor implementation during the life of the agreement;
Communicating useful information;
Preparing adequately to understand the subject matter, the parties, and the process. Eight Elements of Negotiations Negotiations occur for several reasons:
1) To agree on how to share or divide a limited resource (land, property, time);
2) To create something new that neither party can do on its own;
3) To resolve a problem or dispute between the parties. Understand the key elements of the negotiations.
What is negotiations?
Why to negotiate? Key Objectives The Nature of Negotiations Introduction to Business Negotiations Inaction (Avoiding)
Little concern about own outcomes and other part’s outcomes.
One party refers to retreat or do nothing.
Problem Solving (Collaborating)
High Concern for own outcomes, and the other party’s outcomes.
Moderate effort to achieve outcomes, moderate effort to help other party achieve outcomes Conflict Management: Parties Themselves Must be able to recognize situations that require more of one approach than the other;

Must be versatile in their comfort and use of both major strategic approaches;

Must accurately perceive the nature of the interdependence between the parties. Effective Negotiators Zero-Sum or Distributive situation (very competitive; only one can achieve the goal; only one winner);
Non-Zero-Sum or Integrative situations, Mutual- Gains situations (one person’s goal helps others to achieve their goals; positive correlation between the goal attainments of both parties. Types of Interdependence Bargaining or haggling is a type of negotiation in which the buyer and seller of a good or service dispute the price which will be paid and the exact nature of the transaction that will take place, and eventually come to an agreement. Bargaining is an alternative pricing strategy to fixed prices
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