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Chapter
9
Negotiation
“You often get not what you
deserve, but what you negotiate.”
~ John Marrioti
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. 1-2
Chapter Objectives
• Determine what you want in a negotiation and
make a plan to facilitate your ability to achieve it.
• Determine what you’re willing to accept if you
don’t get all that you want in a negotiation.
• Understand what the other party’s wants and
needs are in a negotiation.
• Involve the other person in a collaborative and
interest-based negotiation.
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Chapter Objectives (continued)
• Know when to walk away from a negotiation if a
resolution does not appear possible.
• Utilize framing, scripting, and other negotiation
tactics to increase your effectiveness as a
negotiator.
• Identify unethical negotiation behaviors and
determine the motivation for engaging in such
behavior and strategies for dealing with it.
• Increase your comfort with special situations in
negotiation, such as multiparty, third party, and
global negotiations.
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Why is Negotiation Important?
Factors driving the need for
negotiation skills:
• Scarcity of resources
• Increased use of teams in the
workplace
• Global diversity
• Litigious tendency of our modern
society
Negotiation is a
process in which two
or more people or
groups share their
concerns and
interests to reach an
agreement of mutual
benefit.
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Benefits of Honing Negotiation Skills
• Increases your salary, profits, and marketability.
• Saves time, money and grief, while ensuring
needs are met.
– Negotiation more likely to end in a “win-win”
scenario.
• Improves relationships.
• Reduces the number and severity of conflicts,
thereby reducing stress.
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Integrative Bargaining Strategy
• Used when a win-win situation exists.
• Goal is to collaborate and generate one or more
creative solutions that are acceptable to both
parties.
• Only works when both parties are committed to
preserving the relationship that exists between
them.
• Requirements:
– Proper skills and attitude.
– Climate that supports and promotes open
communication.
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Distributive Bargaining Strategy
• Used to divide a fixed amount of resources,
resulting in a win-lose situation.
• Negotiators typically have an adversarial or
competitive posture.
• Focus is on achieving immediate goals, not
building or preserving relationships.
• Usually only one or two fixed solutions are
presented.
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Comparing Bargaining Approaches
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Five Stage of Negotiation
1. Preparation and planning
2. Definition of ground rules
3. Clarification and justification
4. Bargaining and problem solving
5. Closure and implementation
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Preparation and planning
•
•
•
•
Clarify what you want and why
Establish a BATNA
Develop a frame
Create a strategy
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Definition of ground rules
• Set an agenda
• Agree on objective criteria
• Agree on what to do if an agreement is not
reached
• Discuss what is acceptable or not, e.g., yelling
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Clarification and justification
• Clarify your interests
• Use a frame to make your case persuasive
• Use questions to understand other’s
interests
• Share relevant information that supports
your case
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Bargaining and problem solving
•
•
•
•
Focus on problems, not people
Focus on interests, not positions
Look forward, not backward
Create options for mutual gain; adapt win-win
attitude
• Select from options using principles, or objective
criteria
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Closure and implementation
• Verbally summarize what both parties agreed
to
• Review key points to ensure understanding
• Draft agreement in writing
• Have both parties sign the agreement
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Strategies for Negotiating Effectively
• Scripting
– Develop an interest-based strategy/approach
prior to a face-to-face negotiation
– Identify potential options/plans that can be
proposed
– Topics to consider:
•
•
•
•
Opponent’s probable strategy
Your strategy
How to begin the negotiation
Core issues and problem to be solved
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Strategies for Negotiating Effectively (continued)
• Framing
– Provides a perspective that helps others
understand our position
– Highlights the points you want to make and
provides a filter for the other party
– Focuses attention on the priorities you want to
emphasize
– Establishes a “big picture” context
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Strategies for Negotiating Effectively (continued)
• Managing
–
–
–
–
Practice negotiating
Manage your emotions
Agree to disagree
Use agendas, questions, and summarizing
techniques
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Additional Tips for Effective Negotiating
• Determine the importance of the outcome
for you
• Look forward, not backward
• Separate people from problems
• Adopt a win–win attitude
• Know your best alternative to a negotiated
agreement (BATNA)
• Go into the negotiation with objective criteria
• Respond, don’t react
• Use a third party
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Integrity and Ethics in Negotiation
Reasons for unethical behavior:
• Expected norms
• Pressure from management or others
Suggestions that help you deal with such
behavior:
• Ask direct questions to reveal the truth or missing
information.
• Inform the other party about the tactic being used.
• Request a different party with whom to continue
negotiations.
• End the negotiations immediately.
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Third-Party Negotiations
• Used in serious negotiations, or
when objective assistance is
needed
• Allows each party to “vent” in a
non-threatening environment
• Parties can benefit from third
party’s expertise and experience
• Helps the negotiating parties
organize their thoughts and
develop options that may be
acceptable to both parties
Mediator
Arbitrator
Conciliator
Consultant
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Mulitparty and Virtual Negotiations
• Multiparty negotiations are those where
more than two parties are working together
to achieve a collective objective.
– Complex.
– Difficult to manage.
• Virtual negotiations are carried out via
phone, fax, e-mail, synchronous chat, and
teleconferencing.
– Managing and keeping the conversation on
track is more difficult.
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Top 10 Rules for Virtual Negotiations
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Global Negotiations
• Clarify what you want and why
• Develop your BATNA
• Base your strategy and
implementation on what you
know about the practices and
customs of your global
negotiating partner
• Research culture, practices,
and business
• Use the eight elements of
international protocol
Global
negotiations
are negotiations
between
domestic and
foreign firms.
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Summary
• Learning how to negotiate can benefit you in your
personal as well as your business life.
• The type of negotiating strategy you use is
determined by the situation.
– Interactive bargaining is used if a win-win outcome
is possible.
– Distributive bargaining is used if a fixed amount of
resources must be divided, resulting in a win-lose
outcome.
• When negotiating, the more prepared you are, the
greater the chances that you will get what you
deserve and bargain for.
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