Unit I Negotiation Conflict

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Negotiation

Section 01: Negotiation Fundamentals

Chapter 02: Strategy and Tactics of Distributive Bargaining

© 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.

The Distributive Bargaining Situation

Also called a reservation price.

The asking price is the initial price set by a seller.

The buyer may counter with their initial offer.

The spread between resistance points the bargaining range, settlement range, or zone of potential agreement is important.

bargaining range.

The Role of Alternatives to a Negotiated Agreement

What will you do if no agreement is reached?

What is your best alternative to a negotiated agreement BATNA?

What is your worst alternative to a negotiated agreement WATNA?

Alternatives give negotiators the power to walk away.

Negotiators can set their goals higher and make fewer concessions.

Good bargainers know their realistic alternatives before starting discussions and try to improve their alternatives during negotiation.

Strong BATNAs can influence how a negotiation unfolds.

Negotiators with strong BATNAs usually make the first offer.

Benefits of a good BATNA are strongest when the bargaining range is small and negotiations are competitive or unlikely to reach agreement.

Settlement Point

The fundamental process of distributive bargaining is to reach a settlement within a positive bargaining range.

Both sides want to claim as much of the bargaining range as possible.

Both parties know they may have to settle for less than they prefer, but hope it is better than their own resistance point.

Both must believe the settlement is the best they can get.

Very important, both for the agreement and for the support of the agreement after negotiation ends.

Another factor affecting satisfaction with the agreement is whether the parties will see each other again.

Those expecting future negotiations with the other party are less likely to use distributive bargaining.

Bargaining Mix

The package of issues for negotiation is the bargaining mix.

Each item in the mix has its own starting, target, and resistance points.

Some items are important to both parties, others only to one party.

Negotiators need to understand what is important to them and to the other party, and take this into account during the planning process.

As the bargaining mix gets larger, there is more opportunity for trade-offs across issues.

This part may require integrative negotiation strategies and tactics.

point, motives, and so on, the more likely you will settle favorably.

At the same time, you do not want the other party to have certain information about you.

Your resistance point, some of your targets, and any information on weaknesses is best kept concealed.

You may want the other party to have certain information.

Some factual and correct.

Some contrived to lead the other party to believe things favorable to you.

Each side wants to obtain information and conceal information.

As a result, communication can become complex, conveyed in a type of code that evolves during the negotiation.

The resistance point is set by the value expected from a particular outcome the product of the worth and costs of an outcome.

your value for a particular outcome, costs you attach to delay, and your cost of ceasing negotiations.

Tactical Tasks

Within distributive bargaining, there are four important tactical tasks concerned with targets, resistance points, and the costs of terminating negotiations.

terminating negotiations.

resistance point, and cost of terminating negotiations.

point, and cost of terminating negotiations.

Manipulate the actual costs of delaying or terminating negotiations.

The negotiator can pursue two general routes for information

Indirect assessment.

Determine what information the other party likely used to set target and points and see how they may have interpreted this information.

A variety of information sources can be used for this indirect assessment.

Direct assessment.

Sometimes, the other party will provide accurate information if in need of a quick settlement.

If the other party is not so forthcoming, other methods can be used.

Recruit spies.

Provoke the other party into an angry outburst.

Simulate exasperation and walk out of negotiations.

Negotiators need to screen information about their own position.

Concealment is the most general screening activity.

When using a representative, calculated incompetence may be used.

In team negotiations, channel communication through a spokesperson.

Present many items for negotiation, only a few of which are important.

Negotiations can use direct action to alter impressions.

Selective presentation reveals only the facts to support your case.

Display emotional reaction to facts, proposals, and possible outcomes.

Time and detail of presentation conveys importance of an issue.

Use care when choosing to take direct action.

own position by making outcomes less attractive or costs higher.

One approach is to interpret for the other party what the outcomes of their proposal will really be.

Maybe highlighting a previously overlooked item.

information.

Concealment strategies carry ethical hazards and negotiators must ensure they negotiate in good faith.

Manipulate the Costs of Delay or Termination

There are three ways to manipulate the costs of delay.

Plan disruptive action.

Public picketing, boycotting, and locking negotiators in a room until they reach agreement are all forms of disruptive action that increase costs.

Form an alliance with outsiders.

Involve other parties who can somehow influence the outcome in the process, this will also increase the costs of delay.

Manipulate the scheduling of negotiations.

Use the negotiation schedule to increase time pressure.

Opportunities to increase or alter the timing of negotiation vary widely.

Positions Taken During Negotiation

Effective distributive bargainers need to understand the process of taking positions during bargaining, including the following.

The importance of the opening offer and the opening stance.

The role of making concessions throughout the negotiation process.

Each party takes a position at the beginning of negotiations.

Negotiation is iterative and provides opportunity for both sides to communicate information and their positions may change.

You must be sensitive to two factors when creating offers.

Value characteristics are how much the issues and options of different issues are worth to a negotiator.

Content characteristics involve the way the negotiation is constructed.

Opening Offers and Opening Stance

Making the first offer is advantageous as it can anchor a negotiation.

Those with better BATNAs are more likely to offer first.

Exaggerated opening offers give room for movement.

Sends the message of a long way to go and makes them doubt their own position.

But it may be seen as too tough and rejected.

An opening stance is the attitude a negotiator will adopt at the start of negotiation.

Choose carefully as opponents may respond in kind.

Keep a consistent message with opening offer and stance.

When the messages conflict, the other party may find them confusing.

Initial Concessions

Opening offers, met with counteroffers, define the bargaining range after which is time to hold firm or offer concessions.

The first concession conveys a message of how you will proceed.

Elements at the start of negotiations communicate intentions.

An exaggerated opening offer, a determined opening stance, and a very small initial concession signals a position of firmness.

Research shows firm negotiators achieve better economic outcomes.

There are several good reasons for a flexible position.

Taking different stances throughout a negotiation may reveal the other

Negotiators may use cooperation hoping for a better agreement.

Flexibility keeps the negotiations proceeding.

Role of Concessions

Concessions are central to negotiation without them, negotiation would not exist.

Negotiators generally resent a take-it-or-leave-it approach.

Parties feel better about a settlement when the negotiation involved a progression of concessions rather than not.

Intangible factors may be as important as the tangibles.

Reciprocal concessions cannot be haphazard.

To encourage further concessions, negotiators may link their concessions to a prior concession made by the other.

Pattern of Concession Making

The pattern of concessions made during a negotiation contains valuable information though not always easy to interpret.

When successive concessions get smaller, the obvious message is that

Consider two salesmen telling their clients they have no more concessions they can make.

The believable salesman is the one who has made four previous concessions of decreasing value.

The unbelievable salesman has made three previous concessions of the same value.

In multi-issue negotiations, skilled negotiators will offer different forms of a potential settlement worth about the same to them.

Figure 2.4: Pattern of Concession Making for Two Negotiators

Jump to slide containing descriptive text.

Final Offers

Eventually, a negotiator conveys a message that there is no more room for movement the present offer is the final one.

They may choose to let the absence of concessions be the signal.

One way to convey the message is to make the last offer more substantial.

This implies the negotiator is throwing in the remainder of the negotiating range.

A personalized concession also signals the last concession.

Commitment

One definition is the taking of a bargaining position with some explicit or implicit pledge to a future course of action.

course of action.

constrain the other party to a reduced portfolio of choices.

Often interpreted by the other party as a threat.

Some can be threats but others are statements of intent, leaving the responsibility for avoiding disaster in the hands of the other party.

They involve future promises.

Because of their nature, they require a follow through in action.

Tactical Consideration in Using Commitments

Like many tools, commitments are two-edged.

They exchange flexibility for certainty of action, but create difficulties if you want to move to a new position.

You should also make contingency plans for a graceful exit if you need it but keep the contingency plan a secret.

Commitments may be useful to you as a negotiator, but you want to prevent the other party from becoming committed.

If they should take a committed position, keep open one or more ways for them to get out of the commitment.

Establishing a Commitment

There are three properties to a commitment statement.

A high degree of finality, a high degree of specificity, and a clear statement of consequences.

Public pronouncement.

This increases potency and reduces the chance of changes.

Linking with an outside base.

Link with outside allies, or make it difficult to break a commitment.

Increase the prominence of demands.

Repetition is one of the most powerful tools for prominence.

Reinforce the threat or promise.

Simple, direct statements of demand are the most effective.

Prevent the Other from Premature Commitment

It is important to prevent the other party from committing.

People often commit when angry so pay attention to anger levels.

Deny your opponent the necessary time to make a commitment.

Ignore or downplay a threat.

There are times when it is to your advantage for the other party to become committed.

When your opponent takes a position early, you may want to lock it in.

This can be handled in one of two ways.

By identifying the significance of the commitment when it is made.

Finding Ways to Abandon a Committed Position

Plan a way out.

Simultaneously plan a private way out of any commitment.

Let it die silently.

After some time, make a new proposal without mentioning the first.

Restate the commitment.

Restate the commitment in more general terms, changing some details to fit your current needs.

Minimize the damage.

If the other party backs off a committed position, help them save face.

move was for a noble or higher outside cause.

Closing the Deal

Provide alternatives.

Provide two or three alternative packages people like choices.

Assume the close.

Act as if the decision has already been made.

Split the difference.

When an agreement is close, suggest the parties split the difference.

Exploding offers.

This offer has a very tight deadline, applying pressure to agree quickly.

Sweeteners.

Save a special concession for the close but plan ahead.

Assessing the Quality of the Agreement

Objective outcomes.

and resistance points.

Another way is to compare against what the other party would have paid, but this information is not always available, or is suspect.

Subjective value.

Feelings about the outcome distributive fairness.

Feelings about the self Did you lose face?

Feelings about the process Did the other party listen?

Feelings about the relationship Do you trust the other negotiator?

There is no perfect assessment, but try.

Hardball Tactics

Designed to pressure negotiators into doing things they normally would not do.

Their presence signals a distributive bargaining approach.

Their effect is unproven and can backfire.

Many find these techniques offensive.

Many negotiators consider these tactics out-of-bounds

The authors do not recommend using these tactics.

It is important to understand hardball tactics and how they work.

So you can recognize, and deflect, them when used against you.

Dealing with Typical Hardball Tactics

A good strategic response is identify the tactic quickly and understand how it works response will depend on your goals.

Discuss them.

Label the tactic and indicate you know what is going on.

Ignore them.

Not responding to a threat is often the best way of dealing with it.

Respond in kind.

You can always respond with a hardball tactic of your own.

Co-opt the other party.

Try to befriend the other negotiator before they use such tactics on you.

Hardball Tactics and Their Weaknesses

Good cop/bad cop.

Transparent and easily countered, difficult to enact.

Lowball/highball.

The risk in using this is the other party may end talks.

Bogy.

Deceptive and difficult to enact, may get trapped.

Nibble.

Many feel this is bargaining in bad faith, may illicit feelings of revenge.

Chicken.

Turns negotiations into a serious game, difficult to avoid.

Intimidation.

May use anger, legitimacy, or guilt, teams may help.

Aggressive behavior.

Halt negotiations, a team may help here too.

Snow job.

Ask questions and listen carefully to deflect this tactic.

Distributive Skills Used in Integrative Negotiations

Distributive bargaining skills are applicable in integrative negotiation when claiming value.

Applicable skills include the following.

Setting clear target and resistance points.

Understanding and working to improve your BATNA.

Starting with a good opening offer.

Making appropriate concessions.

Managing the commitment process.

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End of Chapter 02.