Essentials of Negotiation
Chapter 1 The nature of negotiation
Negotiation: a form of decision making in which two or more parties talk with one another in
an effort to resolve their opposing interests
To refer to win–win situations such as those that occur when parties are trying to find
a mutually acceptable solution to a complex conflict.
Bargaining: competitive, win-lose situations such as haggling over the price of that item that
happens at a yard sale, flea market, or used car lot
Characteristics to all negotiation situations:
1. Two or more parties: individuals, groups, organizations
2. Conflict of needs and desires between parties
3. Parties negotiate by choice
4. Expecting a “give-and-take”: we expect that both sides will modify or move away
from their opening statements, requests or demands
5. Parties prefer to negotiate and search for agreement rather that fight openly
6. The management of tangibles and intangibles
a. Tangibles: the price or terms of agreement
b. Intangibles: underlying psychological motivations (need to win, look good,
defend a principle etc.)
In a negotiation situation, parties need each other. They must coordinate or they choose to
work together.
- Independent parties are able to meet their own needs without the help and
assistance of others
- Dependent parties must rely on others for what they need
- Interdependent parties need each other in order to accomplish their objective and
hence have the potential to influence each other
Zero-sum or distributive situations: individuals are so linked together that there is a
negative correlation between their goal attainments.
- When only one party can win a race or when parties need to divide a limited resource
(a pot of money e.g.)
- Distributive bargaining accepts the fact that there can only be one winner given the
situation and pursues a course of action to be that winner
- The purpose of the negotiation is to claim value
1
,Essentials of Negotiation
Mutual-gains situation or non-zero-sum or integrative situation: when there is a positive
correlation between the gal attainments of both parties
- When parties’ goals are linked so that one person’s goal achievement helps others to
achieve their goals, it is a mutual-gains situation
- When a music composer and a writer of lyrics work together to create a musical hit
- Purpose of the negotiation is to create value
Most negotiations are a combination of claiming and creating value processes.
Implications:
1. Negotiators must be able to recognize situations that require more of one approach
than the other
2. Negotiators must be versatile in their comfort and use of both major strategic
approaches
3. Negotiator perceptions of situations tend to be biased toward seeing problems as
more distributive/competitive than they really are
The tendency for negotiators to see the world as more competitive and distributive than it is,
and to underuse integrative, creating-value processes, suggests that many negotiations yield
suboptimal outcomes.
Value may be created in numerous ways, and the heart of the process lies in exploiting the
differences that exist between the negotiators. The key differences among negotiators
include these:
1. Differences in interests
2. Differences in judgments about the future
3. Differences in risk tolerance
4. Differences in time preference
BATNA (best alternative to negotiated agreement)
Whether you should or should not agree on something in a negotiation depends
entirely upon the attractiveness to you of the best available alternative
Negotiators should understand their own BATNA and the other party’s BATNA
The best alternative are frequently less attractive than the preferred agreement
Negotiators with a strong BATNA will have more power throughout the negotiations
Alternatives give negotiators the power to walk away from a negotiation
WATNA: worst alternative to a negotiated agreement
Bargaining range: the range of possible agreements between the two party’s minimally
acceptable settlements
- When making a concession, the bargaining range is constrained
2
,Essentials of Negotiation
Dilemma of honesty: concerns how much of the truth to tell the other party
Information is the life force of negotiation
Dilemma of trust: how much should negotiators believe what the other party tells them?
Conflict: sharp disagreement or opposition, as of interests, ideas, etc. Conflict results from
the interaction of interdependent people who perceived incompatible goals and interference
from each other in achieving those goals
Levels of conflict
1. Intrapersonal or intrapsychic conflict: within an individual
2. Interpersonal conflict: between individuals
3. Intragroup conflict: within a group
4. Intergroup conflict: between groups/organizations etc.
(Dys)functions of conflict
1. Competitive, win-lose goals: parties believe that goals are in opposition and both
cannot simultaneously achieve objectives
2. Misperception and bias
3. Emotionality: emotions overwhelm clear thinking
4. Decreased communication: parties communicate less with those who disagree and
more with those who agree
5. Blurred issues: the central issue becomes blurred and less well defined
6. Rigid commitments: parties become locked into positions
7. Magnified differences, minimized similarities: parties tend to see each other more
and more as polar opposites. Distinguishing factors become more magnified.
8. Escalation of the conflict: as the conflict progresses, each side becomes more
entrenched in its own view, less tolerant, more defensive, less communicative and
more emotional.
3
, Essentials of Negotiation
Yielding: also called accommodating or obliging
Problem solving: also called collaborating or integrating
Inaction: also called avoiding
Contending: also called competing or dominating
4
Chapter 1 The nature of negotiation
Negotiation: a form of decision making in which two or more parties talk with one another in
an effort to resolve their opposing interests
To refer to win–win situations such as those that occur when parties are trying to find
a mutually acceptable solution to a complex conflict.
Bargaining: competitive, win-lose situations such as haggling over the price of that item that
happens at a yard sale, flea market, or used car lot
Characteristics to all negotiation situations:
1. Two or more parties: individuals, groups, organizations
2. Conflict of needs and desires between parties
3. Parties negotiate by choice
4. Expecting a “give-and-take”: we expect that both sides will modify or move away
from their opening statements, requests or demands
5. Parties prefer to negotiate and search for agreement rather that fight openly
6. The management of tangibles and intangibles
a. Tangibles: the price or terms of agreement
b. Intangibles: underlying psychological motivations (need to win, look good,
defend a principle etc.)
In a negotiation situation, parties need each other. They must coordinate or they choose to
work together.
- Independent parties are able to meet their own needs without the help and
assistance of others
- Dependent parties must rely on others for what they need
- Interdependent parties need each other in order to accomplish their objective and
hence have the potential to influence each other
Zero-sum or distributive situations: individuals are so linked together that there is a
negative correlation between their goal attainments.
- When only one party can win a race or when parties need to divide a limited resource
(a pot of money e.g.)
- Distributive bargaining accepts the fact that there can only be one winner given the
situation and pursues a course of action to be that winner
- The purpose of the negotiation is to claim value
1
,Essentials of Negotiation
Mutual-gains situation or non-zero-sum or integrative situation: when there is a positive
correlation between the gal attainments of both parties
- When parties’ goals are linked so that one person’s goal achievement helps others to
achieve their goals, it is a mutual-gains situation
- When a music composer and a writer of lyrics work together to create a musical hit
- Purpose of the negotiation is to create value
Most negotiations are a combination of claiming and creating value processes.
Implications:
1. Negotiators must be able to recognize situations that require more of one approach
than the other
2. Negotiators must be versatile in their comfort and use of both major strategic
approaches
3. Negotiator perceptions of situations tend to be biased toward seeing problems as
more distributive/competitive than they really are
The tendency for negotiators to see the world as more competitive and distributive than it is,
and to underuse integrative, creating-value processes, suggests that many negotiations yield
suboptimal outcomes.
Value may be created in numerous ways, and the heart of the process lies in exploiting the
differences that exist between the negotiators. The key differences among negotiators
include these:
1. Differences in interests
2. Differences in judgments about the future
3. Differences in risk tolerance
4. Differences in time preference
BATNA (best alternative to negotiated agreement)
Whether you should or should not agree on something in a negotiation depends
entirely upon the attractiveness to you of the best available alternative
Negotiators should understand their own BATNA and the other party’s BATNA
The best alternative are frequently less attractive than the preferred agreement
Negotiators with a strong BATNA will have more power throughout the negotiations
Alternatives give negotiators the power to walk away from a negotiation
WATNA: worst alternative to a negotiated agreement
Bargaining range: the range of possible agreements between the two party’s minimally
acceptable settlements
- When making a concession, the bargaining range is constrained
2
,Essentials of Negotiation
Dilemma of honesty: concerns how much of the truth to tell the other party
Information is the life force of negotiation
Dilemma of trust: how much should negotiators believe what the other party tells them?
Conflict: sharp disagreement or opposition, as of interests, ideas, etc. Conflict results from
the interaction of interdependent people who perceived incompatible goals and interference
from each other in achieving those goals
Levels of conflict
1. Intrapersonal or intrapsychic conflict: within an individual
2. Interpersonal conflict: between individuals
3. Intragroup conflict: within a group
4. Intergroup conflict: between groups/organizations etc.
(Dys)functions of conflict
1. Competitive, win-lose goals: parties believe that goals are in opposition and both
cannot simultaneously achieve objectives
2. Misperception and bias
3. Emotionality: emotions overwhelm clear thinking
4. Decreased communication: parties communicate less with those who disagree and
more with those who agree
5. Blurred issues: the central issue becomes blurred and less well defined
6. Rigid commitments: parties become locked into positions
7. Magnified differences, minimized similarities: parties tend to see each other more
and more as polar opposites. Distinguishing factors become more magnified.
8. Escalation of the conflict: as the conflict progresses, each side becomes more
entrenched in its own view, less tolerant, more defensive, less communicative and
more emotional.
3
, Essentials of Negotiation
Yielding: also called accommodating or obliging
Problem solving: also called collaborating or integrating
Inaction: also called avoiding
Contending: also called competing or dominating
4
