Business Negotiations
Discipline: Business
Type of Paper: Question-Answer
Academic Level: Master's
Paper Format: APA
Pages: 1
Words: 275
Question
Business Negotiations
Good Cop/Bad Cop
Negotiating with 2 parties- one if for you and the other is against you
What two dilemmas face negotiators?
Honesty and trust
Dilemma of Honesty
Concern of how much truth to tell the other party
Dilemma of Trust
Concern about how much negotiators should believe what the other party tells them
Ethical questions in negotiations
Omission and commission
Omission
Failing to disclose information that would benefit the other
Commission
Actually lying about the common-value issue
Distributive bargaining
Claiming value: objective is to gain the largest piece of resource
Integrative bargaining
Creating and claiming value: objective is to have both parties do well
BATNA
Determines the point at which you can say "no" to an unfavorable proposal
Negotiating without determining your BATNA is
negotiating with your eyes closed
ZOPA
The area or range in which a deal that satisfies both parties can take place; set of agreements that satisfy both parties
(SR)
Sellers reservation price
Reservation price
"Walk away" point; least favorable point in which you will accept a deal
If BR > SR...
a positive bargaining zone exists
(BR)
Buyers reservation price
If BR < SR...
there is no zone of possible agreement
Anchoring is best used in
distributive bargaining/negotiations
Anchoring is
- Powerful - Undetectable - Unavoidable
Lowball/highball
ridiculously low or high offer
Bogey (red herring)
Used when someone attacks an issue by using irrelevant facts or argument as distractions
Hardball tactics
Used in distributive negotiations (good cop/bad cop, lowball/highball, bogey, the nibble, aggressive behavior, snow job)
The Nibble
Adding
a small item to the deal after both parties have spent significant time
and effort in the negotiation and the agreement is near
Agressive behavior
Using
harsh behavior to attack the other party, insisting the other party
explains their position and insists upon their best offer early in the
negotiation
Snowjob
A
negotiator tries to overwhelm the other party with information, in
order to take advantage of the other's uncertainty and anxiety; intended
to distract or confused
Best way to deal with hardball tactics
Discuss it. Tell the other party that you know the game they are playing and that you aren't going to be fooled by it
Negotiation where claiming maximum value is the primary goal
Distributive
Trust
An individual's belief in and willingness to act on the words, actions, and decisions of another
In distributive bargaining you should not...
disclose any significant information about your own circumstance
What is the most common style of negotiations?
Compromising
Accommodating
-
Likes solving other peoples problems, good relationship building skills
- Sensitive to others emotional states and body language - Great as a
member of a team, in "relationship management" roles and customer
service - Can be vulnerable to high competitors
Weaknesses of Accommodating Style
- Tend to emphasize their own frame of references as objectively right - Can be seen as unreasonably stubborn
Compromising
-
Eager to "close the gap" in negotiations - Useful when time is short,
but can move too fast where integrative opportunities can be overlooked
Weaknesses of Compromising
- Stand on principle (sometimes where others don't see it) - Good for passion and commitment - Can be seen as stubborn
Avoiding
-
Tact and diplomacy, useful when interpersonal differences interfere
with negotiation - Tend to substitute rules and hierarchies for
negotiations - Agents, e-mails memos to minimize direct confrontation -
Can miss opportunities, allowing problems to fester
Weaknesses of Avoiding
-
No fear of conflict, assertive/candid bargaining - Useful for L/R,
litigation, M&A work - Can be seen as tactless and overly
confrontational
Collaborating
-
Likes finding the best solution for all parties - Good at probing below
surface to discover interests - Wants all parties to engage and
interact - Can be complicated when solution is simple and takes more
time than necessary
Weaknesses of Collaborating
-
Can be uncomfortable with creativity in bargaining - Tend to like
clear, pre-set goals - Can be a bottleneck and slow down the process
(use of breaks and caucuses can help)
Competing
- Likes to win (negotiation is a game) - Has value in distributive negotiations - Can be hard on relationships -
Weaknesses of Competing
-
Doesn't value fairness, solving problems, or building relationships -
Can be useful as a member of a team, but can be a disadvantage in high
stakes negotiation with high competitors on the other side
Hardball tactics are best used in
distributive bargaining
Negotiator's dilemma
Both sides could create value if both
were forthcoming with information about their needs and situations.
Either side will suffer if one shares information about their needs and
the other does not.
Positions
What people say they want
Interests
The reasons behind what they say they want
Concessions are
necessary part of distributive barganing
Contrast principle
Affects
the way we see the difference between two things that are presented one
after another. If the difference between the items is fairly great, we
will tend to see a greater difference than actually exists
Concessions
A powerful way to invoke the power of reciprocation because they usually also involve the principle of perceptual contrast
Information Based Bargaining
You
will get better results for yourself and achieve more for others who
depend on you by tirelessly searching for key facts about the parties to
the negotiation and the particular situation
Value creation is most associated with
Integrative bargaining