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L4M5 - Commercial Negotiation > Chapter 1.2 > Flashcards

Chapter 1.2 Flashcards

Differentiate between the types of approaches that can be pursued in commercial negotiations

1
Q

Integrative

A

Approach to negotiation used when the interested parties are attempting to create more of something of value to share, also known as collaborative approach or win-win

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2
Q

Distributive

A

Approach to negotiation used when the interested parties are attempting to divide something up or distribute something of value, also known as zero-sum approach or win-lose

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3
Q

What can the win-win approach also be referred to as (2)

A
  1. Collaborative
  2. Integrative
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4
Q

What can the win-lose approach also be referred to as

A

Distributive

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5
Q

What does the distributive approach assume?

A

A fixed ‘cake’ or ‘pie’ that must be distributed among the parties so that if one party gains the other party loses

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6
Q

What does the integrative approach assume?

A

The pie can be expanded so both parties can benefit

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7
Q

What is assumed to be the best approach to achieve your objectives?

A

Win-win approach

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8
Q

Why should short-term wins be used with care?

A

Short term wins are often gained at the expense of the relationship and so must be used with care if the relationship is business-critical or there are longer-term considerations

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9
Q

What is classed as a ‘good deal’?

A

one where both parties feel good about the outcome

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10
Q

Why should you be careful as a buyer when driving down prices from a supplier to a level where their profits on the sales are now marginal?

A

Commercial good will may have been lost and other buyers may become more attractive to the supplier. The supplier may even seek out new more profitable customers with a view of dropping the buyer

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11
Q

Why are integrative solutions more satisfying for both sides in a negotiation?

A

As the true need and concerns of both sides will be met to some degree

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12
Q

What can integrative, interest-based negotiation facilitate?

A

Constructive, positive relationships and establish contracts between parties on the foundation of goodwill

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13
Q

What is the principled style of negotiation?

A

The codification and application of the win-win approach

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14
Q

What is the method of principled negotiation?

A

Where agreement can be reached without damaging relationships

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15
Q

What does principled negotiation propose using?

A

An integrative approach to finding a mutually agreed shared outcome

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16
Q

What is a criticism of the principled approach to negotiation?

A

It being based on the assumption that all parties are reasonable, open to a logical approach, want to reach an agreement and are focused on achieving the best outcome over the longer term

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17
Q

Who set out the principled approach to negotiation?

A

Fisher and Ury

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18
Q

What are the 4 fundamentals of principled negotiations?

A
  1. People - separate people from problems
  2. Interests - focus on interests not positions
  3. Options - generate options for mutual benefit
  4. Criteria - use objective criteria
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19
Q

Name the 4 segments in the price and relationships diagram

A
  1. Warm tough
  2. Cold tough
  3. Warm easy
  4. Cold easy
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20
Q

Name 3 common problems that can occur when negotiating according to Fisher and Ury

A
  1. trying to impress ones own team instead of clearly stating one’s position to the other party and working towards an agreement
  2. Not actively listening in order to understand the other party and find common ground, but listening for contentious points to contradict
  3. Misunderstanding what the other party says, and/or rephrasing or summarising inaccurately
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21
Q

Name 6 ways to over come common problems in negotiation

A
  1. Empathise with the other party
  2. Try not to project your fear of things going wrong onto the other party before anything has actually happened
  3. Try not to direct blame on to people
  4. Create a culture of openness where the other party can express themselves
  5. Use apologies or expressions of understanding to calm down tense situations
  6. Make it clear that you are listening carefully to the other party by repeating back key information to them
22
Q

What are positions within negotiation?

A

Public things that people in negotiation say they want and may involve demands, minimum requirements, policy red lines, quantitative targets or other specific stated aims

23
Q

What are interests within negotiation?

A

Underlying needs that people have that drive their positions and they tend to be more enduring, overarching and ultimately more useful to uncover and focus on

24
Q

Why is it essential to understand the other party’s underlying interests?

A

To understand why they are taking a particular position on for example price or delivery

25
Q

Are positions easily visible?

A

Yes

26
Q

What is a significant part of what motivates a negotiator?

A

Interests

27
Q

How can you uncover a party’s interests?

A

By asking targeted questions

28
Q

Name 4 suggested steps to uncover a party’s interests?

A
  1. Find out more about the party’s position and why they hold that position
  2. Clearly express your own interests and discuss these together
  3. Focus on solutions rather than dwelling on the past
  4. Focus clearly on your interests, but remain open to different proposals and positions
29
Q

How can you reconcile conflicting positions?

A

Through principled negotiation where the focus is on uncovering the other party’s interests through questioning and then working to meet those interests through bargaining and trading concessions

30
Q

Are conflicting interests more difficult to reconcile?

A

Yes and in some cases they can be impossible to reconcile

31
Q

Tradeables

A

A negotiation variable such as price or contract length that can be traded with the other party in a negotiation

32
Q

What does the options principle aim to help?

A

To help the parties find a solution that both would benefit from. The more options (tradable) that can be brought to the table, the better

33
Q

Name 5 obstacles to identifying options for problem solving

A
  1. Problem definition in win-lose terms
  2. Limited options for negotiation
  3. Too great a focus on narrowing options at the expense of identifying an answer
  4. Premature decision on an option and failure to consider alterntaives
  5. Collective assumption that the other party is responsible for generating the solution
34
Q

How can you overcome the problem definition in win-lose terms

A

Identify any mutual gains

35
Q

How can you overcome limited options for negotiation

A

Invest time in brainstorming creative options. Workshops with existing suppliers may be useful for this

36
Q

How can you overcome too great a focus on narrowing options at the expense of identifying an answer

A

Instead of looking for just one solution, broaden the range of possible options

37
Q

How can you overcome premature decision on an option and failure to consider alternatives

A

Do not make any immediate decisions to rule any one option in or out

38
Q

How can you overcome collective assumption that the other party is responsible for generating the solution

A

Invest time in creating ways to facilitate easy decision-making. Having ready-made packages of options for discussion may be useful

39
Q

What should you do when parties interests are opposed?

A

The parties should seek to use objective criteria to resolve their differences

40
Q

How can both parties test for objectivity?

A

They need to commit to being bound by a set of standards

41
Q

What is distributive bargaining

A

win-lose

42
Q

What are you negotiating for in distributive bargaining?

A

You are negotiating for what is believed by the parties to be fixed resources: one fixed-sized pie

43
Q

When is distributive bargaining usually used

A

When the parties are trying to divide something that is of a fixed-quantity. It tends to define the parties as adversaries

44
Q

What is distributive bargaining associated with?

A

Claiming value

45
Q

What 2 things can distributive bargaining also be called?

A
  1. zero-sum bargaining
  2. Win-lose bargaining
46
Q

What is your goal in distributive bargaining?

A

To negotiate in such a way that when you reach an agreement, you have given up less than the other party

47
Q

What did Fisher and Ury say meaning distributive bargaining tactics can be very useful?

A

When a negotiator wants to maximise value obtained in a single deal and when the relationship with the other party is not important, distributive bargaining tactics may be very useful

48
Q

What is the 11 step formula proposed in the Art of the Deal by Donald Trump and Tony Schwartz

A
  1. Think big
  2. Protect the downside and the upside will take care of itself
  3. Maximise your options
  4. Know your market
  5. Use your leverage
  6. Enhance your location
  7. Get the word out
  8. Fight back
  9. Deliver the goods
  10. Contain the costs
  11. Have fun
49
Q

What is a collaborative or integrative negotiation approach?

A

One that takes into account the other party’s wants, needs, concerns and fears. the focus is on finding a solution, both parties accept that they will have to give something up in order to reach agreement

50
Q

Briefly compare integrative and distributive bargaining

A

Integrative bargaining tends to be more cooperative while distributive bargaining is typically more competitive

51
Q

Name 7 characteristics of bargaining

A
  1. Goal
  2. Guiding principle
  3. Negotiation focus
  4. Information sharing
  5. Dealing with issues
  6. Solution sought
  7. Relationship with the other party

L4M5 - Commercial Negotiation (12 decks)

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