M6: Negotiation

Question 1

Seven principles of negotiation

Answer 1

1. Don’t just ask what – ask why
2. Seek to reconcile interests, not demands
3. Create common ground with uncommon allies
4. Interpret demands as opportunities
5. Don’t dismiss anything as “their problem”
6. Don’t let negotiations end with a rejection of your offer
7. Understand the difference between “selling” and “negotiating”

Question 2

Co-opetition

Answer 2

Mixed motives we often do (and should) have when engaging with those whom we view as our competitors

Question 3

Logrolling (integrative bargaining)

Answer 3

Trading important issues for you with important issues for your partner

Combined payoff of logrolling is higher than compromise (efficient frontier)

Question 4

Compromising

Answer 4

Splitting the difference

Combined payoff of compromising is lower (distributive frontier)

Question 5

Sandbagging

Answer 5

When you both want the same thing, but your partner thinks you’ve conceded, so they’ll give you something else as well

e.g., the Teddy Roosevelt pamphlets

can be fun and produce some wins, but it can ruin relationships when discovered

Question 6

Thompson’s guide to negotiation

Answer 6

• Assess what you will do if you don’t reach an agreement
  with your current partner (i.e., your BATNA)
• Assess what your current partner will do if they do not
  reach an agreement with you (their BATNA)
• Assess the true issues in the negotiation
• Assess how important each issue is to you and your partner
• Look for opportunities to create value (logroll)

Question 7

What are we negotiating? (Flynn’s 3-part pie chart)

Answer 7

Relationship: our ongoing bond

Deal: who gets what

Interaction: how we interact

sometimes its more about one piece than another

Question 8

Gender differences are eliminated when

Answer 8

1. Experience - negotiators are not novices
2. Advocacy - negotiators are advocating on behalf of others
3. (Zone) clarity - negotiators are aware of the bargaining zone

Question 9

Rules to remember

Answer 9

1. Always expand your pool of potential negotiating partners
2. You don’t get what you don’t ask for

Question 10

Three takeaways from negotiation

Answer 10

The hardest skill to learn is asking the right questions
- uncover the other party’s payoff table
- take the other party’s perspective

Remember the rules (e.g., don’t negotiate one at a time!)
- offer packages
- try to improve your alternatives

Leaders create value when negotiating
- identify integrative solutions to boost your rep
- be willing to initiate

Question 11

Five strategies for eliciting information from reticent negotiators

Answer 11

1. Build trust and share information
2. Ask questions - especially if you are surprised or skeptical
3. Give away some information
4. Negotiate multiple issues simultaneously
5. Make multiple offers simultaneously

Question 12

Distributive

Answer 12

Single issues, divided among negotiators

Question 13

Target point

Answer 13

Negotiators most preferred or ideal settlement

Question 14

Reservation point

Answer 14

Point at which the negotiator is indifferent between reaching a settlement and walking away from the bargaining table

Question 15

BATNA

Answer 15

Best alternative to the negotiated ageement

Question 16

Focal points in negotiation

Answer 16

Unprepared negotiators who make the mistake of not developing a reservation point before they negotiate often focus on arbitrary values which masquerade as a reservation price

Question 17

Bargaining Zone

Answer 17

Region between parties’ reservation points.

The difference between both reservation points.

Positive = there is overlap
Negative = no overlap

Question 18

Bargaining surplus vs. Negotiators surplus

Answer 18

Bargaining: amount of overlap in zone

Measure of the value that negotiated settlement offers to both parties over the alternative of not reaching settlement

Negotiators: positive difference between the settlement outcome and the negotiators reservation point

Question 19

Mixed motive

Answer 19

Negotiators motivated to cooperate to reach a settlement and at the same time compete to claim value

Question 20

Five bases of power: Reward

Answer 20

influence based on rewards offered to the target by the power holder contingent on compliance

Less stable

Question 21

Five bases of power: coercive

Answer 21

influence based on punishments or threats directed toward the target person in the event of noncompliance

less stable

Question 22

Five bases of power: legitimate

Answer 22

Influence based on the target’s belief that the power holder has a justifiable right to demand the performance of certain behaviors

more stable

Question 23

Five bases of power: referent

Answer 23

Influence based on the target’s identification with, attraction to, or respect for, the power holder

more stable

Question 24

Five bases of power: Expert

Answer 24

influence based on the target’s belief that the power holder possesses superior skills and abilities

more stable