M6: Negotiation Flashcards
Seven principles of negotiation
- Don’t just ask what – ask why
- Seek to reconcile interests, not demands
- Create common ground with uncommon allies
- Interpret demands as opportunities
- Don’t dismiss anything as “their problem”
- Don’t let negotiations end with a rejection of your offer
- Understand the difference between “selling” and “negotiating”
Co-opetition
Mixed motives we often do (and should) have when engaging with those whom we view as our competitors
Logrolling (integrative bargaining)
Trading important issues for you with important issues for your partner
Combined payoff of logrolling is higher than compromise (efficient frontier)
Compromising
Splitting the difference
Combined payoff of compromising is lower (distributive frontier)
Sandbagging
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
Thompson’s guide to negotiation
- 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)
What are we negotiating? (Flynn’s 3-part pie chart)
Relationship: our ongoing bond
Deal: who gets what
Interaction: how we interact
sometimes its more about one piece than another
Gender differences are eliminated when
- Experience - negotiators are not novices
- Advocacy - negotiators are advocating on behalf of others
- (Zone) clarity - negotiators are aware of the bargaining zone
Rules to remember
- Always expand your pool of potential negotiating partners
- You don’t get what you don’t ask for
Three takeaways from negotiation
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
Five strategies for eliciting information from reticent negotiators
- Build trust and share information
- Ask questions - especially if you are surprised or skeptical
- Give away some information
- Negotiate multiple issues simultaneously
- Make multiple offers simultaneously
Distributive
Single issues, divided among negotiators
Target point
Negotiators most preferred or ideal settlement
Reservation point
Point at which the negotiator is indifferent between reaching a settlement and walking away from the bargaining table
BATNA
Best alternative to the negotiated ageement
Focal points in negotiation
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
Bargaining Zone
Region between parties’ reservation points.
The difference between both reservation points.
Positive = there is overlap
Negative = no overlap
Bargaining surplus vs. Negotiators surplus
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
Mixed motive
Negotiators motivated to cooperate to reach a settlement and at the same time compete to claim value
Five bases of power: Reward
influence based on rewards offered to the target by the power holder contingent on compliance
Less stable
Five bases of power: coercive
influence based on punishments or threats directed toward the target person in the event of noncompliance
less stable
Five bases of power: legitimate
Influence based on the target’s belief that the power holder has a justifiable right to demand the performance of certain behaviors
more stable
Five bases of power: referent
Influence based on the target’s identification with, attraction to, or respect for, the power holder
more stable
Five bases of power: Expert
influence based on the target’s belief that the power holder possesses superior skills and abilities
more stable
