NEG Chapter 4(MQC and Long) Flashcards
What is a Win-Win Negotiation
• A win-win negotiation does NOT equate to any of the following actions:
o Compromise - reaching a middle ground, win-win negotiation does not pertain to how pie is divided, but how pie is enlarged by negotiators
o Even split – how the bargaining zone is divided among negotiators. E.g. cut orange in half = even split but juice or rind is not win-win
o Satisfaction – no guarantee that money and resources have not been wasted
o Building a relationship – people who seem to have the most interest in building a relationship with other party often fail to reach integrative agreements
Tell-tale Signs of Win-Win Potential
• The following are questions for negotiators to ask when assessing the potential of a negotiation situation:
o Does the negotiation contain more than one issue?
♣ Single-issue negotiations are not win-win because one party gains and one loses
♣ Identify more than one issue
o Can other issues be brought in?
♣ Starting salary and vacation and bonus
o Can side deals be made?
♣ Bring other party into negotiations to make side deals – may increase bargaining pie
o Do the parties have different preferences across negotiation issues?
♣ If parties have different strengths of preference across negotiation issues, then win-win negotiation is possible
Most common Pie-expanding Errors
• If reaching win-win negotiation agreements is the objective of most negotiators what prevents them from doing so?
• False conflict/ illusory conflict
o People believe that their interests are incompatible with the other party’s interests when they are not
o E.g. union and management prefer some wage increase, but neither party realised this fact at time of strike
o The lose-lose effect : failure of parties to capitalise on compatible interests
o How to avoid lose-lose agreements?
♣ Negotiators should avoid making premature concessions to the other party
♣ Negotiators should develop an accurate understanding of the other party’s interests
• Fixed-pie perception
o The belief that the other party’s interests are directly and completely opposed to one’s own interests
o Negotiators shared interests can be profitably traded off and completely compatible
o Biggest detriment to attainment of integrative agreements is the faulty assumptions made about the counterparty and the negotiation situation
o Negotiation is not a purely competitive situation
o Most situations are mixed-motive in nature
NB GOING TO be in the exam
A strategic framework for reaching integrative agreements
• The framework of an integrative negotiation has five major components
o Resource assessment
♣ Involves identification of bargaining issues and alternatives
♣ Employment negotiation: bargaining issues = salary, vacation and benefits
♣ Parties identify issues that are of concern to them in negotiation
♣ Both parties issues forms the issue mix of negotiation
♣ Parties must also define and clarify the alternatives for each issue
♣ Later stages move to the unbundling of issues and alternatives
o Assessment of differences
♣ Assess issue mix
♣ Focus on issue differences in valuation, probability assessment, risk preferences, time constraints and capabilities
♣ Each party should focus on its most important issue: its interests
o Offers and trade-offs
♣ Parties should consider several trade-offs among valuations, forecasts, risks, time preferences and capabilities and eliminate those dominated by other alternatives
♣ Parties should focus on issues that are of high value to one party and of low cost for the other party to provide
o Acceptance/rejection decision
♣ Negotiators may identify a set of terms that both find minimally acceptable: it exceeds both parties reservation points
♣ A minimally acceptable agreement does not necessarily mean that settlement is efficient
♣ Negotiators should continue to explore possibilities, depending on their time costs and subjective assessments of the likelihood of reaching superior solution
♣ Negotiators who set challenging goals are more likely to continue to search for integrative agreements
o Prolonging negotiation and renegotiation
♣ Two feedback loops emanate from the decision stage: decision to prolong negotiations and decisions to re-negotiate
♣ Negotiators should prolong negotiations when the best agreement on the bargaining table fails to meet both parties reservation points
♣ Negotiators should re-assess resources by unpacking initial set of issues and breaking them down into smaller issues that may be traded off
♣ Negotiators may add issues and alternatives to the bargaining mix
♣ If mutually agreeable solution has not been found, negotiators should call a halt and pursue BATNAs
