Test 1 Flashcards
Negotiation (Definition)
Art and science of securing agreement between two or more parties, seeking to maximize their outcomes
Negotiation Myths
Good negotiatiors are born
I can only negotiate in environments where it is only explicity allowed
I must negotiate “tough” to be successful
Experience is a great teacher
BATNA
Best Alternative to Negotiated Agreement
“What are you going to do if you do not make a deal with this person - determined by your available alternatives.
Defines most you will pay (buyer) and least you will accept (seller)
Key source of power - ability to walk away
Key: Always include an affirmation of commitment when disclosing your BATNA, and note that you may have to take it!
Counterpart’s perception of your BATNA
Give a positive impression about your BATNA, but don’t disclose specific values!
Aspiration level/target
Your “ideal” settlement price
you set this based on research
Reservation Price
Your point of indifference - “Walk away” point
Your BATNA +/- factors that make you want to do this deal
Never reveal!!
Bargaining Range (ZOPA)
Zone of Possible Agreements
ZOPA is the range between the buyer’s reservation price and the seller’s reservation price
Positive ZOPA
If buyer willing to pay more than seller will accept, ZOPA exists
Negative ZOPA
Seller demands more than most buyer will pay, no zone of possible agreement
Interests
Central concerns underlying one’s preferences
- profitablity, quality, timing, fairness
Issues
Items to be negotiated
price, delivery, etc
Positions
Specific outcomes on each issue that each party states
Judgmental Heuristics
Rules of thumb or shortcuts that people use the reduce information-processing demands
Availability
Tendency to judge the probability or frequency of events by the degree to which instances of that event are readily available or retrievable from memory
Events that 1) evoke emotion, 2) are vivid, 3) are easily imagined, tend to be more available
Representativeness
Tendency to assess the likelihood of an event’s occurrence by the degree to which a specific description corresponds or “represents” a broader category
Anchoring and adjustment
People make assessments by starting from an initial value and adjusting to yield a final decision, even when the reliability of the initial value is questionable
Tendency to allow the initial value to be “anchored” by historical precedent
- insufficient anchor adjustment, overconfidence
Framing
Setting up the question or negotiation in such a way that can sway opinions in a given direction.
200 saved vs. 400 killed
Distributive Negotiations
Fixed sum games - one persons gain is another’s loss; almost directly conflicting interests
Dividing the pie, but don’t know exactly how large the pie is
Key Processes in reaching a deal
Creating Gains
- searching for optimal solutions
Claiming Gains
- influencing the distribution of resources
Claiming Gains (3 key stages)
Opening offers
- framing/anchoring - don’t get too extreme or conservative
Concession making
- Normal, tend to be permanent, should be justified, reciprocity
Signaling commitment
- indirect (slowing concessions, showing pain)
- direct (clarity of statement, outline consequences)
Planning critical processes
1) Goal definition (why want it)
2) Goal pursuit ( what strategies)
- contectual factors, external linkages
Opening statments
Initial Goals: Build rapport Signal Respect Communicate Enthusiasm Appear Optimistic Signal A Problem-Solving Approach
Supporting Arguments
Be prepared to justify your positions
Find Credible sources
Unbiased
Recognized Expertise
Address your opponent’s perspective
Frame in a way they appreciate/understand
Communicate how compliance benefits them!
Closing statements
Similar to the opening remarks … a graceful exit may include: Enthusiasm Praise for the product/service Compliments & friendly remarks NO discussion of your reservation price!
Key: Promote stability and social utility!