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!
Negotiating Styles
Assertiveness (concern for self) vs. Conservatism (concern for others) Equal = Compromising High A, High C = Collaborating High A, Low C = Competing Low A, High C = Accommodating Low A, Low C = Avoiding
Shell’s situational Matrix
Perveived importancr of future relationship vs perceived conflict over stakes
Balance Concerns Relationships Transactions Tacit coordination **Look at image!!
Distributing resources fairly - Equal distributions
Promote cooperation and equal status
Distributing resources fairly - Needs based distributions
Promotes harmony, but also neediness
Keys for distributing fairly…
Identify distributions w/o knowing your “take”
Engage in PERSPECTIVE TAKING… role play, factor in other’s views
Identify OBJECTIVE sources and criteria
Seek a neutral 3rd party’s opinion
Compliance via Trust
Trust: accepting vulnerability based upon a belief in the expectation that another will behave as anticipated
Deterrence/Calculus-Based trust
Can I make it irrational for them to defect?
Identification-Based trust
Can we “connect,” feel personally comfortable?
Trust Building Tips
Take time to BUILD RAPPORT
Communicate an intent to COOPERATE
Gain public COMMITMENTS
Signal INTERDEPENDENCE
Types of Issues
Compatible - areas which our goals are aligned Integrative - Goals are not completely in opposition - May see beneficial trades & deals that vary in efficiency Distributive / Competitive - Areas in which desires are directly opposed - “Zero-Sum” issues
The Pareto Efficient Frontier
No one can be better off without making someone else worse off
The pie has been expanded to its full potential (unless other issues are added)
Scoring Systems
Purpose: To quantify the quality of different alternative outcomes and to help negotiator(s) assess tradeoffs among issues.
Criteria for a good scoring system:
Complete - All important issues are identified.
Measurable - Provides a common metric for comparing qualitatively different issues.
Operational - Can be used to sort out specifics regarding what sets of alternatives are preferable to other sets.
Useful - Provides a shorthand for the negotiator that reasonably translates actual qualitative preferences into a quantitative system of measurement.
Developing a Scoring System
Define all issues
Prioritize
Assign relative weights to each issue by importance
Calculate and quantify the value of all options for each issue
Cialdini’s Principles of Persuasion - Friendship/Liking
Friendship/Liking–We prefer to say yes to people we know and like.
Factors that facilitate liking include:
a) similarity
b) compliments/praise
c) physical attractiveness
Cialdini’s Principles of Persuasion - Reciprocity
Reciprocity–We should repay, in kind, what another person has provided us. Give what you want to receive.
Cialdini’s Principles of Persuasion - Social Proof
Social Proof–We view a behavior as correct in a given situation to the degree that we see others performing it.
1) We are especially susceptible in unfamiliar situations. 2) We more often follow the example of others similar to ourselves. 3) Peer Power: Demonstrate how a respected peer has agreed.
Cialdini’s Principles of Persuasion - Commitment and Consistency
Commitment and Consistency–Once we make a choice or take a stand, we will encounter personal and interpersonal pressures to behave consistently with that commitment.
1) public commitments (e.g., statement of principles) 2) minimal commitments (e.g., foot-in-the-door tactic) 3) saying yes (e.g., would you like to save money?)
Cialdini’s Principles of Persuasion - Authority
Authority–We are more likely to accede to the request of a perceived authority figure. People defer to experts.
1) Authority is a powerful source of influence!
2) Symbols of authority include: titles, clothing, and other trappings 3) 4 out of 5 Dentists recommend…
Cialdini’s Principles of Persuasion - Scarcity
Scarcity–Opportunities seem more valuable when they are less available.
1) People react against threats to their freedom to choose. 2) This can be manipulated through: a) time limits b) limited supply c) decreasing supply d) competition
Integrative Approaches: Strategies
Capitalize on Similarities
Similar BACKGROUNDS
Similar OBJECTIVES
Similar levels of INTERDEPENDENCE
Builds liking and trust
Capitalize on Differing Priorities or Values:
Use “Logrolling”
Give away what matters least in exchange for what matters most
Recognizes that PREFERENCES may differ
Does not require trust or direct disclosure!
Differing Positions, Compatible Interests:
Use “Bridging Solutions”
Surface conflicts erupt, though interests are parallel
Can you get beneath the surface, to identify a route wherein everyone can be satisfied?
Often results from “False Conflict” or from “Position-based Disagreements”
Capitalize on Differing Expectations: Use “Contingency Deals” Who is RIGHT?? Who cares?? May AVOID difficulties in projecting the future, or in establishing correctness via DELAY Create objective TIE-INS to your deal…
Capitalize on Differing Cost Structures or Extra Opportunities:
Use “Cost Cutting”
Make the deal cheaper for one/both parties
Make it easy for them to comply!
Seek to “Expand the Pie”
Add value to the pot to sweeten the deal for both parties
Can makes Impossible deals Possible
Optimizing your Timing
Use “Re-Opener Agreements”
Discussion too heated? Call time-out
Be specific as to when negotiations will begin again
Use “Post-Settlement Settlements”
Can review your deal for possible improvements
Parties work from the safety of a negotiated agreement
Enables info sharing and exploration
