BUS 489 Negotiation Exam 1

How do you define negotiation?
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Describe collaborative negotiation in detailParties learn to work together. BOTH the relationship and outcome is important to both parties. Both parties are committed to working towards a mutually accepted agreement that preserves or strengthens the relationship. Intangibles are important and accounted for. EX: reputation, pride, principles, sense of fairness Negotiations must stay rational, reasonable, fair level Listen to complaints, have an open mind Both parties must be willing to make concessions Objective: find best solution for both sidesWhat are the 4 steps in the Collaborative Strategy?1.) Identify the Problem 2.) Understand the Problem 3.) Generate alternative solutions 4.) Select solutionWhat are the advantages of collaborative negotiation?-increased understanding improves negotiation -more focus on issues -it can create value (increase the size of the pie) -produces long-term solutionsWhat are the disadvantages of collaborative negotiation?-requires more self-understanding -requires more understanding of one party -you can be vulnerable in negotiation with a competitive opponent.Describe the competitive strategy in detailA competitive negotiation style follows the model of "I win, you lose." Competitive negotiators tend to do whatever it takes to reach their desired agreement - even when it comes at the expense of another person or entity. They are results-oriented and focused on achieving short-term goals quicklyWhat are the advantages of using competitive strategy?-initially requires less effort -best response to a competitive negotiator (fight fire with fire)What are the disadvantages of using competitive strategy?emphasizes rights and power, ignores interests, divisive - Divisive - impedes communication and understanding, -may produce short-term success but long-term failureHow can you improve your outcomes in a negotiation where a competitive strategy is being used?-Ignore it -Respond in kind -Co-opt the other party before the negotiation -Call and name their tacticsWhat is framing?The framing effect is the cognitive bias wherein an individual's choice from a set of options is influenced more by how the information is worded than by the information itself. Determines perspective -Fear of loss -Anticipation of gainHow can you shape/influence the bargaining range?-Ask for more than you expect to get -Never say yes to the first offer - Play reluctant -Vise: Ask for more than is offered: "You'll have to do better than that." -Customers want to pay more - give them reason to -Don't offer to split the differenceHow does framing impact negotiations?-Emphasize the other party's loss if you fail to reach an agreement - Emphasize the other party's gain if you do reach an agreement -Can use framing for the Bargaining range by settling as close as possible to the other parties resistance pointWhat points are included in the bargaining range? Then the enhanced bargaining range?Buyers initial offer Target Price Sellers Starting Price Enhanced Bargaining Range BATNA and Resistance PointWhat is a reservation point? How is it different from a BATNA?Resistance Point (Reservation Point) The point at which you will cease a negotiation. You will not accept an agreement that does not meet this criteria.What is an opening offer?An offer that is supposed to be high but that gives you some room to work down and make appropriate concessions.What is a target price?This is what you are hoping to end the negotiation at. It is what you are aiming for.What is the relationship between the different points in the bargaining range?An inverse relationship. As you go lower on one end, you are going higher for the other party.How can you change the bargaining range?-Anchor with your initial offer. -Reduce the other party's confidence -Increase the other party's perception of your positionWhat are hardball tactics? Provide examples of hardball tactics.-Good cop/bad cop team of two taking opposing approaches -Lowball/highball exaggerating initial offerings - Bogey asks for help "i'd love to pay you 1,000 but i only have $100" -Nibbling small concessions - Chicken "this is my final offer" - Intimidation emotional ploy use anger to deliberately - Aggressive behavior - Snow job overwhelm other party with informationHow can you respond to hardball tactics?-Ignore them - Respond in kind - Name and discuss them -Co-opt the other party before negotiations get intenseHow do you prepare for a negotiation?Goals Strategy TacticsWhat are the key elements of negotiation planning?1. Identify joint issues to resolve 2.Define the bargaining mix 3.Define interests 4.Define your limits 5. Bargaining range 6. Understand the players and the context 7. Analyze the other party 8. Presentation to the other party 9. ProtocolWhat are several ways that the planning document can help you during a negotiation?-Gives clear objectives for evaluating offers -Helps to understand other parties' strengths and weaknesses -Prepared to address other partyWhat are 3 objectives for pre negotiation planning?1.) Assess your position 2.) Assess the other party's position 3.) Evaluate how they fit togetherWhat is the definition of an alternative?Nothing to do with the current negotiation partner AND Should be an alternate course of action that helps you address the overall need that the current negotiation would have addressedWhat are the key goals/purposes behind identifying alternatives?-An alternative should help you define when it makes sense to walk away (identify your reservation point) -An alternative should help you gain power and leverage in the negotiationHow are the alternatives you identify related to the bigger picture goal of the negotiation?A bigger picture need... Identifies what you are really hoping to address from a big picture perspective in this negotiation It rises above the details of one particular issue and should encompass all issues ...and should have nothing to do with the current negotiation partnerHow does the behavior of successful and unsuccessful negotiators differ?Superior Negotiators -label behavior - test understanding and summarize ask questions -share internal thoughts and feeling, -reflect on negotiation, -regain balance (prepare for response, let go of trying to control reactions, imagine it's 6 months down the line, take a break) Unsuccessful: -self promotion -direct counter proposals, -defend/attack exchanges, -disagree then explain, -use many reactions to back claimWhat does integrative negotiation look like?-Free flow of information -Understanding the other negotiator's real needs and objectives - Emphasis on commonalties and minimize differences -Search for solutions that satisfy both sidesWhat integrative negotiation strategies work?-Build trust and share information -Ask diagnostic questions -Provide information about interests -Unbundle the issues -Make package deals, not single-issue offers -Make multiple offers simultaneously -Contingency contractsWhat are four ways you can implement a collaborative strategy? Be able to define and give an example of each.-Expand the pie (try and make both people win -Logroll (make a range of requests, some of which are important and some that are not; concede on items that are lower priority) -Offer nonspecific compensation -Cut costs -Bridge (inventing new options that meet the needs of both)What are the take-aways discussed in class for the following negotiations? Used Car - Distributive Bargaining-Prepare thoroughly - think about the bargaining range - Try to identify and change the frame -Provide a pattern of concessionsWhat are the take-aways discussed in class for the following negotiations? Salary Negotiations- Distributive BargainingIncrease your power: Think ahead about how you can sell your strengths and even frame your "weaknesses" as strengths - How much information does it make sense to share? Remember that how you deliver the information (e.g. about another offer) dramatically affects how well it is received -If you have different beliefs about what will happen in the future - create a contingency planWhat are the take-aways discussed in class for the following negotiations? Equity Splits- Pre Negotiation Planning and Integrative Bargaining-Timing of renegotiating - know the key signs that it might be time to renegotiate. Avoidance can come back to bite you - There are benefits to negotiating- clarity in expectations for team and for investors -Build expectations of flexibility into the agreement: when can renegotiation occur? -Remember that the success of your team depends on your ability to openly discuss these issues Don't forget to identify, remember, and stick to your reservation point Process can matter as much, or more, than substantive issuesWhat are the take-aways discussed in class for the following negotiations? Job Offer- Employment Negotiations-What is negotiable in a Job Offer? -Justify your demands/offers - Know your priorities -Develop rapport -Cultivate alternatives - Get it in writing -Be willing to walk awayWhat are the take-aways discussed in class for the following negotiations? The Balancing Act- Work Life Negotiations-Family can be of an issue?What are the "What happened?" conversations?- Disagreement about what happened or should -who said what? who did what? -whos right and whos to blame? -The situation is more complex than either party can see -It is about conflicting perceptions, interpretations, and values -It is about what is important and NOT ABOUT BEING RIGHT -Must look at the real intentions -Defend and protect your own position, but do not assign blame -We are visitors in each other's stories and we have very different stories -We need to understand their stories to understand their conclusions -truth assumption: we argue for our view (I am right, you're wrong) -intention invention: we assume we know the other person's intentions, but we don'tWhat are the "Feelings" conversations?-asks and answers questions about feelings -are my feelings valid? -what do i do about the other persons feelings? -Know that the situation is emotionally charged -difficult conversations are about feelings -we are shaped by an emotional footprint -"engaging in a difficult convo without talking about feelings, is like staging an opera without music"What are the "Identity" conversations?-Convo we have with ones self -may be the most subtle and the most challenging -looks inward, who we are/how do we see ourselves? -difficult conversations threaten our identity -revolves around, I am competent, I am a good person, and I am worthy of loveWhat are the core problems or mistakes people tend to make in each of these three conversations? How can these conversations be problematic? "What happened?"-think about it as they're selfish -they're naive, controlling, & irrational -we never put blame on ourselves -stories can only come from available info, our observations (which we observe the world differently and have different access to info), our interpretations (past experiences), our conclusions -our assumptions about intentions are usually wrong (we assume bad things and jump to that they're bad people)How can you overcome common pitfalls in each of these three conversations? "What happened?"-we need to understand their story -shift from certainty to curiosity -look for understanding, not being right -disentangle impact from intent -hold view as a hypothesis -look to see how each contributedWhat is the role of emotion in difficult conversations?Emotion is at the heart of a difficult conversation and we need to work with it, not against it.What does it mean to "disentangle intent from impact" and why would you want to do this?We go from, "I was hurt" to "you intended to hurt me "We need to look at: *actions (what was said or done) *impact (what it was on me) *assumption (what assumptions am I making about their intentions?) To resolve this, we must hold our views as an assumption/hypothesis. We must inquire, listen, and be open to reflecting.What does it mean to "complexify" your identity?Our emotions and others are more complex than just one dimension, so it is important to add more dimensions, "i can be mad AND so can he" There is no bottom line, we need to complexify our identity. It will help us deliver bad news and help us be curious and clear.What are four ways to regain your balance in a difficult conversation?1.) letting go of trying to control their reaction 2.) preparing for their response 3.)imaging the future to gain perspective 4) take a breakHow can you influence the bargaining range?-Ask for more than you expect to get -Never say yes to the first offer -Play reluctant -Vise: Ask for more than is offered: "You'll have to do better than that." -Customers want to pay more - give them reason to -Don't offer to split the differenceHow can you win and make the other party think that they won?-Claim that you need approval from a higher authority -Set difficult issues aside - Progressively reduce the size of concessions -Negotiate for a long time -Hold to your agreement at closing (no concessions)What four components of negotiation should you focus on during planning? What important questions should you ask yourself in each of these four areas?1.) About YouWhat are the advantages and disadvantages of using a scoring system?(+) comparing different alternatives, keep you analytically focused and puts emotions in check, can be a conversation in the negotiation (-) takes a long timeWhat are the qualities of an effective reservation point?-Should encompass all points-Not vagueWhat is an exploding offer?A deliberate, calculated strategy that is typically offered together with an extremely short, artificially imposed time limit .FUNCTION: force a quick acceptance by ending the negotiation. To restrict the ability of the recipient to comparison ship, and discover that the market was willing to pay at a significantly higher level.Why would anyone make an exploding offer?-the ultimate hard bargaining tactic -defines an end to the negotiation process -rejection will automatically terminate the negotiation, sometimes the relationship as well -purpose" force a quick acceptance to end the negotiation (this way they don't have to sweeten the deal with high costs) -incentivizing to say yes, salary or price offer, (if you walk away now then you might not get this deal)How can you effectively respond to an exploding offer?-try to be reasonable first -then fight fire with fire: the farpoint gambit -defuse it by "embracing it" -"I accept. Provisionally." -key is to make requests that are completely reasonable, by which will eventually result in a deadline being violated, due to the need for further clarification -simply ask "can we talk about it on monday? Extension? -Prepare for a counter offer -Set a date that you would be in a position to accept and explain why this date would be beneficialWhat are vicious cycles? High Cost of Low trust"Vicious cycles frequently grow out of the widespread human tendency to take an exaggerated view of others' perceived hostility or unreasonable behavior. This exaggeration leads us to reciprocate with negative behavior of our own. Our own hostility creates a self-fulfilling prophecy—the other side is likely to respond negatively in return. Taking this genuinely hostile response as confirmation of our earlier perceptions, we fail to recognize that our own actions created exactly what we feared."What are virtuous cycles? High Cost of Low trustDefinition: having or showing high moral standards In negotiations, it is perception of fairness of a negotiation outcome. "Our sense of fairness increases the more we sense that the other side has genuinely considered our perspective."How can you avoid vicious cycles and promote virtuous cycles?"How can you distinguish your misperceptions of hostility from genuine ill will? Before assuming ill intent, look for extenuating circumstances that might provide an alternative explanation. Better yet, ask the other party to explain her behavior." Build trust with the other partyWhat does it mean to label your concessions and why should you do this? example about the union and them going on strike"When you've made a significant concession, be sure to communicate exactly how much you've given away and what the sacrifice means to you" "By doing so, you'll not only affect the other party's perceptions of your goodwill but trigger your partner's desire to reciprocate, and increase the level of mutual trust"What is a unilateral concession?"A carefully crafted unilateral concession can work wonders for trust, for it conveys to the other party that you consider the relationship to be a friendly one, with the potential for mutual gain and trust over time." "A true unilateral concession requires no commitment or concession from the other side. Such concessions must come at little cost or risk to the provider, but be of high benefit to the recipient. In addition to establishing trust, carefully crafted unilateral concessions also demonstrate your competence by portraying you as someone who understands what the other side values." - from the High Cost of Low TrustWhat are some common cognitive mistakes that negotiators make?(1)Negotiators tend to be overly affected by the frame, or form of presentation, of information in a negotiation; (2) Negotiators tend to non rationally escalate commitment to a previously selected course of action when it is no longer the most reasonable alternative; (3) Negotiators tend to assume that their gain must come at the expense of the other party and thereby miss opportunities for mutually beneficial trade-offs between the parties; (4) Negotiator judgments tend to be anchored upon irrelevant information—such as, an initial offer; (5) Negotiators tend to rely on readily available information; (6) Negotiators tend to fail to consider information that is available by focusing on the opponent's perspective; and (7)Negotiators tend to be overconfident concerning the likelihood of attaining outcomes that favor the individual(s) involved.How does the way in which information is framed affect negotiators?"The referent point that we choose determines the frame we impose on our options and ,subsequently, our willingness to acceptor reject those options." "Probably one of the most common referent points is what we perceive to be in our current inventory (our status quo)—what is ours already. We then evaluate offers or options in terms of whether they make us better off (a gain) or worse off (a loss) from what (we perceive to be) our current resource state."What is the endowment effect?Individuals place a higher value on an object that they already own than the value they would place on that same object if they did not own it.What does the framing effect suggest for how negotiators should frame issues in order to get the other side to make concessions?"The framing effect suggests that to induce concessionary behavior from an opponent, a negotiator should always create anchors or emphasize referents that lead the opposition to a positive frame and couch the negotiation in terms of what the other side has to gain" "I can let this go and you can have this car for 22,000" "my loss is your gain"What are five tactics for finding solutions by redefining the problem?1.) Expand the Pie- Expand and reallocate the resources so that each party could obtain their desired end 2.) Logroll- Tradeoff of issues "You get this, I get that" 3.) Offer non specific compensation- "pay off" the other for giving in on an issue EX: sale of house includes window coverings 4.) Cut costs- One party accomplishes specific objectives and the other costs are minimized by going along with the agreement 5.) Bridge- parties invent new options that meet each others needsWhat are four tactics for generating a list of potential solutions? **ideas must not be evaluated as they are suggested**1.) Brainstorming- Write down as many ideas as possible 2.) Piggybacking- Can be used in conjunction with brainstorming. Build on someone else's idea to produce another idea 3.) Nominal groups- each negotiator works with a small group and make a list of possible solutions 4.) Surveys- Distribute a questionnaire stating the problem and asking respondents to list possible solutionsWhat is the "asking advantage"?Perhaps directly negotiating for advantage - asking for what you want - is a male strategy and women simply enjoy other equally effective strategies to get what they want (partly true). Women often worry more than men about the impact their actions will have on their relationships (thus, not getting what they want). In many cases, the only way to get something is to ask directly for it.Why might it be important for managers to understand the differences between men and women described in this reading?-Men are asking for things they want and initiating negotiations (2 to 3 times) --> women just don't ask. -Negotiating your starting salary can produce a gain of more than $0.5M by the end of your career (managers want to pay employees at their lowest cost) -Minor instances of group-based bias will eventually lead to major inequalities between men and womenHow can negotiators be more successful?Preparation is the most important activity in negotiationWhat defines a good goal?SMART Goals Specific Measurable Attainable Relevant TimelyWhat are the problems of the "Feelings" conversations?-If unaddressed, feelings will leak or burst out and leave us disengaged (block our ability listen)What are the problems of "Identity" conversations?The all or nothing syndrome - we become hypersensitive to feedbackHow can you overcome common mistakes in "Feelings" conversations?-describe your feelings and negotiate with them -know your feelings & how they transform themselves -must look for what our story is missing -describe feelings carefully, don't evaluate them; full spectrum of feelingsHow can you overcome common mistakes in the "Identity" conversations?-ground your identity -become aware of your identity issues -complexify your identity with the "and stance" -accept that you will make mistakes -learn to regain balance and not control others' reactions -prepare for their response and imagine it's the future and take a break