Negotiations Midterm 1 – Flashcards
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Negotiation is the art and science of securing agreements between two or more parties who are interdependent and who are seeking to maximize their outcomes.
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How do you define negotiation?
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-Two or more parties -Conflict of differences needing agreed -Choose to negotiate to obtain a better deal (maximize outcomes) -Expect give and take -Prefer to negotiate than to fight openly -Manage tangibles and resolve intangibles -Successful when resolves a dispute or creates something new
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What characterizes an exchange as a negotiation?
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-When you could lose everything -When you couldn't meet the terms of the agreement -When demands are unethical -When the other party is untrustworthy -When you have no stake in the outcome -When you don't have time -When waiting would improve your position -When you're not prepared
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When should you avoid negotiation?
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-Win-lose goals -Misperception and bias -Emotionality -Decreased communication -Rigid commitments -Magnified differences, minimized similarities -Escalation of conflict
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What are roadblocks to negotiation?
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Best Alternative to a Negotiated Agreement. It is a point that shows why you could walk away.
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What is a BATNA and how do you use it?
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The more options you have, the less interdependent you are, which means your negotiation position is strengthened. You can use it to gain confidence and leverage.
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How does the BATNA influence who has power in a negotiation?
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Interlocking goals (win-win); depending on each other
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What is interdependence?
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If you have no back-ups, interdependence increases. If you have many options, your interdependence decreases.
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What increases and decreases interdependence?
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The way negotiations are conducted and their outcomes (interests, issues, position) Will it be cooperative or competitive?
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How does interdependence impact a negotiation?
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It shows the importance of relationships on the Y axis and the importance of outcomes on the X axis.
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What is the dual concerns model and how do you use it?
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A) Accommodating B) Cooperative C) Avoiding D) Competitive E) Collaborative
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What are the five different strategies laid out in the dual concerns model?
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(+) increased understanding improves negotiations, there is more focus on issues, it can create value (increase the size of the pie), and it produces long-term solutions (-) requires more self-understanding, requires more understanding of one party, and you can be vulnerable in negotiation with a competitive opponent.
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What are the advantages and disadvantages of collaborative negotiation?
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(+) initially requires less effort, best response to a competitive negotiator (-) emphasizes rights and power, ignores interests, divisive - impedes communication and understanding, and it may produce short-term success but long-term failure
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What are the advantages and disadvantages of using the competitive strategy?
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-Ignore it -Respond in kind -Co-opt the other party before the negotiation -Call and name their tactics
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How can you improve your outcomes in a negotiation where a competitive strategy is being used?
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A negotiation technique in which the framer defines the issue at stake in a certain way to close a deal. The bargaining range: -Don't settle for "win-lose" -Create "I win, you think you win" -Determines perspective: Fear of loss, anticipation of gain
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What is framing?
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-Emphasize the other party's loss if you fail to reach an agreement -Emphasize the other party's gain if you do reach a negotiation -Influence the bargaining range: Ask for more than you expect, never say yes to the first offer, play reluctant, don't offer to split the differences -Make the other party think they won: Claim you need approval, set difficult issues aside, progressively reduce size of concessions, negotiate for a long time, hold an agreement at closing
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How can you shape/influence the bargaining range?
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-Settle as close to possible to the other party's resistance point -You have an anchor or initial offer -You want to reduce the other party's confidence -You try to increase the other party's perception of your position
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How does framing impact negotiations?
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Buyer's initial offer, target price, seller's starting price
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What points are included in the bargaining range?
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The lowest agreement you are willing to come to. You will walk away if you have to go lower than this.
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What is a reservation point?
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A BATNA is a current offer that you may be willing to go lower than if you can get something better/more important out of a negotiation or have more to give.
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How is it different from a BATNA?
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An offer that is supposed to be high but that gives you some room to work down and make appropriate concessions.
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What is an opening offer?
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This is what you are hoping to end the negotiation at. It is what you are aiming for.
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What is a target price?
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An inverse relationship. As you go lower on one end, you are going higher for the other party.
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What is the relationship between the different points in the bargaining range?
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-Close to your target -Did you take a deal worse than your reservation price? -Did you take a deal worse than your BATNA?
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What are three tangible/measurable ways you can determine whether you were successful in a negotiation?
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-Good cop/bad cop -Lowball/highball -Bogey: pretend you care about something when you really don't -Nibbling: last minute demand for a small concession (come in at the very end and say "oh can I have this one last thing?") -Chicken: use a big bluff to force the opponent to chicken out (pretend to be completely out, but in reality never walk out) -Intimidation -Aggressive behavior -Snow job: overwhelm the other party with too much information
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What are hardball tactics?
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-Ignore them -Respond in kind/the same manner/fire back -Name and discuss them
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How can you respond to hardball tactics?
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-Make a planning document Preparation: defining goals and priorities Relationship building: develop trust Information gathering: learn about issues Information application: assemble your case -3 objectives: assess your position (target point, reservation point, BATNA) -Rational analysis: strengths, weaknesses, arguments -Non-rational analysis: expectation, emotions, norms and standards -Assess the other party's position -Evaluate how they fit together
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How do you prepare for a negotiation?
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-Tangible & intangible outcomes of the negotiation -SMART (specific, measurable, attainable, relevant, timely) -Must recognize independence of parties and acknowledge limits (set a walkaway point) -Strategy: the overall plan to achieve your goals -Tactics: short-term, adaptive moves to enact broad strategies Subordinate to and driven by strategy
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What are they key elements of negotiation planning?
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-Identify the joint issue to resolve -Assemble a bargaining mix (prioritize issues and identify links between them) -Understand the underlying issue -Define interests - not issues -Define limits - reservation and BATNA -Bargaining Range - targets and openings -Understand players and context A - Direct actors on our side B - Opposing actors C - indirect actors D- Interested observers E - Environmental factors -Analyze the other party -Plan your presentation What supports my view? What documents should I present? What do I expect? How can I be convincing? -Define protocol Agenda, location, time, how to handle deadlock, how to record and agreement
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Tactics can:
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-Gives clear objectives for evaluating offers -Helps to understand other parties' strengths and weaknesses -Prepared to address other party
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What are several ways that the planning document can help you during a negotiation?
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*Superior: label behavior, test understanding and summarize, ask questions, share internal thoughts and feelings, 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 claim
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How does the behavior of successful and unsuccessful negotiators differ?
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-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)
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What are several ways to implement a collaborative strategy?
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-Fake it until you BECOME it -Posture can make you more powerful -Body language can change other people's perceptions of you as well as how you view yourself -Posture can change chemistry -We do the opposite of people in regards to power -Our minds change our bodies and our bodies change our minds
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What are the takeaways from Amy Cuddy's research?
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-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't
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What are the "What Happened?" conversations
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-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"
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What are the "Feelings" conversations?
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-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 love
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What are the "Identity" conversations?
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-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)
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What are the core problems or mistakes people tend to make in the "What Happened?" conversation?
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-If unaddressed, feelings will leak or burst out and leave us disengaged (block our ability listen)
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What are the problems of the "Feelings" conversations?
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The all or nothing syndrome - we become hypersensitive to feedback
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What are the problems of "Identity" conversations?
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-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 contributed
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How can you overcome common mistakes in "What Happened" conversations?
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-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 feelings
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How can you overcome common mistakes in "Feelings" conversations?
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-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
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How can you overcome common mistakes in the "Identity" conversations?
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Emotion is at the heart of a difficult conversation and we need to work with it, not against it.
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What is the role of emotion in difficult conversations?
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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.
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What does it mean to "disentangle intent from impact" and why would you want to do this?
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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.
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What is the "And Stance" and why is it important?
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The strength or importance of each of the two key concerns (relationship with the other negotiator and the importance of the outcome of the negotiation) and its relative priority should direct the selection of the optimal negotiation strategy.
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What is the Dual Concerns Model?
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-Reconciling interests -Determining who is right -Determining who has the power
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What are the three approaches to resolving disputes?
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Ex. A superintendent giving employee boots to reconcile his interests & diminishes anger resentment & frustration, prevented the strike, joint problem (wants the miner to be at his assigned shift and miner wants bots to not miss a work shift)
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Give an example of a negotiation based on interests.
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Ex. Two lawyers fighting for which case has more merit.
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Give an example of a negotiation based on rights.
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Ex. Nations exchange threats and counter-threats.
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Give an example of a negotiation based on power.
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Interests are needs, desires, concerns, fears, cares, and wants. They are tangible items they say they want. Ex. Husband and wife get a new care. The husband wants to impress his friends while the wife wants good transportation.
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What roles do interests play in negotiation?
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Financial resources, perceptions that don't coincide, effects.
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What roles does power play in negotiation?
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(+) can help uncover hidden problems, most beneficial for problem solving, lowest costs in resources, higher satisfaction (-) emotions could cause hostility if not addressed
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What are the advantages and disadvantages of interests in negotiation?
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(+) get you to a negotiation, need to clarify boundaries, public importance ; social justice (-) never clear who is right, need a third party (mediator), timely, expensive, difficult, sometimes ends as a "loser", contests
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What are the advantages and disadvantages of rights?
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(+) (-) destructive power contests, power is a matter of perception, perception is that someone ends up as a loser, highest transaction costs, leads to more and worse disputes, strain on relationships, contests
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What are the advantages and disadvantages of power?
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Not only do you have to make compromises, you can also damage relationships as well. They will generate transaction costs (emotional, time, financial, energy, resources), satisfaction with outcomes (mutual satisfaction of interests or fairness), effect on the relationship, recurrence of the dispute
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What are the potential costs of negotiation?
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Ask for more than you expect to get. This raises perceived value and prevents deadlocks (less you know about opposition, the more you should ask for) MPP (maximum plausible position) to seem credible.
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How can you influence the bargaining range?
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-Claim you need approval -Set difficult issues aside -Progressively reduce size of concessions -Negotiate for a long time -Hold agreement at closing -Use the bogey method
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How can you win and make the other party think that they have won?
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-tend to be overly affected by the frame or form of presentation of information -tend to non-rationally escalate commitment to a previously selected course of action when it is no longer the most reasonable alternative -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 -judgments then are anchored upon irrelevant info - such as an initial offer -tend to rely on readily available info -tend to fail to consider info that is available by focusing on the opponent's perspective -tend to be overconfident concerning the likelihood of attaining outcomes that favor the individuals involved
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What are some common cognitive mistakes that negotiators make?
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-The referent point that we choose determines the frame we impose on our options and subsequently, our willingness to accept or reject options -Posing problems as choices among potential gains rather than choices among potential losses can significantly influence the negotiator's preference for specific outcomes -Affects cognitive biases and negotiators behavior
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How does the way in which information is framed affect negotiators?
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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.
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What is the "asking advantage"?
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-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 women
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Why might it be important for managers to understand the differences between men and women described in this reading?
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(Regarding ME/OTHER PARTY) 1. What is your overall goal? (basic needs, why am I talking to this person? what do I hope to accomplish?) 2. What are the issues? (what issues must be negotiated?) 3. How important are those issues to you? (what is/isn't important, where can I stand my ground and where can I concede?) 4. What is your BATNA? The situation: -What deadlines exist? -What fairness norms or reference points exist? -What topics or questions should we avoid? The relationship: -Are they of a continuing series? -Can I trust the other party? -What do I know of the other parties' style and tactics? -What is the limit of their authority? -Consult with them in advance
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What four components of negotiation should you focus on during planning?
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(+) comparing different alternatives, keep you analytically focused and puts emotions in check, can be a conversation in the negotiation (-) takes a long time
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What are the advantages and disadvantages of using a scoring system?
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-Should encompass all points -Not vague
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What are the qualities of an effective reservation point?
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Try to satisfy both parties' needs (ex. 2 weeks in a beachy area and 2 weeks in a mountainous area)
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Redefine the problem tactic: Expand the pie
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Tradeoffs to make both groups of people happy (ex. Go to the mountains but stay in a fancy hotel)
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Redefine the problem tactic: Logroll
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This is the sweetener. (ex. Buy your husband golf clubs so he will be happy to go anywhere)
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Redefine the problem tactic: Offer nonspecific compensation
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What can I do to make x as painless as possible? Easier?
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Redefine the problem tactic: Cut costs
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Invent new options completely (ex. She wants to go to the beach & he wants to go to the mountains --> go to Hawaii)
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Redefine the problem tactic: Bridge
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-Brainstorming (ideas must not be evaluated as they are suggested) -Piggybacking (build on someone else's idea) -Nominal groups (negotiator works with small groups) -Surveys
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What are four tactics for generating a list of potential solutions?
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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.
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What is an exploding offer?
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-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)
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Why would anyone make an exploding offer?
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-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 beneficial
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How can you effectively respond to an exploding offer?
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-power asymmetry (lack of equality between parties) -pressure inducing "test of faith" -situation becomes more complex when the pressure is excessive and built on power imbalances -restricting choice (ex. doesn't want the person to search for other cars or other job offers) -lack of consideration and respect (arbitrary deadlines, unnecessarily rigid, ex. some people might break other commitments that cause hardships in order to accept) -lack of good faith (interchangeable person: if accept then good, but if not, the offerer just moves to next options)
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Characteristics of exploding offers
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Vicious cycles: frequently grow out of widespread human tendency to take an exaggerated view of others' perceived hostility or unreasonable behavior; leads us to reciprocate with negative behavior Vicious cycle triggers: self-fulfilling prophecy, naive realism, confirmatory bias, sincerity gap, accuser and excuser bias, winning traits
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What are vicious cycles?
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A particularly powerful trigger of virtuous relationships is fairness perceptions. Researchers have long understood the importance of people's perceptions of the fairness of a negotiation outcome. More recently, it's been discovered that we also attend closely to whether the negotiation process was itself fair. We tend to judge a negotiation to have been fair when we ourselves had ample opportunity to voice our point of view. Our sense of fairness increases the more we sense that the other side has genuinely considered our perspective
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What are virtuous cycles?
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-test your assumptions: before mounting an aggressive response to other side's perceived unreasonable behavior, check your perspective with others who don't have a stake in the issue -before assuming ill intent, look for extenuating circumstances that might provide an alternative explanation
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How can you avoid vicious cycles?
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-keep in mind that having a close, positive relationship with the party is no guarantee that a negotiation will result in a mutually beneficial outcome -good will should always be combined with the active pursuit of joint gains -our sense of fairness increases the more we sense that the other side has genuinely considered our perspective
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How do you promote virtuous cycles?
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Finding information on our preexisting beliefs. There is a tendency to seek out information that verifies our pre-existing beliefs and to ignore or find flaws with the dis-confirming info. Providing the same info to two opposing parties can further polarize their beliefs.
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What is confirmatory bias?
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-increased contentiousness -diminished info sharing -diminished inter party process cooperation -diminished privacy -diminished trust -increased effect of negative attribution -diminished commitment, motivation, and focus
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What are some problematic ways people often behave or think differently when they negotiate via e-mail?
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-stay on top of things -bridge the gap - make the illusion of an actual conversation -stay focused -keep an eye on your own motivation level
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What are some techniques for preventing or mitigating these problems?
