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The one truth about successful bargaining styles

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Be yourself

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The bargaining method that focuses on: 1. Solid preparation 2. Careful listening 3. Attending to signals the other party sends *It is a skeptical school of negotiation that treats each situation as unique and uses situational strategies *Proceeds from the assumption that you will get better results for yourself and achieve more for others who depend on you by tirelessly searching for key information about the parties and the situation. Your success then turns on using this information skillfully as bargaining goes forward

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Information-based bargaining

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1. Personal bargaining style 2. Your goals and expectations 3. Authoritative standards and norms 4. Relationships 5. The other party's interests 6. Leverage

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Six foundations of bargaining

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Strategies tailored to the facts of each case rather than a single, one-size-fits-all formula

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Situational strategies

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Peter Jovanovich (executive of HBJ) needed to sell his company to Dick Smith of General Cinema. To show General Cinema that it was the perfect buyer for HBJ Jovanovich gave a _______ to Smith *Negotiation had positive outcome

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Engraved HBJ watch

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The opening arguments of a negotiation done by the Arusha people

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Talking to the mountain

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1. Preparation 2. Information exchange 3. Explicit bargaining 4. Commitment/closing

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4 Steps of negotiations

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An interactive communication process that may take place whenever we want something from someone else or another person wants something from us *Likened to a dance

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Negotiation

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The norm of _____ _______ often means there is one price marked on a price tag for those who wish to pay it-and another, lower one for those who wish to negotiate

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Customer satisfaction

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_____ ______ the founder of Warner Communications had a very competitive bargaining style (example: he would not allow his plane to land unless he won the last game of canasta) By contrast, Larry King is not competitive and so when his agent tried to shop him around for a higher salary all CNN''s owner Ted Turner had to do was ask King to stay and he said yes with a modest raise *The lesson here is that if you are a nice person it will be a real stretch to act like Steve Ross at the bargaining table. You can do it, but not for long and not with a lot of credibility

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Steve Ross

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The founder of ______ embraced his avoiding negotiation style by creating his business *He became successful not be overcoming his negotiation weaknesses but by accepting them

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Ebay

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1. Avoiding 2. Compromise 3. Competitive 4. Collaborative (problem-solving) 5. Accommodation

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5 Bargaining styles

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A negotiation style marked by a dislike of negotiation *Good strategy for when you are happy with the status quo and for diplomats *Good strategies include using emails and hiring agents and other intermediaries *Sometimes pass up opportunities to ask for things that would make them better off

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Avoiding

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A negotiation style marked by simplicity, fairness, and speed *Does not solve the problem of who should make the first concession *Try to achieve closure as quickly as possible but sometimes rushes the negotiation too much *Do not ask enough questions

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Compromise

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A negotiation style marked by paying strong attention to the other party's needs *Involves trust before commitment *Good team player *Focuses on relationships *Vulnerable to highly competitive people

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Accommodation

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A negotiation style marked by aggression *Good at seeing how power and leverage can be gained in a given situation *Enjoy haggling more than most *Enjoy negotiating because they like to win *Good for transactional negotiations *Can hurt relationships *Focus on issues that are easy to quantify in terms of winning and losing (ex: money) at the expense of other nonquantitative issues

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Competitive

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A negotiation style marked by brainstorming many options to resolve tough issues using fair standards and criteria *Often the most difficult style to implement *Enjoy negotiating because they enjoy solving tough problems *Sometimes make problems more complex than they need to be

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Collaborative (problem-solving)

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*Avoiding person does nothing and just sits in chair *Compromise person offers the person $500 (half the money) if he gets up and runs behind your chair * Accommodation person runs behind the other person's chair and hopes the other person will compensate them *Competitive person would lie by saying leg is broken to get other person to run behind chair and then possibly keep all the money *Collaborative person would get other person to run behind chair and he also runs behind chair so that they both win $1,000 (full amount)

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Chair example

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Your inclinations to make certain moves when you are negotiating *Can change over time but not radically so they are considered stable, personality-driven traits

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Personal bargaining style

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Scores in the _ percentiles often indicate that the bargaining style in question is relatively accessible and can be called out as the occasion demands

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Midrange

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Your _____ _______ affects how your perceive other negotiators because research shows that most of us believe that other people are like ourselves ("the thief thinks everybody steals" *Can become a self-fulfilling prophecy

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Bargaining style

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There is no ____ set of bargaining style preferences for negotiation effectiveness

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Optimal

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1. Cooperative 2. Competitve

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2 Basic types of bargaining style

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Roughly 65 percent of a sample of attorneys from two major U.S. cities exhibited a consistently _______ style of negotiation whereas only 24% were truly competitive in their orientations *Half the sample was considered effective negotiations but 75% of the _______ attorneys were considered effective whereas only 12% of the competitive attorneys were considered effective *Lesson: Most professional negotiators in the U.S. are _______ and it is easier to gain a reputation for effectiveness if you are ________ *Study done by Gerald Williams

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Cooperative

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Things such as self-serving descriptions of one's offer, gratuitous insults, and direct attacks on the other side's proposal *Typically competitive tactics *Average negotiator uses 10.8 of these per hour whereas an effective negotiator uses only 2.3 of these per hour *Study done by Rackham and Carlise

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Irritators

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1. Gender 2. Culture

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2 aspects of our social identity important to negotiation

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1. Positive 2. Negative 3. Normative

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3 Types of leverage

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True or false: According to the reading on how to detect lying in negotiation, the best way to catch a liar is to watch the other party's eyes and see if they appear "shifty."

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False

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_____ tend to more assertive, more likely to interrupt their counterpart, and more oriented toward affirming their status *More likely to downplay their doubts *Less likely to ask questions and make apologies because they do not want to be in a one-down position *Less likely to ask "What did you think of my x?: because question might invite unwanted critique *Use ritual opposition *According to Deborah Tannen and supported by statistics

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Men

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_______ listen more and pay greater attention to emotional rapport, use more fairness arguments, and taking turns when speaking *_____ learn as children to downplay the ways in which one is better than the others and to emphasize ways in which they are all the same *Tend to focus on positives and negatives when giving feedback (mitigrate criticism with praise) *Exchange many compliments *Use "we" instead "i" which can lead lo getting less deserved credit ( choice of pronoun can affect who gets credit) *More likely to downplay their certainty in public but not private (grade prediction study) *Say "I'm sorry" more than men even when they are not sorry *According to Deborah Tannen and supported by statistics

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Women

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1. Women choose to negotiate less than men in important areas such as salary and promotion 2. Women are a bit more cooperative than men (stereotypes can make this a self-fulfilling prophecy). It is also important to note that this particular stereotype is neither good nor bad.

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2 Main ways gender affects negotiation

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Difference between the salaries women MBA graduates were getting and the salaries men were offered (4,000 difference in favor of men) could be explained by the one behavioral fact that 57 % of ____ asked for more money after receiving an initial offer whereas only 7% of the other gender did *Study by Linda Babcock

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Men

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The Marci story illustrates the _______ ____ in negotiations because the lesson learned was that being afraid to ask is the most self-defeating trait a woman has. Don't be afraid to look pushy. The story is this: Marci thought she deserved a raise but was not pushy enough. When she finally got the raise it was only because her firm learned she was leaving for Wharton

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Gender factor

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Women are susceptible to ____ ____ even when there are attempts to prove the stereotype wrong *This process is reversed only when women are given a positive, women-are-collaborative stereotype just prior to negotiating

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Stereotype threat

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A story about a woman backruptcy lawyer was an example of using a ________ to your advantage Story: Whenever a guy on the other side attacks me personally I never speak up to defend myself. I wait for a man on the other side to come to my defense and I have then gained an advantage of an ally

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Stereotype

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______ does not have to become an issue in negotiations

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Gender

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_______ _______ _____ ______ _____ is a very common way to show you are serious in many parts of the world, including Lebanon

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Walking away from the table

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In Latin America it is customary for _______ to negotiate among themselves not with businessmen

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Lawyers

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1. Cultural issues usually have more to do with form than substance (money, control, and risk are still most likely the most important issues despite the misunderstandings) 2. Single most important difference in cross-cultural negotiations (other than language and custom) is the way the parties perceive the relationship factor

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2 Things to remember about culture

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Best way to avoid _______ is to do your homework on the culture in question

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Miscommunication

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North Americans and northern Europeans tend to focus more quickly on the _______ aspects of the deals whereas most Asian, Indian, Middle Eastern, African, and Latin American cultures focus more intently on social, relational aspects

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Transactional

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Japanese people tend to think of negotiation as a process leading up to an _______ ________

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Arranged marriage

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Effectiveness is as much a matter of _______ as it is of ability

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Attitude

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1. Willingness to prepare 2. High expectations 3. Patience to listen 4. Commitment to personal integrity

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4 Key habits of thought

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_______ _______ consist of a specific goal with a personal commitment to performance *____ _____ leads to better outcomes

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High expectations

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More than a set of rules. Consists of high expectations and an attitude, A quality that leads a person to negotiate consistently, using a thoughtful set of personal values that they could, if necessary, explain and defend to others (explain and defend test)

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Personal Integrity

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All negotiations begin with _____

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You

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You must bake with the flour you ____ *Danish folk saying

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Have

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High achievement comes with high _____ *Saying by King Ching of Chou (1100 B.C.)

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Aims

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I believe in always having goals and always setting them ___ *Saying by Sam Walton, founder of Wal-Mart

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High

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Akio Morita of _____ Corporation had high expectations which led to high sales for the company's new radio. In fact he walked away from a profitable deal with Bulova because it conflicted with his goal of making ______ a brand name. Morita said walking away from this deal was his best decision ever.

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Sony

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Difference between a simple goal and a genuine expectation

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Atttitude

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Thing we strive towards that is usually beyond the range of our past achievements *Set to give us direction but we are not greatly surprised if we fall short *Upper limit of what you will ask *Highest legitimate expectation of what you should achieve

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Goal

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Considered judgment about what we can and ought reasonably to accomplish *If we fall short we feel genuine loss and disappointment

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Expectation

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Happens because 1. You mentally concede everything beyond your goal so you seldom do better than that benchmark 2. Goals trigger powerful psychological "striving" mechanisms 3. We are more persuasive when we are committed to achieving some specific purpose

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What you aim for in negotiations often determines what you get

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What convinces is ___ *Quote by Lyndon Johnson

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Conviction

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H. Wayne Huizenga said secret of success in negotiations is having a passionate commitment to _______ ______

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Ambitious goals

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Minimum acceptable level you require to say yes in a negotiation *Also called walkaway or reservation price

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Bottom line

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Exists when two parties have bottom lines that permit an agreement at some point between them

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Positive bargaining zone

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Exists when parties have bottom lines that do not overlap

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Negative bargaining zone

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Once most people set a firm ______ ____ in a negotiation that becomes their dominant reference point since people have a limited capacity for maintaining focus, but having a goal as your reference point prompts you to think you are facing a potential loss for any offer you receive below your goal. Loss aversion is a powerful motivator and works better when you focus on goals *For most reasonable people the __ ____ is the most natural focal point

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Bottom line

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Parties with ____ (but still realistic) goals outperform those with more modest ones, all else being equal

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Higher

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In order to avoid falling into the trap of letting your bottom line become your ______ _____, be aware of your absolute limits but do not dwell on them

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Reference point

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1. Think carefully about what you really want (remember money is often a means, not an end) 2. Set an optimistic but justifiable target 3. Be specific 4. Get committed 5. Carry your goal with you into the negotiation

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5 Steps to setting goals

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A good __ is usually an important goal because it is precise and quantifiable *Caution: It is often a means to an end and not an end in itself

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Price

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William Paley (founder of CBS) realized price for his shows was a means and not an end in itself so in the late 1920s he started _____ ___ CBS's radio programming in exchange for the right to run ads on local stations during prime-time slots. He earned millions from this strategy.

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Giving away

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According to a study by Siegel and Fouraker negotiators who report higher prenegotiation __________ achieved more than those who entered the negotiation with more modest goals. *In order to indicate that the goals were realistic subjects were given concrete incentives in the form of a promised bonus round if they exceeded the set goal

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Expectations

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1. Protect self-esteem (we are less likely to fail if goals are low) 2. Not enough information to see full potential for gain 3. Lack of desire

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Why we are tempted to set modest goals

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Research suggests that the ____-______ factor plays an important role in low goal setting *Problem with many people is they confuse "win-win" (ambitious goals) with "wimp-win" (bottom line)

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Self-esteem

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As people start setting more ambitious goals they often report felling more _____ and ________ regarding their performance even as their objective results get better. For this reason raise goals incrementally so you maintain enthusiasm. Research shows people who succeed in achieving new goals are more likely to raise their goals next time while those who fail are more likely to lower their targets

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Dissatisfied and discouraged

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Optimistic goals are effective only if they are______, that is only if you believe in them and they can be justified according to some standard or norm

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Feasible

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Negotiation positions must usually be supported by some standard, benchmark, or precedent, or they lose their _____

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Credibility

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Goals should be as _____ as possible

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Specific

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Your goal is only as effective as your _______ to it

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Commitment

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1. Make sure goal is justified and supported by solid arguments 2. Vividly imagine how achieving your goal would feel 3. Write goal down 5. Tell another person about goal 5. Make a public declaration 6. Make a material investment that would be lost if you did not achieve the goal

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How to increase commitment to goal

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People lose sight of their real goals in competitive situations and pay far too much money, spend too much time, or sacrifice too many other interests for the privilege of saying they have won *Leads to regret *Called "winner's curse" in auctions where final bidder overpays *Happens because of asymmetry of information *Example: Barry Diller spent $3.3 million which was too much on buying the movie The Poseidon Adventure for ABC in the 1970s because he lost sight of his primary goal (profit) in the fever of winning a competition

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Escalation of commitment

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The _____ important step in preparation is to commit to specific, justifiable goals

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First

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1. Clarity of purpose 2. Optimism

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2 Key attitudes for goal-setting

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The ___ duty of a wise advocate is to convince his opponents that he understands their arguments *Quote by Samuel Taylor Coleridge

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First

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A man always has two reasons for the things he does a ____ one and the _____ one *Quote by J.P. Morgan

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Good and real

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Negotiation harnesses the psychological _____ to maintain (at least in our own eyes) are appearance of consistency and fairness in our words and deeds

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Drive

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2 Pig story from The Halfway Sun by R.F. Barton: A man of the Ifugao people in the Philippines once borrowed two pigs from a neighbor. Two years later he was supposed to repay four pigs. It was based on a standard natural rate of increase. The lender demanded six pigs however because he said his pig was special. Borrower than said pig was the opposite of special and only worth three pigs. Lender then stole borrower's most prized possession (ancestral gong) which stopped arguments. The wives then got the elders involved. The elder made the buyer pay five pigs but he kept two pigs for his fee so lender only got three pigs *This story was about ________.

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Standards

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The single most common tactic for closing a negotiation is an allocation formula called _____ ____

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Splitting difference

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1. People like to be seen as consistent and rational in the way they make decisions (consistency principle) 2. Human tendency to defer to authority (authority principle)

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Why standards are important

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The need-to-appear reasonable phenomenon, People like to be seen as consistent and rational in the way they make decisions *Explains why standards are important *Based on internal consistency webs *Helpful for building normative leverage

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Consistency principle

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The skillful use of standards, norms, and coherent positioning to gain advantage or to protect a position, leverage based on the consistency principle *Maximizes when the standards, norms, and themes you assert are ones the other party views as legitimate and relevant to the resolution of your differences *Attacking the other person's standard should be a last resort

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Normative leverage

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The goal of this trap is to precommit you to a seemingly innocent standard and then confront you with the logical implications of the standard in a particular case- implications that actually turn out to be against your interests *Form of intellectual coercion *Tip-off is when the trapper tries to get you to agree with some statement before telling you why the statement is important *Favorite of aggressive, competitive negotiators *Often used by telemarketers *Defend against this trap by being alert and if agreeing to a standard do so in the broadest possible terms *If caught in this this trait you can either amend your position to the standard or hold your ground and admit you made a mistake agreeing to the standard (which would make you lose face but could save you money in long run)

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Consistency trap

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Resort to explicit leverage and search for an ally (a third party to whom your bargaining counterpart is answerable and who is sympathetic to your norms). In essence you leverage the audience's consistency principles to bypass the party that opposes your goals *Story: Mahatma Gandhi rides first class: Indians were not allowed by South African law to get first class tickets. To get a first class ticket Gandhi met in person (to avoid an easy no by mail) and told the stationmaster his standard. Gandhi used the standard "well-dressed and well-behaved people can travel first-class, regardless of race" He then enlisted an audience of an Englishman sympathetic his cause to win the negotiation with the train conductor so he could ride first class.

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What to do when you cannot use other party's standards

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The _______ market standards act as anchors or focal points in bargaining

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Strongest

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The _____ in the residential real estate industry in the US is for real estate agents to receive a fixed percentage (6 percent) of the selling price of the home *Literary and entertainment agents and authors earn 15% *Each industry converged on a standard because it eliminates the need to negotiate and saves time

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Standard

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______ of institutionalized bargaining standards is a hallmark of social membership in a given industry or group

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Acceptance

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Most norms in market negotiations are _______ *These are called range-finding standards *These standards provide a basis for arguing in a civilized way about preferred results but they do not dictate what the final agreement will be

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Contestable

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The biggest ______ you can make with range-finding norms is to come to the table unprepared to argue for your end of the range permitted by the legitimate standards

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Mistake

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A crisp, memorable phrase or framework that defines the problem you are attempting to solve in the negotiation *Helps the other party see why you are negotiating and what overall interests and norms tie your various bargaining positions together and helps you monitor your goals

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Positioning theme

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The positioning theme of the Teamsters Union when they won a major strike against UPS *UPS tried to counter with it's own theme "We must stay competitive"but it could not match the Teamsters theme because the Teamsters gained enough leverage from the theme to win

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Part-time America won't work

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Human tendency to defer to authority *Explains why standards are powerful because they carry an authoritative message about what the market, the experts, or society has determined to be fair and reasonable

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Authority principle

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1. Others may seek to exploit our natural tendency to defer to authority by presenting us with unfair terms wrapped in authoritative packages 2. Our deference to authority sometimes inappropriately interferes with our ability to assert our own legitimate interests *This happens when co-pilots do not correct pilots or when nurses don't correct doctors

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When authority becomes a problem

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Herb Cohen told a story in You Can Negotiate Anything about a time on Candid Camera where someone put a sign saying Delaware Closed on the highway. Some people obeyed the sign because of the _______ principle

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Authority

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If you treat people right, they will treat you ____, at least 90% of the time *Quote by FDR

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Right

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Leave a _____ name in case you return *Kenyan folk saying

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Good

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Personal relationships create a level of __ and confidence between people that eases anxiety and facilitates communication *At the core of human relationships is _______

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Trust

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We owe others certain things because of their prior actions *Secret to creating and sustaining trust in negotiation *3 step code of conduct: 1. Always be trustworthy and reliable yourself 2. Be fair to those fair to you 3. Let other people known when they treat you unfairly

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Norm of reciprocity

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People are more likely to send Christmas cards to people who first send cards to them, make charitable donations to organizations that have given them a small ____, and make bargaining concessions to others who have compromises in their direction *Norm of reciprocity at work

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Gift

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J.P. Morgan gave ___ checks to Andrew Carnegie, one for the agreed upon amount an one for the mistake. He did this to send a signal that he was trustworhy

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2

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An ounce of well-grounded personal _____ in a business partners is worth a thousand pounds of contracts and surety bonds

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Trust

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Experiment that produced how sensitive people are to notions of equity and fairness in their bargaining relationships *People reject offers up to 30% of the total amount because the division is unfair *Lesson: Just because you have power in a given situation does not mean it is smart to use it

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Ultimatum game

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_____ begets generosity

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Generosity

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________begets fairness

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Fairness

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______begets a firm response

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Unfairness

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Barry ignored building _____ and a relationship with his Swiss counterpart when he was trying to make a deal for his chemical company. He also was suffering from lack of trust and avoidance from his father to negotiate the deal adequately. The situation ended well when Barry started focusing on relationships *Lesson: Sometimes there are important relationships both across and away from the table and people issues can be just as important as financial ones

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Trust

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The ___ the personal relationship between two negotiators the more likely it is that they will seek to minimize conflict and close the deal based on some simple, roughly equal compromise

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Closer

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Dating couples and friends are __ in their bargaining styles than strangers *Dating couples have more modest goals, make larger concessions, argue less, and tell each other the truth about their bargaining position more often than strangers *Cost of this strategy: Shared interests less likely to be uncovered since simple compromises were used on all issues

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Softer

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_____relationships trigger the use of equality or equal sharing norms, whereas encounters with strangers cause us to expect and exhibit more competitive, selfish behavior

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Close

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Between strangers and friends; exchange relationships of everyday business life *Based on both a degree of trust and reciprocity and on the assumption both parties are looking after their own interests *More formal than friendships and sustained through more explicit conflict *Depend more on explicit reciprocity than on feelings of liking and emotional supprt

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Working relationships

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______is key for psychological strategies for building working relationships

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Sincerity

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1. Similarity principle 2. Gifts and favors 3. Trust and relationship networks

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Psychological strategies for building working relationships

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We tend to trust people who appear more rather than less familiar to us *Applies to communication style and appearance and group membership and general interests/experiences *Used to build working relationships

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Similarity principle

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Japanese ceremonial ritual of exchanging business cards when first meeting a potential business contact *Based on relationship networks and respect *Once the cards are exchanged both sides are free to make a future call without embarassment

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Meishi

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Asian networking is accompanied by obligatory giving and receiving of small gifts, underscoring the _____ nature of these relationships

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Reciprocal

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Chinese name for networks *Strongest connections are with respect to family *Less formal but just as important as meishi *Includes all relationships that have at their source a commitment to reciprocal benefits and obligations *Ex: College alumni networks

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Guanxi

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A woman opened a store in China by relying on her ___ ; not by paying the Chuppies bribes

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Guanxi

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1. Trusting too quickly (solution: move in little steps, recriprocate on little things before big things), especially a prbolem for cooperative people 2. Reciprocity traps (solution: take a break) 3. Negotiating with friends when the stakes are high (solution: involve neutral third parties or use equity norms such as to each according to his inputs or risk instead of simple fifty-fifty splits)

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Relationship traps

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Someone makes a small concession or gives a small bit of information and then asks for a much bigger one in return *Solution: Take a break before making your next move

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Reciprocity trap

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Even if both parties are operating in good faith ___ norms tend to leave large areas of potential value unexplored

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Equality

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1.Be reliable and trustworthy 2.Be fair to those who are fair are you 3.When other parties treat you unfairly, let them know about it

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Rule of Recriprocity

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It is not from the benevolence of the butcher, the brewer, or the baker that we expect our own dinner but from their regard to their own ____ *Quote by Adam Smith (1776)

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Interests

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If there is any one secret of success, it lies in the ability to get to the other person's point of _____and see things from that person's angle as well as from your own *Quote by Henry Ford

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View

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A U.S. hospital had trouble getting a foreign physician they were working with to use the FDA's form so the drug would be approved because they did not consider his ______, specifically, they did not realize he was relying on the perception of his country's FDA and he resented not speaking to another physician (as opposed to a manager)

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Interests

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From effective ______ , negotiators borrow the habit of committing themselves to specific and ambitious goals

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Leaders

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From good ___, negotiators get the skill of developing arguments based on standards and norms

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Advocates

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From effective _____, negotiators learn to value relationships and see the world as the person they are trying to influence sees it *This is one of the most critical and hardest to use skills in practice

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Salespeople

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1. Most people see the world though their own interests (partisan perceptions) 2. Even the most accomodating person brings a somewhat competitive attitude to negotiation 3. The dynamics of the negotiation process itself often work against finding shared interests once discussions begin

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Why it is hard to see the other party's view

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Most people see the world through their own interests Ex: If we favor welfare reform we tend to notice stories about how people are cheating the welfare system

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Partisan perceptions

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At least in a lab setting people failed to identify _____ goals in negotiations about 50 percent of the time *Study by Professor Leigh Thompson *Happened because people were bluffing and not being explicit about what they really wanted

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Shared

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The more skilled the negotiator, the more likely he or she was to focus during planning on possible areas of _____ ground between the parties, including feasible options for settlement (40% of time spent looking for shared interests versus 10% for average negotiators) *Skilled negotiator developed about twice the number of possible settlement options in their planning as did the less skilled groups and appeared to try harder to anticipate options the other party would suggest *Required experience, judgment, and imagination (but not education) *Rackham and Carlisle study of English negotiation professionals

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Common

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1. Identify the decision maker 2. Look for common ground 3. Identify interests that might interfere with agreement (why might the other side say no?) 4. Search for low-cost options that solve the other party's problems while advancing your own goals

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How to discover other party's interests

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Only ____ negotiate

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People

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The decision makers' ______ including their status, self-esteem, and self-fulfillment interests will drive the negotiation

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Need

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One MBA got a South American firm who never hired an MBA before to pay off his entire business school debt by meeting the entrepreneur in an airport lounge and appealing to his past as a debt-burdened student. This appeal worked because it was made to the ______ decision maker and it was framed in terms of the other party's experience and interests

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Ultimate

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Technique to explore the other side's interests where you pretend to be the other side and your friend plays you

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Role reversal

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Firms have often have interest that is greater than a higher price. This interest is ______ its satisfied customers, and this interest allows you to negotiate (ask and it shall be discounted) *Lessons: 1.There are two prices for many things in the U.S: The full price for people who dislike negotiation and the discount price for customers willing to ask for it 2. You may be entitled to more customer satisfaction of many kinds than you are currently getting simply because you do not realize that for many firms your satisfaction is shared (not conflicting) interest

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Maintaining

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___ ___ are the elixir of negotiation; they are the foundations on which to build your proposals *They lie latent in every negotiation *They are opportunities (not godsends) *They can make the negotiation more amicable if you focus on them

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Shared interests

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Lead with your ___ interests

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Shared

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Terry Larsen, CoreState's CEO, hesitated recommending a good deal for the company to be acquired by First Union Corporation because of a ________ reason. Specifically he worried that due to the geographic difference of the two firms, the original charitable promises made by CoreState would be forgotten. The solution was based off the shared interest of giving to charitable causes and allowed Larsen to maintain his charitable promises

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Nonfinancial

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An example of an outside-the-box, ________-____ option involves a story about Oceanside, California and its garbage *Story: Kelly Sarber managed to get Oceanside to accept her bid to take the city's trash even though it was not the lowest bid because she promised to give them free sand from her dump site in the Arizona desert, which the city needed to restore its beaches

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Low-cost

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Every reason that the other side wants or needs an agreement is my _____-provided that I know those reasons *Quote by Bob Woolf

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Leverage

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You can get much further with a kind word and gun than you can with a _____ word alone *Quote by Al Capone

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Kind

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Whoever has the most to lose from no deal has the least amount of _________ and whoever has the least to lose has the most ______,Your power not just to reach agreement but to obtain an agreement on your own terms *Most important factor for high-stakes bargaining *Dynamic and changing (not static) *Derives from balance of needs and fears *More than just improving your BATNA *Not the same thing as power *The people with the economic, social, and political power do not always have the most of it *Depends on perceptions (not facts) *Improve by making sure you have less to lose, other side has more to lose, or both. This is done by gaining more information about the other side wants, acquiring credible power to make other side worse off, framing you needs under norms that are hard for the other side to walk away from, improving your BATNA without help of other party, and binding yourself to a course of action that forces the other side to concede

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Leverage

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Leverage was created in this manner when CEO Frank Borman of Eastern Airlines convinced Airbus to supply his airplanes and all the money to purchase to them because he found a seller that needed a buyer even more than he needed planes

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Shift the balance of needs

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Peter Guber used leverage of the __ ___ ___ when he obtained 20% of a stock of a booming record company owned by Neil Bogart called Casablanca Records in exchange for a modest 5 percent interest in his next movie a sequel to Jaws called the The Deep because Bogart craved the title of being a movie mogul

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Other party's ego

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Janie Mitcham _____ ____ ______ to gain leverage. *Story: Her public utility in Houston was being charged high rates by Burlington Northern for coal transportation and they had a monopoly and refused to negotiate. So she built her own railroad to encourage competition by Northern's rival, Union Pacific. She now has leverage over both companies because she can switch between them *Shows a better BATNA can increase your leverage

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Generate competitive pressure

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1. What the other party wants (explicit and implicit) 2. Power to make the other side worse off 3. Norms or values the other side respects

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3 sources of leverage for hostage negotiators

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Occured in March 1977 when Hanafi Muslims seized 3 buildings in Washington, D.C., killing 1 reporter, wounding others, and taking 134 hostages *Leader was Hamaas Abdul Khaalis, who had recently been the victim of a violent crime where five of his children were murdered by the Nation of Islam *Khaalis originally wanted three things: removal of movie Mohammed, Messenger of God from movie theaters, $750 fine for his misconduct during Nation of Islam trial removed, and surrender to Khaalis of the five men convicted of murdering his children *First two things were granted but third was not. Instead ambassadors from Egypt and Iran spoke on the phone with Khaalis and learned that he liked playing the role of Muslim religious leader (an implicit goal) *The role of Muslim religious leader then became something that could be lost , which allowed the police to gain real leverage *An in-person meeting than occured with Khaalis and the ambassadors. He agreed to release the hostages if he was allowed to go home on bail before the trial. This was the turning point of the negotiation *Hostages were freed and Khaalis got to go home on bail before trial *Lesson: Hostages were leverage to achieve specific goals, creating a vision of something to lose is important for leverage, negotiation process should make other side feel his needs are important

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Hanafi Hostage Situation

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The other party will usually sense a _____ anytime you suggest an option that endangers its status quo *Effective only when credible (action must make other party worse off and other party must believe you will do it)

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Threat

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Given the leverage situation that exists early in _______ ___ the best first moves are to acknowledge the hostage taker's power, indicate that you have relinquished control of the immediate situation to him, and look for opportunities to build a working relationship by giving them little things that they can deliver *Later on it is essential to create a vision that the other side has something to lose if the hostages are not released

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Hostage situations

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If hostages live through the first _____ minutes their odds of surviving are good because time takes a toll on the hostage-taker's do-or-die commitment and time allows captives to make bonds with their hostage takers

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15

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A communication link is established in hostage negotiations in order to buy ______

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Time

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Leverage based on the relative abilities of each party to supply things the other wants *Most common type of leverage

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Positive leverage

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Leverage based on the parties' relative power to take away things each currently has *Threat-based *Works because potential losses loom larger in the human mind than do equivalent gains *Caution: Making even subtle threats is like dealing with explosives

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Negative leverage

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The better your _____ the greater your power according to Getting to Yes authors Roger Fisher, William Ury, and Bruce Patton

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BATNA (best alternative to a negotiated arrangement)

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_____ ______ is known for using negative leverage *Story: He wanted air rights over a small building occupied by Tiffany and Company next door, but was afraid Walter Hoving (owner) wouldn't sell. During his meeting he presented two models. One was an elegant building he would build next to the store if he got the air rights. The other was an ugly building that he would build next to the store if he did not get the air rights. He ended up winning the air rights

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Donald Trump

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Using relationships and shared interests to build _____ can help you gain all three types of leverage and other benefits for three reasons: 1. Group dynamics often favor those who are first to achieve a dominant position in terms of numbers 2. Benefits from social proof 3. Improves leverage by giving you better alternatives, making other party's alternatives worse, or both

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Coalitions

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_____ verdict to gain a majority vote during American jury deliberations usually ends up being the verdict the jury unanimously supports

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First

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People take their cues from what other people do *Makes coalitions more effective because they provide cues for others to follow

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Social proof

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Ranchers in North Dakota gained leverage by creating a _____ for their own meat-packing operation

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Coalition

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Leverage is about ______ _____ ,not objective power

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Situational advantage

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Getting a _____ to eat broccoli is a problem because the _____ has the leverage *Solution: Acknowledge the preferences of the _____ in some way (ex: add sauce to the broccoli) *Lesson: People in charge do not always have most leverage

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Child

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Story: Vera Coking owned a small boardinghouse in a prime location in Atlantic City that Donald Trump wanted. Coking had all of the leverage and kept her home because she had the legal title and wa sin no hurry to sell. She had nothing to lose by saying no. *Lesson _____ people can gain leverage

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Small

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The _____ ____ for negotiating job offers is when you have the most leverage and that is after you get an offer but before you accept it

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Golden moment

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Within families, firms, and organizations some important leverage rules are ___ because of the need to preserve relationships *Walking away is less acceptable and normative leverage is more persuasive *Unlike market transactions, urgency can work in your favor

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Reversed

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An example of ______ _____ rules occurred when General George C. Marshall met with President FDR in May 1940. He was usually quiet but he spoke out passionately about the need to be ready for WWII. He was then put in charge of the WWII effort.

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Reversed leverage

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_____ especially if it is coupled with expertise (facts) gets people's attentions *Works best for people who are usually soft-spoken and helps them gain leverage, as long as this strategy is used sparingly

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Intensity

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The market is a place set apart where people may _______ each other *Saying by Anacharsis (600 BC)

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Deceive

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_____people I play cards with I trust, but I still want to cut the cards *Quote by John K. O' Loughlin of Allstate Insurance Company

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Most

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Darrell Sifford, a Philadelphia newspaper columnist, haggled for a globe and _____ about the price he saw it for in a discount catalog. He ended up getting the price he wanted. What he did may have been unethical

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Lied

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According to a study done in the 1990s on Harvard MBAs, students were quite _____with traditional competitive bargaining tactics, including bluffing about bottom lines, opening demands, time constraints, promises of future relationships, and other offers

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Comfortable

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Your personal beliefs about ethics come with a ___ _ since the stricter your ethical standards, the higher the financial cost you must be willing to pay to uphold them in any given transaction, and the lower your ethical standards the higher the reputation costs you will suffer

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Price tag

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Obeying the law is the ______ standard of ethics

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Minimum

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American law disclaims any general duty of ___ ____ in negotiation of commercial agreements

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Good faith

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1. Knowing (can include reckless disregard for truth) 2. Misrepresentation of a (usually positive but can be affirmative/negative) 3. Material (not about bottom lines) 4. Fact 5. On which the victim reasonably relies 6. Causing damage (quantifiable and economic)

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Six elements of fraud

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Car deal commits __ when he resets a car odometer and sells one of his company cars as if it were brand new

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Fraud

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Avoid _________ by "be silent and be safe" unless there are affirmative disclosure duties

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Misrepresentation

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1. When the negotiator makes a partial disclosure that is or becomes misleading in light of all the facts 2. When the parties stand in a fiduciary relationship to each other 3. When the nondisclosing party has vital information about the transaction not accessible to the other side (greater duty for sellers than buyers) 4. When special codified disclosure duties, such as those regarding contracts of insurance or public offerings of securities apply *Best test is one of conscience and fairness

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4 Affirmative disclosure duties

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Bluffing about ____ ____ can be helpful because it allows the parties to assert the legitimacy of their preferences and set the boundaries of the bargaining range without incurring a risk of loss. It also is a test of the other side's commitment to their expressed preferences

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Bottom lines

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Lying about ______ may or may not be fraud depending on the relative power of the negotiators (unlikely to be fraud in cases of equals) *Buyer lying about getting something somewhere cheaper is usually not fraud *Landlord lying about having another tenant ready to pay rent increase when there really is no other tenant is fraud *Real estate agent lying about having another buyer willing to pay full listing price on same day when there really isn't one is fraud

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Alternatives

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Usually false _____ cannot be considered fraud, but not always *Touchstone of law of fraud is not whether the statement at issue was one of pure fact but whether the statement succeeded in concealing a set of facts the negotiator preferred to keep out of sight

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Opinions

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Lies regarding intention *Key element is proof that the speaker knew he could not live up to his promise at the time the promise was made. Also important that promise be material.

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Promissory fraud

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A generation ago the prevailing view of decision-making in most places was ________

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Hierarchical

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Conflict remains a ______ industry *Goal is to transform (not eliminate) conflict

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Growth

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The _____ negotiator wants to avoid personal conflict and makes concessions readily to reach agreement. Often ends up exploited *Participants are friends *Goal is agreement *Make concessions to cultivate relationship *Be soft on the problem and the people *Trust others *Change your position easily *Make offers *Disclose your bottom line *Accept one-sided losses to reach agreement *Search for the single answer: the one they will accept *Insist on agreement *Try to avoid a contest of will *Yield to pressure *Tends to product fast results (can be considered efficient) *Common among family members and friends

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Soft

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The _____ negotiator sees any situation as a contest of wills in which the side that takes the more extreme positions and holds out longer fares better. Often ends up exhausted and with hurt relationships *Participants are adversaries *Goal is victory *Demand concessions as a condition of the friendship *Be hard on the problem and the people *Distrust others *Dig in to your position *Make threats *Mislead as to your bottom line *Demand one-sided gains as the price of agreement *Search for the single answer: the one you will accept *Insist on your position *Try to win a contest of will *Apply pressure

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Hard

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1. Soft 2. Hard 3. Principled

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3 Types of negotiators

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The _____ negotiator decides issues on their merits rather than through a haggling process focused on what each side says it will and won't due *Look for mutual gains whenever possible and insist that results be based on independent and fair standards *An all-purpose strategy *If used by the other side, it becomes easier to use *A change of the game *Participants are problem-solvers *Goal is a wise outcome reached efficiently and amicably *Be soft on the people but hard on the problem *Proceed independent of trust *Explore interests *Avoid having a bottom line *Develop multiple options to choose from and decide later *Try to reach a result based on standards independent of will *Reason and be open to reason *Yield to principle (not pressure)

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Principled

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Each side takes a position, argues for it, and makes concessions to reach a compromise *Most common type of negotiation *Pros: 1. Tells other side what you want 2. Good for anchor in uncertain situations 3. Can lead to acceptable agreement *Cons: 1. Can produce unwise outcomes 2. Inefficient (takes more time) 3. Can damage relationships

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Positional bargaining

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1. Negotiation should produce a wise agreement if agreement is possible 2. Negotiation should be efficient 3. Negotiation should improve or at least not damage the relationship between the parties

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3 Criteria for fair negotiation

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An agreement that meets the legitimate interests of each side to the extent possible, resolves conflicting interests fairly, is durable, and takes community interests into account

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Wise agreement

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The more you ____ your position and defend it against attack, the more committed you become to it because your ego becomes identified with the position

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Clarify

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Farming in Iraq example illustrates failure of ____ bargaining *Solution to farming example was that the farmers could harvest their crops and they would not impede the oil company's preparations for when they later take over. The oil company would then to try hire as many of the farmers as possible

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Positional

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The __ people involved in a negotiation, the more serious the drawbacks of positional bargaining *Especially a problem since almost every negotiation involves more than two people

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More

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When there are many parties positional bargaining leads to the formations of ___ among parties whose shared interests are often more symbolic than substantive

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Coalitions

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In ____ bargaining a hard game dominates a soft game

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Positional

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1. Substance 2. Procedure (a meta-game)

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Two levels negotiation works on

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1. People : Separate the people from the problem 2. Interests: Focus on interests, not positions 3. Options: Invent multiple options looking for mutual gains before deciding what to do 4. Criteria: Insist that the result be based on some objective standard

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4 Key aspects of principled negotiation (negotiation on the merits)

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1. Analysis 2. Planning 3. Discussion

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3 Stages of principled negotiation

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1. Perception 2. Emotion 3. Communicatiom

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3 Types of people problems

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1. Put yourself in their shoes 2. Don't deduce their intentions from your fears 3. Don't blame them for your problem 4. Discuss each other's perceptions 5. Look for opportunities to act inconsistently with their perceptions 6. Give them a stake in the outcome by making sure they participate in the process 7. Face-saving: Make your proposals consistent with their values

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Ways to overcome perception problems

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During the Law of the Sea Conference from 1974 to 1981 to U.S. and other developed countries saw the developing countries needs as _____ because they thought they were easy to satisfy. This was a mistake because the developed countries lost a chance to build credibility and a relationship with the developing countries

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Unimportant

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Apart from the substantive merits, the feeling of _____ in the process is perhaps the single most important factor in determining whether a negotiator accepts a proposal

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Participation

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____-______ reflects people's need to reconcile the stand taken in a negotiation or an agreement with their existing principles and with their past words and deeds *Involves reconciling an agreement with principle and with the self-image of the negotiators

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Face-saving

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1. First recognize and understand emotions, theirs and yours 2. Pay attention to core concerns 3. Consider the role of identity 4. Make emotions explicit and acknowledge them as legitimate 5. Allow the other side to let off steam 6. Don't react to emotional outburts 7. Use symbolic gestures

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Ways to overcome emotion problems

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1. Autonomy: Desire to make your own choices and control your own fate 2. Appreciation: The desire to be recognized and valued 3. Affiliation: The desire to belong as an accepted member of some peer group 4. Role: The desire to have a meaninful purpose 5. Status: The desire to feel fairly seen and acknowledged

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5 Core interests

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1. Negotiators may not be talking to each other or at least not in such a way as to be understood 2. Even if you are talking directly to the other side they may not be hearing you or paying attention 3. Misunderstanding

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3 Big problems of communication

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1. Listen actively and acknowledge what is being said 2. Speak to be understood 3. Speak about yourself, not about them 4. Speak for a purpose

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Ways to overcome communication problems

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No matter how many people are involved in a negotiation, important decisions are typically made when no more than ____ people are in a room

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2

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The best time for handling people problems is ____ they become people problems *Do this by building working relationships and facing the problem (not the people)

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Before

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Mary Parker Follett's story about two men arguing over a open window was about _______. Ultimately, the ____ of both parties was satisfied when a window in the next room was left open

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Interests

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1. For every interests there usually exist several possible positions that could satisfy it 2. Most interests are shared and compatible (not conflicting)

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Why reconciling interests works

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The ___ powerful interests are basic human needs, such as security, economic well-being, a sense of belonging, recognition, and control over one's life

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Most

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Put the _____ before your answer

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Problem

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If you ask two people why they are arguing the answer will typically identify a ____, but not a purpose even though looking forward is better than looking back

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Cause

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1. Looks backward for a cause and treats our behavior as determined by prior events 2. Looks forward for a purpose and treats our behavior as subject to free will

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2 Meanings of " why"

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Treat ever option you formulate as illustrative in order to maintain your flexibility Ex: Something on the order of a five-year contract should meet his need for job security

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Illustrative specificity

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People dislike inconsistency and will attempt to eliminate it *Useful in this strategy because of its inconsistency between support and attack: Give positive support tot he human beings on the other side equal in strength to the vigor with which you emphasize the problem

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Cognitive dissonance

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1. Premature judgment 2. Searching for the single answer (including premature criticism and premature closure) 3. The assumption of a fixed pie 4. Thinking that solving their problem is their problem

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4 Obstacles to finding mutual gain

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Not inventing is the _____ state of affairs

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Normal

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1. Separate the act of inventing options from the act of judging them 2. Broaden the options on the table rather than look for a single answer 3. Search for mtuual gains 4. Invent ways of making their decisions easy

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How to find mutual gain

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Postpone all criticism and evaluation of ideas

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Key rule of brainstorming

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Produce as many ideas as possible to solve the problem at hand

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Goal of brainstorming

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1. Define your purpose 2. Choose a few participants (5-8 people) 3. Change the environment (do not brainstorm in the same place where negotiation takes place so that it is easier to suspend judgment) 4. Design an informal atmosphere 5. Choose a facilitator

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Steps before brainstorming

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1. Seat the participants side by side facing the problem (physical reinforces the psychological, so sitting side by side helps people work together) 2. Clarify the ground rules, including the no-criticism rule 3. Brainstorm 4. Record the ideas in full view (to give tangible sense of collective achievement)

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Steps during brainstorming

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1. Star the most promising ideas 2. Invent improvements for promising ideas 3. Set up a time to evaluate ideas and decide

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Steps after brainstorming

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1. Brainstorm with yourself or include the other side? -If you include the other side distinguish brainstorming from negotiation and try to suggest two alternatives at once so you do not appear committed to anything yet 2. Keep session on or off record? 3. Allow ideas to be attributed to specific people?

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Brainstorming concerns

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Key to wise decision-making lies in selecting from a __ number and variety of options

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Great

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Chart that shows to invent options: Step 1. Problem (what is wrong in the real world) Step 2. Analysis (what is wrong in theory-->diagnose the problem) Step 3. Approaches (what might be done in theory) Step 4. Action ideas (what might be done in the real world)

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Circle chart

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The task of inventing options involves _____ types of thinking, presented in the circle chart

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4

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Agreements that are: *Substantive *Permanent *Comprehensive *Final *Unconditional *Binding *First-order

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Stronger potential agreements

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Agreements that are: *Procedural *Provisional *Partial *In principle *Contigent *Nonbinding *Second-order

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Weaker potential agreements

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The less for you, the more for me, one party wins and the other loses; win-lose orientation *Result of incompatability bias *Leads use to reactively devalue any concession made simply because it is offered by an adversary *Not always true and can hide opportunities for mutual gain especially if you dovetail differing interests

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Fixed pie assumption

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_____ differing interests if possible to reach agreement through differences *Look for items that are of low cost to you and high benefit to the other side and vice versa *Best differences to dovetail are differences in interests, beliefs, value placed on time, forecasts, and aversion to risk *Ex: Pheasant egg case

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Dovetail

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The final test of an option, a statement that makes the yes response to a proposal sufficient, realistic, and operational

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Yesable proposition

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Be open to reason but closed to ______

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Threats

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Objective standards such as: *Market value *Precedent *Scientific judgment *Professional standards *Efficiency *Cost *What a court would decide *Moral standards *Equal treatment *Tradition *Reciprocity

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Fair standards

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At minimum objective criteria need to be _____ of each side's will

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Independent

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Arbitrator must choose between the last offer made by one side and the last offer made by the other *Puts pressure on the parties to make their proposals more reasonable *How professional baseball settles salary disputes

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Last-best-offer arbitration

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1. Frame each issue as a joint search for objective criteria 2. Reason and be open to reason as to which standards are most appropriate and how they should be applied 3. Never yield to pressure, only to principle

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How to negotiate with objective criteria

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Agree first on _____

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Principles

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Our negotiation speaker. He is chairman of the Federal Communications Commission (FCC)

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Julius Genachowski

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Free up spectrum (airways) for mobile boradband

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Current FCC challenge

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FCC needs to be_____ about goals and use next generation strategies for next generation problems

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Concrete

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Vibrant ____ helps solve FCC problems

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Competition

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Net Neutrality negotiation *Result: Adopted framework for internet freedom that made most people happy and achieved goal of massive innovation

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Negotiation Genachowski is proud of

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Early in career Genachowski used the word _____ too often. He soon realized it was a terrible word because it signals to stakeholders to take on extreme positions since ___ will be made

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Compromise

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Genachowski said ____-_____ is better than compromise because it inspires stakeholders to be persuasive in helping him solve problem

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Problem-solving

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Genachowski said ___-___ is critical and debriefing is an important component of it

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Self-awareness

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You can learn something from every ______ you sit next to

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Person

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Negotiation is a _____ process according to Genachowski

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Fluid

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Most people ____like negotiation

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Don't

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Bob Woolfe says _____ counts

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Kindess

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According to Bob Woolfe nothing is as important to a negotiation as creating the right ______ in which to negotiate

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Atmosphere

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Last thing you want to do is turn a negotiation into a ______. You want ot make it into a situation of mutual respect

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Confrontation

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Bob Woolfe recommends reducing the other side's ________

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Expectations

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Bob Woolfe always leaves _____ on the table

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Money

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Bob Woolfe recommends that the ____ _____ make the first offer

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Other side

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1. The flinch: Whatever price a salesperson quotes you, even if it's a reasonable one, look like you've just been flattened by a semi 2. The squeeze/crunch: Use the internet to find a printout of a rival's offer to bring to the store 3. The quibble: Give salesperson a reason your case is unusual (ex: a merchandise flaw) to make haggling seem acceptable because it isn't the norm in American culture 4. The nibble: Ask the salesperson to throw in a discount right before you close the deal 5. The sob story/bogey: Groan about recent expenses 6. The buddy system: Offer to refer your friends to the store 7. The package deal: Look for deals besides price (such as free giftwrapping)

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Strategies to get store discounts

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1. Forget commissions. I get kickbacks -Ex: Spif (special promotion incentive fee) that makes a salesperson favor one brand over another because of a direct commission from the manufacturer 2. Some salesmen aren't on our payroll 3. Our return policy is half-baked (there is a restocking fee) 4. Outlets are a front for cheaper goods 5. We'll say anything to lure you inside 6. We're watching you naked (dressing room may have surveillance cameras) 7. That dress has been around the block (used pieces may be on the shelf) 8. I'll con you into making investments 9. Designers do shoddy work for their side ventures 10. That is if they work on them at all (when a product is well licensed, consumers rarely know that the branded company didn't acutally make the product)

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What your retailer won't tell you

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Set of possible outcomes

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ZOPA (Zone of possible agreement)

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The phenomenon where people start with one initial value (an anchor) and adjust from this anchor to make a final estimate. The problem is that the adjustment is usually insufficient and thus the final estimate tends to be systematically biased *Can be set externally or internally by a negotiator's first offer

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Anchoring

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________ of a first offer is determined by: 1. Must be somewhat reasonable 2. Depends on preparation of other side (it is better for you when the other side is less prepared)

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Effectiveness

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*Agent's technical expertise of negotiating skills *Principal's emotional involvement in a high-stakes deal, which hampers his ability to negotiate effectively *The principal's desire to avoid having to answer certain questions or react to a new proposal on the spot *The agent's ability to float a trial balloon without implicating his principal (Suggest a proposal to test other side's reaction without committing your principal to it since it was the agent's idea) *Principal's reluctance to cross swords directly with a counterpart who will be working closely with the principal once the relationship is established *The possible advantages obtainable through limited the agents authority

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Pros of using an agent

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When you don't have authority to ban compromise Genachowski says to use ______

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Leverage

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*Faulty communication between principal and agent that harms the principal's cause *An agent with his own agenda or bias who doesn't faithfully represent his principal *A principal who won't level with his agent and thus impairs their dealings with the other side *A nitpicking agent who misses the big picture and thereby undermines the deal *The inability due to interposed agents of one principal to reach the other principal directly in order to be able to persuade, to pressure, or to extract a decision

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Cons of using an agent

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_____-_____ may be impossible according to Timothy Wilson who wrote Strangers to Ourselves because we would have to step outside our own minds and that is not possible

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Self-awareness

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An agent's ____obligation is to do what's best for the principal

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Primary

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1. Negotiation is entirely within agent's realm of expertise and outside the principal's -->Agent should take charge 2. Negotiation is entirely within principal's realm of expertise and outside the agent's -->Principal provides main guidance 3. Negotiation is within agent and principal's realm -->Whoever takes lead depends on what the principal wants *Most common

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3 Types of agent situations

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Agents should always express their views on _____ issues

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Ethical

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The ___, not the agent, should make the decision in risk-reward analyses

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Principal

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It's ultimately ______-______ to send an agent off to do battle without any authority to deviate from the principal's stated position

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Self-defeating

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The major error in agent negotiations is to allow your agent to get into a negotiation where he has the authority to make _______ but his counterpart doesn't *In this case demand to be able to talk to someone with authority to make _______

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Concessions

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1. Mythical fixed pie of negotiations 2. Framing of negotiation judgment 3. Nonrational escalation of conflict 4. Negotiator overconfidence 5. Tendency to ignore the cognitions of others *Most important

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5 Problems of negotiators

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Nonobvious solutions to conflict that yield higher joint benefit than purely distributive agreements *Often do not happen because of incompatibility bias and myth of fixed pie

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Integrative agreements

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The assumption that one's own intersts are incompatible with the other party's

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Incompatibility bias

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Start with ____ interests instead of easy or hard ones because they when alone can cause the negotiation to halt

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Multiple

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A ______ ____ determines whether a negotiator will have a positive or negative frame

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Perceptual anchor

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Buyers tend to _____ sellers in symmetryic negotiation experiments because sellers think about the transaction in terms of gaining resoruces whereas buyers view the transaction in terms of loss. Loss aversion is the more powerful motivator. So buyers are risk seeking and sellers are risk averse. This leads buyers to have anegative frame and be less likely to reach settlement

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Outperform

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The framing effect suggests that in order to induce concessionary behavior in an opponent, a negotiator should always create anchors that lead the opposition to a _______ frame and negotiate in terms of what the other side has to gain

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Positive

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Public announcement of one's position increases one's tendency to escalate _______

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Nonrationally

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Individuals are systematically ___ that their judgments are correct *Most likely to occur when a party's knowledge is limited

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Overconfident

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________ gave up nothing because Israel prodded by President Clinton made all of the concessions first at Camp David

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Arafat

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As much as ____ percent of the meaning transmitted between two people in face-to-face commnications is via nonverbal channels *7% of feelings and attitudes is conveyed with words *38% of feelings and attitudes is conveyed with tone of voice *55% of feelings and attitudes is conveyed through nonverbal behaviors

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90

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The communication channel you have the ____control over, the verbal, as the least impact on your counterpart

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Most

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In a thirty minute negotiation two people can send onver 800 different nonverbal messages

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800

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Stage 1: Awareness of your counterpart Stage 2: Awareness of yourself Stage 3: Management og self and others through nonverbal communications

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3 Stages of nonverbal communication

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Body language reflects people's _____feelings

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True

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Someone who is ____ would display a group of gestures including a lack of eye contract, hands around the mouth, touching the face, and fidgeting

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Dishonest

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1. Face/head 2. Body 3. Arms 4. Hands 5. Legs

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5 Parts of the body

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*Someone who is trying to hide something will tend to avoid eye contact with you or break eye contact as he or she speaks untruthful words *Someone who is bored may gaze past you or around the room *Someone who is angry with you or feels superor may maintain piercing eye contact *Someone who is evaluating what you are saying may turn his or her head slightly to one side, almost as though wanting to hear you better *Someone who is uncertain about what is being said may tilt his or her head slightly *Someone who is in agreement may nod his or her head as you speak *Someone who is being honest and trustworthy maintains good eye contact and smiles

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Face/head signs

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*If counterpart is leaning closer to you, you are making positive progress *The more your counterpart likes you, the closer he or she will be willing to position his or her body *You should always position your body toward your counterpart for win-win situations *When your counterpart disagrees, is bored, or is uncertain with you he or she will position body away from you or lean back farther in his chair *Someone who moves from side to side shifting his weight may feel insecure, nervous, or in doubt

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Body signs

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*Monitory intensity of actions *The more open the position of the arms, the more receptive your counterpart (f arms are closed across chest counterpart is not receptive) *One of the best indicators of changes in the nonverbal communication process

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Arms sign

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*Presentation of the palms: Open palms are positive *Self-touching gestures: Usually indicate your counterpart is nervous and lacks confidence *Involuntary hand movements: Most revealing hand gestures because it reveals true feelings

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Hands signs

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*Legs may be crosses for comfort but can have a devastating effect on negotiaion. You should keep your legs uncrossed with your feet flat on the floor and your body tilted slightly toward your counterpart to have the best chance of sending a positive signal

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Legs signs

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Agreement in which the parties identify the universe of possible future conditions and agree to take on different obligations in each of those conditions *Should contain unambiguous, external triggers for best results *Can create good incentives or moral hazard *Can lead to avoiding the need to declare winners or just the opposite by taking the form of a bet *Caution: Disclosures may lead to the other party taking advantage of you when crafting the agreement by misstating their forecasts

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Contingent agreement

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Condition in which one party under the terms of an agreement may undetectably or uncontrollably behave in a way that is adverse to the other party

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Moral hazard

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All deals are not contingent agreements because of ______ ____ and because parties enjoy having some degree of certainty and finality

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Transaction costs

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1. Overcoming culture shock 2. Negotiating with the boss and headquarters staff back home 3. Dealing with your own negotiation team 4. Receiving bribery and questionable payment issues 5. Establishing an international joint venture 6. Where to hold the negotiation

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6 Most difficult problems faced by international negotiators

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Occurs when we do not have the familiar signposts of how to conduct ourselves *Has 4 phases: 1. Predeparture anticipation and enchantment at the new location 2. Awakening/wake-up phase (realize people from around the world are not the same as Americans) 3. Disillusionment (you become specific about what is wrong with the culture and want to end negotiation) 4. Realization and productivity

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Culture shocks

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* Find a cultural mentor * Be flexible and patient with yourself and those in the host culture * Withhold judgment about the new culture and its people *Recognize that the negative feelings you may have at the awakening and disillusionment stages are normal and appropriate for these phases of adjustment * Keep a sense of humor about yourself and your situation * Reduce stress by being as self-sufficient as possible with regard to business services *Process what has happened and learn from the experience

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Action steps for dealing with culture shock

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*Stress the protracted nature of international negotiations in most parts of the world and try to lower expectations of a speedy agreement * Be clear as to who has the authority to negotiate on the organization's behalf * Take time to educate the boss and others on the key cultural issues that influence the negotiation * Cue the boss and legal staff to differences in contract specification early on *Keep your attorneys away from the negotiating table in most countries * Don't keep asking your attorneys bunches of questions about whether to include various legal terms in an agreement because it is their job to tell you no * Don't surprise the technocrats with a big problem

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Actions steps for dealing with your boss during an international negotiation

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*More complete preparation from more viewpoints *Faster decision making since more key parties are present *Mental support *Slower erosion of motivation *Norm in some nations

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Advantages of team negotiation

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*Expensive *Difficult to manage the egos, roles, and expectations of the team members (you must negotiate within your own team as well as with the other side) *May be less efficient *Can be manipulated by the other side

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Disadvantages of team negotiation

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*Limit size of your team to no more than 5 people *Clarify the roles you want the negotiators to play *Ensure all team members are clear as to strategies and tactics and all are good negotiators

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How to handle teams

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*Backsheesh: Middle East *La busterella (envelope left on a bureaucrat's desk): Italy *Dash: West Africa *Grease: United States *La morbida (bite): Latin America *Kumshaw: Southeast Asia *Pot du vin ("jug of wine"): Frane

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International names for brives

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U.S. law that prohibits any U.S.-based company from corruptly offering or giving money or anything of value to a foreign political official for the purpose of obtaining business. The law does allow facilitating payments (payments made to expedite solely nondiscretionary official actions such as customs)

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Foreign Corrupt Practices

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*Check with your legal staff about any vague area of home or host-country laws *Keep your boss informed *If you must make a payment find out how to do it *If a monetary payment must be made try to get someone else to do it

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Actions for resolving bribery

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Across-border alliances that may or may not involve equity participation *Involves 3 parties: 1. Multinational corporation 2. National partner 3. Government of the host country 4. May also include national investors and U.S. government

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International joint venture

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*To increase market share where there is substantial market size *To maintain reasonable risk and rate of return on investment *To take strategic initiative to use the company's specific advantages

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Multinational corporation goals of an international joint venture

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*To enter into a profitable operation with a prestigious multinational corporation *To obtain technology *To gain business know-how *To obtain trademarks

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National partner goals of an international joint venture

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*To achieve industrialization and economic development *To increase national income and employment *To improve the balance of payments between the host country and home country of the multinational *To develop backward areas of the country

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Host-country government goals of an international joint venture

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*Ensure that you and the other parties have similar goals with respect to the business (short-term and long-term) *Try to maintain control of the critical management responsibilities even if you have minority ownership *Try to find suppliers from the host country *As long as quality and delivery standards are met, allow the joint venture operation to purchase materials from the lowest-cost available source *Make training part of the package *Maintain flexibility

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Action steps for establishing an international joint venture

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*You are more comfortable and confident (no culture shock) *You can treat the other side very well and can gain respect and a good relationship that may later lead to concessions

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Advantages of having negotiation in your country

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*Learn about the other side's way of life *Obtain data about other side *Learn about the other side's relationships *Caution: Look out for culture shock

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Advantages of having negotiation in the other side's country

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*Purpose of the joint venture *Contributions of each partner *Responsibilities and obligations of each partner *Equity ownership *Capital structure *Management *Supplementary agreements *Managerial policies

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What to include in international joint venture agreement

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*Invite the other site to your location *If you're a visitor don't necessarily divulge the timing of your return trip *If you're a visitor, don't let the time, money, and goals you've invested in the trip dissuade you from the planning you did (a no deal might still be the best option) *If you're a visitor, don't be a prisoner to fatigue (give yourself one or two days to recover from jetlag before beginning to negotiate)

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Action steps for dealing with where to hold the negotiation

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Using language is a ______ social behavior

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Learned

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Refers to a person's characteristic speaking pattern.Includes features such as directness or indirectness, pacing and pausing, word choice, and the use of such elements as jokes, figures of speech, stories, questions, and apologies. It is a set of culturally learned signals by which we not only communicate what we mean but also interpret others' meaning and evaluate one another as people *Differs by geography and gender because we learn ways of speaking as children growing up, especially from peers, and chilsren tend to play with other children of the same text *Functions on two levels: Ideas and relationships/status

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Linguistic style

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Apologizing, mitigating criticism with praise, and exchanging compliments are rituals common among women that men often take ______

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Literally

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A ritual common among men that women often take literally, exploration of ideas through verbal opposition

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Ritual opposition

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Men are more attuned than women to the potential ______-_______

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Face-losing

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Those who are uncomfortable with verbal opposition run the risk of seeming_________ about their ideas

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Insecure

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Men behaved _____ often than women in ways likely to get them recognized by those with the power to determine their advancement

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More

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Only ___ are more careful about how they deliver criticism when they are in a subordinate position. Women are more careful delivering criticism when they are in a superior position

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Men

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People in powerful positions are likely to reward linguistic styles _____ to their own

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Similar

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Women are especially likely to be ____ when it comes to telling others what to do. Men are especially likely to be __- when it comes to admitting fault or weakness

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Indirect

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Superiors tend to have a ____style, though not always. This tends to favor men

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Direct

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Women are ___ likely to negotiate than men according to study by Linda Babcock on salary negotiation

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Less

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Women undergraduates tend to be less competitive and more compromise-oriented than men but _____ years into their careers these differences often evaporate *Differences among individuals are greater than aggregate gender differences

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10

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Unfortunately for women, ________ is the latest trend in negotiation

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Hypermasculinity

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______ ___ said cooperation could not develop without a central authority and so strong government is necessary

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Thomas Hobbes

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Norm of ____ is important in Washington because senators want to appear effective to their constituents and they do so through vote trading. *This did not become well established until the 1980s *Explained as a consequence of individual senators pursuing their own interests. w is now lower (senators have a greater chance of running into each other again) because biennial turnover rates have fallen from 40% to 20%

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Reciprocity

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Examines how people pursue their self-interest without aid of central authority to enforce cooperation

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Cooperation theory

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Game where there are two players each with two choices (cooperate or defect). They must choose without knowing what the other will do. No matter what the other does, defection yields a higher payoff than cooperation, but if both defect both do worse than if both had cooperated. *Order of the four payoffs: Best is T (you defect and other person cooperates) then R (mutual cooperation), then P (mutual defection) then S (you cooperate and other person defects) *Players cannot get out of their dilemma by taking turns exploiting each other so reward for mutual cooperation is greater than the average of the T and S payoff *Two egoists playing once or a finite number of times will choose their dominant choice defection *Future is discounted because of time value and the possibility parties may not meet again

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Prisoner's Dilemma

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If the discount parameter, w, is sufficiently ______ there is not best strategy independent of the strategy used by the other player in the prisoner's dilemma because if the future is not important there is no incentive to cooperate

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High

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_____can still happen in the Prisoner's Dilemma even if: *Payoffs of players are not comparable or symmetric or absolute. They can be relative *Cooperation is not desirable from view point of the rest of the world *Players are not rational *Players do not make conscious choices

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Cooperation

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An organism does not need a ____ to play a game *Even bacteria can play a game

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Brain

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Best strategy for Prisoner's Dilemma, cooperate on the first move and then do whatever the other player did on the previous move *Successful because: 1. Avoids unnecessary conflict by cooperating as long as the other party does 2. Provocability in the case of an uncalled for defection by the other 3. Forgiveness after provocation 4. Clarify of behavior so other player can adapt to your pattern of action

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Tit for Tat

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1. There must be at least some chance of meeting the other party again, even in a world of unconditional defection. 2. Strategy of reciprocity can thrive in a world where many strategies exist 3. Cooperation once established can protect itself from invasion by less cooperative strategies *Live and let live system

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3 Stages of cooperation

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1. Do not be envious of other party's success 2. Do not be first to defect 3. Reciprocate both cooperation and defection 4. Do not be too clever

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4 Suggestions for cooperation

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Underlying needs, concerns, or problems that bring the parties to the bargaining table

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Interests

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The #____ trait of all effective negotiators is a willingness to engage in systematic planning and preparation

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1

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_____ increases as a function of: *Specificity of goal *Audience effects *Belief that goal is fair and reasonable *Peer group agreement that goal is legitimate and achievable

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Commitment

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The good reasons you advance to support your goals

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Standard

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1. Getting caught up in a competitive game and not looking for possible relationship gains 2. Making significant concessions in response to an appeal to a future relationship when there is no actual commitment to one 3. Not paying attention to violations of the reciprocity norm

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3 Relationship pitfalls

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1. Shared 2. Conflicting 3. Ancillary/compatible

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3 Types of interests

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*Reduces risk of no deal *Fair *Good moral tone

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Pros of Getting to Yes System

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*Assumes people are rational which is not always true *People sometimes are the problem

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Cons of Getting to Yes System

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1. Cooperate unconditionally 2. Exploit whenever possible 3. Cooperate conditionally (tit-for-tat)

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3 Strategies for mixed motive negotiations

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Any trust-based system where there are high stakes and a payoff for defecting from the social norm *Ex: OPEC

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Mixed motive negotiation

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Willingness to take a chance on someone else doing the right thing

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Trust

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Every commercial interaction has at least ______ levels of reality: the deal level and the interpersonal level. Try to work on trust at both levels

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2

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