BUSM4722 - Topic 2 - Preparing for Negotiations

Negotiations & Infl uence Topic 2: Preparing for Negotiations Dr Steven Clarke The Planning Process Getting Ready to Implement the Strategy Defining the Negotiating Skill Defining the Major Issue Related to Achieving the Goal Assembling the Issues, Ranking Their Importance, and Defining the Bargaining Mix Defining the Interests Knowing Your Alternative (BATNAs) Knowing Your Limits, Including a Resistance Point Analyzing and Understanding the Other Party’s Goals, Issues and Resistance Points Setting One’s Own Targets and Opening Bids Assessing the Social Context of Negotiation 10 Presenting the Issues to the Other Party: Substance and Process Consequences of Failed Planning Negotiators fail to set clear goals Negotiators fail to set clear objectives or targets that serve as benchmarks for evaluating offers and packages in progressing toward their goals If negotiators have not done their homework, they may not understand the strengths and weaknesses of their own positions or recognize comparable strengths and weaknesses in the other party’s arguments Negotiators need to consider their alternatives to doing the deal in front of them Negotiators cannot simply depend on being quick and clever during the give-and-take of negotiations Assumptions A s s u m p t i o n “If you know the enemy and know yourself, you need not fear the result of a hundred battles If you know yourself but not the enemy, for every victory gained you will also suffer a defeat If you know neither the enemy nor yourself, you will succumb in every battle” Sun Tzu instructs in The Art of War A s s e s s m e n t s E l e m e n t s Goal Setting – Direct Effects Wishes are not goals, especially in negotiation • A goal is specific, not a fantasy One’s goals may be, but are not necessarily, linked to the other party’s goals • If I could achieve my goal by myself, without the other party, I probably wouldn’t need to negotiate There are boundaries or limits to what “realistic’ goals can be (review walkaways and alternatives) • If to buy this car at a cheap price, not possible because seller won’t sell the care “cheaply” my goal is ambiguous, must change my goal, or find another car to buy Effective goals must be concrete, specific, and measurable • “To get a car cheaply’ or “to agree on a price so that the loan payment does not use all of my paycheck” are not clear goals” What I mean by using up all my paycheck? Goal Setting – Indirect Effects Distributive vs Integrative Negotiation Distributive negotiation Integrative Negotiation It involves discussion of only one issue at a time It involves discussion of several issues at a time Involved parties have a “Win-Lose’ attitude towards reaching the Involved parties have a ‘Win-Win’ attitude towards reaching the negotiation outcome negotiation outcome Each party wants to use the negotiation to maximize its own share of Each party wants to use the negotiation to ‘expand it’s won share of ‘fixed pie’ the pie’ by creating and claiming value It is an approach usually used in one-time relationship between two It is an approach usually used in a continuing relationship between two people people The involved parties keep the respective interests hidden The involved parties share their respective interests with the other party Each party expresses a strong position for each issue Each party expresses and try to come up with as many options as possible per issue to maximize mutual gains Distributive vs Integrative Negotiation Distributive negotiation The involved parties keep information hidden Integrative Negotiation The involved parties share information with each other and try to get to the root cause of the ‘why’ of the existence of the issue The involved parties are adversaries The involved parties are joint problem-solvers The aim of such negotiation is ‘winning’ The aim of such negotiation is ‘making a wise decision’ The main focus of involved parties is on their ‘stand or The main focus of involved parties is on their ‘goals and position’ objectives’ The involved parties use pressure to get what they want The involved parties not use pressure but strive to get what they want through principles BATNA A comparison of your options, your best option might be walking away For example using another vendor/supplier, making something yourself, going to court, etc Perception and reality of BATNA play a key role in most negotiations Often not given enough time by negotiators ZOPA Assessing the Social Context of Negotiation- Field Analysis Who Who is, is, or or should should be be on on my my team team on on my my side side of of the the field? field? •• Attorney, Attorney, accountant, accountant, experts? experts? •• Coach, Coach, moral moral support, support, listeners, listeners, recorders recorders or or note-takers note-takers Who Who is is on on the the other other side side of of the the filed? filed? Who Who is is on on the the sidelines sidelines and and can can affect affect the the play play of of the the game game •• Who Who are are the the negotiation negotiation equivalents equivalents of of owners, owners, managers, managers, strategist? strategist? •• Direct Direct Supervisors Supervisors to to approve approve How How decisions decisions are are made made about about what what is is acceptable acceptable or or unacceptable unacceptable to to those those on on each each side side Who Who is is in in the the stands? stands? •• •• •• Who Who is is watching watching the the game, game, is is interested interested but but can can only only indirectly indirectly affect affect what what happens? happens? Senior Senior managers, managers, shareholders, shareholders, competitors, competitors, financial financial analyst, analyst, media media or or others? others? What What multiple multiple parties parties or or interested interested parties parties might might be be affected affected by by the the settlement? settlement? What What is is going going on on in in the the broader broader environment environment in in which which the the negotiation negotiation takes takes place? place? •• What What is is the the history history of of the the relationship relationship with with the the other other party party and and how how does does it it affect affect the the overall overall expectations expectations they they bring bring to to this this negotiation negotiation •• What What kind kind of of relationship relationship with with the the other other party party is is expected expected or or desired desired for for the the future, future, and and how how do these these expectations expectations affect affect the the current current negotiation? negotiation? •• How How often often do we we negotiate? negotiate? •• Wheat Wheat are are the the deadlines deadlines •• What What are are the the rules rules of of the the game game 11 ... give-and-take of negotiations Assumptions A s s u m p t i o n “If you know the enemy and know yourself, you need not fear the result of a hundred battles If you know yourself but not the enemy, for. .. discussion of several issues at a time Involved parties have a “Win-Lose’ attitude towards reaching the Involved parties have a ‘Win-Win’ attitude towards reaching the negotiation outcome negotiation... Negotiation Distributive negotiation The involved parties keep information hidden Integrative Negotiation The involved parties share information with each other and try to get to the root cause of