NEGOTIATION/BARGAINING

VIEWS

• DISTRIBUTIVE BARGAINING– DIVIDE A FIXED AMOUNT– WIN-LOSE

• INTEGRATIVE BARGAINING– TRY TO CREATE WIN-WIN

NEGOTIATION SKILLS

REMEMBER, IT IS NEGOTIATION

NOT WAR!

WE ARE OPPONENTS

NOT ENEMIES.

RESEARCH THE OPPONENT

• GOALS

• INTERESTS

• STRATEGY

• PREDICT RESPONSES

• FRAME SOLUTIONS IN TERMS OF HIS/HER INTERESTS

BEGIN POSITIVE

• BEGIN WITH SMALL CONCESSION

• CONCESSIONS USUALLY RECIPROCATED

ADDRESS PROBLEMS

• FOCUS ON THE PROBLEM

• DO NOT FOCUS ON PERSONALITIES

• “MANAGE” EMOTIONS

• MAY “WIN THE BATTLE BUT LOSE THE WAR”

FIRST OFFER IS JUST BEGINNING

• INITIAL OFFER IS POINT OF DEPARTURE

EMPHASIZE WIN-WIN

• LOOK FOR INTEGRATIVE SOLUTIONS

• USE ABUNDANCE MENTALITY

ACCEPT THIRD PARTY ASSISTANCE

• IF STALEMATE, USE NEUTRAL 3RD. PARTY

HINDERANCES TO NEGOTIATION

• Robbins, S. (1994). Management, 4th. Ed. Englegood Cliffs: Prentice Hall, 555-556.

ESCALATION OF COMMITMENT

• WON’T PULL OUT OF A “BAD DEAL”

• “SUNK COSTS” CAN’T BE RECOVERED

• SHOULD NOT BE CONSIDERED

FIXED PIE

• WIN-LOSE

• MISS TRADE-OFFS THAT COULD BENEFIT BOTH SIDES

ANCHORS

• GET “HUNG UP” ON SOMETHING– INITIAL OFFER

– HAVE TO “WIN”

– SET ON A SOLUTION

– SET ON A CERTAIN PROCESS

– “PUBLIC” STATEMENT

FRAMING THE NEGOTIATIONS

• FRAME OF REFERENCE– A SEEKS $4 RAISE– B OFFERS $2– IS THIS A $2 GAIN OR LOSS TO A?

– B SHOULD TRY TO FRAME AS $2 GAIN.

AVAILABILITY OF INFORMTION

• READILY AVAILABLE = IMPORTANT?– “EXPERIENCE” IS READILY AVAILABLE– VIVID EVENTS READILY AVAILABLE,

I.E. REMEMBER

• MUST DISTINGUISH BETWEEN EMOTIONALY FAMILIAR AND RELEVANT/RELIABLE

WINNER’S CURSE

• REGRET FELT AFTER CLOSING– COULD YOU HAVE GOTTEN BETTER

DEAL?– PAY TOO MUCH?

• REDUCE BY GETTING MORE INFORMATION BEFORE YOU BEGIN

OVERCONFIDENCE

• IN JUDGMENT, CHOICE

• “EXPERIENCE,” MENTAL SETS– ARE SURE– IGNORE CONTRADICTORY INFO

-------------------– LESSENS INCENTIVE TO COOPERATE