full version Negotiation Essay

Negotiation

Category: Business

Autor: tomy 25 January 2010

Words: 2285 | Pages: 10

Introduction
Negotiation is the process whereby interested parties resolve disputes, agree upon courses of action, bargain for individual or collective advantage, and/or attempt to craft outcomes which serve their mutual interests. Given this definition, one can see negotiation occurring in almost all walks of life, from parenting especially with three kids up to the courtroom.
In the advocacy approach, a skilled negotiator usually serves as advocate for one party to the negotiation and attempts to obtain the most favorable outcomes possible for that party. In this process the negotiator attempts to determine the minimum outcome(s) the other party is (or parties are) willing to accept, then adjusts his demands accordingly. A "successful" negotiation in the advocacy approach is when the negotiator is able to obtain all or most of the outcomes his party desires, but without driving the other party to permanently break off negotiations.
Traditional negotiating is sometimes called win-lose because of the hard-ball style of the negotiators whose motive is to get as much as they can for their side. In the early Seventies, researchers began to develop win-win approaches to negotiation.

In this paper, I will discuss how the negotiation class and the practical exercises had shaped my way of negotiation behaviour, what did I consider as my strength while negotiating with my counter parts, and what was my weakness’. I will also shed some lights in how did I enhance and develop my learning negotiation curve while progressing through different exercises.

Negotiation characterization
Negotiation usually arise when there is a conflict of interest between two or more parties. The parties negotiate because they think they can use some for of influence to get to a better deal. Moreover, when parties negotiate they both expect give and take situation.


Preparing for a Negotiation Session

Before one engage in a negotiation session, he should prepare and organise his negotiation strategy, plan what type of frames this negotiation would require. The extensive of this preparation and how it will develop and executed depends on one’s goal. Negotiators must anticipate what they want to achieve in a negotiation and prepare for these events in advance. Moreover negotiators should specify their goals and objectives clearly. Negotiation goals can be simple like a one time purchasing of goods with limited concern of the present or future relationship. Other negotiation goals can be complex that will require the initiating a sequence of negotiation episodes; a strong relationship with the other party in this case is usually needed. This discussion bring me to the first negotiation exercise “Bradford Negotiation” in which Ross and myself where engaged. In this exercise, I played the role of the mayor delegate. I was single minded on taking the best out of the pie, with no consideration about Ross’s share. Although Ross immediately specified that he was about 75% satisfied with the settlement and that he also felt I extremely treated him with dignity and respect, he specified after he saw the output of the others that he would hesitate to negotiate with me again. This exercise taught me that yes I might win a deal but lose a friend. Moreover further exercises also taught me that there are two types of active engagement that I would like to elaborate on
o Competition (distributive): known also as win-lose bargaining in which the prime objective for each party is to maximize the value of single deal. Distributive bargaining are important, as it accounts for most of the day-to-day type of bargaining, also some of the interdependent situations that negotiators face are distributive. Moreover, many peoples use distributive bargaining strategies and tactics almost exclusively. It should be noted that while distributive tactics are useful, it could also be counterproductive; it is usually cause negotiators to focus on their differences and ignore what they have in common. Negotiators need to know what is important to them and to the other party, create their bargaining mix as some items will be of obvious important for both parties while other items might be of importance to only one of them.
In a distributive bargaining negotiator need to learn about other party’s outcome values, resistant point, motives and feeling of confidence, the more information one can gather about the other party the higher chance of striking a favourable agreement.
This was the approach I used with Ross. I was aggressive in my opening offer started at $2,000,000, which might have led Ross to walk away from a deal. I cornered him in an area that he wasn’t well prepared for, the net revenue from the project to him, and asked him to share a percentage from the revenue. Although studies [1] indicate that negotiators who make exaggerated opening offers get higher settlements than do those who make low or modest opening offers. However, the main disadvantages for the opening offer that the other party might reject it or it might communicate an attitude of toughness that may be harmful to long-term relationship. I think I learned the lesson, treating your counter part in a friendly, respectable and dignity while negotiating with him is not the end of the road you have to also make him feel happy with the output even after he reached a settlement. You should work hard to get him to feel that he won over you even though if this wasn’t the reality, otherwise you are risking the loss of the deal or bitterness in long-term relation.
This lesson was well implemented in my opinion when we had engaged in the El-Tek group exercise. Akin, Jacqueline, Amanda and I, assigned as group spokesman, of Magnetic Advances had to face a tough negotiation and negotiators, Suzanne, Robert, Francisca and Daniel resembling Audio Component. We first had an intra-group discussion from which we organized who will speak and what we should and shouldn’t accept, we set our walk away bottom line and also our BATNA. We started the negotiation by listening and gathering information, then we through the opening offer. The Magnetic Advances group had to counter the offer. The successive concessions from our group got smaller; the obvious message is that our concession position is getting firmer. As we learned in the class usually skilled negotiators will suggest different alternatives to a potential settlement that are worth about the same for them. These alternatives might sometimes appear as concessions while in reality they are as good as the opening offer. That is exactly what we did, and we start monitoring there response for the different offers. Eventually we were able to determine that option three was the best deal for both parties. The pie was maximized and the Magnetic Advances group thought that they stroke an awesome deal; they claimed that we weren’t as mush organized compared to them. However, in reality we made a better deal, and we significantly exceeded the fair share as had been discussed later in class.

o Collaboration (Integrative): It is also known as the win-win solution. A strategy which I have rarely implemented or considered. This strategy needs talented negotiators in which they can focus in commonalties and not differences, address needs and interests, not positions, exchange information and ideas and also invent options for mutual gain. This strategy was one of the ultimate lessons learned. I tried to implement the integrative negotiation extensively during my class exercise and even in my practical engagement. The idea of information sharing and mutual gain had dragged me until I was about to land below my bottom line in a post settlement session in the Harborco exercise. I was so keen to get everybody happy even Jean playing the role of Other Ports, in which any settlement was against her desire, and also I was keen to maximize the mutual gain. This was another important lesson learned; I should never lose my focus. I learned that it would be more disastrous to have a settlement that doesn’t maintain my bottom line.

One technique I admired, while negotiating the New Recruit exercise, was Amanda’s accommodation strategy, she was so focused in making her new hire happy, accepting the minimum outcome for her company in trade for a happy employee. A quality needed in such negotiation. Sometimes one has to make a primary concession within his specified limits if he can foresee the long term mutual benefit of having a deal “Hiring good employee in that case”.

Defining the Issues (Framing)
Framing the negotiation is determining what issues are in stack. Framing is about focusing, shaping and organizing the issues. It is about making sense of complex reality. Frames also can define event, process and personality. Frames are critical to understanding strategy, how negotiators frame and define a negotiating issue or problem is a clear and strong reflection of their negotiation priority and objectives. I would consider framing as one of my strengths as a negotiator.



There are mainly four types of negotiations:
• Interdependence:
Mutual Adjustment
Value Creation
Conflict
Level of conflict
Intra-personal conflict
Inter-personal conflict
Intra-group conflict
Inter-group conflict

Conflict management
Five major strategies
Contending
Yielding
Inaction or avoiding
Problem solving
Compromising


Negotiation goals can be simple like a one time purchasing of goods with limited concern of the present or future relationship. Other negotiation goals can be complex that will require the initiating a sequence of negotiation episodes; a strong relationship with the other party in this case is usually needed.

Selecting a Strategy

The second element in preparing for negotiation is selecting a strategy; in this paper we will discuss the three main strategic options for the negotiators:
• Alternative situation
• Avoidance
• Active engagement: this can be sub-categorised as competition, collaboration, and accommodation


Opening Offer
Negotiators are often faced at the start of the negotiation by what should be the opening offer, would it be very high or may be very low, should it be somehow closer to the resistant point. These dilemmas can be managed by learning more about the other party’s limits and planned strategy. However
Pattern of Concession
The pattern of concession a negotiator makes contain valuable information, as the successive concessions get smaller; the obvious message is that the concession maker’s position is getting firmer. Usually skilled negotiators in multi-issue negotiations will suggest different alternatives to a potential settlement that are worth about the same for them. These alternatives might sometimes appear as concessions while in reality they are as good as the opening offer.

Closing the deal
Negotiators may be challenged after learning about the other party’s position and resistance point by how to close the deal. Choosing the best tactics for closing the deal depends upon the situation and how much the negotiators learned during the negotiation session. However, some tactics may work better than other for example providing two or three alternatives, as people like to have alternatives. Another way is by assuming the close is already done, a tactic that is very commonly used by sales personnel. Finally negotiators can choose to split the difference or add sweeteners like special concession for the close.


o Collaboration Integrative
o Accommodation: it is as much a win-lose strategy as competition, however, it involves an opposite imbalance of outcomes “an I lose you win situation”


Defining the Issues (Framing)
After selecting the negotiation strategy, negotiators has to There are many types of frames parties use in negotiation

• Substantive: why there is a conflict, usually parties involved in such framing have a particular disposition about the key issues.
• Outcome: negotiator is mostly concerned by what would be the outcome of the negotiation; the dominant frame is how to reach that outcome.
• Aspiration: Rather than focusing on a specific outcome, the negotiator tries to ensure his basic needs are met.
• Characterization: this frame usually shaped by the experience of the negotiator with the other party

Research had shown that negotiators have different approaches when it comes to framing; some negotiators use more than one frame, while other may have a mismatches in frames in which two negotiators may be speaking to each other from different frames. An aspiration frame usually leads to integrative agreements, while mismatches in frames between parties are usually a source of conflict. The frame of an issue changes as the negotiation evolves and these frame change can affect how the conversation evolves.


The framing issue can be partially eliminated or controlled by help negotiators to reshape their frames define their key issues and how they talk about them. The parties also have to understand their preference, what has to be covered and the outcomes to be achieved. Frames will be controlled easier if negotiators understand what frames they are operating from, and what frame the other party is operating from. It should be noted that understanding frames, which means understanding how parties define the key issues and how conversations can shift, is the first step in effective planning.


Assembling the Issues and Defining the Bargaining Mix

Successful negotiation usually starts by assembling all the issues that have been defined into a comprehensive list. The combination of such lists from each side in the negotiation determines the bargaining mix. The negotiator should prioritize the issues on his agenda. This includes determining which issues are most important and which are less important and also to determine which of these issues are connected. Connected issues means that settlement or concession on one will be linked to settlement or concession on the others.

Defining Interests

The negotiator has to define the under lying interest and needs. He also has to take a position on an opening bid or target point. Here the negotiator decides exactly what he wants and what he can afford.

Limits and Alternatives:
Good preparation requires that the negotiator establish two important points, his limit and what alternatives he has, what will happen if he decided to walk away with out a deal

Targets and Openings

There are many ways to set a self satisfactory target, for example; one can ask about his satisfactory target, his own objective, how he can package or consider several issues and objectives.