01 Introduction to Negotiation

Question 1

Why do negotiations occur?

Answer 1

• to agree on how to share or divide a limited resource
• to create something new that neither party could attain in his or her own
• to resolve a problem or dispute between the parties

Question 2

Concepts of Negotiation

Answer 2

• bargaining -> win-lose competitive situation
• negotiation -> win-win situation (try to find a mutually acceptable solution to a complex conflict)

Question 3

Three main ideas of negotiations

Answer 3

1. The definition of negotiation and the basic characteristics of negotiation situation
2. Interdependence, the relationship between people and groups that most often leads them to negotiate
3. Understanding the dynamics of conflict and conflict management process which affect how we approach and manage negotiations

Question 4

1. Characteristics of negotiations

Answer 4

• two or more parties involved
• there is a conflict of needs or desires between these parties
• they negotiate because they think they can get a better deal than when they simply accept what the other side offers
• they expect a “give-and-take” process
• they search for an agreement rather than: fight openly, capitulate, break contact off permanently, take their dispute to a third party
• successful negotiation involves: management of tangibles, resolution of intangibles

Question 5

Management of tangibles

Answer 5

e.g. the price or the terms of an agreement

Question 6

Resolution of intangibles

Answer 6

intangibles = the underlying psychological motivations e.g., wining, losing, saving face, appear fair

Question 7

2. Interdependence

Answer 7

• parties need each other to achieve their preferred outcome
• interdependent parties are characterized by interlocking goals (does not mean they want the same thing)
• sometimes: mix of convergent and conflicting goals

Question 8

Type of interdependence

Answer 8

• zero-sum or distributive -> one winner
• non-zero-sum or integrative -> a mutual gains situation

Question 9

BATNA

Answer 9

Best Alternative to a Negotiated Agreement -> best available alternative

• alternatives shape interdependence
• value of BATNA is always relative
• negotiators need to understand their BATNA, and the other parties’ BATNA

Question 10

3. Mutual adjustment

Answer 10

Adjustments are based on one’s own move and the others’ responses

Question 11

3.1 Concession

Answer 11

One party agrees to make a change in his/her position -> restricts the range of options -> bargaining range is further constrained

Question 12

3.2 Dilemmas

Answer 12

1. Dilemma of Honesty - how much of the truth to tell the other party

2. Dilemma of Trust - how much should negotiators believe what the other party tells them

Question 13

Claiming Value

Answer 13

• opposite to creating value
• result of zero-sum or distributive situations
• object: gain the largest piece of resource
• distributive bargaining

Question 14

Creating Value

Answer 14

• opposite to claiming value
• result of non-zero-sum or integrative situation
• object: both parties do well
• integrative negotiation

Question 15

Combination of two processes

Answer 15

• most negotiations are a combination of two processes
• recognize, be versatile and be aware of biases

Question 16

How to create value?

Answer 16

Exploiting differences between the parties, such as:

• differences in interests
• differences in judgment about the future
• differences in risk tolerance
• differences in time preferences