Globalization

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Chapter 8: Power and Persuasion

Part I - Improving the outcome through “Power”

I. Overview

What distinguishes successful negotiators from the rest is the consistent building of a strong power base. Power, in the context of negotiation, is defined as ‘the ability to induce the other party to settle less than it wanted’. Power is not an absolute commodity. What makes you powerful in some situations may be quite irrelevant in others. In this chapter, we will discuss how to leverage power in a negotiation by using your BATNA, traditional power bases, and persuasion. The word "power" has had a bad connotation for many years.  It received this reputation because most people associate the word with one side dominating the other.  We define power as the ability to influence people or situations.  With this definition, power is neither good nor bad.  It is the abuse of power that is bad. Leverage is often used synonymously with power. All negotiators want leverage; they want to know what they can do to put pressure on the other, persuade the other to see it their way, get the other to give them what they want, or change the other’s mind. Most negotiators believe that power is important in negotiation, because it gives one negotiator an advantage over other party. Using leverage tactics in negotiation usually arises from the followings: 1) To create power difference (used by negotiators in strong position) The negotiators try to gain more advantage to increase the probability of securing a desired outcome or to block the other party’s power moves. Such tactics enhance the capacity for one side to dominate the relationship and often serve as the groundwork for a distributive agreement. Unequal bargaining power might lead to distributive bargaining, because the party with the most power may have little incentive to give up its advantage.

2) To create power equalization (used by negotiators in weak position) The negotiator believes he or she currently has less leverage than the other party. In this situation, a negotiator believes the other party already has some advantage that can and will be used, so he or she seeks power to offset or counterbalance that advantage. Such tactics minimize the capacity for either side to dominate the relationship and often serve as the groundwork for moving discussion toward a compromising or integrative agreement.

II. ASSESS YOUR SOURCES OF POWER
Don’t assume that because the other party has one type of power such as legitimate power (for details about legitimate power, please see the discussion below), he or she is all-powerful. That’s giving away your power! Balance power by assessing the other parties’ source(s) of power, and then your own. Several types of power can influence the outcome of a negotiation. We emphasize the word “can,” because if you have power but don’t use it, the power adds no value to the negotiation.

1. Legitimate Power
Legitimate power is derived from occupying a particular job, office, or position in an organizational hierarchy. Legitimate power is at the foundation of our social structure. When individuals and groups organize into any social system – a small business, a union, a political action organization, a sports team, they almost immediately create some form of structure and hierarchy. By creating a social structure that gives one person a power base, group members also create an obligation in themselves to obey that person’s directives. Thus, holding the title of director or general manager entitles a person to all the rights, responsibilities, and privileges that go with that position. In fact, legitimate power cannot function without obedience. For example, if the president’s cabinet and key advisers are unwilling to act on and dispatch presidential orders, then the president’s effectiveness is nullified. When enough power begins to distrust the authority or discredit its legitimacy, they will begin...
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