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McGraw-Hill/Irwin

Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

CHAPTER ONE The Nature of Negotiation

Introduction

Negotiation is something that everyone does, almost daily

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Negotiations
Negotiations occur for several reasons: • To agree on how to share or divide a limited resource • To create something new that neither party could attain on his or her own • To resolve a problem or dispute between the parties

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Approach to the Subject
Most people think bargaining and negotiation mean the same thing; however, we will be distinctive about the way we use these two words: • Bargaining: describes the competitive, win-lose situation • Negotiation: refers to win-win situations such as those that occur when parties try to find a mutually acceptable solution to a complex conflict

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Three Important Themes
1. The definition of negotiation and the basic characteristics of negotiation situations 2. Interdependence, the relationship between people and groups that most often leads them to negotiate 3. Understanding the dynamics of conflict and conflict management processes which serve as a backdrop for different ways that people approach and manage negotiations

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Characteristics of a Negotiation Situation
• There are two or more parties • There is a conflict of needs and desires between two or more parties • Parties negotiate because they think they can get a better deal than by simply accepting what the other side offers them • Parties expect a “give-and-take” process

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Characteristics of a Negotiation Situation
• Parties search for agreement rather than:
– – – – Fight openly Capitulate Break off contact permanently Take their dispute to a third party

• Successful negotiation involves:
– Management of tangibles (e.g., the price or the terms of agreement) – Resolution of intangibles (the underlying psychological motivations) such as winning, losing, saving face 1-8

Interdependence
In negotiation, parties need each other to achieve their preferred outcomes or objectives • This mutual dependency is called interdependence • Interdependent goals are an important aspect of negotiation • Win-lose: I win, you lose • Win-win: Opportunities for both parties to gain

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Interdependence
• Interdependent parties are characterized by interlocking goals • Having interdependent goals does not mean that everyone wants or needs exactly the same thing • A mix of convergent and conflicting goals characterizes many interdependent relationships 1-10

Types of Interdependence Affect Outcomes
• Interdependence and the structure of the situation shape processes and outcomes – Zero-sum or distributive – one winner – Non-zero-sum or integrative – mutual gains situation

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Alternatives Shape Interdependence
• Evaluating interdependence depends heavily on the alternatives to working together • The desirability to work together is better for outcomes • Best available alternative: BATNA (acronym for Best Alternative to a Negotiated Agreement)

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Mutual Adjustment
• Continues throughout the negotiation as both parties act to influence the other • One of the key causes of the changes that occur during a negotiation • The effective negotiator needs to understand how people will adjust and readjust and how the negotiations might twist and turn, based on one’s own moves and the other’s responses

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Mutual Adjustment and Concession Making
• When one party agrees to make a change in his/her position, a concession has been made • Concessions restrict the range of options • When a concession is made, the bargaining range is further constrained

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Two Dilemmas in Mutual Adjustment
• Dilemma of honesty
– Concern about how much of the truth to tell the other party

• Dilemma of trust
– Concern about how much should negotiators believe what the other party tells them

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Value Claiming and Value Creation
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