Module 1 What is Negotiation? Alternative Methods of Making Decisions

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Business School

Nothing is agreed until everything is agreed’

Ex Bona Fide Negotiari’

’From good faith we negotiate’

Module 1 What is Negotiation?

Alternative Methods of Making Decisions

  1. Say “No”
    t is appropriate when you cannot endure the offer but you can endure the consequences.

  2. Persuasion
    The Selling Approach: Sales people persuade people to make decisions in their favor by selling benefits. Inability to persuade, however, leads to conflict.

  3. Problem-Solve
    Requires trust between parties and recognition that the problem is mutual.
    But candor could be used against you.

  4. Chance
    Decide by tossing a coin.

  5. Negotiate
    Mutual dependence of each decision maker on the other, and involves voluntary exchange of something you want for something they want.

  6. Arbitrate
    When decision-makers cannot agree, third party involvement can be contemplated. The arbitrator should be acceptable to both parties and the decision must be accepted.

  7. Coercion
    Involves the application of pressure by informing the other party of the consequences of saying ‘no’, either with a friendly face or by blatant intimidation. Leads to retaliation.

  8. Postpone
    Buys time for emotions to settle, but may also be seen as a blocking move to refuse any agreement. Common practice of countless organizations.

  9. Instruct
    This is the appropriate choice when the person instructed is obliged and certain to carry out the instruction.

Managers do not normally expect subordinates to question their instructions when their instructions are within the terms of their relationship.

  1. Give in

This is what we do when we accept an instruction, because it is a fair instruction or to argue would be fruitless or need too much time. Giving in is not as weak an option as it sometimes seems. Every time you buy an item at the seller's asking price (take it or leaving), you are giving in.

What is negotiation?

Negotiation as a decision-making technique is appropriate when:

  • People voluntarily want to exchange things that they have for things that they want, creating wealth in the process.

  • Each party needs the consent of the other party and thereby effectively has veto-power. Because parties cannot simply take what they want, each party must accommodate the other party as well.

Negotiation has developed as the process through which the activity of trading and exchanging tangible or intangible things between people is conducted.

Advising Negotiators (Approaches to negotiation)

Description, prescription and prediction are different, yet overlapping, approaches and, by recognizing which is being used in discussions about negotiation, we can assess the relative credibility of contributions to the pool of advice.

Description Describing events that have relevance to the negotiation is useful. Should not go beyond stating facts, even though it is those facts that may lead to disagreement about what is and what is not.

Prescription Prescribing is what is done when think about what ought to happen. Asking for advice is asking for a prescription. An example of a prescription is to avoid interrupting other people because experience taught us that it blocks fruitful negotiation.

Prediction Predictions are statements about what we think will happen. This is the crucial one in negotiations because it is our predictions that we act upon and they either turn out to be true or they are proven false.

Module 2 Distributive bargaining

Best strategy

  • Determine other parties range before making an offer.

  • Not likely, but if no other issues exist (single- issue negotiation), then there is no obvious solution.

Both negotiators strive hard to make the other do the moving towards to your price to win the contest.

  • In these contests there is a ‘winner’ and a ‘loser’ and people do not like losing.

  • lose–lose outcome: Both negotiators could end up unhappy with the outcome.

The buyer/seller dilemma

Motivations for the entry price could be:

  • to cover a mark-up over his costs

  • or from a ‘gut feeling’ he has for

  • or some detailed knowledge of, what the market will bear

  • or from a consideration of tactics

The total negotiating range is the gap between the entry prices of each negotiator.

Negotiation range implies distance and the need to come together implies movement. Hence, do not open with your final price and give yourselves negotiating room.

The exit price is the limit beyond which a negotiator does not intend to go in the current circumstances.


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