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Chapter 1.2. A Model for Strategic Planning, Analyzing Cases and Decison Making

Chapter 1.3 Forest & Forest Case

Chapter 2. Influencing / Persuading

Chapter 3. Negotiating / Conflict Resolution

Chapter 4. Networking / Self Marketing

Chapter 5. Entrepreneuring / Venturing

Chapter 6. Business Plan Outline

Chapter 7. HBS Case Method Deprives Students of An Authentic Learning Experience

Chapter 8. Improving Your Ability to Recognize Business Opportunities

Chapter 9. Why Business Schools Need to Know What MBAs Want to Learn and How to Find Out

Chapter 10. What do MBAs Want and What Do They Get?

Chapter 11. Applying Services Marketing Concepts to the Administration of A Business School

Chapter 12. A Model of the Business School as A Developer of Achievers

Chapter 13. Obtaining More Options in Your 401(k) or 403 (b) Retirement Plan

Chapter 14. Breathe Slowly - Reduce Your Blood Pressure

Chapter 15. The Body Mass Index (BMI) Is Wrong



Chapter 3. Negotiation / Conflict Resolution

    Negotiating is trying to reach agreement with another party when the two parties share an objective, but have a conflict about other matters.  Synonyms for negotiating include: bargaining, haggling, dickering, give-and-take, conflict-resolution or "improving the agreement obtained through influencing."
    If you have a conflict with another party and do not share any objectives with them, the correct strategy choices are avoidance or self-defense.  If you believe that you share an objective with another party, and you seek specific actions from them, the correct strategy is to use influencing techniques, as discussed in Chapter 2.  
    Sometimes, group processes evolve from one type of activity to another.  You may influence someone and proceed to negotiate in order to iron out some conflicts.  Alternately, you may be negotiating with another party and both sides may find that the shared objective is really not at all important compared to the conflict and the conclusion is that there is nothing more to talk about.
    Examples of situations that provide negotiating opportunities include:
    1.  Jack Wilsonís employer wants to promote him to Assistant Branch Manager.  Jack wants a promotion, but to the higher      level of Branch Manager.
    2.  Susie Quinn wants to rent a particular apartment and the landlord wants to rent it to her.  The landlord wants Susie to move in on May 1 but she wants to move in on June 1.
    3.  Rose and Franz Taugwalder are going to Europe on vacation.  Franz wants to hike for three weeks in Switzerland but Rose wants to spend a week in Paris, a week in Athens and cruising the Aegean Islands and a week in Italy, visiting Rome, Florence and Venice.
    We will refer to these examples in the discussion of the negotiating process.

    The Negotiating Process

    1.  Define Objectives and Conflicts

        In negotiating, as in the practice of every other skill discussed in this book, the first step is to define objectives.  In negotiating, you explore three kinds of objectives:
        1. Your objectives.
        2. The other partyís objectives.  Do a mini-SCAN, (see Chapter 1) from their point of view.  Do not assume that the other party wants or needs what you would want if you were in their position.  Their background may be different, their culture may be different, or their position in the organization may require behaviors that are different from yours.
        3. The objectives shared by both parties.    
        4. The conflicts between the two parties.

  2.  What Are You Willing to Trade?  What Will They Offer?

        The essence of negotiation is give and take.  Prepare a list of the things you want and evaluate each of them in terms of how valuable it is to you and its probable cost to the other party.  Prepare another list of things you are willing to give and evaluate each of them in terms of its cost to you and probable value to the other party.  Pick out the trading items that are:
        a)Bargaining Chips:  Of low value to you, but of great value to the other side.  These are things that you are willing to give away in exchange for something else that is more valuable to you.
        b) Non-Negotiable Demands: Valuable to you, but cheap to them.  These are are things you must have get if you are to reach an agreement.  They are less valuable to the other side than they are to you.
        Letís take as an example the promotion to Assistant Branch Manager that was offered to Jack Wilson when he wanted to be Branch Manager.
        Jackís best bargaining chip was that he was willing to take the Branch Manager position that was open in Cheyenne, Wyoming.  He had confidence in his ability to network (Chapter 4) his way out of Cheyenne and back to the Big Apple within two years.  If he accepted an Assistant Branch Manager position, he would have to stay in that job for two years, before he could expect a promotion to Branch Manager.  The way it looked to him was that the company would gain something valuable, they would place a competent performer in a hard-to-fill job.  His non-negotiable demand was that he wanted to complete his work toward his night-school MBA degree before moving out of town.  This was very important to him, and would represent no great sacrifice to the company because Jack was only three months away from graduating.  
        Brief review.  Jackís willingness to work in Cheyenne was a bargaining chip.  It was cheap to Jack but valuable to his employer.  Staying in town for three months was valuable to Jack but cost the company little.  This was Jackís non-negotiable demand.

  3.  Determine Your Best Alternative to Negotiated Agreement (BATNA)

        How well off are you if the negotiation fails to reach a compromise?  The answer to this question will determine how eagerly you reach for settlement at the negotiating conference.  Letís look at the example of Susie Quinn and the apartment.  The market for apartments had softened considerably during the previous three years.  If the landlord insisted on the May first starting date, Susie would be able to find another apartment with a later starting date.  On the other hand, she liked this apartment because of its good location and attractive layout and view.  She decided that she was not too happy about her Best Alternative to Negotiated Agreement (BATNA) and that she would enter the negotiation with a flexible attitude.

   4.  Your Most Important Decision:  How High Should You Aspire?

        How much should you ask for at the start of the negotiating conference?  Should you ask for everything your heart desires and risk a deadlock or should you moderate your demands and aim for a quick settlement?  Experience shows that those who ask for more and support their demands with reasonable arguments, usually get more.  They also encounter a higher risk of deadlock.  Two strategies are available for reducing the risk of standoff when you ask for more of what you want: <b>prepare</b> very thoroughly, and be patient.
        Letís use the Mr. and Mrs. Taugwalder example.  Mrs. T. wants to go to Paris, Greece and Italy and Mr. T. wants to spend the entire three week vacation hiking in the Alps.  Mrs. Taugwalder decides to open the negotiation by demanding that they do it her way.  However, she also wants to continue her happy married life with Franz.  She engages in intense preparation.  She asks Franz what appeals to him about hiking in the Alps.  He reveals that two things motivate him: he wants to do a lot of walking for health reasons and he wants to eat some delicious Swiss food.  (Franz is descended from a family of distinguished Alpine guides in Zermatt, at the base of the Matterhorn, in the Valais canton of Switzerland and his parents have told him many times that when you hike in Switzerland, you are never far from a restaurant that serves wonderful soups, salads and meat dishes and outstanding pastries and freshly brewed coffee.)  
        Rose Taugwalder assures Franz that her itinerary will provide opportunities for walking and as for delicious food, Paris, Athens, Rome, Florence and Venice will provide quality and variety.  On the Greek island cruise, the ship has a gym, as well long decks for jogging and food and drink will be outstanding.  Rose starts the negotiation early to give Franz enough time to get used to the idea that the Taugwalders will visit Switzerland on the European vacation following this one.
        Because Rose prepared her demands with Franz' concerns in mind, thereís a good chance she will get what she wants.  If Franz insists on visiting Switzerland, Rose will allow him to extract a week in the Alps in trade for the Greek week, so sheíll get two out of three.  If Rose had not prepared thoroughly and had not opened with a high demand, she probably would be spending three weeks looking at snow covered mountains and cows munching grass instead of visiting the most beautiful cities of Europe and strolling through some of the finest museums and specialty shops in the world.

    5.  Options to Consider before the Negotiating Conference

        The first option is to refuse to attend the conference until one of your conditions has been met.  Officially, the President of the United States does not negotiate with hostage takers, although he will discuss grievances after the hostages have been released.  The President refuses to negotiate with hostage holders because if he did, he would encourage terrorists all over the world to take American travelers as hostages.  At any one time there are hundreds of thousands of Americans traveling all over the world.  To expose this many American citizens would be intolerable.  
        In my own experience, I once refused to attend a negotiation unless my proposal would be discussed first because I knew that if the alternative proposal were discussed first, time would run out before my proposal would come up.  The other side was inflexible, so there was no meeting.  This shows the risk you take when you establish pre-conference conditions.  I had nothing to lose by setting the precondition.  The fact that the other side was inflexible showed that they had no interest in my proposal.  In negotiating terms, the two sides did not share objectives.  My precondition proved this and saved me time and grief.
        The second option, is to send someone to represent you at the conference.  This is standard practice at Summit conferences.  Lower level representatives complete the negotiating before the heads of state meet to sign the agreements.  During the negotiating sessions, the bargainers often say "I need to contact my principals for instructions."  This provides flexibility that the principals themselves would not have if they were doing the negotiating.
        In more common situations, it is not unusual for parties to a negotiation to use agents.  Actors, authors, baseball players and others use experienced negotiators on the assumption that these professionals will obtain better terms than they could themselves.

6.  Preparing for the Conference

        Many people feel pressured to compromise when they enter a negotiating conference.  Having such a feeling is dangerous because it may lead to a less favorable result for your side.  Here are some suggestions distilled from the experience of thousands of hours of negotiating by some of the leading practitioners of the art.
        1. Do not accept deadlines, targets or any time-based goals.  Allow negotiations to proceed at whatever pace develops.  Accept the fact that the outcome of any individual meeting, or of the entire process may be any of the following: settlement, continuation of the conference at another time or deadlock.  If the perception of common objectives is strong and the conflicts are small, settlement will occur, unless there is a misunderstanding or one of the parties irritates the other.  
        Do not assume that the other side is under less pressure to settle than you are.  Do not allow the other party to pressure you into accepting an inferior settlement.  
        2. Do not underestimate your power.  The fact that other party is meeting with you proves that they need something from you.  It is in your power to grant or to deny their aspirations.  For purposes of the conference, your power is equal to theirs.  Prepare yourself for the possibility that the other party will try to weaken your negotiating strength by various forms of bullying, such as: boorishness, irrationality, citing principles, regulations, customary practice, or by flaunting their status.  Donít allow them to intimidate you by these methods, or by anything else.  Donít accept any of their demands or offers as being non-negotiable.  Almost everything is negotiable.
        3. In preparing your demands, remember that the more you ask for, the more youíll get.  Remember also that to fulfill high aspirations you require excellent preparation, great patience and acceptance of risk of deadlock.
        4. In preparing for the negotiation conference, use preparation methods similar to  those recommended in Chapter 2 for influencing:
        Role-playing consists of practicing your negotiating effort with a willing associate before doing it at the conference.  You have to prepare your role-playing partner by telling him or her how the other party is likely to behave at the conference.  The more you role-play, the more confident and skillful you will be when you do it in reality.  
        Imagery may be used instead of role-playing or in addition to role playing.  In a quiet environment, you imagine yourself in the negotiating situation.  You enter the conference room, state the common objective, wait for the other side to state its demands, respond appropriately and continue the give and take.
        As you imagine the situation many times, trying different approaches to different obstacles (always with a successful conclusion) you gain familiarity with the entire process and build up your confidence and thereby increase your probability of success at the real negotiating encounter.

7.  At The Negotiating Conference

        Wait for the other party to speak.  They may make you an offer that exceeds your wildest dreams.  Why not give them a chance?
        If the other party declines to speak, encourage them.  If they still decline, wait.  If nothing happens, you have two options: make a statement or continue waiting and risk that they may leave.  If you decide to make a statement, announce the shared objective that brings you together, offer to take notes on what happens at the conference and turn attentively to the other party and wait for them to make a demand or an offer.  
        If they absolutely refuse to make a demand or an offer, what you do next depends on your need to reach a settlement.  If you decide that you want a settlement, start by making the strongest demand or lowest offer that you can support with a reasonable argument.  Have in mind, but do not mention your bargaining chips (items that are not important to you and are likely to be important to the other side).  You will use these bargaining chips for making low cost concessions in exchange for something you want.
        If on the other hand, your negotiating partner does make a demand or an offer, state firmly that it is unacceptable.  Say that you simply canít afford it.  If you are a good actor, recoil in shock and exclaim "What?!  You canít expect me to do that!" Consider using some of the intimidation tactics listed in Part 6, above: boorishness, irrationality, statistics, principles, regulations, "customary practice," or flaunting of status.  
        Try to get the other side to lower their demand or to improve the offer they are making, without your offering any concessions.  If you sense that you may have irritated the other side, repeat the shared objectives.  In case of doubt, it never does any harm to repeat the shared objectives and in fact, it may do a great deal of good in helping the other side to be more cooperative.
        Delay your first concession as long as possible.  Allow silences to develop.  Silences build pressure and they cost you nothing.  For yourself, resist pressure engendered by silence, by spending the silent time in reviewing what has happened so far and rethinking your position in view of what has happened and developing alternative settlements that might be acceptable to both sides.
        To increase your toleration of silences, tell yourself mentally:  "You canít give anything away when you are not speaking."
        When you finally do make a concession, make it small and make the other side earn it by giving you a concession in return. The smallest concession is to promise to consider making a concession in the future.  Next on the smallness scale, would be a concession that costs you very little.  If the other side complains that the concession is too small, state firmly: "I canít afford more."
        Repeat the shared objectives from time to time.  If you do not understand something that the other side has said, ask them to explain it.  Never take a chance on misunderstanding the statements or the positions of the other side and never make any assumptions.  Allow them to explain their positions fully and clearly.  Also, clarify your own position from time to time, to make sure that the other side understands your needs.
        Never tell them about any of your weaknesses or any threats that you feel.
        If you feel at any time during the conference that the flow of events is not favorable to your side, step out.  Depending on the effect you want to create, you may say that you will return in fifteen minutes, or you want to adjourn the meeting for another time, or you may declare a deadlock and abandon the negotiation.  
        If you wish, you may say that you need to consult someone: your spouse, a trusted friend, an expert.  It is entirely at your discretion whether you actually consult someone or whether you just take some quiet time to think over the progress of the negotiation.
        Another option is to leave without saying anything and let the other side worry about what will happen next.  
        What you do and how you do it depends on how strong your need for settlement is relative to the need of the other side and the extent to which you want to shake their intransigence.  If you decide later that you want to resume negotiating, remember that almost everything is negotiable.
        Another tactic for softening up a hard-nosed adversary is to set a deadline, for example:  ďIn ninety minutes, Iím walking out of here, with or without an agreement!Ē  Use this tactic only if your BATNA is acceptable to you.
        You may conclude during the conference that the other side does not really understand their best options.  You may also conclude that a settlement that would satisfy you is within reach, if the other party would only understand that this settlement is also good for them.  In such a situation, use influencing techniques from Chapter 2. 

8.  After the Conference

        After every negotiating conference, learn as much as you can from the experience.  Review everything that was said or happened, and when it was said or happened.  If you kept good notes, you should have no trouble doing this.  Ask these questions:  What could we have done better?  What could they have done better?  What should we do differently next time we are in a similar situation?  Review every recommendation in this chapter against what you did and experienced.

9.  Is Negotiating Ethical? 

        Negotiating takes place among parties that are equal, at least for the negotiation.  It is cooperative and adversarial, at the same time.  Any impulse to make excessive demands is tempered by the fact that the other side may not yield to them, or may even walk out.      You should never yield undemanded concessions on the grounds that your bargaining position is stronger and you want to be fair to the other side.  
        Negotiation is a self-regulating process.  The balance of power between the parties insures that settlements will be perceived by both sides as being the best they could have  obtained.  After settling, if either side feels that it canít live with the agreement reached, it can reopen the negotiation.  After all, nearly everything is negotiable.
        My conclusion is that negotiating is as ethical as any activity known to human beings.  The less we fight and the more we negotiate, the better off we will be.

10.  Next Steps

        Your next steps should be to practice and observe negotiating.  Review this chapter and apply the techniques.  Well conducted negotiating is fun and helps you to achieve your goals and to help other people, as well.  You can also learn a great deal by observing other people as they attempt to negotiate with you or someone else.  
        Another valuable experience is to look for negotiating opportunities at meetings that are not announced as negotiating meetings.  If you participate in what is supposed to be a decision-making meeting, and a conflict develops, try to apply the tactics discussed in this chapter.   

A Negotiating Experience

        Conduct a new negotiating experience following <b>all</b> the suggestions presented in this chapter.  Prepare a report on the entire negotiating experience, covering the topics listed below.  Your paper must report a real, new negotiating encounter.  A report based on a hypothetical or old encounter will not be accepted.  ('Old encounter' is an negotiating encounter that occurred before you studied the "Negotiation / Conflict Resolution" Chapter in this book.)        
        Follow this outline in writing your report of the Negotiating experience.  Your report must contain all of the following headings:
    A. Before the Negotiating Encounter
        1. Your objective for this negotiating experience - what did you want?
        2. Who was your negotiating counterpart for this experience?
        3. Your counterpartís Mini-SCAN: Steps 1 to 4 of the SCAN Process.  See Chapter 1.
            Which objectives and SWOTs did you use for the negotiating experience?
        4. Your analysis before the negotiating encounter.
            a)    What was (were) the objective(s) shared by both sides?
            b) What were the conflicts between the two sides?
            c) What were / was your . . . ?                    
                1) Bargaining (trading) chips (cheap to you, valuable to them)?
                2) Non-negotiable demands (very valuable to you, cheap to them)?
                3) Your BATNA?  Your attitude about your BATNA?
                4) Initial aspirations (planned starting position)?
            d. Regarding your negotiating partner what did you estimate as their . . .?
                1) Bargaining chips?
                2) Non-negotiable demands?
                3) BATNA?  Their attitude about their BATNA?
                4) Starting offer?
        5.  Your preparation for the negotiating encounter.
            a)    What opener did you prepare?
            b) How did you conduct the imagery and role-play?
            c) What else did you do to prepare for the encounter?
        6. Did you you use any non-conference tactics?  What were they?
    B. What happened at the conference?
        1. Who spoke first?  What did this person (you or your counterpart) say?
        2. Did you encounter challenges and/or refusals?  If yes, how did you respond?
        3. Did you reach a negotiated agreement?  What was it?
    C. Analysis and thoughts after the meeting.
        1. Were there any surprises at the negotiating encounter?
        2. Should you have done anything differently?
        3. Should they have done anything differently?
        4. What are the three most important things you learned from this experience?
        5. What are your plans for future negotiating encounters?


This Page was last update: Thursday, August 18, 2005 at 2:30:14 PM
This page was originally posted: 8/17/2005; 1:55:21 PM.
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