10/05/2017 - my.liuc.itmy.liuc.it/MatSup/2016/A99002/LUIC 2017-No logos.pdf · • Zone of Possible...

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IntroductiontoNegotiationIÉSEGSchoolofManagementDr. ChaviFlecher-Chen

[email protected]

CourseObjectives

Usingvariousscenariosfromtheoriestolearn:• Negotiationtypesandstrategies,• Negotiationplanningandpreparation.• Valuecreationandco-creation• Culturaldimension

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CourseAims• Attheendofthecourse,youwill:• Beabletoidentifydifferentnegotiationsettingsandrecognizewhichthechoiceofstrategy.• Gainabroadunderstandingofthecentralconceptsin“win-win”negotiation.• Developtoolsfornegotiationpreparation;e.g.self-evaluationinadjusttoself-change,interpersonalcommunication,perception,conflictmanagement,culturalawareness.

CourseContent

• Negotiation theoriesandtypes• Distributivenegotiation• Integrativenegotiation

• Negotiationplanningandstrategies• Negotiationincross-culturalcontext

Assessments

1. Groupparticipation(30%)• Planninganddiscussion• Teamcoordination

2. Individualparticipation(30%)• Attentivenessincourse• Feedbackfromexercises

3. Learningjournal (40%)• 1-2pagespernegotiationroleplayexercise• Deadline:May15th (Monday)• Email:[email protected]

Readingrecommendation:

• Baber&Fletcher-Chen,PracticalBusinessNegotiation,Rutledge.

Imagefromhttps://goo.gl/AbzEZm

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IntroductionWhatisnegotiation?

Whatisnegotiation?

• Definitionsofnegotiationamongdifferentauthorsinvolvesuch“ingredientterms”as:‘process’,‘individuals’,‘groups’,‘organisations’,‘differentcultures’,‘jointdecisionmaking’,‘jointagreement’,‘creatinglastingvalues’,etc.

• Thattellsnegotiationisacomplexphenomenon,andtheroleofnegotiatorincontributingeffectivelyintheprocessisessential.

WhyNegotiation?

• Because we are interested in exchanging things• Resolveanissue(problem-solving),and• resolveconflictsamongmembersoftheirowngrouporbetweenmembersoftheirsocietyandthatofothers.• Divideaspecificresource

Negotiation Variables

• There are plenty of things to negotiate inside “a deal”.• We call these things ‘variables’.• Price is the most often cited variable• There are numerous others:

- Discounts and allowances- Delivery date- Quality- Order timing and frequency, etc

Negotiationstance

1. IWIN,YOUWIN2. IWIN,YOULOSE3. ILOSE,YOUWIN4. ILOSE,YOULOSE DistributiveBargaining

Session1

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Negotiatingononedimension

1. Positionsandinterestsareopposed:• Buyerwantstopayless• Sellerwantstoreceivemore

2. Hardbargaining:gainingasmuchaspossibleattheexpenseoftheotherparty• “Win-lose”or50/50deals

3. Afixed-sumgame:noroomforvaluecreation


Keyconcepts• Walk-AwayPoint(WAP):ourabsoluteminimum/maximum,theamountbeyondwhichwewillnotgo,ourredlineor“bottomline”• ReservationValue(RV):thepointatwhichyoustartconsideringwalkingaway• AspirationValue(AV):ourobjective(tobedistinguishedfromourdreamvalue)• ZoneofPossibleAgreement(ZOPA)


Distributivenegotiationconcepts• Openingbid(ambitiousbutcreditable)• Anchoring(startingprice)

• Doyouopenorwaitfortheotherside?• Reservationprice(worstbutacceptabledeal)• Bargainingzone(narroworwidebargainingzone)

• BATNA:Wasthereany?• Attentionfixation• Goal:Aimforthetarget• Taboo:debatingoverthereservationpoint

Distributivenegotiationstrategies

• Openings:straighttothe$orsocialising?• Concessions:whatdidyoucompromise?• Threats:whatthreatsdidyoureceive?• Walkaway?

• Relationshipprocess• Howdoyoufeelthisnegotiation?• CooperativeorAntagonistic?

• Whatvalueshaveyoucreated?

TacticsforDistributiveNegotiationSettingyourAV/RV/WAP

• Insettingyourobjectives:• How“greedy”didyourgroupwanttobe?

• Withanumberthatisfavourable toyou,butcreditabletobothparties.

• YouwillsignanagreementifbetterthanyourRV/YouwillnotiflesssatisfactorythanyourWAP.Whatdoyoudoifin-between?• Differentintereststoweightandcompare

• Itcanbeahighlysubjectivegame

• Adifficultexercise,withtwoquestions:• Whospeaksfirst?• Wheretoanchor?

• IfIasktoomuch,Imaybreakthenegotiation(destroytheZOPA)• IfIaskfortoolittle…

Anchoring

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Whyisitimportant?

• Astrongpsychologicaleffect:• 1st amountonthetablewillframetherestofthediscussion,evenunconsciously• Astronglinkbetweenanchorandresult

• Level1:Beawareoftheframingeffectanddonotletitinfluenceyoubeyondacertainpoint• Level2:Useittoinfluencetheotherparty

Howtoescapethedilemma?

• Anchorfirst• Youhaveenoughinformation• Youwanttoframebargainingtoyouradvantage•Unlessyouhaveverybadinformationabouttheotherside•Whenyouhaveverybadinformationabouttheotherside(poorpreparation)è favourable totheotherside

Anchoringandconcessions

• Don’tletthemanchoryou:iftheyspeakfirst,reflectonthemeaningoftheiroffer• Toanchorortobeanchored,thisisthequestion!

• Watchforthepatternofconcessions:• Decreasing/stable/random

•Makingconcession• Don’tinitiateitunlessit’snecessary.•Makelargerconcessionsearlyinthenegotiation.• SmalleroneslatertosignalyouarereachingyourRP.• Don’tmaketwoconcessioninarowè creatingdoubtaboutyouractualRP.

Hard-bargainingtactics

• Knowthemandbepreparedtocounterthem• Someexamples:• “Takeitorleaveit”orotherultimatums• Deception(phonyfacts)vs.partialdisclosure• Extremedemandsfollowedbysmallconcessions/“salami”• Refusaltonegotiate• Goodcop– BadCop• Lock-intactics,cherryonthecake,etc.

Beaware:“impasses”&“threats”

• Awareofthreat:• Ifyouwon’t….,Iwill…(e.g.,walkaway).• Whentouseit?• WhenNOTtouseit?

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Threats

• UseitONLYwhenitcanbeusedstrategicallytofurtheraparty’snegotiationgoals• E.g.,urgencymattertothegoal,reliance,

• FirmAownstheproductioncapabilityonFirmB’smobilechips.BhastobuyfromA.• Inaforeigncountry,currencyexchangeswithlocalvenders

• ThreatsprovidesrelevantRPinformation• Threatsè BATNAorWAP

Falsecommitmentandthreats

• Somethreatscanbefalseverbalcommitment• ThisisthelowestIcando…(evenifyouarenotattheimpasse)e.g.,bankmortgage

• Ifyoucontinuereducing/increasingthepointafteryouhavemadesuchastatement/threat• Jeopardizecreditability,• Threatsmeannoinformationvalueforthefuture.

Summary:DistributiveNegotiation

• Positionalorhard-bargainingnegotiation.• haggling,nopreviousinteractiverelationshipandnointentionforfuturerelationship,e.g.foronceortwiceencounterswiththespecificperson/agency/company.

• Condition:afiniteamountofthevaluebeingdistributed/dividedamongthepeopleinvolved.• IWin-YouLoseoutcome

• Oneperson'sgainresultsinanotherperson'sloss.

• Adoptanextremeandfixedposition:commonlyemployacombinationoftrick,trap,bluffing,andbrinkmanshiptogiveinaslittleaspossible.

IntegrativeNegotiationSession2

Positions

• Partiesenternegotiationsbecausetheirpositionsareirreconcilable• Negotiatingoverpositionsmeanspartiesneedtocompromise(yield/stepback)• Difficult/Frustrating/Framedasaloss

• Sometimes,theZOPAdoesnotevenexist:itneedstobeconstructed

Akeyquestion:WHY!

Togofrom stated positions…« Thisis what Iwant »

…totheunderlying interests…« Thisis why Ineed it »

Because asstated positionsaremost often incompatible...…Interests aresometimes compatible!

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Creatingvs.ClaimingValue Interests

• Parties’motivations,needs,values,concerns…• Whatliesbehindpositions• Theanswertothequestion“why?”• Characteristicsofinterests:• Positionsareirreconcilable,interestsmaybecompatible• Fewwaystorespondtoaposition,morewaystofulfillinterests

Frompositionstointerests

• The“mutualgainsmethod”(Fisher&Ury)• Movingthediscussionfromanoppositionofpositionstoadialogueoverinterests• Twomainkindsofinterests:• Substance• Relationship

Fromdistributivetointegrativebargaining

• Distributive:acursortoseton1dimension– whatonewins,theotherloses(fixedpie)• Integrative:expandingtheZOPAbyexploringmultipleissues,findingadealthatsatisfiestheinterestsofbothparties• Itimplieswinningwiththeotherparty,ratherthanagainstthem(non-fixedpie)

NegotiationTypes

Integrativenegotiation Distributivenegotiation

Summary:IntegrativeNegotiation

• Interest-basedorprinciplednegotiation.• Understandtheunderlyinginterests/motivation/needsoftheinvolvedpartiesratherthanthearbitrarystartingpositions.

• Condition:toimprovethequalityandlikelihoodofnegotiatedagreementbyfindingalternatives.• IWinYouWinoutcome

• Involveahigherlevelofrelationshipmanagement(trust,satisfactionandcommitment)withcreativeproblem-solvingformutualgains.

• Treatasasharedproblemratherthanapersonalizedbattle.Insistuponadherencetoobjective,principledcriteriaasthebasisforagreement.

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Planning&PreparationSession3

Negotiationprocess

• Pre-negotiationplanning• Theactualnegotiation• Postnegotiation (mostcrucialstage)

(teamsetting)

(commitment)

Preparingforanegotiation

• Apreparationmethod• BasedonLempereur &Colson,2009,Chap.2

• Strategyelements• Whatareyourobjectives?Whatstrategytoreachthem?• Whatcouldbetheirobjectives andhowtoobtaininformationaboutthoseobjectives• RP/AP/BANTA

• Contextelements(yourcall!)

Keybuildingblocksofnegotiation

Adefinitionofnegotiationusuallyentailsthefollowingthreeelements:• TheWHAT?– Wenegotiateaboutsomething• TheWHO?– Negotiationrequirespeopleinteractingwithoneanother• TheHOW?– Negotiationisaprocess

From3-DNegotiations(Lax&Sebenius,2006)

• Who?• InterpersonalRelationships• Mandate• StakeholderMapping

• How?• Process• Communication• Logistics

• What?• Interests• Creativeoptions• BATNA:alternatives,planB• Justificationcriteria

3dimensions/10Points 1.INTERPERSONALRELATIONS

2.MANDATE 3.STAKEHOLDERMAPPINGWHO?

WHAT?

4.INTERESTS

10TRUMPSFORPREPARATION

HOW?

Mine Theirs

Ours Theirs

5.SOLUTIONSATTHETABLE 7.CRITERIA

6.ALTERNATIVESMine Theirs

MyBATNA TheirBATNA10.LOGISTICS8.PLANNING 9.COMMUNICATION

Questionstoask

Informationtoshare

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ThenegotiationprocessPlanningandpreparation

Opening

Explore

Exchange

Agree

Implementation

Thinkaheadabouttheprocess

• Whatisthepurposeofthemeeting?• Ex:introductoryorconclusivemeeting?

• Settinganagenda:• Timeavailable• Objectiveofthemeetingtoday/thewholeprocess

• Processmaybenegotiatedwiththeotherparty

NegotiationasaprocessI

• Icebreaking– workingontherelationship• It’snotaboutyou.It’saboutwhomyoutalkto(datingprinciple)

• Meta-negotiation:negotiatingonhowyouwillnegotiate• Setup(negotiate)theprocess• Agenda:listingthepointstocoverduringthemeeting• Inanorder:whatisincludedandexcluded• Careful:ahighstrategicvalue• Donotbecomeprisoneroftoostrictagendas.

NegotiationasaprocessII

• Beyondpositions,discussmotivations• Initialstatements(sometimesaroundofmuscleshowing)• Opendiscussion

• Ifimpasse:• Trytodevelopjointlyapprovedcriteria• Discussalternatives(BATNAs)

• Brainstormtocreatemaximumvalue• Worktowardanagreement• (Organizewrite-upandformalizationphase)• Conclude

Negotiationprocesssummary

• CooperativeorAntagonistic?• Considerifyouwillhavetointeractwiththepersoninthefuture(afterthedeal).• Evenifthereisnodeal,shouldyoucareabouttheprocess?YesorNo?• Yes.Thisisasmallworld.Reputationspreads.Thereisalwaysarecordtocheck.i.e.,newjobapplication,businessassociatesinthesamefield;etc.• Peopletendtobemoreaccommodatingtothosewhoarelikable/approachable.

Analyticalpointsforinvolvedparties

• Substance• Relationship• Investment• Return• Obstacles (e.g.,internalresources,institutionalinfluenceà thisoftenassociateswithnon-negotiablestatement)

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PrinciplesofStrategicPositioning

• Long-termrelationship:Diagnosing long-terninvestmenttogeneratetherealeconomicvaluereturn.• Uniquevalue:Makingavaluepropositiontodifferfromcompetitor’soffering,i.e.,valuecreationforbusinesscustomer’scustomer.E.g.Amazonserviceinnovation.• Customisedfocus:Reflectinginadistinctivevaluetoconductbusinessdifferentlyfromcompetitors.• Identifyvaluedifferences:Compromisingsomebusinessaspectsoropportunitiestobeuniqueinotheraspects.• Multiplepropositions:Fittingbothpartiestofindadistinctivevaluepropositionsandenhancetheoverallbusiness.• Commitment:Buildingstrongreputations.(e.g.SharphadpoorhistorywithSony,Toshiba)

Logistics

• Mayseeminsignificantbutmaybeimportant• Wheredowemeet?Yourplace?Mine?Onneutralgrounds?• Ininternationaltalks:whatlanguage?Dowehaveinterpreters?• Ergonomicsoftheroom/shapeofthetable• Materials(istheprojectorworking?)• Transportation• Etc.

CommunicationTimingI

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• Minimizespontaneous(unprepared)negotiations• Watchfor“bad”timestoavoid(orfinishby)• Seekanadequatetimeslot• Takethetimetoestablishrapport/ice-break• Establishcommongoalsandunderstandings

CommunicationTimingII

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• Knowwhentobesilent(e.g.,hitthe“pausebutton”)• Knowwhentoclose(fairforbothparties)• Knowtheeffectofadelayedvs.expedientdecision• Bepreparedtomakeabreak/adjourn

• ifantagonismcan’tbedefusedor• moreresearchisrequired

• Allowsufficienttimeforadvancedreviewofkeymaterialbyinvolvedstakeholders

Talkingaboutinterests

• Positions=confrontation• Interests=sharedproblem-solvingexercise• Needtorespondtotheirintereststoo• Wemaybepartoftheproblem– movefromdwellingoverthepasttotalkingaboutthefuture

• Prerequisite:havingaworkingrelationshipamongtheparties

Identifyinterests• Howdoyouidentifyinterests?• Ask“Why?”,“Whynot?”– understanding• Eachsidehasmultipleinterests- complexity• Interestsofthepartyvs.interestsofthenegotiator

• Makealist

Myinterests TheirinterestsA XB Y

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MultidimensionalnegotiationI:

• Level1:logrolling:makingaconcessiononissueXtogainsomethingonissueY• SomeissuesaremoreimportantforAthanforB• Valueiscreatedviadifferencesinpreferences


MultidimensionalnegotiationII:

• Level2:wedonothavetodisagreeonallissues• Certaininterestsdonotoppose• Certaininterestsaresimilarorcomplementary:whenIwin,youwin(i.e.,1orangefortwopeople)• Ajointproblem-solvingexercise


Fromintereststoagreement

• Interestsaremultiple• Somearecompatible,othersarenot:Therealwaysaredistributiveelementsinintegrativenegotiation• MultiplicityofinterestsèDiversityofsolutions

• Howtorespondtoamaximumofinterests?• Brainstorming/Creativity

Howtocreatemutualgains

• Identifysharedinterests(ex:negotiateforadeal)• Aligninformation- Beexplicitaboutprevisions• Playwithdifferencesinpreferences(time,aversiontorisk,etc.)• Maketheirdecisioneasierratherthanharder

Multipleoptions:Fosteringcreativity

• Avoidprematurejudgment(assumptionmaynotalwaysbenecessary)• Separateinventingfromdeciding• Takedifferentpointsofview/inviteotherpeople• UseMESOs:MultipleEquivalentSimultaneousOffers

Selection:Deciding

• Rankoptionsinorderofsatisfactionforyou,forthem• Combinealternativestocreatevalueandraiseobjections• ComparewithyourBATNA

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Identifyprioritytodecision-making

• Creatingamatrix torank/ratethelevelofpriority• Firmvalues• Packageoffinancialgain• Packageofresources• Valueofrelationshiptypes• Personalinterests• Timeexecution• Impactonstakeholders

• Vertical(businessnetwork)• Horizontal(intra-firminvolvedmembers)

rank rate

Knowing your interests

• Linkinginterests,needs,values,concerns,etc.• Whatdrivesour/theirbehavior?• Whatunderliesaposition:why/whynot?

• RelevantCategoriesofInterests• Someareinline(ex:toresolvethematteronceandforall,toprotecttherelationship)• Othersareopposed(ex:money)

• Differencesinpreference(intime/towardrisk/inprobabilityassessment)

Thefieldofpossiblesolutions

• Innegotiation,thererarelyisonlyonesolution.• Ifyouarriveatthetablewithapre-establishedoutcome,youarenotreadytonegotiate• Instead,defineafieldofpossibilities,withasmanyvariablesaspossible

• Lookforconcrete,multi-variablesolutions• Thatrespondstomost/allinterests• Thatsolvealldimensionsoftheproblem

• Bereadytobecreative!

Bereadytojustifyyouroffers

• Offers/dealshaveahighervalueifsupportedbyalegitimatejustification• Why?• Itneedstopassthe“sowhat?”test

• Criteriamaybeageneralprinciple,amarketsurvey,aprecedent,alegalrule,theopinionofanexpert,etc. TeamworkinNegotiation

Negotiationinabusiness-to-businesscontextisrarelyalone

IntegratedModelofTeamwork

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SuccessfulTeam Performance

• Knowledge,skill,andability• Motivationandeffort• Coordinationstrategies

WhenBuildingtheTeamInternalDynamics TypesofWorkThatTeamsDo

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