NEGOTIATION STRATEGIES

Prepared By:BURCU MEKELF AKKURTSMEYRA KARATATRKAN COKUNF. BETL EKREM

NEGOTIATION GOALSPROCESS OF STRATEGY DETERMINATION

BURCU MEK

NEGOTIATION STRATEGIESStrategy is the overall approach for conducting the negotiation.Tactics are particular actions used to implement a strategy.

NEGOTIATION STRATEGIESWhereas a strategy provides the overall approach used throughout the negotiation, a tactic is particular action used at a specific time during the negotiation to serve a more limited role or purpose.

NEGOTIATION GOALSNegotiation goals encompass a wide range of both tangible and intangible desires.Categories of goals which in turn affect the negotiators choice of strategy and tactics.

Categories of Negotiation GoalsAggressive goalsCompetitive goalsCooperative goals Self-centered goalsDefensive goalsCombinations of goals

AGGRESSIVE GOALSSeeks to undermine, deprive, damage or otherwise injure a rival or opponent.Example: Taking a customer or supplier away from a competitor in order to hurt the competitor.

AGGRESSIVE GOALSAggressive goals seek to damage an opponent.

COMPETITIVE GOALS One side seeks to gain more from the negotiation than the other side.In fact the negotiator hopes to obtain as large a comparative advantage as possible. Example:Receiving the highest possible price.Paying the lowest possible price.

COMPETITIVE GOALSA competitive goal means getting more than the other party.

COOPERATIVE GOALS Cooperative goals are achieved through an agreement that leads to mutual gain for all negotiators and their respective sides. This achievement is also referred to as win-win negotiating. Example: Forming a joint venture, partnership, or corporation to engage in business opportunities to achieve a mutual profit.

COOPERATIVE GOALS With cooperative goals, agreement leads to mutual gain.

SELF-CENTERED GOALSSelf-centered goals are those that depend solely on what ones own side achieves.Scenario: two large accounting firms merge. The tremendous size of the new firm raises a self centered goal to find sufficient prestigious space in a single location. The goal is reached when the new firm negotiates a lease for 15 floors in a major midtown New York office building.

SELF-CENTERED GOALSSelf-centered goals seek a particular result regardless of what the other side receives.

DEFENSIVE GOALSOne seeks to avoid a particular outcome. Examples: Avoiding a loss of respect.Preventing a strike.Avoiding the loss of a customer or supplier.

DEFENSIVE GOALSDefensive goals seek to avoid a particular result.

COMBINATION OF NEGOTIATION GOALS Each negotiation usually has multiple goals. Case: In a collective bargaining negotiation, a transportation firm seeks to have its employees make prompt deliveries in order to maintain its business volume. This is a self-centered goal. A defensive goal is suggested if the maintenance of volume is intended to avoid a loss of customers. The goal is also aggressive to the extent that the same activity lures new customers away from competitors, a result which is likely to weaken the latter.

PROCESS OF STRATEGY DETERMINATIONStrategies are chosen for use in a particular negotiation in order to achieve your sides goals. The nature of those goals will affect the choice of strategy or strategies.A variety of factors determine the best strategy for a negotiating situation.

PROCESS OF STRATEGY DETERMINATIONThe choice of strategy also may be affected by the answers to a number of questions, such as:Does the negotiation involve a transaction or a dispute?Is there more than one issue involved?Can new issues be introduced into the negotiation?Are the parties interests short-term or long-term?Are the parties relationships long-term, limited to one negotiation or some where in between?

MAIN NEGOTIATION STRATEGIESAVOIDANCE STRATEGYCOMPETITIVE STRATEGYCOLLABORATIVE STRATEGYACCOMMODATIVE STRATEGY

ELF AKKURT

MAIN NEGOTIATION STRATEGIESTHE DUAL CONCERNS MODELHow much concern does the actor have for achieving the substantive outcomes at stake in this negotiation? (substantive goals) How much concern does the negotiator have for the current and future quality of the relationship with the other party? (relationship goals)

AVOIDANCE STRATEGY(The Nonengagement Strategy)Reasons of why negotiators might choose not to negotiate: If one is able to meet ones needs without negotiating at all, it may make sense to use an avoidance strategy.

2. It simply may not be worth the time and effort to negotiate.

Avoidance StrategyThe decision to negotiate is closely related to the desirability of available alternatives. Alternatives are the outcomes that can be achieved if negotiations dont work out4. Avoidance may be appropriate when the negotiator is responsible for developing others into becoming better negotiators.

Active-Engagement StrategiesCompetition Collaboration Accommodation

COMPETITIVE STRATEGYDistributive BargainingWin-Lose Bargaining (I win, you lose)

Zero-sum game: whatever extent one party wins something, the other party losses

Competitive StrategyDistributive Bargaining refers to the process of dividing or distributing scarce resources

Two parties have different but interdependent goalsThere is a clear conflict of interests

Distributive Bargaining

The essence of Distributive Bargaining is who gets what share of fixed pie.

Examples of Distributive Bargaining A wage negotiation A price negotiation A boundary or territorial negotiation

Staking Out the Bargaining Zone

COLLABORATIVE STRATEGY Integrative Bargaining Win-Win Bargaining (I win, you win)

Positive-sum situations are those where each party gains without a corresponding loss for the other party.

Integrative Bargaining The law of win/win says Lets not do it your way or my way; lets do it the best wayGreg AndersonThe 22 Non-negotiable Ways of Wellness

Integrative Bargaining is about searching for common solutions to problems that are not exclusively of interest to only one of the negotiators.

Concepts for Integrative BargainingSeparate people from the problem Focus on interests, not positions Invent options for mutual gains Insist on using objective criteria

Distributive versus Integrative Bargaining

ACCOMMODATIVE STRATEGYWin-lose strategy (I lose, you win)The negotiator wants to let the other win, keep the other happy, or not to endanger the relationship by pushing hard to achieve some goal on the substantive issues

Accommodative StrategyAccommodative Strategy is often used; When the primary goal of the exchange is to build or strengthen the relationship and the negotiator is willing to sacrifice the outcome. If the negotiator expects the relationship to extend past a single negotiation episode.

In a successful negotiation, everyone wins. The objective should be agreement, not victory."

The key to successful negotiation is to shift the situation to a "win-win" even if it looks like a "win-lose" situation. Almost all negotiations have at least some elements of win-win. Successful negotiations often depend on finding the win-win aspects in any situation. Only shift to a win-lose mode if all else fails.Professor E. Wertheim, College of Business Administration, Northeastern University

NEGOTIATION STRATEGIESNo-ConcessionsNo Further ConcessionsMaking Only Deadlock-Breaking ConcessionsHigh Realistic Expectations With Systematic ConcessionsConcede FirstProblem SolvingGoals Other Than To Reach AgreementMoving For ClosureCombining Strategies

NO-CONCESSIONSNO FURTHER CONCESSIONSMAKING ONLY DEADLOCK-BREAKING CONCESSIONS

SMEYRA KARATA

NO-CONCESSIONSA No-Concessions Strategy is tough and dangerous, since concessions usually are expected.

With a no-concessions strategy, the negotiation becomes a unilateral process.

NO-CONCESSIONSA no-concessions strategy is suitable for aggressive, competitive and self-centered goals.A no-concessions strategy is not suitable for cooperative and defensive goals.

WHEN TO USE NO-CONCESSIONSWhen the balance of power is strongly in your favor.When you are in a disproportionately weak position.When the dollar amount is too low or time is too short.Cost EfficiencyAvailable Time

WHEN TO USE NO-CONCESSIONS

When the same terms must be available to everyone.When bids or written proposals are soughtWhen another party is waiting in the wings.

DRAWBACKS OF THE NO-CONCESSIONS STRATEGYMight preclude an agreement the terms of which, although less favorable, are still acceptable.A strategy shift away from no concessions might be read as a failed attempt at bluffing, a position to be avoided.

DRAWBACKS OF THE NO-CONCESSIONS STRATEGYAvoid inadvertent bluffs by rashly miscalculating the use of this strategy.It may also be helpful to accompany the demand with reasons why your side is notin a position to offer anything else, and to explain how the demand is fair.

COUNTERING TIPS FOR THE NO-CONCESSIONS STRATEGYAppeal to a higher level of authority in an attempt to change the partys position.Ignore it and proceed as if concessions are possible.Present cost saving or win-win measures that justfy a concession.As a seller, offer less (such as fewer services), thereby effectively increasing the price.As a buyer, demand more, thereby, in effect, reducing the price.Terminate the negotiating session.

NO FURTHER CONCESSIONSA No-Further-Concessions Strategy ispossible when the other party can be forced to make the final concession, or when thesituation has changed.

NO FURTHER CONCESSIONSThe no-further-concessions strategy is implemented after some concessions have been made.The countermeasures to this strategy are the same as those for its parent, the no-concessions strategy.

MAKING ONLY DEADLOCK-BREAKING CONCESSIONS A strategy of Making Only Deadlock-Breaking Concessions is okay when the risk of no agreement is acceptable.A deadlock is an impasse or standstill, a state of inaction resulting from the opposition of equally powerful uncompromising parties.

MAKING ONLY DEADLOCK-BREAKING CONCESSIONSThe strategy of making a concession only to break deadlock is the next toughest strategy after the no-concession strategy.This strategy generates an atmosphere of tension and difficulty. Because of this one should be very careful to use this strategy.

MAKING ONLY DEADLOCK-BREAKING CONCESSIONSA making only deadlock-breaking concessions strategy is viable for aggressive, competitive and self-centered goals.A making only deadlock-breaking concessions strategy is inappropriate for cooperative and defensive goals.

HIGH REALISTIC EXPECTATIONS WITH SMALL SYSTEMATIC CONCESSIONSCONCEDE FIRSTPROBLEM SOLVING

TRKAN COKUN

HIGH REALISTIC EXPECTATIONS WITH SMALL SYSTEMATIC CONCESSIONS (HRESSC)It is the strategy of combining high, realistic expectations with small, systematic concessionsIt entails a planned approach both to the objectives of the negotiation and to the compromises that may be employed to reach those objectivesStrategy which achieves the best results

HRESSC (cont.)It has three components:The size of the concessionsThe use of apparent concessions which actually involve no cost to the negotiators sideThe advance planning of concessions

Small concessions depends on: - the value of that which is being negotiated while the negotiation begins - the value which is put during the negotiationSmall concessions after big concessionsAdvance planning helps to maximize ones results and minimize the pressure to merely respond to the other negotiators actions

CONCEDE FIRST

It is used to reduce tension, create an atmosphere conducive to reaching an agreement and allow one to demand a reciprocal concessionWe made an important concession at the outset of this meeting and you still have not given us anything significant in returnDifficult and sometimes impossible to withdraw a concession

CONCEDE FIRST (CONT.)It is suitable to apply this strategy when the position of negotiator is too weakIt can be used in rare circumstances when any real negotiation may lead the other party to discover information that will harm the negotiators clientIt is used to achieve competitive, self-centered, or defensive goals, depending on the specific context of negotiation

PROBLEM SOLVINGIt is a strategy for creating a procedural agreement to solve a common problem that has been identifiedIt is the most useful strategy after HRESSCIt is different from other concession-based strategies which center on giving up or refusing something of value

PROBLEM SOLVING (CONT.)It focuses on creating a procedural agreement that the negotiators will work together to discover and identify problems that are preventing agreement and to determine whether any common interests can be used to resolve those problemsIt is described in game theory as a win-win strategy

The Four-Step Problem-Solving ProcessA procedural agreement to use problem solvingIdentification of the problem preventing agreementDetermination of any common interests and limiting seperate needsDiscussion to discover fair, mutually beneficial solutions

Laying the Essential Foundations for the Problem- Solving StrategyThere must be an agreement by the parties and negotiators to work together to identify the problems preventing agreement, and to formulate a mutually advantageous solutionTo ensure good faith, the parties must have a mutual interest in solving the particular problems in the same wayThe negotiators must identify the same problems and agree on how to define themParties and negotiators must realize that a win-win solution is possible and that problems will not be solved by one side yielding to other. Instead the participants will strive to create a previously unconsidered, mutually beneficial solution

Important Points in Problem-Solving Strategy Achieving a clear distinction between objectives and needsMaintaining attitudes of empathy and cooperativenessThe related roles of creativity and patience in problem solving

Keeping the focus on mutual interests Outside forces to avoid:Government actionA jury or a judge deciding the facts at trial so that one side wins totally while the other side loses totallyA competitor gaining an advantageThe expiration of a financing commitment

Broadening the pie and trading concessions across issuesIt may be useful to consider the distribution of resources in terms of:What will be distributedWhen it will be distributedBy whom it will be distributedHow it will be distributedHow much will be distributed

Brainstorming Brainstorming for problem solving is a process which requires that the participants:Speak spontaneously or think out loud (as long it is relevant and constructive)Retrain from evaluating or criticizing the statements of others until after all initial ideas are elicitedBe willing to repeat ones ideas if others want to hear them againPersist in the effort even if there is a prolonged silence

GOALS OTHER THAN TO REACH AGREEMENTMOVING FOR CLOSURECOMBINING STRATEGIES

F. BETL EKREM

GOALS OTHER THAN TO REACH AGREEMENTReal purpose of a negotiation is to reach an agreementBut in this strategy it is NOTBe careful-An exercise in gamesmanshipWith cooperative goals

USAGE OF GOALS OTHER THAN TO REACH AGREEMENT STRATEGYA strategy to delayFor eg: a negotiation team is sure that unionll strike in all conditions. But the team believe that theyll soften and a delayll harm seasonal tasks.

Usage of Goals Other Than to Reach Agreement Strategy 2. To gather information 3. Negotiating as a forum for expressing views

Usage of Goals Other Than to Reach Agreement Strategy4 . Negotiating to influence a third party Public Management of the entity Influence of 3rd parties on negotiation is very importantPowerful people or groups, family members, etc

MOVING FOR CLOSURE To finalize a particular issue or the overall negotiation rather than risk losing the available terms.

MOVING FOR CLOSURE A difficult dilemma betweenRisk of losing an agreementThe opportunity of doing better

and balancing by evaluating those: * Value* Potential * Risk * Odds

MOVING FOR CLOSUREIn negotiations the most important risk is losing an available deal that your clients may acceptTo avoid this, the ultimate decision should be made by decision maker

TECHNIQUES FOR MOVING THE OTHER SIDE TOWARD CLOSUREA proposal should be close to other partys bottom-lineOther party should believe No further concession is possibleFailing to accept may result in no agreementClosure is more advantageous

TIPS FOR MOVING FOR CLOSURE STRATEGYExpressing understanding that agreement existsConcession-based inducement to closeMinimizing the danger of cancellation between closure and executionClosing issues within a larger negotiation

COMBINING STRATEGIESGenerally usage of a single strategy isnt efficientFor e.g.: first concession and moving for closure are efficient in specific parts of the negotiation

WHY CHANGE STRATEGIES?Tried and failed strategies may be changedChanging strategies may be the main strategy

CATEGORIES OF STRATEGY CHANGES

Sequential changes

Issue-oriented changes

E.G. FOR ISSUE-ORIENTED CHANGESA purchaser has a competitive goal of getting lowest price for machinery,and a self-centered goal of good service production For 1st one, HRESSC and for 2nd one problem solving strategies are chosen.

A TIP FOR STRATEGY CHANGESWhat is important is: If the negotiator doesnt do the change secretly, this change should be clearly defined not to harm trustworthiness.

You cannot shake hands with a clenched fist. Indira Gandhi

[ Clenched Fist - Woodblock by Frank Cieciorka, 1965 ]

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