Chapter 2: The Language of Negotiation

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Bargaining Mix
All of the issues involved in a negotiation
Bargaining Range/Settlement Zone
The area between parties’ resistance points
Best Alternative to a Negotiated Agreement (BATNA)
The most ideal alternative outcome one party to a negotiation could get without negotiating with the other party. The better the alternatives, the stronger the negotiator’s bargaining position and more likely to make first offer. Thoroughly investigate all alternatives to put yourself in the best possible negotiation position
The lens through which you view a negotiation either positive or negative. How an issue is framed influences your behavior in a negotiation. It is possible to reframe a negotiation.
Initial/Opening Offer
The first offer made by a party in a negotiation
The notion that if someone does something for you, you owe them. Can lead to concessions in a negotiation session. A hardline approach or bad behavior eventually leading to a complete breakdown in a negotiation.
Resistance Point/Reservation Price
A negotiator’s bottom line; the point beyond which they will not go. The reference point during the negotiation to decide whether to reject or consider an offer.
Settlement Point
What the parties actually agree upon
Target Point/Aspiration
The best outcome each party can reasonably and realistically expect to obtain as a result of the negotiation
Worst Alternative to a Negotiated Agreement (WATNA)
The worst outcome you might face if you do not come to a negotiated agreement. Always consider WATNA before the negotiation.
Bargaining Mix Characteristics
1. The more issues, the greater the likelihood both parties will walk away happy that they secured the best overall deal
2. Too many issues makes the negotiation unwieldy
3. Expanding the pie – key principle of integrative negotiation – creating more value for everyone involved in the negotiation
Asking/Listing Price
The initial offer from the seller’s perspective
First Offer Made
The initial offer from the buyer’s perspective
Negotiators and Initial Offers
1. Send a signal with their offer
2. Leave some room to negotiate
3. Research their offer
Who makes Initial Offer?
Depends on negotiation, usually seller, except in an auction
Target Point for Monetary Issues
Should be quantified in advance and based on researched factual information
Target Point for Non-Monetary Issues
Should be based on as much factual information as possible
Negotiators and Target Point
1. Set challenging goals – a target point for each issue
2. Keep their target point quiet at first
3. Share the information strategically
Negotiators and Resistance Point
1. Have a reservation amount below which they will not go
2. Not revealed to the other party or might be called the final offer
3. Not all buyers/sellers will have the same point
Positive Bargaining Range
When there is overlap between the points, settlement is likely if sufficient information is exchanged to indicate this
Non-overlapping Bargaining Range
When the resistance points match, the range is zero and settlement is less likely due to level of information exchange
Negative Bargaining Range
When there is no overlap, the zone is negative and there will be no settlement unless one or both parties adjust their resistance points
Multi-Issue Negotiations
1. Settlement point for each issue
2. Parties must remember to discuss all the issues
3. Overlooking issues can damage relationships when expectations are mismatched
Approaches to Negotiating and Resolving Conflict
Depends on level of assertiveness and concern for substantive issues and the relationship with the other party and concern for their outcomes. Two types: Distributive and Integrative
Distributive Negotiation
Involves more competitive behavior, winner and loser, little concern for the relationship after the negotiation ends
Integrative Negotiation
More cooperation, meeting the needs of both parties, more concern for maintaining the relationship after the negotiation ends
Positive Frame
Leads to more successful outcomes
Negative Frame
Leads to less successful outcomes; the more negative, the more likely there is to be an escalating conflict
Robert Cialdini
Social psychologist that believed that reciprocity was the most powerful negotiation principle
Thomas-Kilmann Conflict Style Model
A model that identifies several approaches to a negotiation or conflict situation. The dimensions are assertiveness/concern for one’s own outcomes and cooperativeness/concern for other’s outcomes, and the approaches to handling conflict are referred to as avoiding, accommodating, competing, collaborating, and compromising.
Dual Concerns Model
A model that identifies several approaches to a negotiation or conflict situation. It identifies the dimensions as concern for one’s own outcomes and concern for the other party’s outcome. The possible approaches are called inaction, yielding, contending, and problem solving.
Categories: Negotiation