Unit 3: Processes and Phases of Negotiation
As we learned in Units 1 and 2, a variety of negotiation approaches are available to help manage conflict effectively. In this unit, we consider some basic principles from negotiation theory, such as a competitive and collaborative negotiation strategy. We examine four phases in the negotiation process and how to implement each phase to accomplish an effective negotiation. You do not always have to settle for your piece of the pie. A successful negotiation strategy can make the pie bigger for everyone concerned.
Completing this unit should take you approximately 15 hours.
Upon successful completion of this unit, you will be able to:
- identify and explain the principles, strategies, and tactics of effective negotiation and professional relationship management;
- identify and assess the variables in negotiations;
- develop reliable planning techniques;
- explain the difference between distributive and integrative negotiation;
- describe the concepts of game theory; and
- list the phases of negotiation and their relevance to an effective negotiating outcome.
3.1: Distributive Negotiation
Read the "Negotiation Strategies" section to learn how the distributive approach may result in missed opportunities to "expand the pie". Rather, one party may get more of the pie, and one party may get less: a win-lose outcome.
Watch this video on distributive negotiation to learn when this strategy might be appropriate and when a collaborative (or integrative) strategy may result in "expanding the pie" for both parties. Parties often use distributive bargaining (or win-lose bargaining) when they are negotiating over price. Words often associated with one or both parties in this type of bargaining include deadlock, final offer, firm, hostile, ultimatum. Inherent in distributive negotiation are the concepts of the target price, buyer's resistance point, seller's public (asking) price, seller's resistance point, and bargaining range.
This lecture describes positional bargaining and cites Fisher and Ury, who argue that positional bargaining will not produce sustainable agreements and is an inefficient means of reaching win-win solutions. Pay particular attention to the "orange" example that explains the benefits of moving beyond the position to the issues of the conflict.
Read section 2 of chapter 1. Game theory has applications for economics, operations research, and psychology, to name a few disciplines. This section gives a basic explanation of game theory, which is the study of optimal decision-making under competition when one individual's decisions affect the outcome of a situation for all other individuals involved. For a classical example, watch the video below on the Prisoner's Dilemma, which you will read about it in many discussions about game theory. How would you describe this in relation to game theory?
The Prisoner's Dilemma is a situation where you base your strategy on what you think the other party will do, and that party bases his strategy on what he thinks you will do. In game theory, the Prisoner's Dilemma illustrates how people's individual choices can lead to the worst situation possible.
View this brief video to learn the basic concept of a zero-sum game.
Read this paper, which describes how the Hobby Lobby case can be thought of as a zero-sum Religious Freedom Restoration Act (RFRA) claim.
This article describes research that seems to indicate that people who view life as a positive-sum game are happier than those who view it as a zero-sum game. While there does not seem to be any direct survey evidence relating to this question, some assessments have been made on the effects of different life goals on happiness. Personal success goals can be viewed as zero-sum, whereas altruistic goals and goals relating to family life are positive-sum goals. Research on neuroeconomics experiments in which participants play games relating to cooperation and trust tends to confirm that people who believe that others can generally be trusted would tend to have a positive-sum attitude to life.
Watch this video to learn examples of zero-sum and positive-sum games. Zero-sum games create a dynamic of competition, whereas positive-sum games can create strong attractors for cooperation. Complex scenarios exist where there are incentives for both cooperation and competition. You will learn more about how these complex and adaptive systems are affected by negative externalities later.
3.2: Integrative Negotiation
Read the sections on the distributive and integrative approaches to negotiations. The often-cited analogy for an integrative or collaborative concept is to "expand the pie", whereas in a distributive negotiation, the parties view the pie as fixed. Each of the parties tries to get more of the pie and win.
Read this article to expand your knowledge of the distributive and integrative approach to negotiations. The author gives pragmatic examples of using distributive and integrative approaches in his life. He also lists requirements for effective negotiations. If the negotiation involves a "fixed pie", what type of approach is that? What type of negotiation is it if the parties hope to "expand the pie"? Is one approach necessarily better than the other? Why or why not?
Read this article for a description of five negotiation styles and strategies. There are three negotiating types: soft, hard, and principled. Principled negotiation is focused on the problem and the pragmatic and organized pursuit of solving it.
This article cites a study of more than 300 managers that found superior performers scored higher in all emotional intelligence attributes, including self-awareness and self-management. A lack of emotional intelligence, particularly self-awareness and self-control, is a key predictor of poor leadership. What are two major emotional intelligence attributes that indicate how EQ can contribute to leadership success?
3.3: Phases of Negotiation
This section describes five phases of negotiation: investigation, determining your BATNA, presentation, bargaining, and closure. Although the presentation stage normally receives the most attention, each phase can affect the outcome of the negotiation.
The chart in this section depicts the negotiation process in three steps: pre-negotiation, negotiation, and post-negotiation. Read the suggestions to consider during pre-negotiation, including assessing your confidence level, determining what is really important to your prospect, and identifying your pre-negotiation goal (the minimum you will accept during negotiation). In the third step, post-negotiation, you should celebrate with everyone who was part of the negotiation. This is an important step to help build your relationship and prepare for your next negotiation. Attempt the exercises questions at the end of the section.
Read this article and pay special attention to the description of SMART goals. Effective goals should be specific, measurable, achievable, realistic, and time-bound. Using quantitative (numeric) terms in their goals will allow parties to measure and benchmark progress.
Have you missed opportunities for effective outcomes by omitting pre-negotiation planning? You are not alone! Expert negotiators often bypass some of these important questions, to their detriment. These basic principles will help you achieve your desired outcomes during future negotiations.
Unit 3 Assessment
- Receive a grade
Take this assessment to see how well you understood this unit.
- This assessment does not count towards your grade. It is just for practice!
- You will see the correct answers when you submit your answers. Use this to help you study for the final exam!
- You can take this assessment as many times as you want, whenever you want.