BUS403: Negotiations and Conflict Management

Read this section on the five phases of negotiations: investigation, determining your best alternative to a negotiated agreement (BATNA), presentation, bargaining, and closure. The text includes best practices and tips on how to avoid common mistakes made during negotiations. Some business leaders and managers have a distributive view which envisions a pie they will divide among stakeholders. This perspective reduces the opportunity for conflict and opens the door for problem resolution. Note that we will refer to this document several times during the course.

Watch this video on four elements of negotiation: goals, strategy, issues, and planning. Notice they resemble the phases listed in the previous reading. Having clear, measurable outcomes will help you determine whether you have won or lost in a negotiation. Dialogue and vocabulary are crucial elements. You cannot reach an agreement or settle a dispute if you do not "speak the same language" or if your goals run in opposite directions. Everyone involved must be able to communicate and understand the concepts and terminology used during the negotiation.

Read this text, which explores tools and techniques business leaders use for making decisions. It defines the advantages and disadvantages of different levels of individual and group decision-making strategies.

Read this text. As you set the goals for a negotiation, pay special attention to this description of SMART goals which should be specific, measurable, achievable, realistic, and time-bound. Using quantitative (numeric) terms helps you measure and benchmark progress. SMART goals keep employees focused, motivated, and inspired. A failure to set SMART goals increases the risk that your work will be derailed or lost to noisy distractions.

Watch this video on how to create a negotiation strategy. The presenter outlines four strategies based on how you answered these questions: How important is the outcome to you, your team, or your business? How important is your long-term relationship with the other person?

1. Competition – you need a good deal now; maintaining a good relationship is not important;
   
   
2. Accommodation – you give the other side what it wants; you must maintain a good relationship;
   
   
3. Avoidance – you withdraw from the negotiation; maintaining a good relationship is unimportant;
   
   
4. Collaboration – you want to work together to both get what you want; you need to maintain a good relationship.

Whether you face a fixed or expanding pie, limiting negotiation errors guarantees a clearer path to victory that is sustainable and long-lasting. Read this text to avoid some common negotiation errors.

Watch this video on distributive negotiation to learn when this strategy is appropriate and when a collaborative (or integrative) strategy may "expand the pie" for both parties. Negotiators often use distributive bargaining (or win-lose bargaining) when negotiating over price.

With this type of bargaining, words like deadlock, final offer, firm, hostile, and ultimatum are commonplace. The concepts of the target price, buyer's resistance point, seller's public (asking) price, seller's resistance point, and bargaining range are inherent to distributive negotiation. The presenter uses the example of a basketball game to make the point that distributive bargaining means winning and losing.

Watch this video lecture on positional bargaining. The presenter cites Fisher and Ury, who argue that positional bargaining does not produce sustainable agreements and is an inefficient means of reaching win-win solutions. Pay attention to the "orange" example that explains the benefits of moving beyond the position to the issues of the conflict. In a case involving the parties' position on price, the price is the mutually accepted price (position), and negotiations are directed toward that goal.

The presenter highlights the limits of position bargaining, which results in a loss for one party. Notice that negotiators who know the other party's desires or needs have an advantage.

Game theory, or decision-making under competition, has its origins and applications in economics, operations research, and psychology. Game theory revolves around social interaction – what occurs depends on what others may be willing or unwilling to do. This section explains the basics of game theory, which studies optimal decision-making in a competitive circumstance where the decisions of one individual affect the situational outcome for every stakeholder. Game theory includes four major categories: classical game theory, combinatorial game theory, dynamic game theory, and other topics in game theory. Exposure to game theory benefits leaders who use critical thinking and logic to plan and manage growing industries and businesses.

Watch this video on the Prisoner's Dilemma, a classic example of game theory. The participants base their strategy on what they think the other party will do. The Prisoner's Dilemma illustrates how individual choices can lead to the worst situation possible. The situation devolves as each side tries to outplay the other. This situation offers a lesson for mergers and acquisitions of smaller or larger companies.

Watch this short video on the concept of a zero-sum game where only one side wins the entire prize, business, or territory. In business, this looks like a full acquisition, hostile or otherwise. This concept is important in industries with high customer turnover and business growth.

Watch this video on the integrative or win-win approach. It assumes the parties can change the situation to create a solution where everyone gets what they want. Perhaps they will cooperate and approach a third party to fund their endeavor. Neither side is compromising (they are not giving up what they really want). The sides minimize their differences and focus on what they have in common. They understand each other's needs.

Collaboration helps everyone walks away with a favorable outcome. Remember to celebrate your victory with everyone who was part of the negotiation. It will help build your relationship and prepare for your next negotiation.

Read this article, where the author offers practical examples of using a distributive and integrative approach. He lists requirements for effective negotiations and circumstances or moments that involve distributive bargaining. Can you think of examples where this occurs in your life?

The text includes three steps in the negotiation process: pre-negotiation, negotiation, and post-negotiation. During pre-negotiation, you should assess your confidence level, determine what is important to your prospect, and identify your goal (the minimum you will accept during negotiation).

The concept of emotional intelligence gained popularity during the 1990s. Robert Cooper and Ayman Sawaf define emotional intelligence as the ability to sense, understand, and apply the power and acumens of emotions to promote human energy, information, connection, and influence. According to Daniel Goleman, your emotional intelligence quotient (EQ) is more important than IQ in predicting leadership success. Emotional intelligence is critical to managers. The more complex the project profile, the more important the project manager's EQ is to project success.

Many view personal success as zero-sum goals (win-lose), while altruism and family-related goals are positive-sum (win-win). Neuroeconomics experiments based on cooperation and trust confirm that people who trust others tend to have a positive-sum attitude to life. People who believe life is a positive-sum game tend to be happier than those who see a zero-sum game.

We can apply many of these negotiation concepts to conflict negotiation, which we will study in Unit 4 – a key predictor of poor leadership is the lack of emotional intelligence, self-awareness, and self-control. Emotional intelligence skills can improve business outcomes by helping managers make decisions more quickly with value-based results and solutions. This helps businesses run more smoothly and keeps leadership and management connected to front-line staff, customers, and vendors.