BUS403: Negotiations and Conflict Management

Unit 1: Negotiation Strategy

• Upon successful completion of this unit, you will be able to:

  • define the theory, processes, and practices of negotiation;
  • describe the five phases of negotiation;
  • describe how to incorporate problem-solving strategies in negotiations;
  • interpret the dynamics of the group decision-making process;
  • explain the advantages of using SMART goals in negotiations;
  • describe the steps of creating a negotiation strategy;
  • describe how to apply the concepts of game theory to negotiation;
  • compare distributive and integrative negotiation; and
    
  • explain the advantages emotional intelligence brings to a negotiation.

• 1.1: What Is Negotiation?

  Negotiation has various definitions but generally involves getting people to agree to certain concepts to follow the same rules of engagement. Governments and large businesses often train their leaders and operational managers to be better negotiators due to the effect it can have on their bottom line.

  They also want to ensure they work from the same script with the same goals.
  

  • Negotiations Page

    Mark as completed

    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.
    

  • What Is Negotiation? Page

    Mark as completed

    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.
    

• 1.2: Problem-Solving

  Negotiation theories are rooted in decision-making analysis. In one theory, decisions are structural and relate to how to navigate a process or procedure. Other theories resemble barter systems or basic trade concepts. There are many ways to achieve your goal.

  Problem-solving goes hand-in-hand with negotiation and conflict resolution because it involves choosing the best strategy for reaching a certain goal. Stakeholders begin by identifying a final goal and deciding the steps they need to take to get there. The discussion should present alternative options that achieve an acceptable resolution.
  

  • Problem-Solving and Decision-Making in Groups Book

    Mark as completed

    This text summarizes common characteristics of problems and the five steps in group problem-solving. The reading describes brainstorming and discussions that should occur before group decision-making, compares and contrasts decision-making techniques, and explores various influences on decision-making. The section "Getting Competent" emphasizes the need for leaders and managers to delegate tasks and responsibilities as they identify specialized skills among their teams and employees.
    

  • Decision-Making in Groups Page

    Mark as completed

    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.
    

• 1.3: Establishing SMART Goals

  Negotiations can involve teams, researchers, marketing agencies, and community organizations. The complexity depends on the magnitude or importance of the goal. Recall the five phases of negotiation. Although the presentation stage receives the most attention, each phase can affect the negotiation outcome.
  

  • Setting the Right Goals Page

    Mark as completed

    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.
    

• 1.4: Creating a Clear Strategy

  The desired outcome from your negotiation should drive the four basic strategies you follow. You should ask two questions before any negotiation: How important is the negotiation outcome to you, your team, or your business? How important is your long-term relationship with the other person?

  Make sure you have planned your strategy with your team before your negotiation so everyone is on the same page and makes similar demands. For example, your outcome could be the price of the item. What is the highest price you are willing to pay? How important are quality and customer service? Are you willing to pay more for these attributes? What actions do you expect the person you are meeting with to perform? Clear communication is critical so neither side is disappointed when the item is delivered due to a misunderstanding about the terms of your agreement.
  Do you want to create a long-term relationship with the other party? You might want to adjust your outcome if you do. For example, you might pay a higher price, throw in additional services, or make concessions to foster goodwill and please them.
  

  • Strategy Planning Page

    Mark as completed

    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.
  • Recognizing and Avoiding Negotiation Mistakes Page

    Mark as completed

    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.
    

• 1.5: Distributive Negotiation (Win-Lose)

  Distributive negotiation is a common way to look at negotiation because it involves a fixed object or item two or more parties want. Since the object or item is set (many use the analogy of the pieces of a pie), each party enters a negotiation as they try to get more for their side. One party gets more pie, and the other gets less: a win-lose outcome. You can extend this analogy to any negotiation, such as a buyer and seller negotiating a price, a store purchasing produce or other supplies, a non-profit organization applying for a grant, or a salary negotiation with your employer.
  

  • Distributive Bargaining Page

    Mark as completed

    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.
    

  • Introduction to Augmenting the Bargaining Zone Page

    Mark as completed

    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.
    

  • An Overview of Game Theory Page

    Mark as completed

    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.
    

  • The Prisoner's Dilemma Page

    Mark as completed

    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.
    

  • What Is a Zero-Sum Game, and How Do I Play? Page

    Mark as completed

    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.
    

• 1.6: Integrative Negotation (Win-Win)

  In a distributive negotiation, the pieces of the pie are known and finite. Each side tries to get more of the pie to win. However, the distributive mindset may prompt negotiators to miss opportunities to "expand the pie". Some negotiators adopt an integrative approach where they look for ways to collaborate so everyone wins. For example, buyers and sellers can launch new initiatives, products, or programs with shared values or interests.
  

  • Integrative Negotiation Page

    Mark as completed

    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.
    

  • The Importance of Integrative Negotiation Page

    Mark as completed

    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?
    

  • Collaborate to Negotiate Page

    Mark as completed

    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).
    

  • Emotional Intelligence Page

    Mark as completed

    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.
    

  • Does a Positive-Sum Attitude Promote Happiness? Page

    Mark as completed

    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.
    

  • What Is Emotional Intelligence and Why Do You Need It? Page

    Mark as completed

    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.
    

• Unit 1 Assessment

  • Unit 1 Assessment Quiz

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    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.