Chapter 1: The Nature of Negotiation Situation

Negotiation decision-making situation with two or more interdependent parties

attempting to reach agreement
Characteristics of negotiations:
1)
2)
3)
4)
5)
6)

Two or more parties

Conflict of need and desires between two or more parties
Negotiation by choice
give-and-take finding middle ground compromise
Prefer negotiation and inventing solution over fighting
Successful negotiations = management of tangibles (price/terms of
negotiation) and resolution of intangibles (psychological motivations such as
need to win, looking good, defending principle, or appearing fair

Managing Interdependence
-

Interdependent parties characterized by interlocking goals (vs. independent

vs. dependent)
o Parties need each other to accomplish objectives
o Mix of convergent and interdependent relations
Zero-sum/distributive situation = when the goals of two or more people are
zero-sum so that one can gain only at the others expense
o Degree to which one attains goal, the others goal attainment is
blocked
Integrative situation when parties goals are linked but not zero-sum, so
that one persons goal achievement does not lock the goal achievement of
another
Alternatives shape interdependence
o whether you should or should not agree on something in a negotiation
depends on the attractiveness to you of the best available alternative
BATNA best alternative to a negotiated agreement

Making Concessions
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Mutual adjustments
Negotiations begin with statements of opening position
Each party states most preferred settlement proposal
o Each party then defends initial proposals and critiques the others
One party makes change in position party has made a concession
Dilemma of honesty how much of the truth to tell the other party
o May take advantage of you
o Other party does not know about your needs stalemate
Dilemma of trust how much of what the other party tells them should
negotiators believe
o Depends on partys reputation, past treatment of you, understanding
of external pressures, etc.
Give-and-take necessary

Value Claiming and Value Creating

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Distributive bargaining there can only be one winner

o Purpose of negotiation is to claim value and to do whatever necessary
to claim the reward and gain the lions share
Integrative negotiators should employ win-win
o Purpose should be to create value and find a way for all parties to meet
their objectives
Most negotiations both value-claiming and value-creating
o Negotiators have to recognize situations where one approach is used
more than other other
o Must be versatile using both
o Their perception of the situation tend to be biased toward seeing
problem as more distributive than they really are
People prone to systematic biases (seeing interdependent
situations as more competitive than they are)
For this reason, many negotiations yield suboptimal results

Conflict
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Results from strongly divergent needs of two parties or from misperceptions

or misunderstandings
Sharp disagreement or opposition, as of interests, ideas, etc.
Conflict management:
o Dual concerns model (framework for conflict management) people in
conflict have two independent types of concerns concern about their
own outcomes and concern about the others outcomes
o Graph cooperative vs assertiveness dimension
5 major strategies for conflict management:
1) Contending lower-right-hand corner
Pursue own outcomes strongly with little concern for other side
threats, punishment, intimidation etc.
2) Yielding upper-left corner
Little interest in own outcomes
Interested in other sides outcomes lowering ones own
aspiration
3) Inaction lower-left-hand
Little interest in other sides outcomes or own outcomes
Withdrawal and passivity
4) Problem-solving top right
High concern for both
Actively pursue approaches to maximize joint outcomes
5) Compromising somewhere in the middle
Moderate effort to pursue both outcomes

Chapter 2: Strategy and Tactics of Distributive bargaining

THE DISTRIBUTIVE BARGAINING SYSTEM

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Ex. Alex wants to pay as little as possible for property while John hopes for a
large sum
o Fixed-sum situation with competing goals between two parties
Target point the point at which a negotiator would like to conclude
negotiations
Resistance point negotiators bottom line or the point at which a negotiator
is indifferent to the deal (reservation price)
Initial offer should be away from target point to leave room for some
concessions
Establish starting, target, and resistance points before negotiation
Target point usually learned or inferred through negotiation
People usually give up the margin between starting point and target point
Resistance point should be kept a secret
Spread between the resistance points of the two parties is called the
bargaining zone/zone of potential agreement
o Anything outside these points will be summarily rejected by one of the
two negotiators
o Positive bargaining zone
o Negative bargaining zone sellers resistance point above buyers
Likely to stalemate
Having a number of alternatives can be useful BATNA will influence the
decision to a close or walk away
Strong BATNAs = more power throughout negotiations gives them power to
walk away

Settlement Point
-

Reach settlement within positive bargaining zone = process of distributive

bargaining
o Goal: obtain as much of the bargaining zone as possible
Negotiators who do not think they got a good deal may try to get out of the
negotiation later or find other ways or recouping the losses

Fundamental Strategies
1) Push a settlement close to the sellers resistance pint (yielding larger part of
settlement range) extreme offers and small concessions
2) Convince seller to change his/her resistance point by influencing beliefs about
value of unit
3) Negative bargaining zone convince seller to reduce resistance point to
create positive settlement zone
4) Convince seller that this settlement is the best that is possible
- Through these strategies, one party influencing the others perception of
general strategy taken
o Discover other partys resistance point
o Influence other partys resistance
Discovering Other Partys Resistance Point

Learn about other sides target, resistance point, motives, feelings of

confidence, etc.
Conceal your own emotional vulnerabilities
Influence other partys resistance point
o Resistance point also influenced by cost an individual attaches to delay
or difficulty in negotiations
The following points important to other persons resistance point
1) Value other attaches to particular outcomes
2) Costs other attaches to delay or difficulty in negotiations
3) Cost other attaches to having negotiation aborted
Other can take advantage if they recognize that delay or impasse are
important to you therefore their resistance point will be stronger
If your own delay/impasse costs are higher, resistance point is weaker
Less party values issue, lower the resistance point
More party believes issue is important to you, resistance point will be lower

TACTICAL TASKS
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4 important tactical tasks concerned with distributive bargaining

(1) Assessing other partys target, resistance point, and cost of terminating
negotiations
Indirect assessment gathering information individual likely
used to set target and resistance
Direct assessment push other party to tell you facts clearly
(2) Managing the other partys impression of the negotiators target,
resistance point, and cost of terminating negotiations,
Screen information about position and represent them as they
would like the other to believe them
Screen activities examples:
Say and do little as possible reticence reducing
likelihood of verbal slips and presenting clues
Calculated incompetence do not give the negotiating
agent all the necessary information, making it impossible
for agent to leak information (when done through
representative)
Channeling all information through team spokesperson in
team negotiations
Present a great many items for negotiations one a few
which are important
Direct action to alter impressions
Selective presentation reveal only facts necessary to
support case
Displaying emotional reaction to direct action (could
cause other side to view relationship in negative light)
o Studies show showing negative reaction is okay as
long as it is not intense and can help capture value
(3) Modifying other partys perception of his or her own target, resistance
point, and cost of terminating negotiations

Make cost of obtaining objectives appear higher

List a potential undesirable outcome if the other party got what
they wanted high-lighting something that may have been
overlooked
Conceal information
(4) Manipulating the actual costs of delaying or terminating negotiations
Negotiations have deadlines extensions can be costly
Most agreements are reached near deadline according to studies
Not abiding by particular deadline can be a powerful tool for
person not under deadline conditions
Three ways to manipulate these costs of delay:
1) Plan disruptive action
Picketing, boycotting, locking negotiators in a room, etc.
increase costs of not settling
2) Form alliance with outsiders
Task forces, political action groups, protest organization to
bring greater collective pressure on the target i.e.
external accreditation standards
3) Manipulate the scheduling of negotiations
Squeeze negotiations into last remaining minutes of
session to extract concessions from visiting party

POSITIONS TAKEN DURING NEGOTIATION

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At the beginning of a negotiation, each party takes a position and then one
party will change his or her position in response to information from the other
party or in response to the other partys behaviour
Opening offers best advice is to make the first offer
Anchoring effect the observation that people who make decisions under
uncertain conditions are influenced by initial starting numbers
Exaggerated opening offers get higher settlements as long as they are no
outrageous
2 reasons ambitious opening offer is advantageous:
(1) Gives negotiator room for movement and allow him time to learn about
other sides priorities
(2) Ambitious opening offer sends meta-message that there is a long way to
go before settlement, ore concessions that originally intended may have
to be made, and other may have incorrected estimated his or her own
resistance point
2 disadvantages
(1) May summarily be rejected by other party
(2) Communicates attitude of toughness harmful to long-term relationship

Opening Stance
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Will you be competitive or moderate?

Belligerent stance attacking positions, offers and character
Moderation and understanding position lets be reasonable type

Negotiators tend to match distributive tactics from the other party with their
own tactics so choose carefully
Reasonable bargaining position couple with friendly stance and exaggerating
bargaining position coupled with tougher stance usually

Initial Concessions
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Opening offer usually met with counteroffer and these two offers define initial
bargaining range
Negotiators can either make concessions or choose to make none
o How large a concession should be made?
First one is symbolic
Small one = position of firmness trying to capture most of the
bargaining range for themselves could lengthen or shorten
negotiations
Moderate = co=operative stance
Reasonable = flexibility easier to learn about other partys
targets and perceived possibilities

Roles of Concessions
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Take-it-or-leave-it approach not good negotiators tend to resent it

Concession making indicates acknowledgement of other party and a
movement toward the others position, it implies recognition of that position
and its legitimacy
Not reciprocating = position of firmness may cause other party to feel their
reputation has been diminished
Some may link concessions to previous concessions like a package
Packaging concessions = better outcomes

Pattern of Concession Making

-

As concessions are getting smaller, resistance point is begin approached

Pattern of concession making also important based on size of concession
(slowly making smaller concessions getting closer to RP)
Must signal that concessions are almost over with words or actions

Final Offers
-

No further room for movement present offer is final offer

Ex. Absence of further concessions as message that offer is insufficient
This is as far as I can go
Make last concessions substantial one way of signaling, this is it throwing
in remainder of negotiation range
o Dramatic but not ridiculously large so that the other party thinks you
are holding back

Closing the Deal

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Provide alternatives = 2 or 3 in a package that are pretty much equivalent

Assumptive close act as if they decision has been made

Split the difference

Exploding offers contains extremely tight deadlines to pressure other party
to agree quickly
o 24 hours to accept job offer (ex) helps them to stop considering
alternatives
Sweeteners special concession saved for the close

Hardball tactics work best against poorly prepared negotiators and can backfire
-

Used to enhance appearance of bargaining position of person using it or to

detract from appearance of the options available to the other party
Often do more harm than good
Involve risk for person using it
o Harm to reputation
o Lost deals
o Negative publicity
o Partys revenge
To deal with them, identify the tactic quickly and understand
o Ignore them (not responding to threat or pretend not to hear)
o Discuss them label the tactic and set behavioural expectations
o Respond in kind often causes hard feeling and chaos often
counterproductive
o Co-opt other party befriend them before tactics can be used
Types of hardball tactics
o Good cop/bad cop
o Lowball/highball ridiculously low or high opening offers that they
know they will never achieve risk = negotiators consider it a waste of
time
Good preparation is a critical defence- insist on more reasonable
opening offer, state own understanding of market value,
threaten to leave negotiations, respond with an extreme
counteroffer
o Bogey pretend is of little or no importance that is actually quite
important fundamentally deceptive
Difficult to change and accept position in other direction
o The nibble used to ask for proportionally small concession on item
that has not been discussed previously to close deal
Take suit if tie (nibble) is given for free
Not bargaining in good faith have your own nibbles prepared
o Intimidation emotional ploy using anger or fear
Guilt can also be used
The greater the appearance of legitimacy, the less likely the
other party will be to question the process being followed or the
contract terms being proposed
Question other partys integrity and lack of trust
o Aggressive behaviour relentless push for concessions
Discuss negotiation process itself to deal with this or having a
team

Good preparation and understanding of bother sides needs and

interests
Snow job negotiators overwhelm the other party with so much
information that they have trouble discerning important facts from
distractions
Use of highly technical language to respond to non-expert
Response: ask questions until you receive the answer you can
understand
Have experts on your own side and listen carefully for
consistency

Chapter 3: Strategy and Tactics of Integrative Negotiation

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If one side achieve their goals, the other side is not precluded from achieving
their own
Allows both sides to achieve their objectives
Manage both context and process of negotiation to gain co-operation
Understand the other sides real needs and objectives
o Emphasize commonalities and search for solutions meeting both ends
create free flow of information
o reveal true objectives and listen carefully wiliness to share
information is not characteristic of distributive bargaining
understand the other negotiators real needs and objectives
o manage dilemmas of trust and honesty
emphasize commonalities between parties and minimize differences
o Set aside quarrels or squabbles
o Stress larger goals for the parties

Search for solutions that meet needs and objectives of both sides
-

Negotiators must be firm but flexible

o Firm about interests and needs
o Flexible about how those interests and needs are being met
Negotiate to make sure that what one obtains does not take away from the
others accomplishments
Pursue own goals but remain mindful of the others goals

RECOGNIZING INTEGRATIVE SITUATIONS

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Clues that it is integrative situation

(1) Negotiation includes more than one issue
(2) It is possible to add more issues into the mix
(3) Negotiation is likely to recur over time
(4) Parties have varying preferences over the issues

KEY STEPS IN INTEGRATIVE NEGOTIATION PROCESS

Claiming value negotiator carves out share of a finite set of resources DB

Creating value parties with conflicting yet compatible interests trade low
priority issues for higher priority issues
Push claiming value toward upper right-hand side
o Pareto efficient frontier = line that contains a point where there is no
agreement that would make any party better off without decreasing
the outcomes to the other party
Identify Pareto efficient solutions
Create deal on this frontier
Some issues may be more critical than other (assign points accordingly)
Compromises in the middle fall below efficient frontier
Trade high priority issues for low-priority ones
When you do not reach this frontier, you are leaving money on the table
and value that could have been created was not
The negotiators dilemma the fact that there is a tension between
behaviours that are competitive and behaviours that are co-operative
o No matter how much creative problem solving enlarges the pie, it must
still be divided; value that has been created must be claimed
Creating value should proceed capture because
(1) Processes that create value are effective when done collaborating
and without a focus on who gets what
(2) Claiming value involves distributive bargaining processes that
needed to be introduced carefully or they may harm the
relationship and derail progress

Understand the situation fully identify interests and needs

-

Interests = underlying concerns, needs, desires, or fears that motivate the

negotiator to take a particular position
o Why does each negotiator want what they want? understand the why
Presumption = if both parties understand the motivating factors for the other,
they may recognize possible compatibilities in interest that permit them to
invent new options that both will endorse
Different types of interests
o Intrinsic (values it in and of itself) vs instrumental (party values
because it helps them derive other outcomes in the future)
Substantive interests relate to focal issues under negotiation (economic or
financial issues)
Process interests related to how the dispute is settled (i.e. one party may
want distributive bargaining because he enjoys competition or someone
wants to have a say)
Relationship interests indicate that one or both parties value their
relationship with each other and do not want to take actions to damage it
Interests in principle concerning what is fair, right, and acceptable
o Often involve intangible factors
Some observations on interests
o Almost always more than one type of interest underlying a negotiation
o Parties can have different types of interests are stake
o Interests can change

Surfacing interests ask yourself what do I want from these

negotiations
o Surfacing interests not always easy to do or in ones best interest
trying to focus on interest alone often oversimplifies or conceals the
real dynamics of a conflict
o Focusing on interests can be harmful interests can impede
negotiations with a group of negotiators whose consensus on a
particular issue is built around a unified position rather than a more
generalized set of interests (i.e. coalition)
Generate alternative solutions create a list of possible solutions to the
problem
o Identify the easiest and least costly method and progress to the more
costly approaches if others fail
o Expand the pie begin with a shortage of resources and add resources
in such a way that both sides can achieve their objectives
o Logrolling process of exchanging low-priority issues for higher priority
ones
Often done by trial and error
Better agreements reached as the number of issues increases
Use nonspecific compensation allow one person to obtain his objectives and
pay off the other person for accommodating their interests payoff may be
unrelated to substantive negotiation but the party receiving it considers it an
adequate form of payment
Need to know what is valuable to the other side
Cut costs for compliance through cost cutting, one party achieve her
objectives and the others costs are minimized if she agrees to go along
o Ex. Samantha and Emma give Sam a travel subsidy and a new car if
she takes Emmas company location
Find a bridge solution bridge solutions inventing new options to build an
agreement
o

Evaluate and Select Alternatives

-

Have one party agree to one set of alternatives

Guidelines for evaluating options and reaching a consensus
(1) Narrow the range of solution options examine list of options and focus on
those that one or more negotiators strong support
(2) Evaluate solutions on the basis of quality, standards and acceptability
look at most logical and rational ones
Objective standards objectively fair outcomes or processes that can
be used to benchmark settlements
Agree to criteria in advance of evaluation options
Be willing to justify personal preferences
Be alert to the influences of intangible in selecting options
o Ex. Feeling like a winner or good about oneself
Use subgroups to evaluate complex options
Take time to cool off
Explore different ways to logroll (logroll high-priority for low-priority tradeoffs)

Exploit differences in risk preferences

Exploit differences in expectations one may want smaller payment
now and other might want larger payment later
o Exploit differences in time preferences one may need to meet short
term needs while other one is interested in long-term awards
Keep decisions tentative and conditional until all aspects of the final proposal
are complete soft bundling revise package throughout negotiations
Minimize formality and record keeping until final agreements are closed
o
o

Strategies that Facilitate Successful Integrative Negotiation

(1) Create common objective or goal
o Common goal = goal that are all parties share equally each
benefiting in a way that would not be possible if they did not work
together
o Shared goal = one that both parties work toward but benefits each
party differently (ex. Cost cutting or divided profits differently)
o Joint goal = involves individuals with different personal goals agreeing
to combine them in a collective effort (ex. Joining political campaign for
different reasons)
(2) Share information important to know how counterpart prioritizes
information so that trade-offs can be made
o 3 types of information
(a) Underlying interests
(b) Priorities and preferences let counterpart know how you rank
issues in terms of importance
(c) Interpretation of key facts how do they interpret the market value
of a parcel of land being negotiated
(3) Build trust by-product of information sharing
o Mistrust inhibits collaboration creates defensiveness
(4) Make Multiple Offers Simultaneously
o Presenting more than one package offer, ensuring that each package
offer is of equal value to yourself
o Do not negotiate on an issue-by-issue basis
o Sends signal of flexibility
o MESOs should be close to target and not reservation point
o Acquire information about which one is furthest from their preferences
(5) Motivation and commitment to work together
o Parties must be motivated to collaborate rather than compete
o Commitment to reaching a goal that benefits both fo them rather than
pursing only their own needs
o Parties deeply committed to each other as themselves also not likely to
succeed
Should remain firm in achieving own objectives with healthy
active self-interest while recognizing collaborative, problemsolving relationship
o Can enhance this motivation and enhancement by:
Learn that they share a common fate

Demonstrate to each other that there is more to be gained by

working together
Engage in commitments to each other before the negotiations
begin
Pre-settlement settlements (commitments made by
parties before negotiations begin)
o Legally binding agreement
o Settlement occurs before parties undertake fullscale negotiations
o Resolves subset of issues and establishes
framework within to delineate comprehensive
agreements
(6) Try post-settlement settlements
o Commitments in which negotiators reach a settlement and try to agree
upon improvements to that settlement afterwards
o Emphasize that discussions are informal and will not affect current
agreement until they result in a better one than the original (to make
sure the other side knows you are not forcing last-minute concessions)
o Use clear and accurate communication
Share information
Reconcile differences in interpretation

Chapter 4: Negotiation Planning and Strategy

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Poorly prepared negotiator needlessly surrenders initiative and power to the

other side
Expert and nave negotiators differ not in time of planning but in terms of
what they plan for and how
o Twice as many options
o Three times are much attention to common ground issues
o Twice as much attention to long-term issues
o Focused on their goals and limits
o Gave twice as much attention to sequencing of offers
Direct effects of goals
1. Wishes are not goals goals are specific, focused targets
2. Goals are linked to other partys goals linkage defines an issues to
be settles
3. Goals must be attainable
4. Effective goals must be concrete, specific, and measurable
Goals can also be intangible or procedural
o Ex. Maintaining reputation, establishing precedent for future
negotiations, establishing precedent for future negotiations,
conducting negotiation in a manner that is fair to all sides
Indirect effect of goals
o Often pursue short-term goals and downplay long-term impact of
negotiations
o Relationship-oriented goals should motivate toward a strategy in which
the relationship valued as much as substantive outcome

GETTING READY: PLANNING PROCESS

-

Planning document
Define issues
o Single issue = distributive bargaining system usually
Assemble issues and define bargaining mix
o Prioritize issues rank-order
o Award total of 100 points and divide points among issues
o Are issues linked or separate?
Define interests, limits, and interests
o Substantive, process-based, or relationship-based?
o What will happen if other party refuses to accept proposal (RP and
alternatives must be known)
o Alternatives?
o RP?
Define objectives and opening bids
o Target point (realistic) vs. asking price (best deal one can hope to
achieve)
o Opening bid may be best possible outcome
o Cannot be unrealistic and self-defeating
o Target setting requires positive thinking about ones own objectives
o Should not become too reactive and fixated on other party
o Consider how to package several issues and objectives together
o Understanding of trade-offs and throwaways
Assess constituents and social context
o Bosses, superiors, who make final decision and other parties to
evaluate an critique solution
o May be more than one negotiator at the table
o Who is on our side, on the other side, on the sidelines and can affect
outcome? Who is interested in the outcome (i.e. senior managers,
shareholders, etc.)? What is happening in broader environment?
(History of relationship, what kind of relationship is expected or
desired?, etc.)
Analyze other party
o Learn their issues, preferences, priorities, interests, alternatives, and
constraints
o Resources, interests, etc.
o Their bargaining mix
o Anticipate the interests, asking questions, asking others who have
negotiated with them
o Ask them directly
o Keep in mind misrepresentation of limits and alternatives
o Other constituents, authority, and social structure
o Other partys reputation and style past? Other parties?
o Other partys strategy and tactics
Plan issue presentation and defence

Present case clearly and provide ample supporting facts and

arguments or refute the other partys arguments and
counterarguments
o Who can I consult to help me with fact clarification?
o Have these issues been negotiated before?
o How can I present them convincingly?
Define protocol (when and where)
o What agenda should we follow?
o Where should we negotiate?
Select neutral territory to minimize advantages of home turf
o Time period for negotiations?
o What happens if negotiations fail?
o How will we keep track of what is agreed to?
o How do we know if we have a good agreement?
o