Innovative Negotiating:An Alternativ to Distributive
Negotiating
I. Distributive (or positional ) approach Philosophy: Take negotiation for a dividing of a fixed pie, a win-lose game. The negotiators assume that the other side must lose for us to win. Negotiating is an art of making concessions or playing tricks; Practice : Apply psychological pressure or so-called strategies to resolve singleissue disputes II. Innovative (or Principled ) approach Philosophy: A. People-centered game. Holds that negotiating is expanding the pie for both sides to win, a win-win game. Practices: Separate people from problems and interests from positions, Make principled concessions, esp invent creative options to reach a mutually satisfactory agreement by external criteria, Resolve 11 multiple-issue disputes
same roof.
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Exploring What You Believe About Negotiations
I. Consider the following questions before the lecture
1. What is a negotiation? 2. Name one kind of negotiation you know between two persons or organizations.
$525
Buyer’s Target Point
Buyer’s Reservation $575 Point $650
Target Point Seller’s Opening Offer
$500
Seller’s Reservation Point
$550 Seller’s $600
*****-----The lowest amount the seller is willing to accept (seller’s reservation point) is less than the highest amount the buyer is willing to pay (buyer’s reservation point).
What Cognitive Biases Can Hurt Distributive Negotiations?
Endowment effect
– Sellers typically believe that their possessions have more intrinsic value than buyers do
International Business Negotiations
Wuhan University
MBA Program of Economics & Management School November- 10, 2011
Prof. Guo-ping Gui
My motto :
We are blessed with the opportunity to share knowledge under the
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Conflict Management Styles
Competition Collaboration
High
Concern for Your Own Outcomes
Low
Compromise Avoidance
Low
Accommodation
High
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Concern for Other Party’s Outcomes
Sunk costs
– Expected future costs & benefits should influence decisions, but people have difficulty forgetting about past costs
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Processes of Conventional Negotiating Adopted by Most Chinese Negotiators
3. When should you negotiate (versus do something else)?
4. What do good negotiators do that makes them effective? 5. What do poor negotiators do that makes them ineffective?
B. Set target point C. Bargaining zone determines whether we can make a deal
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Core of Conventional Negotiating ____ Positive Bargaining Zone
Buyer’s Opening Offer
II. What are alternatives are there to negotiating a joint agreement?
1. Accept whatever terms offered by the other side 2. Walk away from any agreement (find a different way to meet your needs) 3. Have a third party (e.g., mediator, government) decide what the agreement will be 4. Use force or physical threats to get what you want Questions: Give examples of each kind of negotiating;
Framing effects
– People become risk avoiding when there is something to gain (they prefer a ―sure thing‖) – People become risk seeking when there is something to lose (they prefer to take a chance of no loss)
Distinguishing Good & Bad Negotiators
• Good negotiators
– Flexible within limits – Manage emotions so that they don’t interfere with reasoning – Prepare by thinking through alternatives – Listen & ask questions – Consider creative ways to structure agreements – Watch for & interpret the other parties’ reactions – Make sure other side is happy with the deal
Abbreviation of the processes PRAM: P. Preparation: R. relationship A. agreement M: maintenance relationships. Questions: 1. What are the troubles with the Chinese conventional negotiating approaches. 2. What could be the inevitable outcome if one adopts such approach?
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The Essence of Negotiating and
Alternatives to Conventional Negotiating
I. In essence, What is a negotiation?
It is back-and-forth communication designed to reach an agreement when you and the other side have some interests that are shared and others that are opposed to each other.
$550
Seller’s Seller’s Seller’s ReservationTarget Opening Point Offer Point
*****----The lowest amount the seller is willing to accept (seller’s reservation point) is more than the highest amount the buyer is willing to pay (buyer’s reservation point). 6