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International Negotiation 2011 02 International Negotiation 2011 02 Presentation Transcript

  • International Negotiation
    Stephan Langdon, MBA M.Ed
  • Negotiation Case
    While on vacation you go into a jewelry store and see an attractive looking watch. You ask the store’s owner how much it costs and he replies $4.095.670
    How much would you offer to pay for this watch?
    Should you offer anything?
  • When should you negotiateWhen should you never negotiate
  • Lewicki:When Should You Never Negotiate
    Cuandousted no cuida.
    • Cuandoustedpodríaperdertodo.
    • Cuando no hay nada ustedpodríaganar (el otrohaceque nada ustedquiera).
    • Cuandolasdemandas son ilegales o inmorales.
    • Cuandoactúan con maldad.
    • Cuandousted no tienetiempo.
    • Cuando el esperarmejoraríasuposición.
    • Cuando le no preparan.
    When you don’t care.
    • When you could lose everything.
    • When there is nothing you could gain (the other has nothing you want).
    • When the demands are illegal or unethical.
    • When they act in bad faith.
    • When you don’t have time.
    • When waiting would improve your position.
    • When you’re not prepared.
    4
  • Distributive Negotiation
    • Goals of one party are in fundamental, direct conflict to another party.
    • Resources are fixed and limited.
    • Maximizing the share of resources is the goal.
    • Distributive negotiation is all about who gets (or pays) how much. It is also where more for me means less for you.
    • Las metas de un partido están en el fundamental, conflicto directo a otro partido.
    • Los recursos son fijos y limitados.
    • La maximización de la parte de recursos es la meta.
    • La negociación distributiva está todo sobre quién consigue (o paga) cuánto. Está también donde más para mí los medios menos para usted.
    5
  • Integrative Negotiation
    • Create a free flow of information.
    • Attempt to understand the other negotiator’s real needs and objectives.
    • Emphasize the commonalties between the parties and minimize the differences.
    • Search for solutions that meet the goals and objectives of both sides.
    • Cree un libre flujo de información.
    • Intente a entender las necesidades verdaderas y los objetivos del otro negociador.
    • Acentúe los las cosas en campo común entre los partidos y reduzca al mínimo las diferencias.
    • Busque para las soluciones que logran las metas y los objetivos de ambos lados.
    6
  • Positions and Interests
  • Position/Interest
    • Positions are concrete things that you say you want.
    • Interests are the tangible motivations that lead you to take that positions – needs, desires, concerns, fears and aspirations.
    • Las posiciones son cosas concretas que usted dice que usted quiere.
    • Los intereses son las motivaciones tangibles que le llevan a tomar que las posiciones - las necesidades, desean, las preocupaciones, los miedos y las aspiraciones.
    8
  • Managing simple conflict
    Clarify both perceptions of message
    Focus discussion on issues
    Use facts not opinions
    Use structured problem solving
    Compromise
    Make conflict group concern
    Tackle one issue; most important
    Find areas of agreement
    Postpone decision while conducting additional research
  • Managing ego - conflict
    Encourage active listening
    Keep discussion on key issues
    Turn discussion to problem to solve, rather than conflict to win
    Seek cool, calm climate
    Be descriptive rather than evaluative
    Develop rules or procedures that permit differences of opinions
    Agree to disagree & return to areas of agreement
  • Two Types of Negotiations
  • Negotiator's Dilemma
    In any negotiation, the parties must decide whether to be competitive, cooperative, or some of both.
    David Lax and James Sebenius call this the negotiator's dilemma
    Joint value
    Joint gains
    new developments are considered improvements by both sides.
  • Key Concepts
  • 14
    Principled Negotiation
    • Key Principles – PIOC Model.
    • People.
    • Interests.
    • (BATNA).
    • Options.
    • Criteria.
    • PrincipiosDominantesModelo de GIOC.
    • Gente.
    • Intereses.
    • (MANA).
    • Opciones.
    • Criterios.
  • 05/09/08
    15
    People
    • Partnership in problem-solving, not adversarial.
    • Future relationship importance considered.
    • Research on Influence.
    • Normative Influence.
    • “peripheral cues” nonverbal, tone, posture, likable.
    • Informational Influence.
    • “central cues” – logic, reasoning, facts.
    • Sociedad en la solucion de problemas, no adversarial.
    • La importancia futura de la relación consideraba.
    • Investigación sobre influencia.
    • Influencia Normativa.
    • "señales periféricas" nonverbal, tono, postura, agradable.
    • Influencia Informativa.
    • “señales centrales" - lógica, razonamiento, hechos.
  • 05/09/08
    16
    Interests
    • What you need vs. what you say you want.
    • Know your own.
    • Know your audiences’.
    • Must prepare, do homework.
    • Allows for creative solutions.
    • Qué usted necesita contra lo que usted le dice desee.
    • Sepa sus el propios.
    • Conozca a sus audiencias.
    • Debe prepararse, hace la preparación.
    • Tiene en cuenta soluciones creativas.
  • 05/09/08
    17
    BATNA/MANA
    • Best Alternative to a Negotiated Agreement.
    • If you can’t come to an agreement, what is your walk away alternative?
    • Weigh every suggested outcome against your BATNA.
    • Example: Jerry McGuire clip.
    • El mejor alternativa a un acuerdo negociado.
    • ¿Si usted no puede venir a un acuerdo, cuál es su camina alternativa ausente?
    • Pese cada resultado sugerido contra su BATNA.
    • Ejemplo: Clip jerry de McGuire.
  • 05/09/08
    18
    Importance of BATNA
    • If no BATNA, risk escalating commitment.
    • example: negotiating condo, stocks.
    • Need to know when it is in your best interest to walk away.
    • Si ningunos BATNA, arriesgan el extender de ejemplo de la comisión:
    • condo de negociación, acción.
    • La necesidad de saber a cuando está en su mejor interés camina lejos.
  • Improving Your Position
    A Weak BATNA
    A weak BATNA is not the end of the world. Whatever hand you’ve been dealt, here are three potential approaches to strengthening your position:
     
    Strengthening a BATNA
    Improve your BATNA.
    Identify the other side’s BATNA.
    Weaken the other party’s BATNA.
  • 05/09/08
    20
    Options
    • Expand the pie.
    • Brainstorm solutions.
    • Involvement in solution = higher likelihood of persuasion.
    • Amplíe la Pie.
    • Soluciones de la buena inspiración.
    • Implicación en la solución = más arriba probabilidad de la persuasión.
  • 05/09/08
    21
    “Expanding the Pie”
    • Negotiation is about more than a fixed division of a single resource (Pie).
    • “Win-win” situation.
    • Make the “Pie” bigger so that you both get.
    • More than half.
    • La negociación está sobre más que una división fija de un solo recurso (pastel).
    • "Ganar-gane" la situación.
    • Haga la " pastel" más grande de modo que usted ambos consiga.
    • Más que medio.
  • 05/09/08
    22
    “Expanding the Pie”
    • Clear Opportunities for Win-Win.
    • Negotiation on more than one issue.
    • Possibility of side deals.
    • Different issue preferences between.
    • Las oportunidades claras para Ganar-Ganar.
    • Negociación en más de una cuestión. Posibilidad de repartos laterales. Diversas preferencias de la cuestión en medio.
  • Distributive Concepts
    • Resistance Point.
    • ZOPA.
    • Range.
    • Frame.
    • Anchor/Counteranchoring
    • Concession.
    • Leverage.
    • Punto de la resistencia.
    • ZOPA.
    • Gama.
    • Marca.
    • Ancla/Contra Ancla
    • Concesión.
    • Palancada.
    23
  • 24
    Reservation Price/Ultima Precio
    • The least favorable point where one will accept.
    • The “walk-away”.
    • Example: you are looking for larger office space. You set your BATNA at $20 and your Reservation Price at $35
    • If owner won’t budge from $35, you walk away and take advantage of your BATNA
    • El menos punto favorable donde uno aceptará.
    • El "walk-away".
    • Ejemplo: usted está buscando un espacio más grande de la oficina.
    • Usted fijó su BATNA en $20 y su precio de reservación en $35.
    • Si el dueño no bulle a partir del $35, usted camina lejos y se aprovecha de su BATNA
  • 25
    ZOPA
    • Zone of Possible Agreement (ZOPA).
    • The difference between the Seller’s Reservation Price and the Buyer’s Reservation Price.
    • What happens if positions below are reversed?
    • Zona del acuerdo posible (ZOPA).
    • La diferencia entre el precio de reservación del vendedor y el precio de reservación del comprador.
    • ¿Qué sucede si se invierten las posiciones abajo?
    $275k
    $250k
    ZOPA
    Buyer’s Reservation Price
    Seller’s Reservation Price
  • Anchoring / Counteranchoring
  • Anchoring / Counter-anchoring
  • Concessionary Moves
  • Negotiation
  • Isabella has worked as the executive assistant to Martina for ten years.  Isabella has worked overtime on many occasions when Martina had special projects to complete.  Martina has not given Isabella a raise in her salary for three years and Isabella is thinking about looking for a new position which could pay her more money.  Martina is concerned about losing Isabella to another employer but is worried that her own company has not made a profit in the last two years.  Isabella and Martina sit down in the conference room to negotiate a possible raise in salary for Isabella.
    ROLE #1: ISABELLA
    ROLE #2: MARTINA
    ROLE #3: OBSERVER (Take notes and report about negotation)
  • More Theory
  • Mark H. McCormack, best-selling author of “What They Don’t Teach You at Harvard Business School,” has stated the perfect negotiator should have:
    • Faultless people sense
    • A strong competitive streak
    • A view of the big picture
    • An eye for the crucial detail
    • Unimpeachable integrity
    Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 13.
    32
    Contract Negotiation Competencies
  • Contract Negotiation Competencies
    33
  • Negotiation Process
  • Negotiation Process 3 Steps (Cronkite)
  • Negotiation Process 4 Steps (Shell)
  • Seven Stages (Folberg, Golann)
  • Negotiation Considerations
  • Negotiation Considerations
    Social
    How will others view the agreement
    Emotional
    How will you feel about the agreement
    Successful Negotiations
    Lewicki and Fisher
    Economic
    Will you be satisfied with the economic results
    Triad of concerns
  • Power of Pre-negotiation
  • Step #1: Preparing Your Strategy
    Assess the situation.
    There are four basic bargaining situations depending on: (1) The perceived importance of the ongoing relationship and (2) the perceived conflict over the the stakes involved (to what degree do both sides want the same limited resource such as money, power, terms, etc.)
  • The Situational Matrix
    Perceived Conflict Over Stakes
    High
    Low
    High
    Importance
    of Relationship
    Low
  • Negotiating in the Quadrants
    Quadrant IV: Tacit Coordination - Calls for tactful avoidance of conflict, not negotiation.
    Quadrant III: Transactions - Stakes are substantially more important than relationships. Leverage counts. Competition, problem solving.
    Quadrant II: Relationships - Treat the other party well, generously, the stakes are secondary. Accommodate. (Einstein job offer, e.g.)
    Quadrant I: Balanced Concerns - Problem solving or compromise
  • Prepare a Bargaining Plan
    Make a list of questions you intend to ask at the beginning of the negotiation in order to assess the assumptions of the other side:
    Is a relationship most important to them?
    Are the stakes most important to them?
    Do they believe it is a Balanced Concerns situation?
    Prepare your bargaining plan based on the other side’s assumptions.
  • 45
    Bargaining Mix
    • Set of issues that are or could be considered in the negotiations.
    • Often, substantial differences between the parties in the importance of various issues.
    • Having multiple items in the bargaining mix and being creative in dealing with them can be very helpful - in both competitive and collaborative negotiations.
    • Sistema de las ediciones que son o se podrían considerar en las negociaciones.
    • A menudo, diferencias substanciales entre los partidos en la importancia de varias ediciones.
    • Tener artículos múltiples en la mezcla de negociación y el ser creativos haciendo frente a ellos pueden ser muy provechosos - en negociaciones competitivas y de colaboración.
  • Step #2: Exchanging Information
    The information exchange step has several phases:
    Developing rapport between the individual negotiators
    The surfacing of underlying interests, issues, and perceptions that concern both parties
    The initial testing of expectations
    As we share information, we test our counterpart’s commitment to the norm of reciprocity.
  • Developing Rapport
    The “liking rule.”
    We prefer to say “yes” to someone we like and trust.
    We like and trust people exactly like ourselves -- similarity.
    Research the decision maker’s likes and dislikes, hobbies, sports, etc. thoroughly
    Negotiate face-to-face, not online or over the phone -- tough to build trust, rapport, and understanding.
  • Relationships according to Salacuse
  • Obtaining Information on Interests, Issues, and Perceptions (reconassance)
    Exchange information without giving up anything.
    Ask questions -- don’t be a blabbermouth -- and remember the cardinal rule of discovery:
    Probe first, disclose later.
    Test for understanding
    Make sure you understand
    Summarize
  • Signaling Expectations and Leverage
    Deliver bad news (deal breakers, threats) early in a negotiation.
    Sell all the deal terms early.
    Indicate where you can and cannot be flexible (credibility).
    Signal your expectations and leverage.
  • Signaling Leverage
    Your Leverage as You See It
    Strong
    Weak
    Firm
    How
    You
    Want
    to
    Act
    Flexible
  • If You Are Going to Be Flexible, Get Credit for It
    Let the other side know what alternatives you have before you show you are not going to use the alternatives (BATNAs).
    By revealing your alternatives and not using them, you get credit for being generous and reasonable.
    Be fair, but always make sure you get credit for being fair.
  • Match the Other’s Side’s Style
    Tit for tat in style, too.
    If the they are screaming, tough, fierce competitors, they will like and respect you if you are like them.
    Yell back
    If they are bullies, confront them early.
    Once again, the reciprocity principle at work.
    Train people to be cooperative.
  • Step #3: Opening and Making Concessions
    The bargaining stage is dominated by tactics, which depend on the situation.
    Competitor Vs competitor, relationship vital, etc.
    Bargaining formally begins when negotiators on one side open with a concrete, plausible (in their mind) offer.
  • Opening Tactics: Open First?
    If you are uninformed about the other side’s business, interests, or demands, never open first.
    If you are well informed, always open first:
    It lets you fix the range -- the zone of realistic expectations.
    Sometimes forces the other side to rethink its goals.
    Most important, allows you to set the anchor.
    We tend to be heavily influenced by first impressions.
  • Anchoring
    When the other side hears a high or low number, they adjust their expectations (unconsciously) accordingly.
    The first offer anchors the other side’s perception of your walk-away price (NBC Super Bowl).
    First offer must be somewhat reasonable (no more than 50% higher than you will settle for).
    As high as possible--as close to the other side’s walk-away as possible (that’s the home run).
    Outlandish numbers at the beginning can kill the deal or destroy your credibility if you drastically reduce the offer later.
  • Framing
    Framing is a process of describing or explaining a situation a particular way.
    Framing is the use of analogy, metaphor, or characterization to define the problem or to advocate a solution of that problem.
  • Framing
    Frame all of your offers.
    Framing emphasizes the value of your offer.
    Framing provides justification for the other side to make concessions.
    “Just pennies a day” frames an offer.
    To those who like to win, frame as a gain, a win -- emphasize benefits.
    For those who are afraid to lose (losses loom larger than gains to many), frame as a possible loss -- emphasize the pain and shame of losing.
  • Opening: Optimistic or Reasonable
    Depends on the situation:
    Relationship - High, generous
    Transaction - Open optimistically (high, but not too high) - the highest for which there is a supporting standard or argument enabling you to make a presentable case.
    Make the highest opening you can “with a straight face.”
    Don’t open high if you have no leverage and the other side knows it.
  • Optimistic Openings
    Take advantage of two psychological tendencies: The Contrast Principle and the Norm of Reciprocity.
    The contrast principle: If I want you to pay me $500,000 for a schedule, and I open with $750,000 (supported by presentable, “straight-face” argument), my settlement of $500,000 seems reasonable and gives the perception of getting a good deal. If I had opened for $550,000 and only come down to $500,000, the contrast would have been small and the deal not satisfying.
  • Optimistic Openings
    The Norm of Reciprocity:
    I make an optimistic opening ($750,000), and you reject it.
    I moderate my offer by making a significant concession ($650,000), and you feel obligated to accept it (reciprocity).
    Big then small offer -- “door in the face” -- second offer seems reasonable.
  • Concession Tactics
    Open optimistically and have room to make concessions.
    Concessions are the language of cooperation. They tell the other side in concrete, believable terms that you accept the legitimacy of their demands and recognize the necessity to cooperate and sacrifice to get a fair deal.
  • Concession Tactics
    To get movement, offer a small trade -- show that agreement is possible.
    Give a trade or concession in your least important area.
    Price to get a desired deal term or payment, e.g.
    The other side’s first concession is in its least important area of concerns.
    Try not to give the first major concession (it raises expectations and confuses people).
    Put the major issues aside, agree on small, easy issues first.
  • Concession Tactics
    Give small concessions and give them slowly.
    The slower you give them, the more value they have.
    A fast concession makes the buyer feel awful and devalues the product.
    Make them work hard for every concession, they will appreciate it more.
    Make concessions progressively smaller.
  • Concession Tactics
    Which tactic is best?
    1. 25% 25% 25% 25%
    2. 0 50 % 0 50%
    3. 0 0 0 100%
    4. 100% 0 0 0
    5. 10% 20% 30% 40%
    6. 30% 20% 10% 5%
  • Split the Difference?
    Not unless it’s in your favor.
    If the other side offers it, it usually isn’t.
    Split the split.
  • Integrative Bargaining
    Tactics for integrative bargaining in which both sides start with a complete bundle of offers, demands, and interests are as follows:
    After a discussion of all the issues (without offers), both sides trade issues and try to problem solve.
    No issue is closed until all issues have been decided.
    Sides trade issues in clusters: “If you give me what I want on issues A and B, I’ll give you what you want on X and Y” -- the “If-Then…” scenario.
    For example, you can throw away deal points you don’t need (set this up in advance).