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Manhattan Elite Prep offers in-depth Negotiation and Decision Making seminars for individuals and corporations. Manhattan Elite Prep offers GMAT, SAT, GRE, LSAT, TOEFL, MCAT preparation class, course, …

Manhattan Elite Prep offers in-depth Negotiation and Decision Making seminars for individuals and corporations. Manhattan Elite Prep offers GMAT, SAT, GRE, LSAT, TOEFL, MCAT preparation class, course, tutoring & tips. Also offers MBA, Graduate School, law school & college admissions consulting, language, computer and career training. Call 888-215-6269 or visit http://www.manhattaneliteprep.com/

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  • 1. Negotiation & Decision Making Version 10.1 □ Tactic Tip Sheets □ Assessment Chart □ Unilateral Strategy Formation □ Step by Step Planning □ Distributive Bargaining □ Integrative Negotiation □ Communication in Negotiation □ Power and Social Behavior □ Decision Making Framework http://www.ManhattanElitePrep.com ©Manhattan Elite Prep. All Rights Reserved.
  • 2. Copyright and Terms of Use Copyright and Trademark All materials herein (including names, terms, trademarks, designs, images and graphics) are the property of Manhattan Elite Prep, except where otherwise noted. Except as permitted herein, no such material may be copied, reproduced, displayed or transmitted or otherwise used without the prior written permission of Manhattan Elite Prep. You are permitted to use material herein for your personal, non-commercial use, provided that you are not permitted to combine such material into a combination, collection or compilation of material. If you have any questions regarding the use of the material, please contact Manhattan Elite Prep at info@manhattaneliteprep.com. This material may make reference to countries and persons. The use of such references is for hypothetical and demonstrative purposes only. Terms of Use By using this material, you acknowledge and agree to the terms of use contained herein. No Warranties This material is provided without warranty, either express or implied, including the implied warranties of merchantability, of fitness for a particular purpose and non-infringement. Manhattan Elite Prep does not warrant or make any representations regarding the use, accuracy or results of the use of this material. This material may make reference to other source materials. Manhattan Elite Prep is not responsible in any respect for the content of such other source materials, and disclaims all warranties and liabilities with respect to the other source materials. Limitation on Liability Manhattan Elite Prep shall not be responsible under any circumstances for any direct, indirect, special, punitive or consequential damages (‘Damages’) that may arise from the use of this material. In addition, Manhattan Elite Prep does not guarantee the accuracy or completeness of its course materials, which are provided ‘as is’ with no warranty, express or implied. Manhattan Elite Prep assumes no liability for any Damages from errors or omissions in the material, whether arising in contract, tort or otherwise. Last updated on April 28, 2014
  • 3. Negotiation and Decision Making i www.manhattaneliteprep.com ©Manhattan Elite Prep Manhattan Elite Prep Advantages ▶ Time Efficiency and Cost Effectiveness – The most limiting factor in test preparation and career skills preparation for most people is time. – It takes significantly more teaching experience and techniques to prepare a student in less time. – Our preparation is tailored for busy professionals. We will teach you what you need to know in the least amount of time. ▶ High-quality and dedicated instructors who are committed to helping every student reach her/his goals ▶ Manhattan Elite Prep’s team members have combined wisdom of – Academic achievements – Years of teaching experiences at prestigious schools around the world – Career success ▶ Our curriculum & proprietary Turbocharge Your Career course materials – Well-illustrated and professionally presented content & tips – Detailed examples & explanations – Internally developed vocabulary list with detailed definitions, related words and sentence examples ▶ Combine with Private Tutoring for a more tailored study package ▶ Special Offer for Our Online Recording Library (Visit Online Library on our website!) ▶ High-quality Career, Business School (MBA), Graduate School, Law School & College Advisory Full Service ▶ Our Pursuit of Excellence in All Areas of Our Service Visit us often at www.ManhattanElitePrep.com!
  • 4. Negotiation and Decision Making ii www.manhattaneliteprep.com ©Manhattan Elite Prep Chapter 1   Pre-Negotiation Preparation .......................................................................................1   1.1   Pre-Negotiation Assessment Chart.....................................................................................1   1.2   Pre-Negotiation Unilateral Strategy Formation.................................................................4   1.2.1   Design a Unilateral Strategy........................................................................................4   1.2.2   Four Major Types of Unilateral Strategy ....................................................................4   1.3   Pre-Negotiation Step-by-Step Planning .............................................................................6   Chapter 2   Distributive vs. Integrative vs. Hybrids......................................................................8   2.1   Definitions .........................................................................................................................8   2.1.1   Distributive Bargaining (A Fixed Total Pie)...............................................................8   2.1.2   Integrative Negotiation (Various Mutually Beneficial Results)..................................8   2.1.3   Hybrid Negotiation......................................................................................................8   2.2   Comparison Chart...............................................................................................................9   Chapter 3   Distributive Bargaining.............................................................................................10   3.1   Key Bargaining Points in Distributive Bargaining (Such as Buy & Sell)........................10   3.11   BATNA (Best Alternatives To a Negotiated Agreement) .........................................10   3.12   The Spread..................................................................................................................11   3.2   Key Goals .........................................................................................................................12   3.2.1   Negotiation Mix.........................................................................................................12   3.2.2   Negotiation Goals......................................................................................................12   3.3   Negotiation Scenarios.......................................................................................................13   3.4   Key Strategies...................................................................................................................14   3.4.1   Communicating and Assessing Information .............................................................14   3.4.2   Influencing Perceptions.............................................................................................16   3.4.3   Influencing the Resistance Point ...............................................................................18   3.4.4   Controlling Relative Positions...................................................................................20   3.4.5   Managing Concessions..............................................................................................21   3.4.6   Managing Commitments and Final Offer..................................................................23   3.5   Hardball Tactics................................................................................................................25   3.5.1   Identify Hardball Negotiators....................................................................................25   3.5.2   Hardball-Countering Tactics .....................................................................................27   Chapter 4   Integrative Negotiation .............................................................................................30   4.1   Outline Problems and Underlying Interests .....................................................................31   4.2   Create Possibilities for Resolution ...................................................................................32   4.3   Assess Possibilities and Choose the Best Resolutions .....................................................33   4.4   The End Result of Integrative Negotiation.......................................................................34   4.5   Common Myths................................................................................................................35   Chapter 5   General Tips..............................................................................................................36   5.1   Important Steps to a Good Deal .......................................................................................36   5.1.1   Understanding/Problem Solving ...............................................................................36   5.1.2   Planning.....................................................................................................................37   5.1.3   Building Communication ..........................................................................................37   5.1.4   Controlling the Negotiation.......................................................................................37   5.1.5   Solving Their Problem ..............................................................................................38   5.1.6   Let the Other Person Win..........................................................................................38   5.1.7   How to Derive Those Numbers.................................................................................38   5.1.8   Achieving Results......................................................................................................39   5.2   How to Say No without Saying No..................................................................................40   5.3   Common Negotiating Mistakes........................................................................................41  
  • 5. Negotiation and Decision Making iii www.manhattaneliteprep.com ©Manhattan Elite Prep 5.4   Getting Better at Negotiation............................................................................................42   5.5   Negotiate Over the Phone.................................................................................................44   5.6   Negotiate Via Email .........................................................................................................45   5.7   Build a Negotiation Team ................................................................................................46   5.8   Establish Strategic Partnerships .......................................................................................47   5.9   Negotiate with Customers ................................................................................................48   Chapter 6   Communication in Negotiation.................................................................................49   6.1   Three Main Stages............................................................................................................49   6.2   Active Listening ...............................................................................................................52   6.3   Nonverbal communication ...............................................................................................54   6.4   Planning Your Meeting ....................................................................................................55   Chapter 7   Authority in Negotiation...........................................................................................57   7.1   The Origins of Authority..................................................................................................58   7.2   Use Power for Influence..................................................................................................59   Chapter 8   Multi-Party Negotiations ..........................................................................................60   Chapter 9   Decision Making Advice ..........................................................................................62   9.1   Key Principles to Guide Your Decision-Making .............................................................62   9.1.1   Collect Key Information............................................................................................62   9.1.2   Meet with Others .......................................................................................................63   9.1.3   Evaluate Options and Be Creative.............................................................................63   9.1.4   Do Not Procrastinate .................................................................................................63   9.1.5   Don’t Rush if There is Still Time..............................................................................63   9.1.6   Avoid Self-Doubt ......................................................................................................63   9.1.7   Monitor the Outcome ................................................................................................64   9.2   Selecting a Leadership Method ........................................................................................65   9.3   Making Ethical Decisions.................................................................................................66   Chapter 10   Cultural Sensitivity & Etiquette...............................................................................67   10.1   Overview ........................................................................................................................67   10.2   Cross Cultural Communication ......................................................................................68   10.3   Tips for Cultural Sensitivity & Etiquette........................................................................72   Chapter 11   Simulation Exercises................................................................................................73   11.1   Job Offer.........................................................................................................................73   11.2   Office Lease....................................................................................................................81   11.3   Business Partnership.......................................................................................................89   11.4   Business Combination....................................................................................................97   Index............................................................................................................................................100  
  • 6. Negotiation and Decision Making 1 www.manhattaneliteprep.com ©Manhattan Elite Prep Chapter 1 Pre-Negotiation Preparation 1.1 Pre-Negotiation Assessment Chart A successful negotiation requires careful planning, thorough research, skills and determination. The main factors related to a negotiation are outlined below. YOU OPPOSITION(S) Motives for reaching an agreement and achieving goals __Main Motive __Secondary Motive __Misc. Motives __Individual Motives __Group Motives __Main Motive __Secondary Motive __Misc. Motives __Individual Motives __Group Motives Deadline for reaching an agreement __Immediate __Near-term (<1 month) __Medium-term (1-3 months) __Long-term (>3 months) __Immediate __Near-term (<1 month) __Medium-term (1-3 months) __Long-term (>3 months) Alternatives to not reaching an agreement __None __One __A few __Many __BATNA (Best Alternative To a Negotiated Agreement) __None __One __A few __Many __BATNA (Best Alternative To a Negotiated Agreement) Risks involved without an agreement (including execution risks for a different agreement with another party) __None __Low __Medium __High __None __Low __Medium __High Specifics related to this particular negotiation __Key decision-maker(s) in each party __No. of people involved in each party __No. of parties involved in total __Outcome (Distributive vs. Integrative) __Key decision-maker(s) in each party __No. of people involved in each party __No. of parties involved in total __Outcome (Distributive vs. Integrative) Frequency of interactions and extent of future implications Historical Relationship __None __Yes. Successful. __Yes. Moderately successful. Historical Relationship __None __Yes. Successful. __Yes. Moderately successful.
  • 7. Negotiation and Decision Making 2 www.manhattaneliteprep.com ©Manhattan Elite Prep __Yes. Unsuccessful. __Long-term vs. short-term Future Relationship __Ongoing relationship with multiple future negotiations __Ongoing relationship with this one-time negotiation __One-time relationship with ongoing implications on relationships with others in the industry __One-time relationship only __Yes. Unsuccessful. __Long-term vs. short-term Future Relationship __Ongoing relationship with multiple future negotiations __Ongoing relationship with this one-time negotiation __One-time relationship with ongoing implications on relationships with others in the industry __One-time relationship only Style, Culture & Reputation __Negotiation style (e.g., Accommodating vs. Hard- balling) __Group & Corp Culture (e.g., Flat vs. Hierarchical) __Personality (e.g., Flexible vs. Inflexible; Trustworthy or Unreliable) __Negotiation style (e.g., Accommodating vs. Hard- balling) __Group & Corp Culture (e.g., Flat vs. Hierarchical) __Personality (e.g., Flexible vs. Inflexible; Trustworthy or Unreliable) Track Record (related to similar negotiations) Outcome __None __Highly successful __Moderately successful __Not successful Procedures __Simple __Complex Outcome __None __Highly successful __Moderately successful __Not successful Procedures __Simple __Complex ↓↓ ↓↓ Bargaining Zone __Target Outcome __Acceptable Outcome __Resistance Point (Related to BATNA) __Target Outcome __Acceptable Outcome __Resistance Point (Related to BATNA)
  • 8. Negotiation and Decision Making 3 www.manhattaneliteprep.com ©Manhattan Elite Prep A thorough understanding and a complete analysis of these factors contribute to more profitable and successful negotiations. It is important that you prepare in advance so that you come to the negotiating table primed and ready, something many negotiators fail to do.
  • 9. Negotiation and Decision Making 4 www.manhattaneliteprep.com ©Manhattan Elite Prep 1.2 Pre-Negotiation Unilateral Strategy Formation Before actually negotiating, you must plan, strategize, and do some tactical analysis. Consider the following attributes of your strategy as you develop it: • Voluntary (created by you) or Involuntary (imposed by your organization) • Firm or Flexible • Based on excellent or limited knowledge of the other party 1.2.1 Design a Unilateral Strategy A unilateral strategy is the most common form before the negotiation stage, in which it is unlikely that the negotiator has the benefit of deeper knowledge of the needs and desires of the other party. Thus, this strategic choice requires an analysis focused more on the individual party’s goal, not the two combined. Two major elements you need to consider in designing your own unilateral pre-negotiation strategy: 1) How crucial is it to achieve a final agreement with a set target outcome? 2) How important is it to maintain the relationship with the other party? The answers to these questions will guide the negotiator in one direction or the other. 1.2.2 Four Major Types of Unilateral Strategy If BOTH your target outcome and relationship with the other party are highly important, consider engaging in collaborative negotiation. ↓ If Only your target outcome is highly important, consider engaging in competitive negotiation. ↓ If Only your relationship with the other party is highly important, consider engaging in accommodating or compromising negotiation. ↓ If NEITHER your target outcome NOR relationship with the other party is highly important, consider staying put and not engaging in any vigorous negotiation.
  • 10. Negotiation and Decision Making 5 www.manhattaneliteprep.com ©Manhattan Elite Prep When & Which: Competitive Strategy: The ultimate goal is to succeed or win. Accommodating Strategy: It is most important to maintain the relationship. Whether you win or lose on some items is of lower importance. Compromising Strategy: Meet in the middle for the entire negotiation situation. Collaborative Strategy: It is possible for all needs to be met to varying degrees.
  • 11. Negotiation and Decision Making 6 www.manhattaneliteprep.com ©Manhattan Elite Prep 1.3 Pre-Negotiation Step-by-Step Planning Step 1: Prioritize Negotiation Items and Potential Areas of Conflict; Analyze Underlying Factors To achieve your goal, you need to: § Talk to fellow negotiators and others on your side to verify your own understanding of what is most important and what is at stake, as well as to firm up your knowledge of the other party; § Do thorough research, including inquiries into past relationships; § Develop a detailed understanding of the dilemma existing between your party and the other; and § Discuss your strategies and goals with specialists. Once you’ve compiled the major negotiation items, conflict areas and underlying factors, § Organize them in a list from the most important to the least important factors to you; § Make a special note of any underlying factors that are related. Make an effort to include similar or related factors together on you list; and § There is no need to streamline the list. At this point, a longer list is better. ↓ Step 2: Define and Analyze your Main Objectives Perform a detailed analysis of your own goals in which you clearly define the following: § Target Outcome § Acceptable Outcome § Resistance Point You may want to categorize your various goals into subject groups and in each category pay attention to feasibility and possibility. ↓ Step 3: Defining and Evaluate the Objectives of the Other Party This will require some investigation into your past relationship with the other party as well as that of other groups with the party. Consider and try to define their goals, their tendencies, trends, compelling factors to them, and who ultimately is calling the shots for the other party. ↓
  • 12. Negotiation and Decision Making 7 www.manhattaneliteprep.com ©Manhattan Elite Prep Step 4: Make Logistical Arrangements Determine the location where negotiations will occur and possibly the method/procedure for engaging each other. What kinds of additional staff or consultants will attend? Who else might be permitted? What is the expected timeline to reach an agreement? Answers to these questions will enable you to come in well prepared. ↓ Step 5: Define the Most Important Objectives for Both Parties Re-evaluate your list. If you have a greater sense of the issues that are most important to the other party, you should include additional notes as to where greatest discord might occur. ↓ Step 6: Create Cases to Support your Requests and Arguments This will require research, knowledge of facts to support your view, trusted sources or experts to back up facts, knowledge of potential arguments that might be waged by the other party, and the creation of counterarguments of your own. ↓ Step 7: Role Play to Be Better Prepared for Unanticipated Responses Notes All negotiations are different. For every negotiation, methods need to be slightly adjusted and redefined. However, fundamental aspects remain highly similar. Thus the proceeding steps of analysis, research, and strategy provide a helpful guide in preparation for negotiations.
  • 13. Negotiation and Decision Making 8 www.manhattaneliteprep.com ©Manhattan Elite Prep Chapter 2 Distributive vs. Integrative vs. Hybrids 2.1 Definitions There are two main types of negotiation that differ in terms of their approach to problem solving and conflict resolution. 2.1.1 Distributive Bargaining (A Fixed Total Pie) § Any distributive bargaining scenario can be called a win-lose situation. - Two parties are battling for the most access to certain limited resources. An important aspect of this type of negotiation is the strategic distribution of information. While this may be a more negative style of negotiation that many would prefer to shy away from, it is important to be aware of the strategies and tactics that are proven successful in competing with a “hard bargainer.” 2.1.2 Integrative Negotiation (Various Mutually Beneficial Results) In an Integrative Negotiation, parties work to resolve conflict and create peaceful and satisfying solutions to problems. Achieving this goal, however, requires all of the negotiating parties to carefully examine each potential problem themselves. It also requires openness, understanding and a degree of creativity. 2.1.3 Hybrid Negotiation In a business world, complex negotiations often times are a combination of both distributive and integrative negotiations. Some issues involve distribution of a fixed resource, others can be resolved to maximize joint benefits.
  • 14. Negotiation and Decision Making 9 www.manhattaneliteprep.com ©Manhattan Elite Prep 2.2 Comparison Chart Information Flow Mutual Efforts Discrepancy Time Line Resolution Integrative Negotiation § Direct § Shared → Effort made to understand one another → Focus on agreement → Longer → Mutually beneficial Distributive Negotiation § Standoffish § Guarded → Less attempt to understand one another → Highlight differences → Shorter → One-sided
  • 15. Negotiation and Decision Making 10 www.manhattaneliteprep.com ©Manhattan Elite Prep Chapter 3 Distributive Bargaining In Distributive Bargaining, there are usually negative consequences. Many negotiators will use techniques to maximize their gains. Most often in distributive situations, maximizing one’s gains causes a decrease in another’s. 3.1 Key Bargaining Points in Distributive Bargaining (Such as Buy & Sell) - Target Outcome: The goal of the negotiator o This may be inferred throughout the negotiation process rather than stated outright - Resistance Point: The most the negotiator will pay or the lowest settlement the negotiator will accept, etc. o This price will be kept secret throughout the process - The initial price set by the seller - Initial Offer: The number that the buyer quotes, o One’s initial offer must be below his target point. If the buyer must make concessions, then he will still be approaching his target point rather than his resistance point o If it is too low, then the seller may break negotiations due to an “unreasonable” offer - Settlement Point: The final set of terms both parties agree upon 3.11 BATNA (Best Alternatives To a Negotiated Agreement) - Sometimes, one party may have the option of completing a deal with a third party - A BATNA can be same as the resistance point, but they can also differ, depending on the party’s perception of the BATNA in comparison to the resistance point - A new BATNA can create a new resistance point - Realistic alternatives can be good for the negotiator because they produce options and exit strategies - The better the BATNA, the stronger the negotiating power
  • 16. Negotiation and Decision Making 11 www.manhattaneliteprep.com ©Manhattan Elite Prep 3.12 The Spread - The spread is the area between the lowest and highest points in a bargaining scenario o This can also be called the zone of potential agreement, bargaining or settlement range - Negative Bargaining Zone: o When the seller’s resistance point is above the buyer’s - Positive Bargaining Zone: o When the buyer’s resistance point is above the seller’s The characteristics of the spread are typically not known to either negotiator initially because the resistance points are still undisclosed. If it is discovered that there is a positive bargaining range, then the negotiation is likely to end in a mutually satisfactory way. If it is negative, then the negotiation may be cut off, or both parties may be forced to re-position themselves.
  • 17. Negotiation and Decision Making 12 www.manhattaneliteprep.com ©Manhattan Elite Prep 3.2 Key Goals 3.2.1 Negotiation Mix - The mix should include all the major items related to closing the deal. In a buy/sell situation, relevant terms include the price, payment method, payment timing, exclusivity, confidentiality, the closing date, final adjustments, unexpected situations, future liability and future dispute resolution channels. - Each of the elements in a negotiation mix can have its own mini bargaining zone with separate target, resistance, and starting points. - You should have a clear idea of the priority of the major elements in the mix to both you and your opposition. 3.2.2 Negotiation Goals Your Goals in a Distributive Negotiation - Identify as much of the opposition’s bargaining zone as possible - Influence the opposition’s bargaining zone - Get the settlement as close to the opposition’s resistance point as possible - Make the opposition feel that it is a fair exchange and the settlement point is the best he/she can realistically obtain to ensure no bruised egos