The document discusses three models of negotiation: 1. Negotiation as compromise, where parties make concessions to reach a deal between their initial positions. 2. Negotiation as domination, where one party tries to overpower the other using tactics like deception. 3. Negotiation as problem-solving, where parties see the negotiation as a shared problem and work cooperatively to find integrated solutions that satisfy both sides. The document evaluates the models, finding that problem-solving is most likely to yield good results, especially in international business, while domination carries hidden risks and does not build long-term relationships.

1. Negotiation Models

2. Lesson
Plan 1. Negotiation models;
2. Applying the models;
3. Evaluating the models

3. WHAT IS NEGOTIATION
MODEL & ITS SIGNIFICANCE

4. Negotiation Models
Negotiation is a process of
communication by which 2 or more
persons seek to advance their
individual interests through joint
action.
Negotiation takes place when both
parties agree that they can improve
their situation if the other party agrees
on a specific joint act
Since both parties seek their own
interest first, negotiation should be
carried on as a process – as a
progressive movement towards a
desired goal
All of these
demands
negotiation
to be
handled as a
model

5. Significance of Negotiation Models
• Succeeding in any negotiation requires a
mastery of both the “substance “ and the
“process” of the transaction
•Capital contributions,
•payment terms and
•performance guarantees
•Relationship,

6. Negotiation Models
• People keep a model in mind while approaching to
any negotiation
• Model influences their actions at the negotiation table.
• There are three types of model:
Model 1: Negotiation as Compromise
Model 2: Negotiation as Domination
Model 3: Negotiation as Problem Solving

7. • For many executives, the process of
negotiation is essentially one of compromise ,
of striking a deal
– Compromise somewhere between their initial
offer and their counterpart’s
• Negotiation begins from beyond their expected
point.
– A series of concession takes place
– Reservation price
– Zone of possible agreement
Model 1: Negotiation as Compromise

8. • Win-Lose
• Distributive bargaining
• Diving fixed pie
Model 1: Negotiation as Compromise
DEAL
A B

9. • For many executives, negotiating a deal is
combat
– A means to dominate a business opponent
• One party dreams up a deal – using power
plays, dirty tricks etc
Model 2: Negotiation as Domination
DEAL
A
B

10. Model I
SIMILARITIES
• In both models
– both parties think their interest
as incompatible.
– Both parties believe they are
struggling over a fixed pie
DIFFERENCES
• In Model II, One party uses the rough
tactics.
• Model I is driven by agreed upon
norms and standards; model II uses
power
Model II

11. • Not a compromise or combat, but as a process of
Problem Solving.
• Negotiators view their task
– as resolving a problem that they both share
– As a process in which each can gain
• Known as Integrative Bargaining
• Participants consider themselves to have compatible
goals,
– rather than struggling over fixed pie…they enlarge
the size of the pie to satisfy both the parties
Model 3: Negotiation as Problem Solving

12. • Negotiation begins by understanding each
other’s interest
Model 3: Negotiation as Problem Solving contd….
DEAL
Interest Interest
A B

13. • Known as Interest-based negotiation. & win-win
model
• Identical needs are not necessary to come to an
integrative solution; rather parties explore how they
can integrate
• Model I & II emphasizes the competitive aspects of
negotiation, model II stresses the cooperative aspects
Model 3: Negotiation as Problem Solving contd….

14. APPLYING THE MODELS

15. • Negotiators may use any one of the three
negotiation models, depending on their
–Background
–The industry in which they are working
–The type of deal they are trying to negotiate
Applying the Models

16. • Factors determining which approach to
choose:
–Context of the negotiation
–The personalities of the negotiators
–Their culture
–Their occupation
Applying the Models contd…..

17. EVALUATING THE MODELS

18. • Which model brings the best result?
• Most scholars agree that in international business,
joint problem solving is more likely to yield better
results
Evaluating the Models
Why not compromise?
• It does not allow parties to
achieve their full potential
• Relationship is hampered

19. Evaluating the Models contd…
Why not Domination?
• Has high probability of hidden
costs and failure either during
deal making or later on when the
transaction is implemented.
• Certainly does not create a base
for long-term relationship