Negotiation

CONTENTS

1. SUMMARY

a. Executive Summary

b. Summary of the Course

 Definition of Negotiation

 Distributive Bargaining

 Integrative Negotiation

 Perceptions and Subjectivism

 Understanding and Interdependence

 Ethics

 The Tendency to Evaluate - Suspending Evaluation

 The Competitive Situation

 The Cooperative Situation

 Strategic Choice

 Power

 Trust

c. Lessons about cases

 Auction: About Interdependence & Fairness

 Sloane Company Case: About, structuring, prioritizing, asking, listening & understanding

 Used Car Sale: About capturing value & tough negotiating

 Rio Copa Foods: About capturing value vs. creating value

 Recruiter & Candidate: About Prioritizing & creating value

 Viking Investments: About seeking creative solutions and maintaining relations

 Accessing to Foreign Market: About Trust, Power and Teams

2. PRACTICAL APPLICATION CASE: The First Order from Syria

a. Context

b. Problems

c. Process

d. Performance

ANNEXES

BIBLIOGRAPHY

1. SUMMARY

a. Executive Summary

Negotiation is a process inherent to human being and is a matter of common sense. People negotiate all the time, even though they do not realize that they are negotiating. Negotiation can occurr as result of varied reasons that generate discrepancies between two or more parties: (a) how to share a limited resource, (b) to create something new that parties could not do on their own or (c) to resolve a problem between parties. In order to solve these problems, it is advisable that the negotiation be based upon principles, that is to take an approach on the interests of the parties, rather than the positions taken by them. Apart from achieving the specific objectives, the performance of a negotiation is based on good sense, efficiency, learning and the capacity to maintain or improve the relationship between the parties, and above all, on the capacity to create or capture the most of the value under consideration. No matter if it is the case of a bargaining (competitive) situation or “real” negotiation (cooperative, win-win), essential requirements to obtain a successful negotiation are: elaboration of a strategy, firmness, ethics, respect to the other party, empathy, confidence, flexibility, creativity, assertiveness, separation of persons from the problem, and patience.

b. Summary of the Course

Definition of Negotiation

“Negotiation occurs when two or more parties attempt to find a mutually acceptable solution to a problem or dispute that neither party could resolve on his or her own” (Roy J. Lewicki, et al., 2003).

Distributive Bargaining

Distributive negotiation is basically a conflict situation where the parties claim value, competing through a bargaining process. This way, the size of the "pie" is fix and the negotiation adds up to zero (win-loose). It is also known as a type of negotiation based on positions (which is equivalent to decisions previously assumed) and its characteristic is to produce senseless agreements, since due to its human nature, the parties usually have tendency to confine within them, the ego identifies with the position (target) and the agreement gets complicated. It is also inefficient because it creates incentives that delay the agreement, since it is likely that the opening is initiated with an extreme position, which causes that decisions are hard to take and require longer time. Finally, this negotiation endangers the relationship, since the rough points may convert it into a confrontation of wills that tighten the relationship and may even destroy it, making the negotiation process more complicated since not only an agreement has to be looked for but also the parties are to be kept willing to negotiate.

Nevertheless, it should be admitted that this type of negotiation is a natural selection in many occasions and requires adequate planning, a strong execution and maintaining constant monitoring of the reaction of the other party. Likewise, some skills of the distributive bargaining are important at value claiming in any type of negotiation.

Integrative Negotiation

On other side, a negotiation based on principles (integrative or cooperative) describes a way to negotiate focused on wishes and worries, considering that interests are the factors that define the problem. It interrelates the persons, separating them from the problem and orienting to comprehension of the needs and objectives of the other party. It focuses on its interests and opens a free flow of information to exchange ideas openly, which generates multiple options. The creativity and prioritization of similarities rather than differences (taking into consideration objective criteria to solve them), may create or capture the most of the value under consideration through agreements that satisfy the goals of the parties (extending the "size of the pie": win-win).

Perceptions and Subjectivism

When persons do not separate from the problem (getting involved with the situation), misunderstandings and personal offenses may arise, since negotiators may be victim of their own emotions, wrong perceptions and/or misunderstood attitudes.

"The understanding on how the other party thinks is not a useful activity that will help to solve the problem. His way of thinking is the problem". (Roger Fisher et. al., 1991). This resumes the importance of subjectivism: each person perceives the world in a different way. If we understand this, we will be able to guide and administer the negotiation. For example, negotiators may fail when they do not perceive the real potential during a specific situation of the negotiation. Likewise, persons have a scientifically demonstrated tendency to see in a selective way what they want to see, or what they are used to see (in many cases in a different way to ours). This is the base to understand that the problem in a negotiation arises from the way the other party perceives the objective reality that generated it, and, if we are not conscious of this fact, we will be unable to settle a negotiation even if there is a wide margin to solve it.

We should also be aware that a source of information may take us to multiple interpretation, and that each person is free, according to its motivation, the environment where it developed and passed experiences, to interpret diverse situations in a completely subjective manner. For that reason and the overload of information, learned

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