Chapter 5 Choosing Your Strategy

© Pearson Education South Asia Pte Ltd 2 Win-lose strategies: Recap Also known as bargaining, haggling or positional bargaining –Get what you want using power –Power generates resistance as reaction –Conditions: big power difference & short-term concern –Riskier on average than win-win

© Pearson Education South Asia Pte Ltd 3 The bargaining process Simple, well-known, intuitive “TAKE IT OR LEAVE IT” (“Tioli”) Compromise or No deal POSITION A or No Deal Final Offer or No Deal Final Last Offer or No Deal Last Offer or No Deal POSITION B or No Deal Final Offer or No Deal Final Last Offer or No Deal Last Offer or No Deal

© Pearson Education South Asia Pte Ltd 4 The bargaining styles Hard (alternatives): power used to intimidate Soft (commitments): relationship above all else

© Pearson Education South Asia Pte Ltd 5 The bargaining tension Hard party: Tries to squeeze the most possible value Soft party: Tries to build a relationship at any cost Any combination sacrifices value: Still “take it or leave it”

© Pearson Education South Asia Pte Ltd 6 Win-win strategies: Recap Get what you want independently from power Collaboration and communication: no resistance Tit-for-tat: proactive, clear communication towards a value-focused process Higher value at lower risk than win-lose Value

© Pearson Education South Asia Pte Ltd 7 Win-win processes StrategyFocusRisk Interest-basedInterests X PositionsDiscuss few interests and still fall into a bargaining trap Mutual gainsOptions to benefit everyone Create too many options and still bargain to split them PrincipledWin-win choicesOverwhelming number of decisions and lose focus Value NegotiationValueAdopt win-lose if failure to consider ways towards value

© Pearson Education South Asia Pte Ltd 8 Negotiation: More than one Boulwarism: negotiation strategy from 1950s Two main steps: 1)Data analysis to determine maximum wage 2)Present “first, last and best offer” on a “take-it-or- leave it” basis

© Pearson Education South Asia Pte Ltd 9 The three negotiations Boulwarism did not consider all 3 negotiations: Unilateral approaches create a power play perception: RISKY! NEGOTIATION RELATIONSHIPSUBSTANCECOMMUNICATION TrustValueProcess

© Pearson Education South Asia Pte Ltd 10 The three win-lose negotiations Win-lose strategies treat each negotiation as a different power source NEGOTIATION RELATIONSHIPSUBSTANCECOMMUNICATION ManipulationPower differences Information asymmetry

© Pearson Education South Asia Pte Ltd 11 The three win-win negotiations Win-win strategies explore all three negotiations to unlock their value potential –Independent –Simultaneous –Parallel –Interconnected NEGOTIATION RELATIONSHIPSUBSTANCECOMMUNICATION TrustValueProcess

© Pearson Education South Asia Pte Ltd 12 The three win-win negotiations Ultimate purpose of relationship & communication negotiation: –To maximize the substance negotiation value NEGOTIATION RELATIONSHIPSUBSTANCECOMMUNICATION TrustValueProcess

© Pearson Education South Asia Pte Ltd 13 The three negotiations in detail The win-win directive to… makes it harder to… and tempts us with… so we persistently … SubstanceFocus on value Focus on power Easy power opportunities Promote the dialogue pattern RelationshipNegotiate the three negotiations autonomously ManipulateRelationship over value Avoid trading between negotiations CommunicationPromote learning Exploit information asymmetry ComplacencyProactively diagnose

© Pearson Education South Asia Pte Ltd 14 Substance negotiation Focus on value, not power Strategic derivative Forego easy power opportunities Trade-off Identifying easy power moves Temptation

© Pearson Education South Asia Pte Ltd 15 Focus on value Demonstrates to the other party that there is no need for a race for power Can be difficult in two situations: 1)The only thing they concentrate on is power 2)Easy power moves continuously present themselves

© Pearson Education South Asia Pte Ltd 16 Promote the dialogue pattern A balancing effort to reduce power differences Reduces or eliminates unilateral moves Every move can be a value or power move When reciprocating value-focused moves: Reward Good Behavior

© Pearson Education South Asia Pte Ltd 17 Relationship negotiation Negotiate 3 negotiations autonomously Strategic derivative Forego getting value for free Trade-off Relationship over value Temptation

© Pearson Education South Asia Pte Ltd 18 Negotiate autonomously Mixing the 3 negotiations rewards bad behavior Example: FARC in Colombia –The president gave away piece of land (substance) in hopes of starting a relationship + communication process –Established a negative negotiation pattern of unilateral substance demands

© Pearson Education South Asia Pte Ltd 19 Avoid trading between negotiations Separate and negotiate substance and relationship through different channels “Hard on the problem, soft on the person”

© Pearson Education South Asia Pte Ltd 20 Communication negotiation Promote learning Strategic derivative Reduce ability to use information asymmetry Trade-off Complacency Temptation

© Pearson Education South Asia Pte Ltd 21 Promote learning Learn as much as possible from the available data –Boulwarism failed the hardest: Did not learn what the unions’ interests really were Learning reduces information asymmetry and the temptation to bargain.

© Pearson Education South Asia Pte Ltd 22 Proactively diagnose Seek further information to make the best possible decision DIAGNOSE to clarify before deciding