Negotiation Professor Robert W. Cullen Fall 2007

Negotiation Process (4 Stages)  Negotiation Planning and Preparation. This is extremely important and not enough people do this.  Beginning to interact-- orientation to the situation, relationship with other side, information exchange.  Initial proposal, offer or demand; making concessions; narrowing of differences.  Closing and getting commitment.

Seven Stages (Folberg, Golann)  1. Preparation and Setting Goals.  2. Initial Interaction and Offers.  3. Exchanging and Refining Information.  4. Bargaining.  5. Moving toward Closure.  6. Reaching and bridging impasse, decisions.  7. Finalizing the Agreement.

Claiming value through DISTRIBUTIVE BARGAINING Creating value through INTEGRATIVE BARGAINING Every Negotiation is a Mixed-Motive Exchange Competition Cooperation Some negotiations can be completed using only distributive strategies. Some negotiations can be completed using only integrative strategies. Most negotiations involve elements of BOTH strategies.

Managing the Tension between Problem Solving and Competitive Bargaining.  It cannot be resolved but manage it.  That is why you must know all the techniques and strategically move from one to the other.  Some call this: Context Based Theory of Negotiation.  I like to call it Strategic Negotiations or Situational Negotiations.

Preparation Identify the issues. Think about interests-yours and theirs. Contemplate value creating opportunities. Know your BATNA and improve it. Be prepared to be competitive as well as solution oriented. Establish an ambitious but realistic goal and aspiration level.

Bargaining For Advantage: Preparations  First Foundation: Your Bargaining Style.  Second: Goals and Expectations.  Third: Authoritative Standards and Norms.  Fourth: Relationships.  Fifth: The Other Parties Interests.  Sixth: Leverage.

Goal Setting: What is your client trying to Achieve?  Work with your client to define the Goal. It is usually not just money.  Trying to eliminate risk. A loss may be too risky.  What is the business goal? (ex. Sony and Bulova)  Always help your client create options: early in the litigation, in the middle and at the end.

Goals: You’ll never hit the target if you don’t Aim.  Your goals set the upper limit of what you will ask for.  Setting specific goals motivates people.  We are more persuasive when we are committed to achieving some specific purpose.

Goals Versus Bottom Lines  The bottom line is the minimum acceptable level you require to say “yes”.  A “goal” is your highest legitimate expectation.  Orient firmly toward your goal in the planning and initial stages of negotiation, then gradually reorient toward a bottom line as that becomes necessary to close the deal.

Steps for Preparation of Goals  Think carefully about that your client really wants- and remember that money is often a means, and not an end.  Set an optimistic-but justifiable-target.  Be specific.  Get committed. Write down your goal, if possible, discuss the goal with someone else.  Carry your goal with you into negotiation.

Set an Optimistic, Justifiable Target  Optimistic goals are effective only if they are feasible - if you believe in them and they can me justified according to some standard.  Be specific as possible.  Negotiating is a challenge and involves conflict. It is my experience that one has to enjoy the challenge a little bit.

Third Foundation: Authoritative Standards and Norms  Industry norms and standards are independent and give the impression of fairness.  They are very persuasive; they appear reasonable and legitimate.  Look for norms that are legitimate to the other side and are also advantageous to your interests (a battle of standards).

Authoritative Standards and Norms  There are times that you can negotiate around the norms if they are a disadvantage to you.  You have to come up with very good reasons, you must have good leverage and be very prepared.  Anticipate what the other side will use, call an expert, perform good research.

Prepare for Good Negotiation Skills at the Table  Identify interests, resources and capabilities.  Ask question and listen. I always make sure to listen for interests and needs.  I am also patient with lawyers. Let them be the advocates they want to be.  Good Questions:  What is important to you?  Why? Why not  What about this idea?

Having Good Negotiation Skills at the Table Generate value creating options. Pre think them. Treat distribution as a shared problem. We have to figure out a way to solve this, use objective standards. Change the game to competitive negotiation or stay with problem solving.

Management of the Negotiation  Manage the difference to your benefit. Different resources. Different relative values. Different forecasts. Different risk preferences. Different time preferences.  Manage the non competitive similarities Divorced parents want their children to succeed. Businesses may have similar needs. A good partnership. Orange example.

Management of the Negotiation  Economies of scale Work together to get larger. One takes the big projects the other the small projects.  Reducing Transactional Cost

Prepare and Manage the Negotiation  Understand your own Tendencies.  Recognize and diagnose the other sides conflict tendencies.  During the negotiations, understand the interaction and identify the productive elements (Successful) and eliminate unproductive ones (Unsuccessful); most often I have found focusing on positions is the most unproductive.  I would say: focus on the best tactic, Assertiveness or Empathy. Monitor this during the negotiation (this requires a high level of self awareness also).