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Chapter 1 The Nature of Negotiation

Negotiations occur for several reasons:

1. To agree on how to share or divide a limited resource, such as land, property or time.
2. To create something new that neither party could do on their own.
3. To resolve a problem or dispute between the parties.
Characteristics of a Negotiation Situation
Negotiation: Process by which two or more parties attempt to resolve their opposing interests.
1. 2 or More Parties
2. Conflict of needs/desires between 2 parties.
3. The parties negotiate by choice. We negotiate because we think we can improve our outcome or result.
4. Negotiation = Give & Take
5. Parties search for agreement rather than fight openly.
6. Negotiations should contain both Tangibles and Intangibles
Tangibles The price or terms of agreement
Intangibles Underlying psychological motivations. (the need to win, the need to look good, competent or
tough, the need to defend an important principle, the need to appear fair or honorable and the need to maintain a
good relationship with the other party.)
Most relationships between parties can be characterized in three ways.
- Independent Parties Independent parties are able to meet their own needs without the help and
assistance of others; are detached/indifferent and uninvolved with others.

Dependent Parties Must rely on others for what they need; because they need the cooperation of the
other, must accept/accommodate to others.
- I.E. Employee is dependent on an employer for a job and salary, if they have to either do the job as
instructed and accept the pay offered, or go without a job.

Interdependent Parties Interlocking goals, parties need each other in order to accomplish their
- I.E. In a project management team, no single person could complete a complex project alone; all team
members may need different things, but they must work together to accomplish their goals.

The interdependence of peoples goals and the structure of the situation in which they are going to
negotiate, strongly shapes negotiation processes and outcomes.
Zero-Sum or Distributive Competition among parties. Individuals are so linked together that there is a
negative correlation between their goal attainments (Only 1 winner)
Non-Zero Sum, Integrative, Mutual Gain Create value for multiple parties. There is a positive correlation
between goal attainments

Mutual Adjustment

Mutual Adjustment When parties are interdependent, they find a way to resolve their differences, by
having both parties simultaneously influencing the other's outcomes and decisions.

Bargaining Range [Adjusting for Concessions] The difference between the preferred acceptable
settlements. (When a party makes a concession the bargaining ranges in constrained)

2 Dilemmas in Mutual Adjustment

1. Dilemma of Honest How much of the truth to tell the other party; may influence how much
information they have and changes negotiation.
2. Dilemma of Trust How much should negotiators believe what the other party tells them.

Distributive bargaining: purpose is to claim value.

Integrative bargaining: purpose is to create value.
Key Differences Among Negotiators [Pg 17]
* While value is often created by exploiting common interests, differences can also serve for creating value.
1. Difference in Interests Finding compatibility in diff interests is often key to value creation.
2. Differences in Judgments about Future People differ in the future value of an item.

- I.E. Real estate develops work hard to identify properties they see future potential that current owners fail to
3. Differences in Risk Tolerances People differ in the amount of risk they are comfortable in assuming.
4. Difference in Time Preference Time affects negotiators differently.
- Some negotiators need a quick settlement while the other has no need for change in the status quo; time
preferences can result in value creation. - I.E. Car salesman may want to close a deal by the end of the week, while
potential buyer intends to buy in the next 6 months.
Levels of Conflict [18-19]
Conflict: sharp disagreement or opposition, as of interests, ideas etc.
1. Intrapersonal or Intrapsychic Conflict Conflict within an individual , such as ideas; thoughts; emotions; values.
(want ice cream badly-ice cream is fattening)
2. Interpersonal Conflict Conflict BETWEEN individuals; most negotiation based on interpersonal conflict.
3. Intragroup Conflict Conflict within a group. (analyze how conflict affects the ability of the group to make
decisions, work productively etc.)
4. Intergroup Conflict Between organizations, warring nations, ethnic groups. (large number of people involved)
Functions and Dysfunctions of conflict
1. Competing Parties compete against each other because they believe that their interdependence is such
that goals are in opposition and both cannot simultaneously achieve their objectives.
2. Misperception and bias: As conflict intensifies, perceptions become distorted. People tend to interpret
people and events as being either with them or against them.
3. Emotionality: Conflict tends to become emotionally charged as the parties become anxious, irritated,
annoyed, angry or frustrated.
4. Decreased communication: Productive communication declines with conflict.
5. Blurred issues: Generalizations abound, the parties become less clear on how the dispute started and what
is really about.
6. Rigid commitments: parties become locked into positions (either/or)
7. Magnified differences, minimized similarities: parties tend to see each other as opposition and polar
8. Escalation of the conflict: each party becomes more entrenched in their own view.
Functions or benefits of conflict:
Makes organizational members more aware and able to cope with problems.
Promises organizational change and adaptation. Draws attention to those issues that may interfere with and
frustrate employees.
Strengthens relationships and increases morale.
Promotes awareness of self and others.
Enhances personal development. Managers find out how their style affects subordinates.
Encourages psychological development.
Effective conflict management. (dual concerns model pg. 22)
1. Contending (competing): pursue their interest strongly and show little concern with the other party obtaining
their desired outcomes.
2. Accommodating [Yielding] Show little interest or concern whether they attain their own outcomes; "let the
other win".
3. Avoiding [Inaction] Show little interest in whether they attain their own outcomes; withdrawal and passivity,
may remain silent or do nothing
4. Compromising Moderate effort to pursue own outcome and other party.
- Lazy problem solving; half-hearted attempt to satisfy both parties
5. Collaborating/Integrating [Problem Solving] Parties pursue the problem-solving strategy, have high concern
for attaining their own outcomes and high concern for other party.; maximize joint effort.