Negotiation

Techniques
Communication & Negotiation

Moroz Ana, Sandor Endre

Year I, Group II
Economic Science and Business Administration Faculty
University of Transilvania

Summary
I.

Introduction

I.1. What is the negotiation?........................................................................................................3

I.2. What is the purpose of a negotiation?....................................................................................3
I.3. Why people are ineffective negotiators?...............................................................................3
II. Before the negotiation 4
II.1.Self-assessment.....................................................................................................................4
II.2. Know your BATNA.............................................................................................................4
II.3. Know your reservation value...............................................................................................5
II.4.Know the other party.............................................................................................................5
II.5. Situation assessment.............................................................................................................5
III. During the negotiation 6
III.1. Emotions.............................................................................................................................6
III.2. Gathering the information...................................................................................................7
III.3. The bargaining zone (ZOPA)..............................................................................................7
III.4. Dividing the pie...................................................................................................................8
III.5. Ultimatum...........................................................................................................................8
III.6. Power principles..................................................................................................................9
III.7. Influence tactics..................................................................................................................9
IV. Conclusion

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V. Bibliography

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I.

Introduction

I.1. What is the negotiation?

Everyone negotiates. In its various forms, negotiation is a common mechanism for resolving
problems, differences and allocating resources. Even if the majority of people understand under
negotiation an interaction between a buyer and a seller, this process occurs with a wide variety of
exchange partners: colleagues, spouses, children, neighbors and even nations.
Negotiation is a decision-making process among independent parties who do not share
identical preferences. It is through negotiation that the parties decide what each will give and
take in their relationship.

I.2. What is the purpose of a negotiation?

On the graph below(graph 1.1) is represented the Curve of Conflict which illustrate, how the
conflict develops and how the external forces can influence a conflict on its different stages.

Graph 1.1. The Curve of Conflict

Source: Negotiation and conflict management US Institute of Peace, 2010
Negotiation is a principal tool used in conflict management and resolution. Negotiation can be
used to prevent violence before it has taken hold(upward slope of the curve), to stop violence
once it has begun(top of the curve), and to prevent its recurrence and to create conditions for a
lasting peace in the aftermath of violence(downward slope of the curve).

I.3. Why people are ineffective negotiators?

Statistic shows that people are actually not very effective at the bargaining table. Because
negotiation is so important for personal and business success, it is rather surprising that most
people do not negotiate well.
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The problem is rooted in four fundamental biases: egocentrism, confirmatory information

processing, satisficing, and self-reinforcing incompetence.
Egocentrism is the tendency for people to view their experience in a way that is fulfilling for
them. In one investigation, people who were self-absorbed, were more likely to exhibit decisionmaking biases, thus making more unreasonable decisions. In contrast, people, who had taken
time to focus on values that were not important to them, but to their opponent, succeeded more in
their negotiations.
Confirmation bias is the tendency of people to see what they want to see when apprising their
own performance. The confirmation bias leads to selectively seek information that confirms what
they believe is true. This phenomenon makes people to ignore the opponents point of view and
to get a wrong image of what is happening at the moment.
Satisficing, according to Nobel Laureate Herb Simon, is opposite for optimizing. In a
negotiation situation, it is important to optimize ones strategies by setting high aspirations and
attempting to achieve as much as possible; in contrast, when people satisfice, they settle for
something less than they could otherwise have.
Self-reinforcing incompetence can play a detrimental role in a negotiation. This term simply
means the fear of losing keeps people from experimenting with change. The fear of making
mistakes may result in a persons inability to improve his or her negotiation skills.

II.

Before the negotiation

II.1.Self-assessment
The most important questions a person needs to ask himself before the negotiation are: What do
I want? and What are my alternatives?. Many people do not actually know what they really
want when they enter a negotiation. The second question defines a negotiators power and
influences the outcome of the negotiation.

II.2. Know your BATNA

BATNA Best Alternative To a Negotiation Agreement
BATNA is an alternative that a person would take if he/she does not negotiate, or will take if the
negotiation fails.
A rational negotiator should reject anything worse than his BATNA and accept anything superior
to his BATNA.
Some key points about BATNA:

BATNA is determined by the reality but not by ones whishes

BATNA is time-sensitive and can either improve or deteriorate
Thus, negotiator should constantly improve their BATNA
The other party always has an intention to minimize the quality of your BATNA
Thus, dont let other party to determine or influence your BATNA
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II.3. Know your reservation value

Lets take an example to explain this term more clearly:
Lets say a student has a job offer from company A with the salary of 1000 euro/month. The
student is interested in getting a job-offer from company B.
In this situation, company A is students BATNA.
The question here is: What salary has to offer me company B so that I feel it is as attractive as
the offer made by company B?
The answer to this question is the students reservation value. It includes not just money the
student could get, but also some abstract things, such as quality of life and feeling about the
company.

II.4.Know the other party

A negotiator should do as much research on the other party as possible before the negotiation to
determine the counterparties interest in the negotiation.
The question that could help you might be:

What issues are important to the other party?

What alternative does the other party have?
What is the others party BATNA?

II.5. Situation assessment

One of the main question to pay attention before the actual negotiation are:
Is the negotiation One Shot, Long Term, or Repetitive?
In a One-Shot negotiation the chances to meet again with the other party a very low.
However, most negotiations are not one-shot situation. Most people use repetitive negotiations,
in which your reputation and your behavior are strongly related to the impression the other party
have about you, and, sometimes, it influences a lot the result of the negotiation.
Do the negotiations involve scarce resources, ideologies, or both?
There are two main types of conflicts: consensus conflict and scarce resource competition.
Consensus conflict occurs when one persons ideas, opinions or beliefs are incompatible with
those of another, and these two try to reach an agreement of opinion. Consensus conflict is about
ideology and fundamental beliefs, which make it difficult to resolve. People are less likely to
reach an agreement when values are at stake.
Scarce resource competition exists when people vie for limited resources.
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Here is presented a table of questions to help you prepare for a negotiation:

Table 2.1. Preparation Questions for Negotiations

Source: Mind and Heart of a Negotiator Leigh L. Thompson, 2012

III.

During the negotiation

III.1. Emotions
Emotions play a major role in the process of negotiation. Moreover, negotiators vary in terms of
how accurate they are in assessing the emotional expression of others.
Emotions are relatively fleeting states that are usually fairly intense. In general, emotions are
characterized in terms of pleasantness and activation. Moods are more chronic and more diffuse,
and they, in comparison with emotions, are not directed at someone. Emotions and moods can
be either a consequence or a determinant of negotiation behavior and outcomes.
Perhaps the key question when it comes to emotion in negotiation concerns whether emotions
are genuine or strategic.
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Scientists defer three different strategic emotions: positive emotion, negative emotion and no
emotion(poker face). The positive and poker face strategies are distinctly more effective than the
negative one in obtaining a favorable outcome of the negotiation.
Emotional intelligence is the ability of people to understand emotions in themselves and the
others and to use emotional knowledge to effect positive outcomes.
A large number of researches indicates, that different emotions can influence peoples ability to
make good decisions. For example, people experiencing high level of emotional stress tend to
fail more in what they do. Expressing positive emotions, on the other hand, might have a positive
consequence in negotiations(good moods promote creative thinking and innovative problemsolving, which lead to better outcomes of negotiations).

III.2. Gathering the information

Knowing as much as possible about the other party is essential to achieving a favorable outcome.
During the negotiation you, as a negotiator, should strive to update your knowledge about the
other party, their interests and goals.
This can be accomplished by:
1. Encouraging dialogue
Ask open-ended questions, let other side to provide you some information
Let the other part speak openly
2. Active listening
Focus on the speaker and what is being said
Use body language to encourage the speaker(e.g. nodding)
Do not interrupt, let the speaker finish
Repeat what you have just heard, summarizing the information and demonstrating
the other part, that you have understood what have been just said
3. Eye contact
Maintain eye contact with the other party
4. Using silence
Silence is not a bad thing if used properly it can encourage other party to talk
freely

III.3. The bargaining zone (ZOPA)

The bargaining zone, or Zone Of Possible Agreement(ZOPA) is the range between negotiators
reservation points. The final decision of a negotiation will fall somewhere above the sellers
reservation point and below the buyers reservation point.

In the picture below you can see how in this particular case the bargaining zone of buyer and that
of seller are identified.

Picture3.1. Bargaining Zone

Source: Mind and Heart of a Negotiator Leigh L. Thompson, 2012

III.4. Dividing the pie

The pie is how much more two parties, A and B, can achieve by working together than they can
get if they dont reach an agreement.
In other words:
The pie = benefit from working together (As benefit on its own + Bs benefit from its own)
Negotiators often use one of free principles, when it comes to slicing the pie:
1. Equality rule, of blind justice, prescribes equal shares for all. Outcomes (pie) are
distributed equally between negotiators and everyone benefits (or suffers) equally.
2. Equity rule, or proportional division, prescribes that distribution should be proportional to
a persons contribution
3. Need-based rule, or welfare-based allocation, states, that benefit (pie) should be
proportional to need

III.5. Ultimatum
Sometimes, in real negotiations, these three principles, stated above, dont suit the interest of a
party. This is where the Ultimatum game begins.
In an ultimatum bargaining situation, one person makes a final offer an ultimatum to another
person. If the other person accepts the offer, then the first player receives the demand that he or
she made, and the other player agrees to accept what was offered to accept what was offered to
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him or her. If the offer is refused, then no settlement if reached and negotiators receive their
reservation points.
One of the techniques to avoid this situation is to show the other party that there are another
results of the negotiation, even better, then the ultimatum he made. Of course, he will be more
likely to accept a better deal. But it is important not to forget, that the proposal you are making
has to be better not just for your opponent, but for you as well.

III.6. Power principles

Power is a probability that a person can carry out of his or her own will despite the resistance.
There are different types of power you can use during the negotiation:
Reward power. As power over B in this situation depends on how much B can be rewarded and
the extent to which B believes that A controls these rewards.
Coercive power. As power over B is determined by how much B believes that the punishment
can be avoided, if B complies with As wishes.
Expert power. As power over B depends on Bs perception that A possesses some special
knowledge or expertise.
Legitimate power. As power over B is a function of how much B believes that A has the lawful
authority to influence B.
Referent power. As power over B is determined by how much A can influence Bs feelings of
personal acceptance, approval and self-esteem.

III.7. Influence tactics

Here are some influence tactics you can use in your negotiations:
Pressure. A party uses demands, threats, or intimidation to increase the other partys compliance.
Legitimation. A party attempts to claim the right to request a compliance by referencing existing
policy, law or tradition.
Exchange. A party uses promises to reciprocate if the target complies.
Coalition. A party obtains the aid of others to help persuade or pressure the other party to
comply.
Ingratiation. A party attempts to make a favorable impression and improve the other partys
mood before requesting compliance.
Rational persuasion. A party uses logical arguments and factual information to support the
profitability of complying with the request.
Inspirational appeal. A party makes an emotional appeal for compliance by appealing to the
other partys values and ideas.

Personal appeal. A party appeals to the other partys sense of loyalty or friendship before
requesting compliance.

IV.

Conclusion

Negotiation is a skill that impacts practically all areas of your life. You can negotiate good
business for your company or you can negotiate a grade in the university. Every negotiation is
important and has its consequences.
Always look for the common ground and the area of mutual advantage.
The tips used for the negotiation can be also applied to many different spheres of our social life.
That is why it is very important to develop our negotiation skills.

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V.

Bibliography

Articles:
Tsay C.-J., Bazerman M.H.(2009) A decision-making perspective to negotiation: a review of the
past and a look into the future. Harward Business School.
Neale M.A., Bazerman M.H.(1992) Negotiating rationally: the power and impact of the
negotiators frame. Academy of Management Executive, Vol. 6, No. 3, pp. 42-51
Kim P.H., Pinkley R.L., Fragale A.R.(2005) Power dynamics in negotiation. Academy of
Management Review Vol.30, No.4, pp. 799-822

Books:
Baker & McKenzie(2007) The international negotiations handbook. Baker & McKenzie
Shell.G.R.(2006) Bargaining for advantage: negotiation strategies for reasonable people.
Penguin Books
Fisher R., Ury W.L., Patton B.(2011) Getting to Yes: negotiating agreements without giving in.
Penguin Books
Thompson L.L.(2012) The mind and heart of the negotiator. Pearson.
United States Institute of Peace(2010)Negotiation and conflict management. United States
Institute of Peace.

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