Business Negotiation Slides PDF

Business negotiation 2024-2025 For this session Read Getting to Yes - Chapters 6, 7, 8 and "Ten questions people ask" (Mandatory) There will be a quiz, worth 5% of the final grade in the beginning of the class Watch the section 2 (mandatory) and section 3 (highly recommended) fro...

Business negotiation 2024-2025 For this session Read Getting to Yes - Chapters 6, 7, 8 and "Ten questions people ask" (Mandatory) There will be a quiz, worth 5% of the final grade in the beginning of the class Watch the section 2 (mandatory) and section 3 (highly recommended) from the online-content Start working on the final group project (highly recommended) Advanced Topics in Negotiation Business negotiation Session 3 At some Please answer the course evaluation point today survey on Aurion Should you ever reveal your BATNA? Should you ever reveal your BATNA? Be careful with rigid rules!  The BATNA is an important source of bargaining power And you need to know when it is important to share this information with the other party What have we seen so far? Distributive Integrative Negotiation Negotiation (win-lose) (win-win) Quick survey (raise your hands) Who here prefer win-win negotiations whenever possible? Are conflicts negative or Should conflicts be avoided or promoted? positive? Perspectives on conflicts What is the relationship between conflict and team performance? Good ? Conflict outcomes 0 Bad Low Level of conflict High Perspectives on conflicts Traditional view of conflict Good Conflict outcomes 0 Bad Low Level of conflict High Traditional perspective on conflict The belief that all conflict is harmful and must be avoided Reasons Poor communication Lack of openness Failure to respond to employee needs Distraction Decrease in productivity Frustration Impacts on physical and mental health Negative impact on relationships Novel view on conflicts The belief that conflict is a natural and inevitable outcome in any group. It is not only a positive force in a group but that it is absolutely necessary for a group to perform effectively Reasons Different perspectives Divergent expertise Positive process Generates curiosity and innovation Source of personal and social change and growth Test ideas and alternative solutions Clarify goals and methods Promotes group cohesion Improve the quality of group relationships Perspectives on conflicts Traditional view of conflict Novel view of conflict Good Good Conflict outcomes Conflict outcomes 0 0 Bad Bad Low Level of conflict High Low Level of conflict High Perspectives on conflicts Good Optimal 1970s to 1990s – belief in conflict an optimal level of Conflict outcomes conflict Some level of conflict is 0 good because: Energizes debate Reexamine assumptions Improves responsiveness to external environment Increases team cohesion Bad Low Level of conflict High  Different types of conflicts Task conflicts Divergence about the content of the task or the goals of the task; Divergence about the best way to complete a certain task. Relationship conflicts Based on interpersonal relationships, caused by interpersonal animosity; Usually has roots on negative emotional interactions. The challenge: These two types of conflicts are positively correlated. Too little or too much task conflict is detrimental to creative group performance (Farh, Lee & Farh, 2010)  If conflicts are unavoidable (and even desirable), it is not enough to resolve conflicts It is essential to manage conflicts Five basic conflict management styles Conflict management styles Source: K. Thomas, “Conflict and Negotiation Processes in Organizations,” in M.D. Dunnette and L.M. Hough (eds.), Handbook of Industrial and Organizational Psychology, 2nd ed., vol. 3 (Palo Alto, CA: Consulting Psychologists Press, 1992), p. 668. Conflict management techniques Reduce tension and synchronize de- escalation Release the tension Ackowledge each other’s feelings When the situation is too tense, separate the parties Conflict management techniques Improve the accuracy of communication Promote active listening Promote perspective taking and role reversal Conflict management techniques Control issues Reduce the number of parties on each side Restrict the precedents involved Control the number of issues involved State issues in concrete terms Break down the big issues into more manageable issues Depersonalize issues Conflict management techniques Establish commonalities Establish common goals Focus on common enemies Agree to follow a common procedure Establish a common framework for approaching the negotiation problem Conflict management techniques Make your offers more desirable Make them a « yesable » offer Do not intensify threat but sweeten your offer Use objective criteria to evaluate offers Ask for a different decision Simulation: Jerry, a conflict simulation Instructions Roles: An employee (Jerry) and his Supervisor Instructions: Find a pair Define the roles Read your confidential instructions (see MyCourses) and prepare the meeting for about 15 minutes Meet for about 15~20 minutes Debriefing  What is the situation? How did the meeting go? What did you decide to do? What were your goals before the meeting? Jerry What were you expecting from the meeting? Simulation Was this about task or relationship conflicts? How was this exercise different from the others we have done previously? Was it easier or harder (than you expected)? Adding a third party to the conflict resolution would have helped? At some Please answer the course evaluation point today survey on Aurion Activity: Money Game Divide the class in 4 teams of approximately the same size (spread all over the room, so other teams cannot hear your discussion) Your aim is to win as much money (points) as possible from the “banker” (the teacher) Instructions: Game with 10 rounds At each round, your team needs to choose a letter (X or Y) Your points depend on the choice of the other teams (see next slide) At the end, we count the points Negative points means that the “banker” won Activity: Money Game Scoring key: Case 1: If all teams select ‘X’: 100pts to each team Case 2: If one team selects ‘Y’: 300pts to that team, 100pts deducted from the others Case 3: If two teams select ‘Y’: 200pts to those teams, 200pts deducted from the others Case 4: If three teams select ‘Y’: 100pts to those teams, 300pts deducted from the others Case 5: If all teams select ‘Y’: 100pts deducted from each team Activity: Money Game Were you What was your successful in this goal? activity? Why? Do you remember this question? Who here prefer win-win negotiations whenever possible? Activity: Money Game Was this a win-win Why? negotiation? Trust in negotiations – Activity: Money Game What is it? Prisoner's Dilemma is a game which demonstrates whether people display win-win (co-operative) or win-lose orientation (selfish competitive) in a situation which offers the possibility of both It contrasts their actual behavior with their expressed intentions, i.e. do people who say they support a win-win approach actually carry it out when the chips are down? If they do, the implication is that they will be equally concerned that the other party’s needs are also met in any agreement Prisoner’s Dilemma (Original) Two members of a criminal gang are arrested and imprisoned. Each prisoner is in solitary confinement with no means of speaking to or exchanging messages with the other. The police admit they don't have enough evidence to convict the pair on the principal charge. They plan to sentence both to a year in prison on a lesser charge. Simultaneously, the police offer each prisoner a Faustian bargain. If A and B each betray the other, each of them serves two years in prison If A betrays B but B remains silent, A will be set free and B will serve three years in prison If A remains silent but B betrays A, A will serve three years in prison and B will be set free If A and B both remain silent, both of them will serve one year in prison (on the lesser charge). Prisoner’s Dilemma B stays silent B betrays A stays silent A jail time = 1 year A jail time = 3 years B jail time = 1 year B jail time = 0 year Total jail time = 2 years Total jail time = 3 years A betrays A jail time = 0 years A jail time = 2 years B jail time = 3 years B jail time = 2 year Total jail time = 3 years Total jail time = 4 years WHAT IS THE RATIONAL DECISION? Prisoner’s Dilemma B stays silent B betrays A stays silent A jail time = 1 year A jail time = 3 years B jail time = 1 year B jail time = 0 year Total jail time = 2 years Total jail time = 3 years A betrays A jail time = 0 years A jail time = 2 years B jail time = 3 years B jail time = 2 year Total jail time = 3 years Total jail time = 4 years A RATIONAL AGENT WOULD BETRAY, ALTHOUGH THE TOTAL REWARD FOR COOPERATION IS BIGGER Trust in negotiations – Activity: Money Game Why is it useful? Often we’re more concerned with winning than with achieving the optimum result. This activity: Explores the issues of risk and trust between team members and the effects of trust betrayal Demonstrates the effects of competition between teams Demonstrates the potential advantages of a collaborative approach to solving problems Demonstrates the necessity of establishing the purpose of any activity Trust in negotiations What is trust? Trust is the willingness to be vulnerable (Rousseau et al., 1998) Why do people trust? They hope that the other party is generous, good and cares about the interests of both parties. Two dilemmas The dilemma of honesty To what extent should I tell the truth to the other party? I should do it if I want to find a win-win deal At the same time, the other party can abuse the information about my preferences The dilemma of trust To what extent should I believe what the other party tells me? I should believe it if I want to find a win-win deal At the same time, the other party could be manipulating me Consequences of trust How do you know if trust is possible? Different cultures are more or less suspicious of others  Generally speaking, would you say that How would most people can be you answer this question? trusted or that you need to be very careful in dealing with people?  Generally speaking, How would would you say that French people most people can be answer this question? trusted or that you need to be very careful in dealing with people?  Brazil Canada China France Germany Mexico Sweden Switzerland USA Most people 6.5% 46.7% 63.5% 26.3% 44.6% 10.5% 62.8% 57.1% 37.0% can be trusted Need to be very 91.6% 53.3% 35.7% 72.3% 52.4% 89.4% 35.7% 41.7% 62.5% careful Source: World Values Survey www.worldvaluessurvey.org Selected samples: Brazil 2018,Canada 2020,China 2018,France EVS,Germany 2018,Mexico 2018,Sweden EVS,Switzerland EVS,USA 2017  How much you trust people of another How would you answer nationality? this question? Completely, somewhat, not very much or not at all?  How much you trust How would French people people of another answer this nationality? question? Completely, somewhat, not very much or not at all?  Brazil Canada China France Germany Mexico Sweden Switzerland USA Trust completely 3.9% 12.4% 0.6% 9.8% 4.3% 5.0% 26.3% 8.8% 8.1% Trust somewhat 30.6% 69.7% 16.1% 56.4% 53.8% 18.3% 63.9% 68.2% 65.1% Do not trust very 22.3% 15.4% 56.2% 17.1% 27.2% 30.1% 5.9% 18.1% 21.0% much Do not trust at 30.1% 2.5% 26.0% 8.1% 5.2% 45.5% 1.0% 2.1% 4.6% all Source: World Values Survey www.worldvaluessurvey.org Selected samples: Brazil 2018,Canada 2020,China 2018,France EVS,Germany 2018,Mexico 2018,Sweden EVS,Switzerland EVS,USA 2017 When trust is likely… (Gunia, Brett & Nandkkeolyar, 2012) Assume trustworthiness Prioritize your interests and give away some information about them Engage in reciprocity (Q&A) Highlight similarities, spend time together Get to know your counterpart personally, try to be likable Behave consistently and predictably (remember the game?) Paraphrase your counterpart’s positions When trust seems possible…(Gunia, Brett & Nandkkeolyar, 2012) Emphasize common goals Focus on the goals, not on the people Look to the future and find a shared vision Mix Q&A with making and justifying offers Take a break, suggest another approach, or call in a mediator. Be forgiving of the other party's mistakes When trust is not possible… (Gunia, Brett & Nandkkeolyar, 2012) Make multi-issue offers Think holistically about your counterpart’s interests Engage in reciprocity (concessions) Express sympathy, apologize, or compliment your counterpart Look for preference patterns in your counterpart’s offers and responses  In all cases: Remember you always have a BATNA and you should be prepared to abandon a bad deal Capstone project – Business Negotiation Task 1: Identify an external negotiating partner who will play a crucial role in the development of your business (this could be an investor, a supplier, a retailer, etc.). Task 2: Describe your positions and interests Task 3: Describe the anticipated positions and interests of your negotiating partner Task 4: Review your BATNA, Reservation point, Aspiration point, and Zone of Possible Agreement Task 5: Review the possible opportunities and challenges due to the use of digital communication channels (vs. face-to-face communication) in your upcoming negotiation. How could digital communication affect the initiation of the negotiation, the bargaining phase, etc., and what will you do about it? Final Group Assignment Due 15 days from now Only one person per group needs to submit it Submit it via MyCourses: 2 links – video (Panopto) + supporting files Make sure to write the name of all group members in the final file (otherwise I might assume that the person whose name is missing didn’t participate in the project) There is a peer assessment survey to be filled as well At some Please answer the course evaluation point today survey on Aurion