The Nature of Negotiation

The Nature of Negotiation


Negotiation is something

that everyone does, almost


Approach to the Subject

Do not confuse Bargaining with negotiation. Most people think bargaining and negotiation mean the same thing; however, we will be distinctive about the way we use these two words:

Bargaining: describes the competitive, win-lose situation, for example; haggling over price  that happens in shops.

Negotiation: Negotiation occurs when parties try to find a mutually acceptable solution to a complex.


•      Negotiation is an interpersonal decision-making process necessary whenever we cannot achieve our objectives single-handedly.

In the business world, people negotiate at multiple levels and contexts—within departmental or business units, between departments, between companies, and even across industries. For this reason, managers must understand enough about negotiations to be effective negotiating within, between, and up and across all of these business environments.


Negotiations occur for several reasons:

•      Resources are scare and it  helps to share or divide a limited resources.

•      To create something new that neither party could attain on his or her own.

•      To resolve a problem or dispute between the parties.

Characteristics of a
Negotiation Situation

•          There are two or more parties

•          There is a conflict of needs and desires between two or more parties

•          Parties negotiate because they think they can get a better deal than by simply accepting what the other side offers them

•          Parties expect a “give and take” process

Characteristics of a
Negotiation Situation

•          Parties search for agreement rather than:

–        Fight openly

–        Break off contact permanently

–        Take their dispute to a third party

•          Successful negotiation involves:

–        Management of tangibles (e.g., the price or the terms of agreement)

–        Resolution of intangibles (the underlying psychological motivations) such as winning, losing, saving face. Intangibles are often rooted in personal values.

Negotiation Skills

Negotiation Skills

Negotiation Skills

Importance of Negotiation Skills



Dynamic Nature of Business

Dynamic Nature of Business



Information Age


In negotiation, parties need each other to achieve their preferred outcomes or objectives

•This mutual dependency is called interdependence

•Interdependent goals are an important aspect of negotiation

•   Win-lose: I win, you lose

•   Win-win: Opportunities for both parties to gain



•      Interdependent parties are characterized by interlocking goals

•      Having interdependent goals does not mean that everyone wants or needs exactly the same thing

•      A mix of convergent and conflicting goals characterizes many interdependent relationships


Types of Interdependence
Affect Outcomes

•      Interdependence & The Structure of the Situation shape processes and outcomes

–    Zero-sum or distributive – one winner

For Example: Two people are running a race so the situation is competitive.

So there is a negative relation between the two’s goal attainment.

–    Non-zero-sum or integrative – mutual gains situation

For Example: the combination of Musician & Lyric writer.

Alternatives Shape Interdependence

•      Evaluating interdependence depends heavily on the alternatives to working together

•      The desirability to work together is better for outcomes

•      Best available alternative:  BATNA        (acronym for Best Alternative to a Negotiated Agreement)

Mutual Adjustment

•      Continues throughout the negotiation as both parties act to influence the other

•      Negotiation is a process that transforms over time & mutual adjustment is one of the key causes of the changes that occur during a negotiation

•      The effective negotiator needs to understand how people will adjust and readjust and how the negotiations might twist and turn, based on one’s own moves and the other’s responses

Mutual Adjustment and Concession Making

•      When one party agrees to make a change in his/her position, a concession has been made

•      Concessions restrict the range of options

•      When a concession is made, the bargaining range is further constrained

Two Dilemmas in
Mutual Adjustment

•      Dilemma of honesty

–    Concern about how much of the truth to tell the other party

•      Dilemma of trust

–    Concern about how much negotiators should believe what the other party tells them

Value Claiming and Value Creation

•      Negotiators face two related tasks, value claiming and value creation (Lax & Sebenius 1985).

•      Opportunities to “win” or share resources

–   Claiming value: result of zero-sum or distributive situations where the object is to gain largest piece of resource and is often described as `increasing the size of the pie’.

Value Claiming and Value Creation

Value Claiming and Value Creation

•      Most actual negotiations are a combination of claiming and creating value processes

–    Negotiators must be able to recognize situations that require more of one approach than the other

–    Negotiators must be versatile in their comfort and use of both major strategic approaches

–    Negotiator perceptions of situations tend to be biased toward seeing problems as more distributive/  competitive than they really are



Conflict may be defined as a:

“An expressed struggle between at least two interdependent parties who perceive incompatible goals, scare resources and interference from others in achieving their goals” (Wilmot & Hocker, 2001, p. 41)


Types of Conflict

Levels of Conflict

•      Intrapersonal or intra-psychic conflict

–   Conflict that occurs within an individual

•   We want an ice cream cone badly, but we know that ice cream is very fattening

•      Interpersonal conflict

–   Conflict is between individuals

•   Conflict between bosses and subordinates, spouses, siblings, roommates, etc.

Levels of Conflict

•      Intra-group Conflict

–   Conflict is within a group

•   Among team and committee members, within families, classes etc.

•      Intergroup Conflict

–   Conflict can occur between organizations, warring nations, feuding families, or within splintered, fragmented communities

–   These negotiations are the most complex

Levels of Conflict

Functional (or Constructive) Conflict

Functions of Conflict

?        Makes organizational members more aware and able to cope with problems through discussion.

?        Promises organizational change and adaptation.

?        Strengthens relationships and heightens morale.

?        Promotes awareness of self and others.

?        Enhances personal development.

?        Encourages psychological development—it helps people become more accurate and realistic in their self-appraisals.

?        Can be stimulating and fun.

Dysfunctional (or Destructive) Conflict

Dysfunctions of Conflict

?       Competitive, win-lose goals

?       Misperception and bias

?       Emotionality

?       Decreased communication

?       Blurred issues

?       Rigid commitments

?       Magnified differences, minimized similarities

?       Escalation of conflict

Styles of Conflict Management

Although conflicts can be managed in a variety of ways, individuals’ CMS are typically based on a two-dimensional typology, the so called “dual concern model”: concern for self (assertiveness dimension) and concern for other’s interests and outcomes (cooperative dimension) (Pruitt & Rubin, 1986).

The Dual Concerns Model

Problem Solving

Problem Solving

Problem Solving

Problem Solving

Problem Solving

Problem Solving







Actors show moderate concern in obtaining own outcomes, as well as moderate concern for the other party obtaining their outcomes.

• Negotiators pursue this approach when-

–Goals of parties are mutually exclusive

–Parties are equally powerful

–Integrating and dominating styles are not successful

–Temporary solution