Chapter 1 I Negotiation is an interpersonal decision making process necessary whenever we cannot achieve our objectives single handedly a Negotiation skills are increasingly important for managers because i The dynamic nature of business Generation Y people are likely to change majors every 2 years A need arises to negotiate and renegotiate themselves into a new business setting Interdependence people need to know how to integrate their interest and work across business units and functional areas A rise in work specialties and expertise make us dependent upon one another ii iii Competition inevitable between companies good managers must know how to navigate to save their business from bankruptcy iv The information age creates efficiency and managers should know how to negotiate within a moment s notice v Globalization different norms of communications as people travel more II Negotiation Sandtraps for business potential III Why people make ineffective negotiators a Leaving money on the table negotiators fail to recognize and exploit win win b Settling for too little occurs when negotiators make too large concessions resulting in a too small share of bargaining pain c Walking away from the table negotiators reject terms that are agreeable because they are proud or miscalculate d Settling for terms that are worse than the alternative negotiators feel obliged to make a deal when walking away and finding other options would be better a Egocentrism is the tendency to view their experiences in a way that is flattering or fulfilling of themselves People believe they are smarter and more capable than they are b Confirmation bias is the tendency of people to see what they want to see when appraising their own performance Choosing what you believe is already true c Satisficing is the opposite of optimizing or settling for something less than they could have had d Self reinforcing incompetence being unaware of your own fallacies IV Debunking Negotiation Myths a Myth 1 Negotiations are fixed sum i What s good for one party is bad for the other isn t true and there is reward in cooperating and compromising b Myth 2 You need to be either tough or soft i Great negotiators are neither tough or soft somewhere in between c Myth 3 Good Negotiators are Born i Luck seems to be on some people s side but most great negotiators are self made through practice and feedback d Myth 4 Experience is a great teacher i Without feedback practicing does not help until you know where to ii Experience may improve confidence but not our accuracy e Myth 5 Good negotiators take risks i Tough style of negotiation where you give a lot of take it or leave it offers ii Learn when a risk is a safe move and how to make good decisions when improve can be harmful uncertain f Myth 6 Good negotiators rely on intuition i Develop strategies that are proactive or anticipatory as opposed to reactive dependent upon opponents actions Chapter 2 I Fixed pie vs Mixed motive enterprise a A fixed pie enterprise is the perception that there is only one outcome available and adopt one of three mindsets soft bargaining hard bargaining and midpoint compromise b Mixed motive enterprise is a negotiation that involves both cooperation and II III Effective preparation comes from three general abilities self assessment assessment of the other party and assessment of the situation Self Assessment competition a What do I want point i The ideal is the target or the aspiration Sometimes called the aspiration ii The underaspiring negotiator sets targets too low 1 Winners curse occurs where first offer is accepted and leaves feeling of regret for lost opportunity iii The overaspiring negotiator or positional negotiator is too tough and sets the target point too high refuses to make any concessions iv The grass is greener negotiator doesn t know what they want only that they want what the other party does not want to give Also known as reactive devaluation IV BATNA Best Alternative To Negotiated Agreement a BATNA determines the point at which a negotiator is prepared to walk away from the negotiation table Reject what is worse than BATNA accept terms better than BATNA i Does not have to be static ii Don t let other party manipulate BATNA or make you minimize it iii Keep your BATNA in your pocket when in need of an objective reassessment Determine Reservation Point V a The reservation point is not determined by what the negotiator wises and hopes for but by what their BATNA represents i Example Job A offers 90k salary and stock options In addition to 90k salary and stock options what does Job B offer b Steps to developing a Reservation point i Brainstorm your alternatives ii Evaluate each alternative iii Attempt to improve your BATNA iv Determine your reservation price c Be Aware of focal points but have no basis in fact d Beware Sunk Costs i Focal points are salient numbers figures or values that appear to be valid i Sunk costs is money invested that is gone Trying to recoup sunk costs can lead to trouble e Do not confuse your target point with your reservation point f Identify the Issues in a negotiation i Negotiators make the mistake of focusing on one aspect usually money and forget about other aspects that could be of more importance i Example would be payment for a car more interest or more money down g Identify the Alternatives for each issue or both Identify equivalent Multi Issue Proposals h i Assess your risk propensity i All negotiations have risk ii Risk aversion is where a person given two options that are equal will choose the less risky one iii A reference point defines what a person considers to be a gain or a loss iv Strategic risk refers to the riskiness of the tactics that negotiators use at the bargaining table Negotiators often choose between extremely cooperative tactics or competitive tactics v BATNA risk is due to BATNAs being uncertain because opportunities arrive sequentially Car dealers BATNA changes when they notice another customer in the next room vi Contractual risk refers to the risk associated with the willingness of the other party to honor its terms Military contract may lead to peace or may lead to disadvantage if something goes wrong j Endowment effects i Value of an object should be the same whether you are buyer or seller VI Sizing up the other party VII Situation Assessment accrue to the parties ii If you are given a mug worth 5 dollars and then try to sell it you may get 10 You have less value for the mug because