Chapter 1

Report
Negotiation
 Spring
2015
 Course
 Ivar
convenors:
Bredesen
Robert Hartnett
Negotiation
http://home.hio.no/~ivar-br/fag/Negotiation/Negotiaton.htm

7.5 ECTS

4 - 5 lectures 7 January – 4 February

3 full days given by Robert Hartnett, Edinburgh
Business School. On February 13 he will cover
Influencing and on 25 and 26 February there will
be intensive negotiation training.

4 hour closed book exam 20 March

Exam format: Case study with 5 questions (40 %)
+ 3 essay questions (60 %). Case study without
questions published about 1 week ahead
Slide 2
Negotiation?
Slide 3
Course objective

The course consists of two parts – negotiation
and influencing

The part in negotiation aims to provide a
thorough grounding in the science and practice
of negotiation. Various academic disciplines
(economics, psychology, sociology, politics,
anthropology and mathematics) have
researched negotiation from their particular
standpoints and much of this material forms the
basis for the scientific analysis of negotiation
Slide 4
Course objective

Influencing explains how people are influenced,
how to exert influence, how to develop
relationships with those around us to achieve
personal and organisational goals and how to
recognise influencing games played by other
managers
Slide 5
MBA based course

The Negotiation part of the course is
based on Edinburgh Business
School MBA, where the Negotiation
course is a very popular elective

Robert Hartnett is Senior Teaching
Fellow at Edinburgh Business
School and regularly teaches MBA
students and managers negotiation
and influencing
Slide 6
Course contents

The course in negotiation will address:
 What
is negotiation?
 Preparation
 Debate
in negotiation
 Prososals
 Rational
 Ploys
for negotiation
and bargaining
bargaining
and manipulation techniques
Slide 7
Readings: Negotiation
Slide 8
Readings: Influence

Also available in
Norwegian and
other languages
Slide 9
Supplementary reading

Getting to Yes –
highly influential
book published in
1981, now in 2nd
ed.
Slide 10
Course structure

The textbooks are international best
selling books on negotiation

The texts give examples and theories and
these will be further developed in the case
studies and essay questions

Past exams with solutions is an important
learning tool, perhaps the most important
one
Slide 11
Kennedy web www.negotiate.co.uk
Slide 12
Behavioural negotiation


There are many ways to study negotiation

Fisher and Ury: Principled Negotiations

Karass: Ploys and manipulation

Kennedy: Behavioural (process) model
Some people think of a skilled negotiator as
someone who can bluff and double bluff his way
to whatever he wants. Negotiation is a lot more
than ploys and tactics
Slide 13
What would you do?

You have been very busy at work lately,
and this is the last day before your annual
holiday
 Your
family has already gone ahead to the
villa you have rented
 Your
taxi to the airport is waiting outside
 Your
boss comes in and asks you to work on
some customer account over the weekend
Slide 14
Alternative methods of making
decicions

Say ”No”

Arbitrate

Persuasion

Coercion

Problem-solve

Postpone

Chance

Instruct

Negotiate

Give in

Litigation
Slide 15
Adam Smith (Book 1, ch. 2)

Nobody ever saw a dog make a fair and deliberate
exchange of one bone for another with another
dog. Nobody ever saw one animal by its gestures
and natural cries signify to another, this is mine,
that yours; I am willing to give this for that.

But man has almost constant occasion for the help
of his brethren, and it is in vain for him to expect it
from their benevolence only. He will be more likely
to prevail if he can interest their self-love in his
favour, and show them that it is for their own
advantage to do for him what he requires of them
Slide 16
What is negotiation?

Give me some of what I want and I will give you
some of what you want

The process by which we search for the terms to
obtain what we want from somebody who wants
something from us

Negotiation is an explicit voluntary traded
exchange between people who want something
from each other
Slide 17
Negotiation

Negotiation is one of several means
available to managers to assist in the
making of decisions. It is neither superior
nor inferior to other forms of decisionmaking - it is appropriate in some
circumstances but not in others
Slide 18
When do we negotiate?

We negotiate:
 When
we need someone's consent
 When
the time and effort of negotiating are
justified by the potential outcome
 When
the outcome is uncertain
 We
negotiate because our decisions affect
others and their decisions affect us
Slide 19
The four phases

Negotiations involve a four stage process:
 Preparation
 Debate
– what do they want?
 Propose
 Bargain
– what do we want?
– what wants might we trade?
– what wants will we trade
Slide 20
What do you think?
Agree Disagree
1
2
3
4
5
6
7
8
9
10
Negotiators should not reveal their true feelings in case their
opponents take advantage
A magrinally acceptable deal is better than no deal
at all
If an opponent gives me an opportunity to take
advantage discreetly, that`s their problem
I will renegotiate profitable deals if the other
negotiator say they are in difficulties
I look after my own interests and leave
opponents to look after theirs
It is generally beneficial to be open about
one`s true circumstances
I am worried about rejection when negotiating
If opponents are too soft and can`t look after
themselves, that`s their lookout
A good cause is more worthy than power
When opponents buckle under pressure I
should push harder
Slide 21
Red and blue behaviour

Everyone will accept that an outcome will
depend on both our own activity and the
activity of others

Is the opponent ”red” or ”blue” ?

Red – exploits the other party

Protects oneself - ”I defect not because I want to,
but because I must”

Has dishonest agenda and often seek zero-sum
outcomes
Slide 22
Red assumptions

”In a successful negotiation, both parties gain
– but one gains more than the other.”

”We recognise that, far from being honest,
negotiation is a web of even more delicate
lies. A skilled negotiatior will appear friendly if
this is the role he considers to be most
effective, but will never sacrifice profit for
friendship in his business dealings”
Slide 23
Red attitudes

Be aggressively competitive and noncooperative

Dominate your opponents

Seek always to win

All deals are ”one-offs”

Use ploys and tricks

Bluff and coerce

Exploit the submissive
Slide 24
Blue behaviour

Be co-operative – even with agressive
partners

Show respect to all partners

Seek to succeed

All deals lead to others

Avoid manipulation

Be open and play it straight
Slide 25
Blue behaviour

Blue players seek non-zero-sum
outcomes – what they gain is not at
their partner`s expense

Extreme blue - naive, are often taken
advantage of

Within negotiations – purple behaviour
is often recommended
Slide 26
Prisoners dilemma
Prisoner B
Confess
Confess
Deny
-5, -5
-1, -10
-10, -1
-2, -2
Prisoner A
Deny
Slide 27
Prisoners dilemma

This is a dilemma because the choice of
how to behave is is motivated by the
prisoner doing what is best for himself or
doing what is best for the pair of them

The choice for one prisoner is
complicated by the choice made by the
other prisoner

Red and blue game
Slide 28
Blue and blue

Only about 8 % av players in negotiation
games open with blue

Blue is only selected if the other party
opens with blue

If the other player selects red, you will
respond with red (tit-for-tat)

Players need to trust each other before
blue/blue behaviour will emerge
Slide 29
Distributive Bargaining
Slide 30
Single issue negotiation

Vital (but probably unavailable) information is
how little is John prepared to accept

There is no obvious solution to this dilemma

Zero sum game – one loses what the other
one gains

Lose-lose is a possible outcome too and both
strive hard to make the other party moving
Slide 31
Single issue negotiation

In negotiation we start with at least two solutions
(yours and mine) to the same problem, and the
objective is to end up with only one solution, if we
can

What is to be the agreed price for the used car?

A negotiator opens with an entry price, the price
he prefers to get. The gap between the entry
prices for each negotiator is called the total
negotiating range or the haggling range
Slide 32
Negotiating range

The negotiating range implies distance and
movement

”After 12 hours of talks, we are still a long
way apart”

Movements from entry prices are of course
inevitable. No one opens with his/her final
price
Slide 33
Negotiating range

There will always be a limit beyond which
you do not want to go – this is the exit
price

The exit price will normally lie somewhere
in the negotiating range. Unless exit prices
at least meet, there will be no agreement
Slide 34
Negotiating range
Slide 35
Settlement range
Slide 36
Disclosing entry price can be
dangerous
Slide 37
The Run-down bar Negotiation
Slide 38
The Run-down bar Negotiation
Slide 39
Negotiators surplus

Assume you are willing to sell a
property for 150 000 but hope to get
250 000

The difference of 100 000 can be
divided between buyer and seller –
settlement range
Slide 40
Settlement range

115 is the lowest price the seller will accept
and 120 is the highest price the buyer is
prepared to pay

Any price in between can be a settlement
price
Slide 41
Settlement price

Diffence between settlement price and the seller
exit price is called sellers surplus, and difference
between settlement price and buyers exit price is
called buyers surplus.

Sum of buyers and sellers surplus is negotiators
surplus
Slide 42

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