MAN5245 OB Chapter 14

A process in which two or more parties communicate and confer to reach a mutual agreement on the exchange of goods or services

Negotiation

What are the two general approaches to negotiation?

Distributive bargaining and integrative bargaining

Negotiation that seeks to divide a fixed amount of resources; it is a win-lose situation

Distributive bargaining

The belief that there is only a set amount of goods or services to divide between the parties

Fixed pie

Negotiation that seeks one or more settlements that can reate a win-win solution

Integrative bargaining

The outcome a negotiator would like to achieve

Target point in negotiation

The lowest acceptable outcome for a negotiator — the point beyond whcih they would break off negotiations rather than accept a worse settlement

Resistance point in negotiation

The area between a party’s target point and resistance point

Aspiration range in negotiation

The area in which the two parties’ acceptable ranges overlap, making an agreement possible

Settlement range (barganing zone/ZOPA)

The point at which a negotiator is indifferent between accepting a negotiated agreement and walking away; functionally, it represents the negotiator’s limit

Reservation point

How does anchoring bias affect a negotiation?

People tend to fixate on the first offer, which becomes an anchor, and fail to adequately adjust away from it as they receive additional information

What advantage can come from making the first offer in a negtiation?

The first offer can anchor the negotiation in your favor by influencing the other party’s perception of the negotiable range

What is a potential disadvantage of making the first offer?

It can reveal information about your priorities or position that theo ther party can use against you

Mediator, arbitrator, and conciliator

three basic third-party roles in negotiation

A neutral third party who facilitates a negotiated solution through reasoning, persuasion, and suggestions for alternatives

Mediator

Does a mediator have the authority to impose an agreement?

No. A mediator helps the parties reach their own agreement

A third party who has the authority to dictate an aggreement

Arbitrator

A trusted third party who provides an informal communication link between the negotiating parties. They may also gather facts, interpret messages, and persuade the parties toward agreement

Conciliator

What is the key difference between a mediator, arbitrator, and conciliator?

Mediator = facilitates a solution; arbitrator = imposes a solution; conciliator = facilitates communication between the parties

What does BATNA stand for?

best alternative to negotiated agreement (best outside option or plan b)

In distributive bargaining, frame the negotiation by…

Making the first offer, making an aggressive offer, and not going beyond your reservation point

The degree to which an individual will hold “tough” in maintaining their own interests

Resistance to yielding