Business Negotiation

Contents

Chapter One Laws of Business Negotiation

Part One Principles of Collaborative Negotiation

Part Two Principles of Interest Distribution

Part Three Principles of Trust in Negotiation

Part Four Principles of Distributive, Integrative and Complex

Negotiations

Chapter Two Modules of Business Negotiation

Part One Enquiry and Reply

Part Two Offer and Counter-offer

Part Three Acceptance and Conclusion of a Contract

Chapter Three Phases of Business Negotiation

Part One The Preparing Phase

Part Two The Opening Phase

Part Three The Bargaining Phase

Part Four The Closing Phase

Chapter Four Strategies and Tactics of Business Negotiation

Part One Major Team Styles and Personal Styles

Part Two Strategies and Tactics

Chapter Five Types of Business Negotiation

Part One On Sales of Goods

Part Two On Investment

Part Three On Technology Transfer

Chapter Six Etiquette in Business Negotiation

Part One Greeting Etiquette and Seeing Off Etiquette

Part Two Business Meeting Etiquette

Part Three Dinner Party Etiquette and Dress Etiquette

Part Four Etiquette of Signing Agreement

Chapter Seven Cross-cultural Negotiation

Part One Language and Communication

Part Two Understanding Cultural Differences

Part Three Negotiation among Cultures

Part Four Cultural Conflict Management

Bibliography
 Chapter One Laws of Business Negotiation

What is negotiation? Negotiation is the process we use to satisfy our

needs when someone else controls what we want according to Robert

Maddux, author of Successful Negotiation. Gerard I. Nierenberg, author

of the first book on the formalized process of negotiation, The Art of

Negotiating, stated, “Whenever people exchange ideas with the intention

of changing relationships, whenever they confer for agreement, then they

are negotiating.”

何谓谈判？谈判是人们为了协调彼此之间的关系，满足各自的需要，通过协商而争取达到意见一致的行为和过程。

Negotiation takes place between human beings. It is the most

common form of social interaction. Almost everybody in the world is

involved in negotiations to one degree or another for a good part of any

given day. People negotiate over where to go for dinner, which movie to

view, or how to split household chores.

Negotiation, in its modern sense, is defined in Negotiation Quality as

follows: it refers to the ability to deal with business affairs, to arrange by

discussion the settlement of terms, to reach agreements through treaties

and compromise, and to travel through challenging territory. All of these

connotations suggest a purposeful effort to resolve problems through talk

and intellectual maneuvering. Negotiation includes consultation,

bargaining, mediation, arbitration, and sometimes even litigation.

Negotiation can take on different forms. Professor Mary P. Rowe

with Massachusetts Institute of Technology listed nine different types in

her Negotiation: Theory and Practice (N 101):

Competitive Style (竞争式谈判) To try to gain all there is to gain

Accommodative Style（通融式谈判） To be willing to yield all there is to

yield

Avoiding style （回避式谈判） To try to stay out of negotiation

Compromising style（妥协式谈判） To try to split the difference or find

an intermediate point

according to some

principle

Collaborative style（合作式谈判） To try to find the

maximum possible gain for

both parties – by careful

exploration of the interests

of all parties – and often by

enlarging the pie

Revengeful Style（报复式谈判） To try to injure the other

 Self-injurious Style（自损式谈判） To act so as to injure oneself

Revengeful and

Self-injurious Style（报复和自损式谈判） To try to injure the

other and also act so

as to injure oneself

People who go for the competitive style are known as hard-bargaining

negotiators. They start with outrageous demands, make threats and use

other tactics to get what they want. One side typically starts high, the

other low. After several rounds of demands and counter-demands, the

negotiators end up “splitting the difference”. In this form, negotiation is

viewed as a game where each side tries to get the best deal for

themselves. Neither side exhibits concern for the other side.

Part One Principles of Collaborative Negotiation （合作式谈判的原则）

I. Collaborative Negotiation（合作式谈判）

Negotiation can also assume the form of collaborative style. It

involves people with diverse interests working together to achieve

mutually satisfying outcomes. Collaborative negotiation is known by

many names. Some popular names include “problem-solving”,

“consensus building”, “interest-based negotiation”, “win/win”, “mutual

gains”, and “principled negotiation”.

 The goal of collaborative negotiation is to manage the dispute so that

the outcome is more constructive than destructive. A destructive outcome

results in harm and involves exploitation and coercion. A constructive

out come fosters communication, problem solving, and improved

relationships.

In their book entitled Interpersonal Conflict, William Wilmot and

Joyce Hocker had a detailed discussion on collaborative negotiation. The

assumptions of this style are:

- Negotiating parties have both diverse and common interest;

- Common interests are valued and sought;

- The negotiation presses can result in both parties gaining

something;

- The negotiating world is controlled by enlightened self-interest;

- Interdependence is recognized and enhanced;

- Limited resources do exist, but they can usually be expanded

through cooperation and creativity;

- The goal is a mutually agreeable solution that is fair to all parties

and efficient for the community/group.

The collaborative negotiation focuses on interests rather than

positions. Integrative solutions are obtained by understanding interests,

not by arguing for positions. The classic story to illustrate this describes

two sisters fighting over the only orange in the family larder. Each sister
must have the entire orange for herself, any less is impossible. A wise

parent asks each of the girls in private why she wants the orange. One

explains she wants to drink the juice; the other wants to use the rind to

cook a pudding. What each sister wants is her position, why she wants it

is her interest. In this case, the simple solution is to give the cook the

rind after the juice has been squeezed for the thirsty sister – thus meeting

the interest of both .

The collaborative negotiation places value on relationship, requires

trust and relies on full disclosure of relevant information.

The disadvantages of this approach are:

- It may pressure an individual to compromise and accommodate in

ways not in his/her best interests;

- It avoids confrontational strategies, which can be helpful at times;

- It increases vulnerability to deception and manipulation by a

competitive opponent;

- It makes it hard to establish definite aspiration levels and bottom

lines;

- It requires substantial skill and knowledge of the process;

- It requires strong confidence on one’s perceptions regarding the

interests and needs of the other side.

II. Principled Negotiation（原则式谈判）

 In this form, each side of the negotiating parties attempts to meet

the other side’s interest as well as their own interest. By thoroughly

understanding their own interest as well as the other side’s interest, both

sides are often able to arrive at solutions which neither alone could have

envisioned or made possible. In this type of negotiation each side

recognizes and accepts the legitimate interest of the other and they are

committed to dealing with differences constructively in order to advance

their own self-interest. This has been called “collaborative principled

negotiation”, a concept set forth by Roger Fisher and William Ury in their

book Getting to Yes.

Principled negotiation is particularly oriented to collaborative

negotiations. However, it can be used in competitive negotiations and in

other aspects of conflict management. It is a method that is centered

around four considerations (PIOC):

- People: Separate people from the problem

- Interests: Focus on interests, not positions (interest always

underlie positions)

- Options: Generate a variety of possibilities before deciding what

to do

- Criteria: Insist that the result be based on some objective standard

1. Separate the People from the Problem

 Fisher and Ury point it out that “negotiators are people first” –

that there are always relational and substantive issues in negotiation. The

relational issue tends to become entangled with the problem and the

positional bargaining puts relational and substantive issues in conflict.

Fisher and Ury suggest negotiators separate the relationship from the

substance and deal directly with the people problem.

It is achievable to deal with a substantive problem and maintain a

good working relationship between negotiating parties. People problems

are usually caused by inaccurate perceptions, inappropriate emotions and

poor communication. In order to deal with those problems, three

techniques are recommended for both parties to follow:

A. Form up accurate perception

- Conflict, very often, is not caused by what happens, but by how

people conceive what happens.

- Increase the capability of each party to see the other side’s point

of view (for example, by reversing roles).

- Avoid blaming the other party for your problems.

- Discuss each other’s perceptions of the problem.

- Get the other party participated in the mutual activities.

- Seek to make negotiation proposals consistent with the other

party’s values.
 B. Cultivate appropriate emotion

- Your emotion affects that of the other party.

- Recognize and understand emotions of both parties.

- Make emotions explicit and legitimate.

- Allow the other party to let off steam.

- Stay calm with the other party’s emotional outbursts.

C. Strive for better communication

- Negotiation is a process of communicating between parties for

the purpose of reaching a joint decision.

- Be an active listener and acknowledge what is being said.

- Speak to be understood.

- Avoid being judgmental or debating the other party as an

opponent.

- Avoid criticism that may hurt the other party’s feelings.

- Speak for a purpose.

The best time for handling people problems is before they become

people problems. To do so, negotiators need to establish a working

relationship with the other party. Be “partners”, not “adversaries”. One

specific technique that can work is to change the shape of the table rather

than sitting opposite your “opponents”, arrange the seating so that all the

parties are sitting together facing a flip chart or blackboard where the
problem is presented. That makes it clear that all the participants are

facing the problem together, that instead of it being “us” against “them”,

it is a case of “all of us” against “it”.

2. Focus on Interests, not Positions

The following story describes how this principle works. On a

touring ship from Chongqing to Yichang in the spring of 2002, a couple

with a young boy shared a cabin with me and another passenger. When it

was time to sleep at night, the boy would not allow the light to be turned

off or he would cry. The other passenger, however, insisted that the light

must be off for he could not get to sleep with it on. And a good sleep was

a necessity for his next day’s activities. While it seemed that neither the

boy nor the passenger would give in from their positions, an idea hit upon

my mind. I managed to get a piece of brown paper from the steward,

made a long hat-like lampshade and taped it on the ceiling where the bulb

was in the way that allowed the light to be shed only towards the boy’s

bed. Thus the boy got his light and the passenger slept a sound sleep.

This story may sound familiar to many negotiators. In such a case,

negotiators need to distinguish between interests and positions and focus

on interests not positions. A position is what you say you want or must

have. An interest is why you want what you want.

Positions can be thought as one dimensional point in a space of

infinite possible solutions. Positions are symbolic representations of a

participant’s underlying motivating interests. In negotiation, there are

many kinds of interests: multiple interests, shared interests, compatible

interests and conflicting interests. Identifying shared and compatible

interests as “common ground” can be helpful in establishing a foundation

for additional discussions. “Easy points of agreement” can be identified

and the principles underlying those easy points of agreement can often be

extrapolated to help resolve other issues. Methods for focusing on

interests instead of positions are as follows:

A. Identify interests

- Explore and recognize interests of the other party standing in

your way.

- Examine different interests of different people on the other side.

- Respect your counterparts as human beings and recognize their

needs and interests underlying their positions.

B. Discuss interests with the other party

- Give your interests a vivid description, be specific.

- Demonstrate your understanding of the other party’s interests

and acknowledge them as part of the overall problem that you are

trying to solve.

- Discuss problems before proposing a solution.

 - Direct discussion to the present and future, away from the

difficulties of the past.

- Be concrete but flexible.

- Be hard on the problem, soft on the people.

3. Invent Options for Mutual Gain

Before seeking to reach an agreement on solutions for the future,

Fisher and Ury suggest that multiple solution options be developed prior

to evaluation of those options. The typical way of doing this option

generation is called brainstorming. The parties generate as many

solutions as possible before deciding which of those options or

components of identified options when grouped together best fulfill the

parties’ interests. This brainstorming of options prior to decision-making

is a critical piece for the success of the collaborative negotiation process.

Whether this brainstorming is done explicitly as part of a shared exercise

or whether the parties individually commit to actively looking at each and

every possible solution before moving on to decision-making, this type of

open-minded thinking is possible because the parties are co-operating

with one another. It is this open-mindedness that ensures the parties are

providing themselves with the best possible chance of maximizing their

results.

The ability to invent options is one of the most useful assets a

 negotiator can have.

Negotiators tend to be easily trapped by their own positions mainly

because they only pay attention to a single event, to which the solution is

either win or lose. There are four major obstacles that prevent negotiators

from creative thinking: (1) premature judgment; (2) searching for the

single answer; (3) the assumption of a fixed pie; and (4) thinking that

“solving their problem is their problem.”

Here are the steps for overcoming the obstacles and developing multiple

solution options:

A. Separate the act of inventing options from the act of judging them

- Run a brainstorming session

- Before brainstorming:

- Define your purpose – what you would like to achieve at

the meeting.

- Choose a few participants (between five and eight

people).

- Change the environment – select a time and place

distinguishing the session from regular discussions.

- Design an informal atmosphere – talking over a drink,

meeting at a vacation lodge or any other forms that make

 participants feel relaxed.

- Choose a facilitator – a facilitator is needed to keep the

meeting on track, make sure everyone gets a chance to

speak, and stimulate discussion by asking questions.

- During brainstorming:

- Seat the participants side by side facing the problem.

- Clarify the ground rules, including the no-criticism rule.

- Brainstorm.

- Record the ideas in full view.

- After brainstorming:

- Star the most promising ideas – mark those ideas that

participants think are best.

- Invent improvements for promising ideas – take one

promising idea and invent ways to make it better and

practical.

- Set up a time to evaluate ideas and make a decision.

- Consider brainstorming with the other side; it can be very

valuable

B. Develop as many options as possible before choosing one

- Adopt the four types of thinking in inventing options: identifying

 a problem, analyzing the problem, considering what ought to be

done, and coming up with some specific and feasible suggestions

for action.

- Look at the problem through the eyes of different experts. For

example, in a case regarding the custody of a child, look at the

problem as it might be seen by an educator, a banker, a

psychiatrist, a civil rights lawyer, a minister, a nutritionist, a

doctor, a feminist, a football coach, or one with some other special

point of view.

- Invent agreements of different strengths, such as “weaker”

versions – in case a sought-for agreement proves beyond reach;

agreement on procedure if that on substance not reachable;

provisional agreement when permanent agreement not possible,

and so on.

- Change the scope of a proposed agreement – “fractionate” the

problem into smaller units. Agreements may be partial, involve

fewer parties, cover selected subject matters, apply only to certain

area, or remain in effect for a limited period of time.

C. Search for mutual gains

- Identify shared interests: shared interests exist in every

 negotiation; they are opportunities, not godsends; stressing your

shared interests can make the negotiation smoother and ore

amicable.

- Dovetail differing interests. The story of the two sisters sharing

one orange demonstrates that different interests can be dovetailed.

D. Invent ways of making the other party’s decision easy

- Your success in a negotiation depends upon the other party’s

making a decision you want, you should do what you can to make

that decision an easy one.

4. Insist on Using Objective Criteria

When options become available, negotiation parties need to decide

which one suits both sides best. Fisher and Ury’s suggestion that

negotiating parties consider using objective criteria (standards

independent of the will of any party) to make their decision is where the

label “principled negotiation” comes from. Fisher and Ury suggest that

solution selection be done according to concepts, standards or principles

that the parties believe in and which are not under the control of any

single party. They recommend that selections be based upon such

objective criteria as market value, precedent, scientific judgment, moral

standards, tradition, course of dealing, outside recommendations, a flip of

a coin or any other standard where one party does not simply prevail over
the other based upon raw power.

The guidelines for objective criteria are:

- Independent of wills of all parties;

- Legitimate and practical;

- Acceptable to all parties.

The next important step is to choose a fair procedural standard, the way

of implementing the criterion, when an agreement is reached upon such a

criterion. A good example for “fair procedure” is the way to divide a

piece of cake between two children: the one who cuts the cake must let

the other choose first. The fair procedures may also include “doing it in

turns”, “drawing lots” and “looking for an arbitrator”.

After identifying objective criteria and procedures, it is time to discuss

them with the other party. There are three basic points to remember:

A. Frame each issue as a joint search for objective criteria. For

instance, in a negotiation of buying a used car, one might say:

“Look, you want a high price and I want a low one. Let’s figure

out what a fair price would be.” If the seller starts by giving a

position, such as “the price is $8,000,” ask for the theory behind

that price. Treat the problem as though the seller too is looking for

a fair price based on objective criteria.

B. Reason and be open to reason as to which standards are most

appropriate and how they should be applied.

 C. Never yield to pressure, only to principle – yield to an argument or

presentation that is based on reason and principle, not to one based

on pressure

In a word, focus on objective criteria firmly but flexibly.

Principled negotiation is a powerful tool to crack the tough nuts in

negotiation. It is applicable to almost all situations from international

negotiations to domestic and private negotiations, from simple events to

complex situations and from routine talks to urgent meetings. It is an all-

purpose strategy. The essentials of the success of collaborative

negotiation are fairness, objectiveness and mutual understanding.

EXERCISES

I. Negotiation Quiz

Please check off on this sheet which of these situations represents a

negotiation:

1. Purchasing a computer at a department store

2. Deciding with the family where to go for the weekend

3. Writing back and forth with someone you do not know on the Internet
4. Deciding how the house will be cleaned up

5. Borrowing a musical instrument from a friend

6. Selecting a contractor to build a new kitchen

7. Deciding whether to stay late at work to finish up a project

8. Giving or receiving commendation and criticism

9. Making up, or rebuilding a relationship with someone you love

10. Deciding on a date for the next meeting with your customer

11. Picking a successor for the CEO of a company where you are on the

board

12. Getting a child to go to bed

13. Buying plants for your backyard

14. Soliciting a major gift from a major donor

15. Deciding who gets to use the car for the weekend

16. Getting into a technical seminar with limited enrollment

17. Agreeing on change of work schedule with your employer

18. Saying good-bye to someone you will not see for a long time

19. Finding an advisor or a new dentist

20. Discussing with a recruiter the salary and benefits you feel you

deserve

21. Trying to injure or ruin a competitor

22. Trying to shake off a stranger on the street who keeps walking with

you
23. Apologizing to someone whose property you unknowingly damaged

24. Seeing someone you dislike and turning away at a party

25. Accepting a bribe

26. Turning down a bribe

27. Getting another country to lower a trade barrier

28. Meeting a new teammate for the first time

29. Trying to capture/kill a warlord in a regional war

30. Struggling to stay on a diet or exercise plan or give up smoking

List other negotiating situations in which you are apt to find yourself

below:

1__________________________________________________________

____________________

2__________________________________________________________

____________________

3__________________________________________________________

____________________

4__________________________________________________________

____________________

5__________________________________________________________

____________________
II. Review the story happened on the touring ship (see the section of

“Focus on Interests, not Positions”) and point out the position and

interest of the boy and those of the other passenger respectively.

III. Case Study

In one negotiation in the early 1980s, a Taiwanese manufacturer was

locked in a dispute with an American importer over how many models of

its bicycles it would produce. The American importer wanted four

different models, to give its customers greater selection. The Taiwanese

company wanted to produce only two models, to keep tooling, inventory,

and other manufacturing costs down. The position of the Taiwanese

company was that it would produce only two models, while the

underlying interest was to keep manufacturing costs down. The position

of the American importer was that it wanted four models, while its

underlying interest was to increase its profits by selling more bicycles.

As long as the negotiators focused on these positions, the dispute could

be resolved only through concessions by one or both sides. But an

interest-oriented examination of the dispute leads to the question: How

can the higher cost of manufacturing four models be allocated between

the American importer and the Taiwanese manufacturer? In this example,

the parties were able to devise a formula that increased the unit cost of the

different models to reflect the Taiwanese manufacturer’s increased

manufacturing cost. The interests of the Taiwanese were achieved by the

solution – profit per unit remained constant. The interests of the

American importer were also met – it sold more units at higher prices,

which more than offset the increased manufacturing costs. (Adapted from

The Global Negotiator by Trenholme J. Griffin & W. Russell Daggatt)

Notes:

lock in 把……锁在里面(关在里面);纠缠于…… inventory n.存货

underlying underlie 的现在分词 a. 潜在的 concession n.让步

allocate v.分配,分摊 devise v. 设计,想出计划

Questions:

What type of negotiation approach was applied to the negotiation? What

principle was used to solve the conflict between the Taiwanese

manufacturer and the American importer?

This simple procedure was used in the Law of the Sea negotiations, one

of the most complex negotiations ever undertaken. At one point, the issue

of how to allocate mining sites in the deep seabed deadlocked the

negotiation. Under the terms of the draft agreement, half the sites were to

be mined by private companies, the other half by the Enterprise, a mining

organization to be owned by the United Nations. Since the private

mining companies from the rich nations had the technology and the

expertise to choose the best sites, the poorer nations feared the less

knowledgeable Enterprise would receive a bad bargain.

The solution devised was to agree that a private company seeking to mine

the seabed would present the Enterprise with two proposed mining sites.

The Enterprise would pick one site for itself and grant the company a

license to mine the other. Since the company would not know which site

it would get, it would have an incentive to make both sites as promising

as possible. This simple procedure thus harnessed the company’s

superior expertise for mutual gain. (Adapted from Getting to Yes by

Roger Fisher, William Ury & Bruce Patton)

Notes:

deadlock vt.& vi.(使)僵持,(使)陷入僵局 grant vt.授予(权利)

harness vt.利用 expertise n.专门知识(或技能等)

Questions:

“This simple procedure” appears twice in the passage. What procedure

does it indicate? In what part of the Principled Negotiation is it

discussed? Name some examples of this procedure.

IV. Simulated Negotiation

Read the short passage below. Do you think the conflict between the

manager and the workers can be solved? Imagine you are the

manager/workers’ representative who would negotiate with the

workers/manager. How would you prepare your proposal that may lead

to a win-win solution? Write down your plan and find a partner for a

mimic negotiation.

The management of a major television manufactory’s warehouse has a

dispute with employees about overtime scheduling. Workers do not want

to be locked into spur-of-the-moment overtime assignment, yet

management needs to be sure that the warehouse will be fully staffed.

Please help both sides work out a solution that satisfies them all.

Notes:

warehouse n. 仓库 (on) the spur of the moment 凭一时冲动

staff v t. 为…配备职员(工作人员)
 2

Try to negotiate with someone about a problem that divides you. Use

some of the principles to deal with the difficulty arising between you.

Part Two Principles of Interest Distribution ( 利益分配原则)

The purpose of negotiation is to reach agreements between parties

with different interests. Negotiation can take a variety of forms. While

the traditional competitive approach to negotiation tries to maximize one

party’s gain over the other party’s loss, the collaborative approach focuses

on parties with diverse interests working together to achieve mutually

satisfying outcomes. However, no matter what form a negotiation may

take, its goal will never change: interest realization.

In a two-party one-issue negotiation such as buying/selling a used car,

the result of the bargaining may only affect the two individuals

concerned. But in negotiations involving three or more parties,

discussing multiple issues concerning such as economy development,

environment protection, national security, arms control, and the like, the

results can be serious or even disastrous if the negotiators put their

personal interests above their organization’s interests or national interests.

In negotiations at the domestic level, there are two types of interests

involved: personal and organizational; at the international level, there are

three: personal, organizational and national.

Personal interests are interests of individuals who participate in

negotiation. Organizational interests are interests of collective bodies

such as private or state-owned enterprises, institutions and other kinds of

entities. Organizations cannot negotiate with each other by themselves.

They delegate individuals – negotiators who act on their behalf. The

national interests are the interests of the whole nation -- the entire

population of a country -- not merely the interests of certain groups.

Negotiations are conducted by people – human beings. Like it or not,

when a negotiator sits at the negotiating table, he has his personal

interests with him, which may include aspects such as realization of

personal value, position promotion, salary increase and more comfort in

life. If his personal interests are in line with those of the organization that

he represents in the negotiation, namely, the realization of his personal

value, position promotion, salary increase and more comfort in life are

closely related to and determined by his performance at work and his

contribution to the organization, the negotiator will try his best to push
for the most attractive deal for the organization.

Personal interests, however, are not always in convergence with

organizational interests. If lured by money or other material gains, a

negotiator may place his own interests before the interests of the

organization he represents and cut a deal unfavorable to the organization.

The organization therefore suffers loss.

While personal interests seem easier to be in line with organizational

interests, national interests sound remote and indirectly connected with

personal interests. For some individuals, national interest is a

“meaningless idea – everyone pursues narrow self-interest.” However,

when an individual represents his country in bi-national or multi-national

negotiations, he must defend the interests of the country and make all his

efforts to gain national interests. That is because any suffering of national

interests will bring heavy losses not only to the nation but to

organizations and individuals as well.

Organizational interests and the national interests should be in

convergence and well coordinated, too, since national interests represent

organizational interests fundamentally. When dealing with issues

involving bilateral relations of two countries, organizations have to get

the support from the government because bilateral or multilateral

relations of countries are so complicated that they are beyond

organizations’ abilities and authorizations to manage. By requesting

assistance from the government, organizations can still have strong

influence on government’s decision making. The government will give its

full support for the realization of the interests at both the organizational

and national level.

Organizations, on the other hand, paying undue attention to their own

interests at the negotiating table will undermine or jeopardize national

interests. Such cases are not uncommon in recent years. For instance,

some companies imported scrapped cars causing air pollution; some

enterprises manufactured products such as non-reusable wood chopsticks

for export at the cost of valuable natural resources.

In addition to what have been discussed, there are some other kinds of

factors that play an important role in determining which one should have

the priority in negotiation among personal interests, organizational

interests and national interests. In the book entitled Principles of

International politics: People’s Power, Preferences, and Perceptions, the

author discussed international politics and decision making from different

perspectives. The issues described and the principles suggested by the

author can be enlightening to negotiation. And here are some of the

points:

Organizational Roles

- Each organization in a government (e.g., Department of Defense,

 Department of Agriculture, Department of Commerce, Congress)

has a different job to do;

- As a result, each has its own perspective on what is the “best”

choice;

- Because of their different perspectives, representatives of any

given organization might offer suggestions in cabinet meetings or

ask for treatment that reflects what is good for that organization

than what is good for the nation as a whole.

A typical example to support the above arguments is as follows:

In the 1990s, private industry lobbied for a relaxation on U. S.

government restrictions on the export of encryption technology. State of

the art encryption produced by U. S. manufacturers is extremely difficult

to penetrate. Export of this technology would benefit U. S. manufacturers

and open a new realm of goods for sale. The Defense and Justice

Departments of the United States consistently opposed allowing the

export of advanced encryption technologies because these technologies

would allow foreign governments and individuals to better protect their

secrets and allow them to communicate securely with their agents inside

the United States.

The example clearly indicates that national interests should be

always the top priority. When there is a conflict between organizational

interests and national interests, organizational interests must be

subordinated to the interests of the nation.

Principals and Agents

- National leaders must often act through intermediaries to get

things done.

- An agent is an individual or group who acts on behalf of someone

else, the principal.

- Any time a leader delegates, a principal-agent situation is relevant.

- Leaders must delegate if they are to effectively manage the many

tasks they face in government.

- Agents may have their own interests and these interests may be

distinct from those of the principal.

- Agents often bring particular skills that a principal needs (fro

example, the president needs advice from experts on the budget,

the economy, the military, negotiating, etc.), and so the principal

needs to rely on agents.

The problem is how does the principal manage to allow the agent

enough freedom to do a good job while still being able to recognize when

the agent has gone against the principal’s core interests? The following

example illustrates the principal-agent problem.

There are two leaders, P (principal) and F (foreign leader), and three
agents, A1, A2, and A3, all of whom work for P. There is a range of

options for the treaty P and F want to negotiate ranging from

“Disarmament” to “No Arms Control.” The preferences of the various

players are:

- P will accept any deal from “Disarmament” but “No Arms

Control;”

- F will accept neither “Disarmament” nor “No Arms Control,” but

something in between;

- A1’s preferred treaty is at “Bilateral Disarmament;”

- A2’s preferred treaty is close to “Disarmament;”

- A3’s preferred treaty is at “No Arms Control.”

P does not know the ideal points of F, A1, A2, or A3. But A1, A2, and

A3 know the ideal points and range of acceptable options of both P and F.

The difficulty in the real world is that P and F do not know each other’s

ideal points and do not know what agreement will be acceptable to the

other player. Because he does not know F’s ideal point and the range of

options, P is worried about two outcomes that might result from this

negotiation. First, P is worried about making a demand that is rejected by

F. Second, P is worried about making a deal that is not as good as it

could have been. That is, P wants a deal that is favorable to P and does

not “give away the farm” to F. Because of these problems, P calls in a set

of expert agents, A1, A2, and A3, to recommend what deal P should ask
for. The problem with this solution is now P must rely on what A1, A2,

and A3 tell him. And A1, A2, and A3 might propose solutions that are in

their personal interest or fit their personal beliefs, even if they do not

match what P wants. How much can A1, A2, and A3 get away with in

terms of getting their own private preferences?

The extremists, A1 and A3, cannot offer their preferred positions,

because either P or F will reject them. If A1 offers a disarmament treaty,

P would say yes while F would say no. If A3 offers no arms control,

neither P nor F would take it. So the preferences that P and F have act as

a constraint on what the extremist agents can offer. However, as long as

they offer some deal that is acceptable to both P and F, the agents do have

the ability to manipulate the terms of the offer. Given that X is

acceptable to P and F, A1 will propose deal X, since out of all the deals

that can be cut, X is closest to what A1 wants. Given that Z is acceptable

to P and F, A3 will propose deal Z, since Z is closest to what A3 wants

out of all the deals that can be cut. Only A2 will offer a “moderate”

solution like Y, because Y is closest to A2’s personal ideal point, and this

deal will fly with both P and F.

Given that agents can significantly shape agreements, how can leaders

maximize their own interests rather than their agents’ interests? The

author offers two suggestions:

 1. Use multiple agents. If agents offer deals that work but that also

reflect their personal interests, then the leader can use different

agents with different personal interests to get a set of different

workable deals to pick from. The leader can pick the deal that is

closest to what he or she prefers.

2. Use agents with preferences close to the leader’s. Different agents

make different recommendations based solely on their own

preferences. A leader may have to discount the recommendations

of the more extreme agents because their recommendations are

driven further from the leader’s ideal point based on personal

preferences.

To sum up, agents have a significant ability to manipulate deals, as

long as they stay within the broad preferences of the two negotiating

principals. When a leader appoints a particular negotiator to make a

particular deal, people should not take it for granted that this negotiator

would do exactly what the leader wants since he or she is working for

him. If there is a range of acceptable deals that can be cut, then the

preferences of a particular negotiator can be a big deal.

 EXERCISES

I. Questions

1. What is the goal of negotiation?

2. How many levels of interests are involved in an international

negotiation? What are they?

3. Is it right that personal interests should submit to organizational and

national interests? Why?

4. In the principal-agent relation, do you agree that agents have a

significant ability to manipulate deals? What do they do in order to

realize their goal?

5. What should leaders do to minimize the influence from their agents

when they ask for recommendations?

II. Case Study

 1

During the cold war, the Department of Agriculture of the United States

consistently recommended that the U. S. sell grain to Moscow in times of

shortage in the Soviet Union (this benefited U. S. farmers). The

Department of Defense of U. S. consistently recommended against it.

Questions:

Put your feet into their shoes, do you think the Department of Defense of

U. S. did the right thing? What principle did they follow?

A U. S. -European conservation group wished to preserve the maximum

amount of rain-forest habitat in a South American country. From

membership contributions and foundation support, the conservation group

had U. S. dollars it could use to buy development rights after they convert

the dollars to local currency at the official exchange rate. The owner of

the land and the conservation group negotiated hard and tentatively

agreed on an amount of rain forest to be protected and a price per hectare

based on local currency. Before the deal was made, the conservation
group found out that the financial situation of the host country was bad.

The country was indebted in dollar-denominated bonds, which were

trading at a 45% discount to their face value. It had to use scarce

earnings from export, needed for many pressing domestic purposes, to

keep its debt-service obligations current. Interest payments were

determined by the face value of the debt, not the bond discount. These

facts suggested that more value could have been created by adding two

other sets of players to the initial negotiation between the landowner and

the conservation group. So, the conservation group bought country debt

from foreign holders at the prevailing 45% discount. It then brought this

debt to the country’s Central Bank and negotiated its redemption for local

currency at a premium between the discounted value of the debt and its

full-dollar face value. The conservation group then used this greater

quantity of local currency from the Central Bank to buy more

development rights from the landowner at a somewhat higher unit price.

This expanded four-party negotiation – sequentially involving the

conservation group, international bondholders, the Central Bank, and the

landowner – benefited everyone more than the best result possible in the

initial negotiation between just the landowner and the conservation group.

The bank was able to retire debt and cancel dollar-interest obligations,

which were very costly to the country. The conservation group was able

to save more rain forest at the same dollar cost, and the landowner got a
higher price thus had a better income. (Adapted from 3-D Negotiation by

David A. Lax and James K. Sebenius)

Notes:

habitat n.(动物的)栖息地,(植物的)产地 tentatively adv.暂时地

indebted a.负债 prevailing a.优先的

redemption n.买回 premium n.奖赏,奖金

sequentially adv.相继地,结果地 bondholder n. 债券持有人

Questions:

1. How many parties were involved in the negotiation at the beginning?

How many more were added to it later? Who were they?

2. What type of negotiation was this? What approaches and principles

were applied to the negotiation?

3. How many types of interests were involved in the negotiation? Was

everybody happy with the outcome of the negotiation? Why?

Part Three Principles of Trust in Negotiation （信任的原则）

Trust is something of great importance in negotiation. Professor

Richard D. Reuben defined it as “a state involving expectations about

another’s motives and actions with respect to oneself in situations

entailing risk or uncertainty”. In the outline of his Negotiation - Law

5810, he states that there are three types or trust in professional

relationships:

- Deterrence-based trust（威慑型信任）: People trust or expect that

they will be punished if they do or do not do something based on

consistency with past behavior. It extends to:

- Calculus-based trust（预计型信任）: An extended concept beyond

punishment to include benefits of behaviors. People trust or

expect to benefit if they do or do not do something.

- Knowledge-based trust（了解型信任）: People trust or expect that the

other person will act in a certain way based on what they have

learned about that person.

 - Predictability is based on their understanding of the other

person’s actions, thoughts and intents, not just his past behavior.

- Identification-based trust（识别型信任）: People trust or expect that

they can act on behalf of the other person because they share the

interests, values and concerns of the other person so well.

- It involves substantial internalization of the other person’s

desires, intentions, and values and so on.

In his paper Building Trust among Enemies: the Central Challenge to

Peace Making Efforts, Herbert C. Kelman points out that in both

communal and exchange relationships, trust is an essential ingredient. In

a communal relationship, such as friendship or marriage, mutual trust is a

given. The relationship is defined by the parties’ responsiveness to each

other’s needs and concern for each other’s welfare, and there is a strong

normative expectation that they will not harm or deceive each other and

that each will look out for the other’s interests. A violation of trust

precipitates a serious crisis in a communal relationship and often marks

the end of it.

In an exchange relationship, mutual trust is a fundamental condition

for the advancement of the parties’ interests. Take the trust in the

relationship between managers and their subordinates and colleagues as

an example. It is not a given, but it must be built and tested over time.
To build a relationship of mutual trust, managers must extend trust to

their subordinates and they must earn the trust of their subordinates by

their own trustworthy behavior.

As it is discussed in Negotiation Quality, the problem of building

mutual trust is one of the challenges negotiators face. It is a serious

problem because, on many occasions, suspicion is justified. Trust can

only be built when adequate honesty is both given and returned. When

people on one side are noticeably dishonest, those on the other side

suspect their motives. In turn, when people on the other side are

dishonest, those on this side become wary of our motives.

Honesty in negotiation implies that people on all sides tolerably tell

the truth and are willing to give the benefit of the doubt to one another.

In contrast, when elemental mistakes that distort people’s understanding

of truth work their way into a political framework, it becomes difficult for

people in contact with that system to have sufficient trust in one another

to conduct high-level negotiations. The easiest solution to this problem

(perhaps the only solution) is to address the errant ideology and correct

the root errors that stand in the way of building honesty, trust, and esteem

for impartial truth.

Trust Building in Negotiation

Winning the trust from the other party is key to successful negotiation.
All negotiations involve some level of risk. Sometimes when negotiators

say they are prepared to bargain in good faith, they do not really mean it

or they are misunderstood. Talks collapse since each side lacks trust in

the other’s competence and good intentions. “Trust is particularly elusive

in high-stress, high-stakes conditions, as when you are negotiating with

strangers, facing deadlines, cooping with differences in power and status,

or hammering out unenforceable contracts”, according to Professor

Deepak Malhotra with Harvard Business School. It may develop

naturally over time, but negotiators hardly have the time to let nature take

its course. Professor Malhotra describes six ways to build trust in

negotiations in her article Risky Business: Trust in Negotiations.

1. Speak their language

It helps:

- Understand technical terms and lingo;

- Catch the nuances and cultural implications behind what’s being

said;

- Learn how the other side uses words to convey ideas.

The following example shows the importance of speaking one

another’s language. At a meeting sponsored by an airline that was

seeking high technology for its ticketing process, a company was

dramatically out of the competition due to its representatives’ failure to

catch the meaning of lifts – paper tickets.

2. Manage your reputation

- Reputation spreads. A bad reputation may be destructive in

negotiation, while a good one can be constructive.

- Make your reputation a tool in negotiation by providing references

from mutually trusted third parties that speak for your character

and competence or by offering other forms of evidence of past

success such as media or trade reports.

3. Make dependence a factor

- Trust between parties will increase when both sides believe that

they need each other to achieve their individual goals.

- Start the trust-building process by highlighting the unique benefits

you can provide and by emphasizing the damage that might result

from an impasse.

- A negotiator who senses he has no other recourse may come to

trust even his “enemy”.

4. Make unilateral concessions

- Negotiations with strangers and enemies tend to be calculative,

namely, both parties carefully measure what they have gained with

each concession made by the other side.

 - Negotiations based on long-term relationships are less focused on

counting wins and losses.

- A carefully crafted unilateral concession can work wonderfully for

trust.

- A true unilateral concession requires no commitment or

concession from the other side.

5. Label your concessions

- Actions in negotiation are often ambiguous.

- Negotiators are motivated to discount and devalue each other’s

concessions and contributions to relieve their obligation to

reciprocate.

- Unnoticed or unacknowledged concessions may lead to confusion,

resentment or unaccommodating behavior by the slighted party.

- When making a significant concession, make it clear to the other

party how much you have given away and what the sacrifice

means to you.

6. Explain your demands

- It helps avoid misunderstanding of your motives and intentions

from the other party.

- Make a strong case for your moves in a negotiation and provide

the other party with explanations of your demands.

 - An offer that is explained and justified may preserve trust and

enhance it as well.

The above are the six strategies presented by Professor Deepak Malhotra

for building trustworthiness. In their book entitled The Only Negotiating

Guide You’ll Ever Need, Peter B. Stark and Jane Flaherty list fifteen

things that a negotiator can do to build trust with his counterpart.

1) Demonstrate your competence.

- Trust can be built by convincing your counterpart that you have

both the expertise and the will to support your end of the

negotiation. For example, when buying a computer, you have a

higher level of trust in a salesman who gives knowledgeable

answers to your questions.

2) Make sure the nonverbal signals you are sending match the words

you are saying.

- Your counterpart can tell more about your total message by

reading and understanding the nonverbal signals you are sending

than by just listening to your words.

3) Maintain a professional appearance.

- A well-groomed professional appearance is important.

- Further enhance your appearance with good posture, a careful

 choice of words, a clear confident voice and eye-to-eye contact.

4) Communicate your good intentions.

- People tend to give greater leeway to an individual if they know

his intentions are good.

- Emphasize that your counterpart’s needs and goals are important

to you and that you will do whatever it takes to create a lifelong

win-win relationship.

5) Do what you say you are going to do.

- Keep your promises and honor your commitments. Your

reliability may be the most important factor in a counterpart’s

decision to negotiate with you again at a later date.

6) Go beyond the conventional relationship.

- The example is that when a negotiator needed more time to study a

contact that was unfamiliar to him, his counterpart not only

allowed him more time, but also offered him samples of the

contract to study. By doing so, the counterpart went well beyond

the conventional relationship. Thus the trust between them went

up quickly.

7) Listen.

- Listen openly to your counterpart’s ideas.

 - Encourage your counterpart to exchange ideas.

- Get complete information before expressing your opinion.

8) Over-communicate.

- When negotiations get tough, the natural tendency is to

communicate less. Resist that tendency.

- Open and honest communication breeds trust.

9) Discuss the undiscussables.

- There are issues difficult to address. Salary is one example. But

discussing these types of issues helps build trust and eliminate

future problems.

10) Provide accurate information, without any hidden agenda.

- Each counterpart has to have enough information to make good

decisions that meet both negotiators’ goals.

- Give your counterpart information on both sides of an issue, not

just the side you prefer.

- Admit it when you do not have all the answers.

11) Be honest – even when it costs you something.

- If your counterpart has made a mistake in adding his figures, tell

him.

- If you make a mistake in your calculations or decision making,

 admit it.

12) Be patient.

- Patience breeds trust – and better decisions.

13) Safeguard for fairness.

- It is your responsibility to ensure that your counterpart gets a fair

outcome. If you make sure everyone goes away happy, you will

earn yourself a good reputation as a negotiator.

14) Negotiate for abundance, not scarcity.

- Focus on creating a bigger pie. If your counterpart in a negotiation

wants you to lower the price of your product or service, instead of

simply refusing, consider agreeing to lower the price if he will buy

more products or extend the length of the service contract.

15) Take calculated risks.

- One of the fastest ways to build trust in a relationship is to be

willing to take calculated risks.

Maximizing Joint Gain

Trust is hard to build, but easy to destroy. Once it is destroyed, it can be

very difficulty to rebuild. Believing that the other party is competent and

has character allows negotiators to take the risks that are necessary to
achieve negotiated outcomes, and to implement agreements in ever-

changing social, economic, and political environments. When profit,

security, or peace depends upon the motives and actions of another party,

trust becomes essential. Fortunately, by applying those principles and

strategies discussed above, negotiators can build the trust that is

necessary for a negotiation to yield maximum joint gain.

 EXERCISES

I. Questions

1. Define trust in your own words.

2. How important is trust in your communal and exchange relationships?

Name two examples.

3. Do you trust people around you? How do you show your trust to

others?

4. Review the principles and strategies for building trust. Compare those

presented by Professor Deepak Malhotra with those listed by Peter B.

Stark and Jane Flaherty.

5. Which of those principles and strategies would work best for you in

negotiation?

II. Case Study

An author was negotiating with a literary agent over the right to

sell his book. The agent told him that her commission would be higher

for profits received in international deals than in domestic ones. At first,

the author was annoyed. The higher international rate sounded arbitrary,

just a sneaky way to squeeze more money out of him. But the agent went
on to explain that she had to charge a higher commission for an

international deal because she needed to split her percentage with the

agent in the foreign country. Her net commission would be actually

lower for international deals than for domestic ones. Though this

explanation had no effect on the writer’s bottom line, it smoothed his

ruffled feathers and made him like the agent and trust her even more.

(Adapted from Six ways to Build Trust in Negotiations by Deepak

Malhotra)

Notes:

commission n.佣金 arbitrary a.任意的

sneaky a.鬼鬼祟祟地 bottom line 谈判底线

ruffle vt.弄皱,弄乱

Questions:

What strategies did the agent use to build trust in her relationship with the

author? Write them down.

In 1996, the executives at Boeing Aircraft in the United States had a

negotiation with the company’s suppliers. In an effort to make the

production of the 717 profitable, Boeing asked its suppliers to cut their
prices 20 to 30 percent. This was a bold move, since the suppliers’ prices

were already competitive. Although not all the suppliers were

enthusiastic about the proposition, almost everyone agreed that if the

plane could not be produced profitably, everyone, including the suppliers,

would lose. In return for lower prices, Boeing promised to outsource as

much work as possible to the suppliers and do more business with each of

them in the future. Thus, an agreement was reached.

Notes:

a bold move 大胆举动 enthusiastic a.热情的 outsource v. 外购,外部采办

Questions:

What strategies did Boeing apply to the negotiation? Do you think the

trust was established between the company and its suppliers? Why?
Part Four Principles of Distributive, Integrative and Complex

Negotiations(两分法谈判、 双赢谈判和复杂谈判)

Negotiations, according to parties being involved and issues

discussed, can be divided into two categories: simple negotiation and

complex negotiation. Simple negotiation is between two parties and

deals with one issue, whereas complex negotiation involves three or more

parties with different interests and deals with multiple issues.

Negotiations, based on how they are conducted – competitively or

cooperatively, can also be divided into two different types: distributive

and integrative.

I. Distributive Negotiation（两分法谈判）

Distributive negotiation or distributive bargaining, also called

positional bargaining, “claiming value,” “zero-sum,” or “win-lose”

bargaining, is a competitive approach that is used when there is a fixed

“pie” – a finite limit to a resource – and negotiators have to decide who

gets how much of that pie. The negotiators assume that there is not

enough to go around, and they cannot “expand the pie,” so the more one

side gets, the less the other side gets.

Distributive bargaining, according to Brad Spangler with University

of Colorado, is important because there are some disputes that cannot be

solved in any other way. Consider the following example:

Barbara wants to buy a used How to Program textbook. The

bookstore is selling used copies for $80. She hopes to get one for $50 but

is willing to pay up to $75 for one in good condition. Peter has posted a

note advertising his used How to Program for $80. He can sell it back to

the bookstore for $55, so he won’t go lower than that price. The ideal

outcome for Barbara is $50, for Peter $80. If they can’t reach an

acceptable deal, Barbara’s best alternative to a negotiated agreement

(BATNA) is to share a text with her roommate and Peter’s is to wait and

see whether a more generous buyer shows up or to sell the textbook to the

bookstore. In this case, Barbara and Peter arrive at a deal that is halfway

between the positions for each party. Peter asks $80, Barbara counters

with $60, and they split the $20 difference at $70.

The process of distributive negotiation, stated by Spangler, involves

the interplay of one’s walk away value – the minimum or maximum one

can accept before “walking away” from the deal – and the adversary’s

walk away value. The trick is to get an idea of your opponent’s walk
away value and then try to negotiate an outcome that is closer to your

own goals than theirs. Whether or not parties achieve their goals in

distributive bargaining depends on the strategies and tactics they use.

Spangler further pointed out that information is the key to gaining

a strategic advantage in a distributive negotiation. A negotiator should do

his best to guard his information carefully and also try to get information

out of his opponent. To a large extent, the negotiator’s bargaining power

depends on how clear his is about his goals, alternatives, and walk away

values and how much he knows about his opponents’. Once he knows

these values, he will be in a much stronger position to figure out when to

concede and when to hold firm in order to best influence the response of

the other side.

Common tactics in distributive bargaining include trying to gain

an advantage by insisting on negotiating on one’s own home ground;

having more negotiators than the other side; using tricks and deception to

try to get the other side to concede more; making threats or issuing

ultimatums; trying to force the other side to give in by overpowering

them or outsmarting them, not by discussing the problem as an equal.

Jennifer E. Beer listed a set of distributive bargaining strategies in

Culture at Work:

1. Preparation
 - Prepare yourself to walk away to get your needs met elsewhere.

- Develop a strong BATNA and keep it to yourself.

- Research their BATNA and their intangible needs (such as getting

the deal done, making the customer happy, being fair, beating the

competition, saving face, preserving reputation and setting a

precedent). What matters to them?

- Set high aspirations for yourself. Do not look at your minimum

standard and say “anything better than this is a deal.” Research what

the deal is worth in the market, think about the best real-world

outcome you can imagine, then stretch some more and go for it.

- Have a purpose, an agenda, and a “what next” in mind before each

interaction with the other party.

2. Opening Offers

- Listen carefully and ask many questions before making any

proposal.

- Make the first offer if you have done your homework and have a

good idea about what the transaction is worth.

- Wait for a response after making an offer.

- Be quick to counteroffer.

3. Exchanging information and arguments

 - Base your discussion on “objective” standards, principles,

rationales, norms of fairness.

- Beware of giving information that lowers your leverage -- the ability

to help or harm the other party -- just to seem “nice” or to signal that

you trust them. They may not notice your signal or interpret it as you

intended. Leverage given away is tough to regain.

4. Concessions and decisions

- Make sure you receive something of similar value for each

concession you offer.

- Start with small concessions; give larger, more generous concessions

towards the end.

- Focus on your goal; do not let your fears, anger, weariness, or ego

derail you.

- Do not agree to split the difference unless it meets your interests.

- Help the other party save face, achieve what you need without

humiliating others.

II. Integrative Negotiation（双赢谈判）

Integrative negotiation or integrative bargaining, also called

“interest-based bargaining,” “win-win bargaining,” is an approach in

which parties collaborate to look for a solution that maximizes joint gain

and allows everyone to walk away feeling like they have won something.
The basic idea is that both sides can achieve their objectives.

This approach focuses on developing mutually beneficial

agreements based on the interests of the negotiators. Interests include the

needs, desires, concerns, and fears important to each side. They are the

underlying reasons why people become involved in a conflict.

“Integrative” refers to the potential for the parties’ interests to be

combined in ways that create joint value or enlarge the pie. Potential for

integration only exists when there are multiple issues involved in the

negotiation. This is because the parties must be able to make trade-offs

across issues in order for both sides to be satisfied with the outcome.

Integrative bargaining is important because it usually produces more

satisfactory outcomes for the parties involved than does positional

bargaining. Positional bargaining is based on fixed, opposing viewpoints

(positions) and tends to result in compromise or no agreement at all.

Oftentimes, compromises do not efficiently satisfy the true interests of

the negotiators. Instead, compromises simply split the difference

between the two positions, giving each side half of what they want.

Creative, integrative solutions, on the other hand, can potentially give

everyone all what they want.

Let’s take a look again at the classic example of two little girls

disputing over an orange. Both girls take the position that they want the

whole orange. If the mother, based on their positions, cut the orange in
half and gave each girl one half, the outcome would represent a

compromise. However, the mother asks each of the girls why she wants

the orange and finds out that one girl wants to drink the juice and the

other just wants the rind to cook a pudding. By giving one girl the meat

of the orange and the other the peel, the wise mother applies the principle

of the integrative negotiation to the dispute and creates a win-win

outcome.

Integrative bargaining is a collaborative process and the parties

actually end up helping each other. It facilitates constructive, positive

relationships between previous adversaries.

To apply integrative bargaining to negotiation, the first step is to

identify each side’s interests. A key approach to determining interests is

asking “Why?” Why does the other side want that? The bottom line is

you need to figure out why people feel the way they do, why they are

demanding what they are demanding. Be sure to make it clear that you

are asking these questions so you can understand their interests (needs,

hopes, fears, or desires) better, not because you are challenging them or

trying to figure out how to beat them.

Next you might ask yourself how the other side perceives you

demands. What is standing in the way of them agreeing with you? Do

they know your underlying interests? Do you know what your own
underlying interests are? If you can figure out their interests as well as

your own, you will be much more likely to find a solution that benefits

both sides.

After interests are identified, the parties need to work together

cooperatively to try to figure out the best ways to meet those interests.

Often by “brainstorming” – listing all the options the participants can

think of without criticizing or dismissing anything initially, parties can

come up with creative new ideas for meeting interests and needs that had

not occurred to anyone before. The goal is a win-win outcome, giving

each side as much of their interests as possible so that they see the

outcome as a win.

Distributive bargaining and integrative bargaining are not mutually

exclusive negotiation approaches. Even in cooperative negotiations,

distributive bargaining will come into play. Integrative bargaining is a

good way to make the pie as large as it can possibly be, but ultimately the

parties must distribute the value that was created through negotiation.

III. Complex Negotiation（复杂谈判）

Complex negotiation, also called multilateral negotiation, multiparty

negotiation and group negotiation, is a process in which three or more

parties, with their own interests, decide how to resolve their conflicts

among issues. The dynamics of multiparty negotiation are far more

complex than those of two-party negotiations. Negotiators must

understand what may be good for one party or a coalition may be bad for

the group as a whole. It is more difficult to reach rational agreement in a

multiparty negotiation than in two-party bargaining. Negotiators need to

consider the varying interests of more people and deal with the possibility

of forming coalitions. In their book Negotiating Rationally Max H.

Bazerman and Margaret A. Neale developed five principles for complex

negotiation.

1. Think carefully about the distribution rule to be used in allocating

resources among the parties.

- People have different perceptions of what is fair in a situation.

- There are specific distribution rules one can follow in dividing the

negotiation resources:

- An equity allocation rule divides the available resources in

proportion to each group member’s input.

- Equality allocation rules divide the resources equally among the

members.

- Divide the resources according to the needs of the individual

group members.

- Past practice is also a critical way to determine the fairness of

resource distributions in group negotiation.

 - Be sensitive to what other group members consider fair when

developing proposals. If one follows the equitable allocation rule

when the other group members expect equality, it can lead to

misunderstandings and inefficient outcomes.

- To resolve a negotiation, groups should agree on the appropriate

allocation norm.

2. Avoid majority rule in group negotiations whenever possible.

- Consensus in group negotiation is one of many decision rules.

- Majority rule is commonly used to make decisions in groups.

- In a purely cooperative group, it may be the most efficient way

to reach a decision.

- In a purely competitive group, a majority vote may be the best

way to avoid an impasse.

- In a mixed-motive (neither purely cooperative nor purely

competitive), when there are more than two issues to be

negotiated, there are many ways majority rule can be

strategically manipulated to prevent fully integrative outcomes.

- Majority rule fails to recognize the strengths of individual

preferences. While one person may care very strongly about an

issue, his or her vote counts the same as the vote of someone who

does not have a strong opinion on that issue.

 - Encouraging negotiation groups to reach unanimous decisions may

help expand the pie of resources and satisfy the interests of all group

members.

3. Avoid strict issue-by-issue agendas whenever possible.

- Agendas are essential to efficient decision-making.

- In mixed-motive negotiation, groups using an agenda usually reach

less integrative agreements that groups not using one because the

agenda forces the group to consider the dispute on an issue-by-issue

basis.

- Managers should use agendas that structure the general problem-

solving process: (1) identify priorities, (2) reveal individual interests,

and (3) suggest creative approaches to solving the problems.

4. Focus on the differing interests and preferences of group members

to facilitate creative integrative agreements.

- Decision rules and agendas are two options to structure group

negotiation. Which particular rule the parties prefer depends on the

possible outcomes achieved by using that rule.

5. Recognize that coalitions are inherently unstable, often leading to

agreements that are not in the best interest of the organization.

 - Two or more parties within a group may form a coalition in order to

pool their resources and have a greater influence on outcomes.

- What is best for one coalition may not be in the best interest of the

group.

- In mixed-motive groups where coalitions have formed, majority rule

can easily lead to outcomes that are not in the larger group’s best

interests.

- When group members have equal power, the group achieves more

integrative agreement and uses resources more effectively than

groups where coalitions have formed and power is distributed

unevenly.

- In groups already suffering from power imbalances, group members

are much more likely to form coalitions to take advantage of that

imbalance.

Group negotiations are becoming increasingly common in and among

organizations. To effectively manage these negotiations, one needs to

look more carefully for integrative opportunities, be aware of barriers to

integrative agreements, and be sensitive to the impact of decision rules on

the quality of group outcomes. Negotiating as a group allows one to take

advantage of the knowledge, information, and perspective of each

member to reach a creative, integrative solution.

 EXERCISES

I. Questions

1. What is distributive negotiation? Have you had distributive

negotiation in your life? Describe your experience in such a

negotiation to your classmates.

2. Define integrative negotiation. Have you experienced integrative

negotiation? What are the major differences between distributive

negotiation and integrative negotiation?

3. What is complex negotiation? What are the five principles

developed by Bazerman and Neale?

II. Case Study

Tony is a computer software designer, who lives in St. Louis,

Missouri. He has gotten a job offer from a big company located in

Seattle, Washington. Based on his experience and ability, Tony is

confident that his new position should justify a big increase from his

current annual salary of $80,000. As he and James, his prospective boss,

begin to discuss compensation, they both want to negotiate the best deal

possible without starting their relationship off on the wrong foot. James
asks Tony how much he is expecting for his salary. Tony says that he

wants $140,000. James Offers $75,000, which annoys Tony. He says:

“That’s less than I’m making now! I guess you don’t want me as much as

I thought you did.” James’ second offer is $85,000 and Tony counters

with $130,000. Then James says: “We can do $95,000 and that’s my final

offer.” A few months after accepting the offer and starting his new job,

Tony is shocked by what he has found out: not only is he the lowest-paid

software designer on the staff, but James would have paid more

than$120,000 to get him to take the job. Feeling undervalued and

disrespected, Tony soon leaves the company, to James’ dismay.

Notes:

justify v.证明….是有理的 undervalue v.轻视,小看 disrespect 不尊敬,无礼

Questions:

1. What kind of negotiation approach does James apply to his

negotiation with Tony?

2. Is the result ideal for James? Why? How about Tony?

3. How would you handle the negotiation if you were the hiring

manager?

2
 During the 1960s, Kennecott Copper’s long-term, low-royalty

contract governing its huge El Teniente mine in Chile was at high risk of

renegotiation; the political situation in Chile had changed drastically

since the contract was originally drawn up, rendering the terms of the

deal unstable. Chile had what appeared to be a very attractive walk-away

option – or in negotiation lingo, a BATNA (best alternative to negotiated

agreement). By unilateral action, the Chilean government could radically

change the financial terms of the deal or even expropriate the mine.

Kennecott’s BATNA appeared poor: submit to new terms or be

expropriated. Chile’s officials seemed to hold all the cards: they didn’t

need Kennecott to run the mine; the country had its own experienced

managers and engineers. And Kennecott’s hands seemed tied: it couldn’t

move the copper mine, nor did it have a lock on downstream processing

or marketing of the valuable metal, nor any realistic prospect, as in a

previous era, of calling in the U. S. fleet.

Fortunately for Kennecott, its negotiators set up the impending talks

most favorably. The team took six steps and changed the playing field

altogether. First, somewhat to the government’s surprise, Kennecott

offered to sell a majority equity interest in the mine to Chile. Second, to

sweeten that offer, the company proposed using the proceeds from the

sale of equity, along with money from an Export-Import Bank loan, to

finance a large expansion of the mine. Third, it induced the Chilean

government to guarantee this loan and make the guarantee subject to New

York state law. Fourth, Kennecott insured as much as possible of its

assets under a U. S. guarantee against expropriation. Fifth, it arranged for

the expanded mine’s output to be sold under long-term contracts with

North American and European customers. And sixth, the collection rights

to these contracts were sold to a consortium of European, U. S., and

Japanese financial institutions.

These actions fundamentally changed the negotiations. A larger mine,

with Chile as the majority owner, meant a larger and more valuable pie

for the host country: the proposal would result in more revenue for Chile

and would address the country’s interest in maintaining at least nominal

sovereignty over its own natural resources.

Moreover, a broad array of customers, governments, and creditors

now shared Kennecott’s concerns about future political changes in Chile

and were highly skeptical of Chile’s capacity to run the mine efficiently

over time. Instead of facing the original negotiation with Kennecott

alone, Chile now effectively faced a multiparty negotiation with players

who would have future dealings with that country – not only in the

mining sector but also in the financial, industrial, legal, and public

sectors. Chile’s original BATNA – to unceremoniously eject Kennecott –

was now far less attractive than it had been at the outset, since hurting

Kennecott put a wider set of Chile’s present and future interests at risk.

And finally, the guarantees, insurance, and other contracts improved

Kennecott’s BATNA. If an agreement were not reached and Chile acted

to expropriate the operation, Kennecott would have a host of parties on its

side. (Adapted from 3-D Negotiation by David A. Lax and James K.

Sebenius)

Notes:

low-royalty 低税(费) unilateral a.单边的 expropriate v. 没收 impending a.即

将发生的

proceeds (pl.) n.收益 consortium n.国际财团 nominal n.名义上 sovereignty n.

统治权

creditors n.债权人 skeptical a.怀疑的 unceremoniously adv.不拘礼仪地 eject v.

排斥,驱逐

Questions:

1. What kind of negotiation is this?

2. What type of negotiation approach/approaches did Kennecott apply to

the negotiation?

3. What did you learn from those fairly complicated strategies used by
the negotiators on Kennecott’s side? How did you like the result?