Business

Negotiation
Lecturer: MSc. Le My Linh
 COURSE’S CONTENT
Chapter 1: The Nature of Negotiation
Chapter 2: Strategy and Tactics of Distributive Bargaining
Chapter 3: Strategy and Tactics of Integrative Negotiation
Chapter 4: International and Cross‐Cultural Negotiation
Chapter 5: Strategy and Planning of Negotiation

BN | Chapter 5: Strategy and Planning of Negotiation

 Chapter 5
STRATEGY AND PLANNING
OF NEGOTIATION

BN | Chapter 5: Strategy and Planning of Negotiation

 Content

CHAPTER 5 1. Goals - The Focus That Drives a Negotiation Strategy

2. Strategy and Tactics
STRATEGY AND
3. Understanding the Flow of Negotiations: Phases
PLANNING OF
4. Getting Ready to Implement the Strategy: The Planning
NEGOTIATION
Process

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 1
Goals - The Focus
That Drives a
Negotiation Strategy

BN | Chapter 5: Strategy and Planning of Negotiation

 1.1. Direct effects of goals
on choice of strategy
• Wishes are not goals, especially in negotiation
• A negotiator’s goals may be, but are not necessarily, linked to the
other party’s goals
• There are limits to what realistic goals can be
• Effective goals must be concrete, specific, and measurable

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 1.1. Direct effects of goals
on choice of strategy
Goals can also be intangible or procedural
❑ In the car purchase example, intangible goals might include
enhancing my reputation among my friends by owning and driving
a slick sports car; maintaining an image as a shrewd, pennywise
negotiator
❑ Procedural goals might be to make sure that the seller makes at
least two concessions from his opening price, to convince me that
he is negotiating “seriously”

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 1.2. Indirect effects of goals
on choice of strategy
• Pursuing short-term goals affects our choice of strategy; in
developing and framing our goals, we may ignore the present or
future relationship with the other party in favor of a simplistic
concern for achieving only the substantive outcome
• Negotiation goals — particularly ones that are more difficult or
require a substantial change in the other party’s attitude — may
require you to develop a long-range plan for goal attainment. In
these cases, progress will be made incrementally and may depend
on establishing a strong relationship with the other part

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 2
Strategy and Tatics

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 Strategy and Tatics
The main difference between strategy and tactics is that of scale,
perspective, or immediacy.
• Strategy refers to the overall plan to accomplish one’s goals in a
negotiation and the action sequences that will lead to the
accomplishment of those goals.
• Tactics are short-term, adaptive moves designed to enact or pursue
broad (or higher-level) strategies.

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 Strategy and Tatics
Tactics are subordinate to strategy; they are structured, directed, and
driven by strategic considerations.
Example:
• Strategy: Integrative Negotiation
• Appropriate tactics:
- Clearly describe your (inner) interests
- Raise open questions, positively listen to understand the other’s interests
- Develop mutual benefit solutions.

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 Strategy and Tatics
• In Chapter 1, we used the Dual concerns model to describe the
basic orientation that people take toward conflict (Pruitt and
Rubin, 1986).
• Savage, Blair, and Sorenson (1989) propose a similar model for the
choice of a negotiation strategy.

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 Negotiation strategy - Dual Concerns Model
Accommodating/ Collaborating/
Concern for the other party’s outcomes Integrating
Obliging
Problem
Yielding
solving
(Cooperation)

Compromising

Inaction Dominating

Avoiding Contending

Concern for their own outcomes

(Assertiveness)
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 3
Understanding the Flow of
Negotiations: Phases

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 Understanding the Flow of Negotiations: Phases

GĐ 1 GĐ 2 GĐ 3 GĐ 4 GĐ 5 GĐ 6 GĐ 7
Chuẩn bị Xây dựng Thu thập Sử dụng Đặt giá Kết thúc Thực hiện
mối quan hệ thông tin thông tin giao dịch thoả thuận

Phase Phase Phase Phase Phase Phase Phase

1 2 3 4 5 6 7
Preparation Relationship Information Information Bidding Closing Implementing
building gathering using the deal the agreement

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 Understanding the Flow of Negotiations: Phases
1. Preparation: deciding what is important, defining goals, thinking
ahead how to work together with the other party. Preparation is the
most important step.
2. Relationship building: getting to know the other party,
understanding how you and the other are similar and different, and
building trust and commitment toward achieving a mutually beneficial
set of outcomes.
3. Information gathering: learning what you need to know about the
issues, about the other party and his or her needs, about the feasibility
of possible settlements, and about what might happen if you fail to
reach agreement with the other side.
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 Understanding the Flow of Negotiations: Phases
4. Information using: assembling the case you want to make for your
preferred outcomes and settlement, one that will maximize your own
needs. This presentation is often used to “sell” your preferred outcome
to the other party.
5. Bidding: making moves from your initial, ideal position to the actual
outcome. Bidding is the process by which each party states its opening
offer and then makes moves from that initial offer toward a middle
ground.

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 Understanding the Flow of Negotiations: Phases
6. Closing the deal: building commitment to the agreement achieved in
the previous phase. Both you and the other party have to assure
yourselves that you have reached a deal that you can be happy with, or
at least accept.
7. Implementing the agreement: determining who needs to do what
once the agreement is reached. Not uncommonly, parties discover that
the agreement is flawed, key points were missed, or the situation has
changed and new questions exist. Flaws in moving through the earlier
phases arise here, and the deal may have to be reopened or issues
settled by mediators, arbitrators, or the courts.

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 4
Getting Ready to
Implement the Strategy:
The Planning Process

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 The Planning Process
1. Defining the negotiating goal.
2. Defining the major issues related to achieving the goal.
3. Assembling the issues, ranking their importance, and defining the
bargaining mix.
4. Defining the interests.
5. Knowing your alternatives (BATNAs).

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 The Planning Process
6. Knowing your limits, including a resistance point.
7. Analyzing and understanding the other party’s goals, issues, and
resistance points.
8. Setting one’s own targets and opening bids.
9. Assessing the social context of negotiation (for example, who is at the
table, who is not at the table but has a strong interest in the negotiation
outcomes, and who is observing and critiquing the negotiation).
10. Presenting the issues to the other party: substance and process.

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 1. Defining the negotiating goal
• Goals can be substantive (tangible), psychological (intangible), or
procedural (how we get to agreement)
• Goals can have both direct and indirect effects on the choice of
strategy
• Knowing one’s goal is the first and most important step in developing
a strategy and executing a negotiation.

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 2. Defining the major issues related to
achieving the goal
• Some negotiations may consist of only a single issue. For example,
the price of a computer desk being purchased at a yard sale or the
price of a used car.
• Other negotiations are more complex. For example, the purchase of
one company by another may include a large number of questions
such as price, transfer of inventory, workers who will be retained or
laid off, a new headquarters location, and the like.

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 2. Defining the major issues related to
achieving the goal
The number of issues in a negotiation, together with the relationship
between the negotiator and the other party, is often the primary
determinant of whether one uses a distributive or integrative strategy.
• Single-issue negotiations tend to dictate distributive negotiations
because the only real negotiation issue is the price or “distribution”
of that issue
• In contrast, multiple-issue negotiations lend themselves more to
integrative negotiations because parties can use processes such as
logrolling to create issue “packages” that are mutually beneficial.

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 2. Defining the major issues related to
achieving the goal
While the number of issues affects strategy, it does not preclude the
possibility that single-issue negotiations can be made integrative or that
multiple-issue negotiations will remain distributive.

Q. How can single-issue negotiations be made integrative?

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 2. Defining the major issues related to
achieving the goal
In any negotiation, a complete list of the issues at stake is best derived from the
following sources:
• An analysis of all the possible issues that need to be decided
• Previous experience in similar negotiations (e.g., buying your fifth house
versus buying your first)
• Research conducted to gather information (e.g., study the neighborhood,
have the house inspected, or read up on how to buy a house)
• Consultation with experts in that industry (real estate agents, mortgage
lenders, attorneys, home repair experts, or friends who have bought a house
recently)

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 3. Assembling the Issues, Ranking Their
Importance, and Defining the Bargaining Mix
• The next step in planning is to assemble all the issues that have been defined
into a comprehensive list. The combination of lists from each side in the
negotiation determines the bargaining mix (tập hợp các terms mình muốn deal với partner)
• The package of issues for negotiation is the bargaining mix. Each item in the
mix has its own starting, target, and resistance points. Some items are of
obvious importance to both parties; others are important only to one party.
• Introducing a long list of issues into a negotiation can make success more,
rather than less, likely — provided that all the issues are real. Large
bargaining mixes allow many possible combinations for settlement, thus
increasing the likelihood that a particular “package” of component elements
will meet both parties’ needs and therefore lead to a successful settlement..

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 3. Assembling the Issues, Ranking Their
Importance, and Defining the Bargaining Mix
After assembling issues on an agenda, the negotiator next must prioritize them.
Prioritization includes three steps:
• Determine which issues are most important and which are less important.
Intangible issues are often difficult to discuss and rank-order, yet if they remain
subjective and not quantified, negotiators may overemphasize or underemphasize
them.
Đem các vấn đề link với nhau ra deal trước để tránh bị sót
• Determine whether the issues are linked together or separate. If the issues are
separate, they can be easily added or subtracted (here is where points can help); if
connected, then settlement on one will be linked to settlement on the others and
making concessions on one issue will inevitably be tied to some other issue.
• Be willing to use “carrots” and “sticks.” Carrots tượng trưng cho phần thưởng, sticks tượng trưng cho hình
phạt
Dừng lại ở mức warning
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 4. Defining the interests
• Interests are the underlying concerns, needs, desires, or fears that
motivate a negotiator to take a particular position
• Needs are the specific demands and outcomes of a negotiator

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 4. Defining the interests

Relationship interests
Substantive interests

Process interests Interests in principle

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 4. Defining the interests
Types of Interests
• Substantive interests: are related to focal issues that are under
negotiation — economic and financial issues, such as price or rate, or
the division of resources
• Process interests: are related to how the negotiation unfolds
• Relationship interests
• Interests in principle: what is fair, what is right, what is acceptable,
what is ethical, or what has been done in the past and should be
done in the future. These principles often involve intangible factors

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 5. Knowing your alternatives (BATNAs)
• BATNA (Best Alternative To a Negotiated Agreement): Another solution
that may satisfy the negotiator's needs if he abandons the negotiation. If
he still has a better alternative, he should not accept the deal.
BATNA facilitates the negotiator because it creates power.
• WATNA (Worst Alternative To a Negotiated Agreement): Risks, bad
situations... that can force negotiator to sit at the negotiating table.
WATNA is detrimental because it puts negotiators in a weak position in
negotiations.

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 5. Knowing your alternatives (BATNAs)
• BATNAs are other agreements negotiators could achieve and still meet
their needs. Alternatives are very important in both distributive and
integrative processes because they define whether the current outcome is
better than another possibility (with a different negotiating partner).
• BATNA needs to be understood as the best and possible alternative, not a
pure threat to the other party. It needs to be set scienctifically, measurably
and responsibly.
• BATNA is considered “Plan B” in case not being able to reach an
agreement.

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 5. Knowing your alternatives (BATNAs)
Fisher and Ury chose the term “best alternative” because in most
situations, there are many alternatives, and it will be depend on our
understanding about which is the best.
For example, if a company wants to possess a new technology, it can:
• Buy the company that owns the copyright to the technology, or
• Buy ownership of the technology, or
• Sign a contract to license the technology, or
• Developing their own competitive technology
BATNA sẽ không giới hạn

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 5. Knowing your alternatives (BATNAs)
• BATNA can be independent. No party can negatively affect the other’s
BATNA (both sides are free to terminate the current negotiation and shift
to negotiate with another party).
• BATNA can be dependent. There are circumstances where both parties
are not free to switch to their BATNAs.
• Ex: The defendant in a dispute cannot unilaterally terminate it unless the
plaintiff does. In this case, both parties’ BATNAs are not independent. If
the dispute is deadlocked, the plaintiff’s BATNA is what he will do to the
defendant, and it is likely the defendant’s WATNA (being jailed).

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 5. Knowing your alternatives (BATNAs)
Example 1 of BATNA
If you are negotiating a commercial contract and cannot mutually agree on
the price term, BATNA can be:
• Increase the volume and lower the price accordingly
• Find an alternative buyer or seller

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 5. Knowing your alternatives (BATNAs)
Example 2 of BATNA
You are negotiating a compensation with the supplier, who sent you a batch
of low quality goods, and the two parties have not successfully made a deal
on how much the compensation would be (though you have lowered it to
your resistance point).
Example 3 of BATNA
You are likely to fail in an internal negotiation with your colleagues.

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 6. Knowing your limits, including a resistance point
• A resistance point is the place where you decide that you should stop
the negotiation rather than continue, because any settlement beyond
this point is not minimally acceptable.
• Resistance point is also known as “reservation point”, “walk-away point”
or “bottom line”.
• The limit for a tangible issue can be determined by numbers; for an
intangible one, the limit is set by rules, norms, etc.
• Limits help us to be wise, stopping at the right time rather than trying to
pursue the contract.

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 6. Knowing your limits, including a resistance point
Relationship between BATNA and resistance point
• Resistance point the bottom line to terminate the negotiation. BATNA is
the best alternative when the negotiation fails. Resistance point is the
criterion to build up BATNA.
• BATNA can include some alternatives (the best, second-best, third-best,
etc) to a negotiation. In contrast, there is only one resistance point.
• When a solution is not accepted, an alternative will be raised. When all
solutions are denied, then terminating is the only choice.

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 7. Analyzing and understanding the other party’s
goals, issues, and resistance points
Do research on the other party’s plan
• Their power and Bargaining Mix
• Their interests and needs
• Their resistance point
• Their BATNA
• Their goals and opening offers
• Members and structure of their negotiation team
• Their prestige and negotiation style
• Their frequent strategy and tactics

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 8. Setting one’s own targets and opening bids
Setting a Target
• Targets should be specific, difficult but achievable, and verifiable. In
short, targets should be optimistic, but not unreasonable.
• When negotiating one or several issues, the target is simple. When
there are many issues to be solved, negotiators need to set targets for
each single issue or each group of issues, as well as understand the
relationship between them.
• Negotiators also need to sort targets based on preference; and
understand how to reach the targets.
• In negotiation, a target can be fulfilled while others not. Understanding
them and their relationship helps negotiators get better results.

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 8. Setting one’s own targets and opening bids
Setting an Opening Bid
• When the negotiator got enough information about the other’s
BATNAs, it would be easy for him to make the opening offers. In
contrast, when there is not much information collected, the negotiator
needs to let the other make the opening offers.
• Be careful when making opening offers because normally it would be
the limit for the negotiator (cannot ask for higher) - “the anchor” for
the negotiation. Also be careful with communication in making the
offer.

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 9. Assessing the social context of negotiation
Participants
• We (official, reserve, etc.)
• The other side (official, reserve, etc.)
• Third party (middlemen, observers, influencers, etc.)
Negotiation context
• The current relationship
• Time to negotiate
• Time allowed for the negotiation
• The differences in culture, language, law, politics, etc.
• Norms, values, practices, etc.
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 10. Presenting the Issues to the Other Party:
Substance and Process
Issues need to be considered during the official negotiation
• Negotiation schedule
• Location
• Kick-off rituals
• Time
• Alternatives when negotiation is deadlocked
• Methods to follow up solved issues
• Mechanism to review agreements if necessary

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The end of Chapter 5
STRATEGY AND PLANNING
OF NEGOTIATION