Negotiation Excellence

The following sections are included:

• Dedication
• Contents
• Acknowledgments
• About the Contributors
• Introduction: Adding Value through Negotiation

Negotiations take place in a wide array of forms, whether to resolve a dispute, get a better deal, or find new solutions that neither party could realize on their own. The first, and often the most important step toward successful negotiation is planning and preparation. According to Thompson (2009), about 80% of negotiators' efforts should go toward the preparation stage. However, planning and preparation go beyond what negotiators should do before negotiation. Because negotiation is a dynamic communication process where new information, concerns, emotions, and goals may arise, negotiators should also be prepared for dealing with contingencies as well as factors that may interfere with goal pursuit. The purpose of this chapter, therefore, is to provide guidelines for effective planning and preparation both before and during the negotiation process, including guidelines for assessing the negotiation situation, analyzing the negotiation structure, planning for strategies that facilitate goal attainment, and re-orienting to manage contingencies that may arise during the dynamic, interactive negotiation process.

Helen looked around nervously. Jasmine had asked to meet at a restaurant to discuss the sale of the house. Both were realtors and were discussing the division of commission on the new block of condominiums that were for sale. Helen checked her watch and looked around nervously again. Had she got the address right? This was a dangerous part of town. Outside she could see a group of young men pushing each other around. The restaurant she was in had bars on the door and windows. She wanted to leave. She was just about to call Jasmine to see if she had the correct location when she saw Jasmine enter the restaurant. Jasmine talked causally for while about one of her clients. Helen shifted in her seat and only caught part of what Jasmine was saying. How long was this going to take she thought to herself. Eventually they started talking about the details of the agreement. Jasmine took a firm stand and Helen found herself agreeing with Jasmine's points. Even later, after they had left the restaurant Helen kicked herself for giving in so easily. What was wrong with her?

Negotiations occur when parties experience or anticipate interdependence. Negotiators may seek to acquire information or resources from others, resolve a dispute, or explore the possibility of creating something new by working together. During a negotiation, the parties use a variety of behaviors to frame the boundaries of the negotiation, exchange information, construct possible solutions, and advocate for a preferred outcome. While these basic elements of negotiation remain the same across many contexts, the approaches that the parties take to move through the negotiation process may vary significantly. Consider the following example…

When thinking about the two terms “creativity” and “negotiation,” common sense seems to say that those two do not go together well. However, as we will argue below, common sense is not a good counselor in this case. In this chapter, we illustrate that creativity plays a key role in negotiations and that constructive conflict management — such as negotiations — can in fact enhance creativity and innovation. We thereby refer to different taxonomies and theoretical models (Carnevale, 2006; Lax and Sebenius, 1986; Pruitt, 1981; Pruitt and Carnevale, 1993). As a start, we introduce an example from an actual negotiation, which helps us to illustrate the role of creativity.

The following sections are included:

• Introduction
• Defining Social Capital
• Different Types of Social Capital and Relational Ties
• Outlining the Benefits and Costs of Social Capital: Implications for Negotiators
• The Creation and Maintenance of Social Capital: Implications for Negotiators
• The Joint Ownership and Interdependency of Negotiators' Social Capital
• Maintaining Shared Values and Norms with Negotiating Counterpart
• Conclusions

Hong Kong Disneyland, a joint venture between the Walt Disney Company and the Hong Kong government, was conceived during the Asian financial crisis as a strategy for making Hong Kong a major tourist destination and providing Disney with a foothold into the potentially lucrative China market. Unfortunately, the park steadily lost money since opening in September 2005. The Hong Kong Disneyland is the smallest of Disney's theme parks worldwide, having only four “lands.” Many visitors complain that it is too small, with too few attractions to attract them for a second visit. In fact, Hong Kong Disneyland reflects Disney's new strategy of opening parks in phases, rather than trying to build an extensive park all at once as was done in Paris and Florida…

The following sections are included:

• Introduction
• Negotiation — The Process of Power Dependence, Social Influence, and Joint Problem Solving
• Power and Influence Defined
• Sources of Power
• Power in the Context of Negotiation
• The Importance of Power Assessment
• Power Imbalance
• Strategies to Tackle Power Imbalance
• Influence Tactics
• Effectiveness of Influence Tactics Across Cultures
• Summary

Negotiation is one of the most important aspects of selling and buying (Neslin and Greenhalgh, 1983) and is a very effective marketing vehicle (Roman and Iacobucci, 2010). The negotiations conducted while carrying out a sale involve two parties, a seller and a buyer, interacting voluntarily to come up with an exchange agreement which will be a compromise between each party's interests and expectations (Patton and Balakrishnan, 2010). This applies whether both stakeholders are firms (e.g., B2B with a purchasing manager as the buyer and a marketing manager as the seller) or where the buyer is an individual (e.g., B2C). Existing empirical research primarily focuses on one aspect of the sales dyad — the buyer. Over-emphasizing buyer behavior is misleading since the seller's negotiation orientation is just as critical to the outcome of dyadic interactions (Mintu-Wimsatt and Gassenheimer, 1996). The bilateral context of sales negotiation allows both sellers and buyers to have some monopoly power (Rapoport et al., 1995). Typical examples are a buyer with a sole supplier or a vendor with a unique product that has special value for a particular industrial customer…

The following sections are included:

• Introduction
• Definition of Negotiation Strategy
• Basic Negotiation Strategies
• 3D Negotiation
• Negotiauctions
• When Not to Negotiate
• Conclusion

Omnicorp Technologies has scheduled its annual strategy and budgeting retreat. Once a year the organization's directors convene for discussion of resources and strategic planning. This is a time for negotiating — for the organization, for one's department, or sometimes for one's own self interests. The attendees have very different approaches to the negotiations. Amy is confident in her ability to gain more staff and office space and is persistent in voicing her requests. During breaks, Juan indirectly gathers information on what others think of his new proposal for a joint venture so he can modify his “pitch.” Evelyn deceptively overstates some market data to bolster her case for increased research funding. Jae-Hwa spends time talking with various groups and discussing how to help them get the resources they need. William mainly hopes that everyone leaves the meeting on friendly terms and that they are willing to cooperate in the future. Each director has very different perspectives that are not necessarily compatible…

The Paris Peace Conference at the end of World War I surely ranks among the most costly of diplomatic failures, a “peace to end all peace” (Fromkin, 1992). After he directly contributed to some of the early mistakes made by the American delegation, Walter Lippmann observed these errors rapidly multiply as the negotiation process went awry. In the book Public Opinion (Lippmann, 1922), he developed a complex multilevel theory identifying certain psychological factors responsible for the cascade of mistakes committed by the negotiators along with organizational and political forces that sustained and magnified them (Bottom, 2010). Turning prescriptive, he urged social scientists to undertake a systematic “study of error,” one that would more fully reveal the operation and impact of these psychological factors…

The following sections are included:

• The Role of Gender in Negotiation
• Summary

Negotiators striving for excellence, whether in business, politics, or family interactions, need to take into account the emotional dynamics they frequently witness and experience as they navigate complex interdependent agreements. This is not always easy as negotiations are challenging social interactions that require strategic analysis of resources being exchanged, sophisticated communication processes between people, and mindful personal engagement…

The following sections are included:

• Introduction
• Physiology Primer
• Competition
• Cooperation
• Conclusion
• Appendix: Glossary of the Physiological Terms Used

You have been getting erratic performance from your mobile handset the last few days and you decide to bring it back to the mobile service provider for repairs. At the customer service counter, the service representative examined the equipment and informed you that you have violated the warranty agreement. You have a choice to pay $300 for repairs or get a new phone at a rebated price of $400. You recall several occasions when you had exposed the phone to “extreme” weather conditions, however, instead of taking responsibility, you find yourself raising your voice at the customer service representative, indignant of any wrong doing, and insisting that no one had informed you of the non-service clause at the point of purchase. After a heated negotiation to get your phone repaired at no cost, both parties remained firm on their respective positions. You stormed out of the center vowing never to patronize the shop again, leaving behind an “emotionally abused” customer service representative, and bewildered onlookers having doubts about the phone and the level of service provided by the company…

Entering into cross-cultural negotiations is a bit like heading out as the captain of the Titanic. When surveying the negotiation terrain, you will easily spot the most evident parts of culture — food, music, history, art, literature, and language — these are the tips of the icebergs floating in the foreign sea. After studying these aspects carefully, it is possible to learn to navigate these parts of the cultural terrain. For example, discussions with your Chilean negotiation partner of Chilean literature, music and painting could help set the foundation for a relationship with them; it will demonstrate to them that you have an interest in their country and culture and that you are willing to take the time to get to know something about them prior to any discussion of business. Such extra measures could go far in helping to establish empathy and trust, particularly in a relationship-oriented culture, and could lead to a mutually beneficial negotiated agreement (Lewis, 2006)…

In 1988 Komatsu, Japan's leading construction-equipment manufacturer, and Dresser, a giant in the American energy industry, combined their resources in a joint venture. The partnership was seen as a match made in heaven; the companies expected it to create what they called “a mountain of resources” for both sides. But as talks progressed, it became increasingly difficult for Dresser and Komatsu to stay on the same page, let alone to trust each other. As conflict escalated and trust faltered, the joint venture's market share plummeted and 2,000 employees were fired. Ultimately, in 1994, the partnership was dissolved. The experience of Komatsu and Dresser is not rare. The business world bristles with stories of intercultural negotiations gone wrong…

While a great deal has been written about negotiation styles in Japan (Graham, 1984; March, 1988; Kramer, 1989) and in China (Pye, 1982; Blackman, 1997; Faure, 1998; Fang, 1999), negotiation in India appears to be the poor cousin as far as the negotiation literature goes. The scant attention, however, is surprising as the Indian subcontinent is fast becoming an important player in the global economy. Measured by the latest statistics, India has the 11th largest economy in the world by nominal gross domestic product and the fourth largest by purchasing power parity (CIA, 2009). Foreign direct investment, for example, increased from one billion dollars in the 1980s to $70 billion between 2000 and 2005 (Alfaro and Chari, 2009). According to a study by Goldman Sachs, India is expected to be the world's third-largest economy by 2035 (Kumar, 2005). A telling measure of India's rise to economic prominence is the recent acquisitions by Indian firms of major companies around the globe. In June 2006, for example, Mittal Steel acquired Arcelor, the world's second-largest steel maker (Europe's largest) for $32.2 billion, creating the world's largest steel making company (Bouquet and Qusey, 2009). Tata, India's largest company, acquired the Anglo-Dutch Corus Group in 2006 in a $7.6 billion deal, creating the fifth-largest steel company, and in 2008, it acquired Britain's most famous automobile manufacturer, Jaguar and Land Rover, in a $2.3 billion deal with Ford…

In early 2010, the Renault–Nissan Alliance was the fourth largest automotive group in the world. With 350,000 employees and operations in 190 countries, the Alliance had sold 6.1 million vehicles — more than 9% of the world total — and taken in revenue of €86.5 billion (US$120 billion) in 2009. The Alliance had performed so well over the past decade that it was widely touted as a model for successful partnership (“All together now,” 2010)…

The following sections are included:

• The Arcelor and Mittal Steel Merger Negotiations
• Arcelor's Shareholders
• The Defense
• Another Billionaire
• The Deal Closes

The following sections are included:

• The Problem
• Diagnosis
• A Strategy to Build Cooperation
• Tactics: Applying the Core Concerns Framework
• Preliminary Evaluation
• Summary

This chapter focuses on two wide-spread social and organizational phenomena: teams and negotiation. Understanding the intersection between teamwork and negotiation becomes vital in the era of globalization with its mounting competition and concomitant growing interdependencies among individuals, groups and organizations. Effective collaboration within team structures may provide a competitive advantage and foster sustainability (Richter et al., 2006). Consequently, teams of practitioners collaborate with academics in development projects, business organizations form strategic alliances, leveraging their advantage over other companies and residents in communities build partnerships and networks to muster scarce resources (Tomlinson, 2005)…

The following sections are included:

• Introduction
• How Do Communication Media Differ?
• Are Computer Mediated Media Good or Bad for Relationship Building?
• Perceiving Negotiation Counterparts over Different Communication Media
• Disclosure over Computer Media
• Impression Management
• Communication Media and Negotiation Outcomes
• Conclusion

The following sections are included:

• Negotiation — Here, There, Online and Everywhere
• Negotiating Online Is Unavoidable — And Unavoidably Different
• The Medium and the Message: A Theoretical Model
• Using Email: A Moving Target
• Negotiating via Email: Eight Major Challenges
• A Look Ahead
• Conclusion

The following sections are included:

• References
• Index