TUNGHAI UNIVERSITYDepartment of International Business - Taichung

Negotiation Strategy and Planning

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Rights Reserved

Systematic Planning

Most negotiation outcomes are left to chance…why?

• Advance planning is overlooked:– Time constraints– Boring / Tedious– Interested in Action / Doing

The result is either no deal or suboptimal deals (winners curse, leave value on the table for one or both parties)

Were not as quick, smart or clever as we think we may be.

• Results are failed or suboptimal negotiations:– Lack of clear objectives– Inability to evaluate offers

accurately– Inability to understand

alternative proposal strengths & weakness

Use of Planning

Research suggests (Rackham, 1980) that “skilled negotiators” vs. “average negotiators”:

• Explored a wider range of options for action

• Worked harder to find “common ground” with the other party

• Spent more time considering long term implications

Thus, the skilled negotiators were able to understand fully when to accept, reject or continue negotiating.

• Were significantly more likely to set:– Upper limits, Lower limits– Understand the

negotiating range of acceptable settlements

Key Steps to an Ideal Negotiation Process

Negotiation proceeds through distinct phases or stages:

Beginning phase (planning, initiation)

Middle phase (negotiation, problem solving)

Ending phase (resolution)

Key Steps to anIdeal Negotiation Process

1. Preparation – What are the goals?– How will I work with the other party?

2. Relationship building– Understanding differences and similarities– Building commitment toward a mutually beneficial set of

outcomes

3. Information gathering– Learn what you need to know about the issues (Eg.. Range

[ZOPA] from Baker-Andersen)

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P1, P2 & P3

Key Steps to anIdeal Negotiation Process

4. Information using– Assemble your case/argument

5. Bidding, Trading: The Dance.– Each party states their “opening offer”– Each party engages in “give and take”

6. Closing the deal– Build commitment, step-by-step.

7. Implementing the agreement (who, what, when)

P4, P5, P6 & P7

Negotiation:

Most refer to it is simply step’s 5 & 6:

Skilled negotiators employ all 7 steps.

Questions???

Goals, Strategy and Planning

A review of the whole negotiation process…

Goals

Types of Goals Need to be Specific, Measurable, Easy to Communicate.

May be Win-Win or Win Loose, depending on your situation.

E.g.

A Cheap Car? Vs.

New car 5 below dealer cost

Better sales results vs.

Sales growth 5% better than the industry growth rate.

• Substantive Goals– Money– Specific Outcome– Result or Behavior Change

• Intangible Goals– Reputation (maintain or create)

– Winning Market Entry– Selling your company(any

price)

• Procedural goals– Agenda, Location, Law,

Input in outcome

Goals – The Focus That Drives Negotiation Strategy

• Determining goals is the first step in the negotiation process

• Negotiators should specify goals and objectives clearly -prioritized

• The goals set have direct and indirect effects on the negotiator’s strategy.

• E.g. Money $$$ or a Specific Action/Outcome

• Process goals, dates, timing

• Reputation and Relationship.

Strategic Options

• Per Dual Concerns Model, choice of strategy is reflected in the answers to two questions:

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How much concern do I have in achieving my desired outcomes at stake in the negotiation?

r How much concern do I have for the current and future quality of the relationship with the other party?

Strategy: The Dual Concerns Model - Modified

Accommodation: I let you win, enhance relationship: Compromise for Future?

Integrative Strategy Compromising

Distributive, Win –Loose Strategy

No Deal, I Have a better BATNA

Strategy versus Tactics

• Strategy: The overall plan to achieve one’s goals in a negotiation based on situation and resources available

• Tactics: Short-term, actions designed to enact or pursue broad strategies– Tactics are subordinate & driven by strategy

• Planning: The “mapping” component of the strategy process

Example: Integrative strategy designed to build and maintain a productive relationship, & create the most value between the two.

Example: Open –ended questions, active listening to understand others genuine interests, problem solving or hard ball actions

Example: How will I implement the strategy?

Planning

Getting Ready to Implement the Strategy: The Planning Process

1. Define the issues

2. Assemble the issues and define the bargaining mix– The bargaining mix is

the combined list of issues

3. Define your interests– Why you want what you

want

4. Know your limits and alternatives

5. Set your objectives (targets) and opening bids (where to start)– Target is the outcome

realistically expected– Opening is the best that

can be achieved

6. Assess constituents and the social context of the negotiation

Negotiating Planning Guide

Lewecki Text Chapter 4, Figure 4.3

Summary on the Planning Process

“...planning is the most important activity in

negotiation.”

It provides you the information to do the negotiation. Otherwise you have no arguments.