CHAPTER ONE
The Nature of
Negotiation
4th Canadian Edition
Kevin Tasa
Schulich School of Business
York University
© 2020 McGraw-Hill Limited
1.1
Learning Objectives
After reading this chapter you should be able to:
LO1: Define negotiation and explain the key elements
of a negotiation process and the distinct types of
negotiation.
LO2: Describe how people use negotiation to manage
situations of interdependence.
LO3: Explain how negotiation fits within the broader
perspective of processes for managing conflict.
© 2020 McGraw-Hill Limited
1.2
Becoming a Better Negotiator
 Negotiation is something that everyone does, almost
daily
 A skill that can be developed

Requires practice, analysis, and reflection
 Negotiators are made, not born
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1.3
Negotiations
 Negotiations: decision-making situations in which
two or more interdependent parties attempt to reach
agreement
 We negotiate whenever we cannot achieve our objectives
single-handedly
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1.4
Characteristics of a Negotiation Situation (1)
 There are two or more parties
 There is a conflict of needs and desires between two or
more parties
 Parties negotiate because they think they can get a
better deal than by simply accepting what the other
side offers them
 Parties expect a “give-and-take” process
© 2020 McGraw-Hill Limited
1.5
Characteristics of a Negotiation Situation (2)
 Parties search for agreement rather than:
 Fight openly
 One side dominate and the other capitulate
 Break off contact permanently
 Take their dispute to a higher authority
 Successful negotiation involves:
 Management of tangibles (e.g., the price or the terms of
agreement)
 Resolution of intangibles (underlying psychological
motivations that directly/indirectly influence the parties)
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1.6
Characteristics of a Negotiation Situation (3)
 Examples of intangible factors:
 The need to win or avoid losing
 The need to look good, competent, or tough to those you’re
representing
 The need to defend an important principle or precedent
 The need to appear fair or honourable or protect one’s
reputation
© 2020 McGraw-Hill Limited
1.7
Interdependence (1)
 Most relationships between parties may be
characterized in one of 3 ways:



Interdependent
Independent
Dependent
 In negotiation, parties need each other to achieve their
preferred outcomes or objectives
 This mutual dependency is called interdependence
© 2020 McGraw-Hill Limited
1.8
Interdependence (2)
 Interdependent parties are characterized by
interlocking goals
 Having interdependent goals does not mean that
everyone wants or needs exactly the same thing
 A mix of convergent and conflicting goals
characterizes many interdependent relationships
© 2020 McGraw-Hill Limited
1.9
Types of Interdependence Affect Outcomes
 Interdependence and the structure of the situation
shape processes and outcomes


Zero-sum or distributive situations – one winner only
Non-zero-sum or integrative situations – goals are linked
to achieve a mutual gain
© 2020 McGraw-Hill Limited
1.10
Alternatives Shape Interdependence
 Evaluating interdependence depends heavily on the
alternatives to working together
 The desirability to work together is better for outcomes
 Best Alternative to a Negotiated Agreement: BATNA
 Whether you should or should not agree on something
in a negotiation depends upon the attractiveness of
your BATNA
© 2020 McGraw-Hill Limited
1.11
Making Concessions (1)
 Both parties engage in mutual adjustment as each
attempts to have an influence on the other


Negotiation is a process that transforms over time by
mutual adjustment
Effective negotiators must understand how people will
adjust and readjust
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1.12
Making Concessions (2)
 Concessions occur when one party alters his/her position
based on the other party’s suggestion to do so
 Concessions constrain the bargaining range
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1.13
Two Dilemmas in Mutual Adjustment
 Dilemma of honesty

Concern about how much of the truth to tell the other
party
 Dilemma of trust

Concern about how much negotiators should believe of
what the other party tells them
© 2020 McGraw-Hill Limited
1.14
Creating Trust in Negotiations
 Outcome Perception

Perception of results can create/destroy trust
 Process Perception

The process itself has an effect on trust in negotiations
 Satisfaction with negotiations is both outcome and
process dependent
© 2020 McGraw-Hill Limited
1.15
Value Claiming and Value Creating (1)
 Distributive Bargaining


Purpose is to claim value
Obtain the largest piece of the pie
 Integrative Bargaining



Purpose is to create value
Find a way for all parties to meet their goals and share
the reward
Expansion of the pie
© 2020 McGraw-Hill Limited
1.16
Value Claiming and Value Creating (2)
 Most actual negotiations are a combination of
claiming and creating value processes



Negotiators must be able to recognize situations that
require more of one approach than the other
Negotiators must be versatile in their comfort and use of
both major strategic approaches
Negotiator perceptions of situations tend to be biased
toward seeing problems as more distributive/competitive
than they really are
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1.17
Conflict
 Conflict may be defined as a…

"sharp disagreement or opposition" and includes "the
perceived divergence of interest, or a belief that the parties'
current aspirations cannot be achieved simultaneously”
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1.18
Managing Conflict

Dual Concerns Model – people in conflict have 2
independent types of concern:
(Accommodating)
(Integrating)
1) Concerns about
their own outcome
(assertiveness)
2) Concern about
the other’s outcome
(cooperativeness)
(Dominating)
© 2020 McGraw-Hill Limited
1.19
5 Major Strategies for Conflict Management
 Forcing

Competing or dominating
 Yielding

Accommodating or obliging
 Avoiding

Inaction
 Problem solving

Collaborating or integrating
 Compromising
© 2020 McGraw-Hill Limited
1.20
Summary and Key Points
 Managing interdependence requires an
understanding of relationships between parties
 Concession making and mutual adjustment introduce
the ways parties begin to set goals for themselves and
adjust them to emerge with a mutually satisfactory
agreement
 Skills in value claiming and value creation are central
to negotiation success
 Conflict can be both functional and dysfunctional
© 2020 McGraw-Hill Limited
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