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COMMERCE 2NG3 In Class Notes
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Lecture notes of 59 pages for the course COMMERCE 2NG3 at mcmasteru (Full slide notes)
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Negotiations - 2NG3,Chapter 1 - Nature of Negotiation
Negotiations
,Defined as: decision making situations in which 2+ interdependent parties attempt to reach an
agreement.
- Negotiate whenever we cannot achieve our objectives single handedly
Characteristics of a Negotiation Situation
- 2+ parties
- Conflict of needs & desires
- Negotiation to get a better deal
- “Give & take” process
Parties look for an agreement rather than:
- Fight openly
- One side dominating
- Break off contact permanently
- Take dispute to a higher authority
Successful negotiation involves:
- Management of tangibles (eg. price or terms)
- Resolution of intangibles:
- Need to win or avoid losing
- Need to look good, competent, tough
- Need to defend important principles
- Need to appear fair or honorable
Interdependence
Relationships between parties may be classified in 3 ways:
- Interdependent
- Independent
- Dependent
Interdependence being when both parties need each other to achieve their preferred outcome
- Characterized by interlocking goals
- Does not mean everyone needs the same thing
- Usually a conflicting goal
Types of Interdependence Affect Outcomes
Interdependence & the structure of the situation shapes the processes & outcomes
- Zero-Sum - 1 winner only
- Non-Zero-Sum - Mutual gain
, Alternatives Shape Interdependence
- Evaluating interdependence depends on alternatives
- Desirability to work together is better for outcomes
BATNA: Best Alternative to a Negotiated Agreement
- Whether you should or shouldn’t agree in a negotiation depends upon the attractiveness
of your BATNA
Making Concessions
Both parties engage in mutual adjustment as each attempts to have an influence on the other
- Negotiation transforms over time by mutual adjustment
- Effective negotiators understand how people will adjust & readjust
Concessions occur when one party alters their position based on the other parties suggestion to
do so thus reducing expected benefits
- Eg. Opponent suggests I should throw in rims on the car they want to buy, I oblige an
make the concession to throw in rims
2 Dilemmas in Mutual Adjustment
Dilemma of Honesty
- Concern about how much truth to tell other party
Dilemma of Trust
- Concern about how much negotiators should believe of the other party
Creating Trust in Negotiations
Outcome of Perception
- Perception of results may make or break trust
Process of Perception
- Process had an effect on trust in negotiations
Satisfaction with negotiations is both outcome & process dependent
Value Claiming & Value Creating
Distributive Bargaining
- Purpose to claim value
- Obtain biggest piece of pie
Interactive Bargaining
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