Chapter 5 Choosing Your Strategy. © Pearson Education South Asia Pte Ltd 2 Win-lose strategies: Recap Also known as bargaining, haggling or positional

Chapter 5

Choosing Your Strategy

© Pearson Education South Asia Pte Ltd 2

Win-lose strategies: Recap

• Also known as bargaining, haggling or positional bargaining– Get what you want using power

– Power generates resistance as reaction

– Conditions: big power difference & short-term concern

– Riskier on average than win-win


The bargaining process

• Simple, well-known, intuitive• “TAKE IT OR LEAVE IT” (“Tioli”)

Compromise orNo deal

POSITION A or No Deal

Final Offer or No Deal

FinalLast Offer

or No Deal

Last Offer or No Deal

POSITION B or No Deal

Final Offer or No Deal

FinalLast Offer or No Deal

Last Offer or No Deal


The bargaining styles


The bargaining tension

• Hard party: Tries to

squeeze the most possible

value

• Soft party: Tries to build a

relationship at any cost

Any combination sacrifices value:

Still “take it or leave it”


Win-win strategies: Recap

• Get what you want independently from power

• Collaboration and communication: no resistance

• Tit-for-tat: proactive, clear communication

towards a value-focused process

• Higher value at lower risk than win-lose

Value


Win-win processes

Strategy Focus Risk

Interest-based Interests X Positions Discuss few interests and still fall into a bargaining trap

Mutual gains Options to benefit everyone

Create too many options and still bargain to split them

Principled Win-win choices Overwhelming number of decisions and lose focus

Value Negotiation Value Adopt win-lose if failure to consider ways towards value


Negotiation: More than one

• Boulwarism: negotiation strategy from 1950s

• Two main steps:

1) Data analysis to determine maximum wage

2) Present “first, last and best offer” on a “take-it-or-

leave it” basis


The three negotiations

• Boulwarism did not consider all 3 negotiations:

Unilateral approaches create a power play perception: RISKY!

NEGOTIATION

RELATIONSHIP SUBSTANCE COMMUNICATION

Trust Value Process


The three win-lose negotiations

• Win-lose strategies treat each negotiation as a different power source

NEGOTIATION


Manipulation Power differencesInformation asymmetry


The three win-win negotiations

• Win-win strategies explore all three negotiations

to unlock their value potential

– Independent

– Simultaneous

– Parallel

– Interconnected

NEGOTIATION


Trust Value Process


The three win-win negotiations

• Ultimate purpose of relationship &

communication negotiation:

– To maximize the substance negotiation value

NEGOTIATION


Trust Value Process


The three negotiations in detail

The win-win directive

to…

makes it harder to…

and tempts us with…

so we persistently

…

Substance Focus on value

Focus on power

Easy power opportunities

Promote the dialogue pattern

Relationship Negotiate the three

negotiations autonomously

Manipulate Relationship over value

Avoid trading between

negotiations

Communication Promote learning

Exploit information asymmetry

Complacency Proactively diagnose


Substance negotiation


Focus on value

• Demonstrates to the other party that there is no

need for a race for power

• Can be difficult in two situations:

1) The only thing they concentrate on is power

2) Easy power moves continuously present themselves


Promote the dialogue pattern

• A balancing effort to reduce power differences

• Reduces or eliminates unilateral moves

• Every move can be a value or power move

• When reciprocating value-focused moves:

Reward Good Behavior


Relationship negotiation


Negotiate autonomously

• Mixing the 3 negotiations rewards bad behavior

• Example: FARC in Colombia

– The president gave away piece of land (substance) in

hopes of starting a relationship + communication

process

– Established a negative negotiation pattern of unilateral

substance demands


Avoid trading between negotiations

• Separate and negotiate substance and

relationship through different channels

“Hard on the problem, soft on the person”


Communication negotiation


Promote learning

• Learn as much as possible from the available data

– Boulwarism failed the hardest: Did not learn what the

unions’ interests really were

Learning reduces information asymmetry and the temptation to bargain.


Proactively diagnose

• Seek further information to make the best

possible decision

• DIAGNOSE to clarify before deciding

Documents

Chapter 5 Choosing Your Strategy. © Pearson Education South Asia Pte Ltd 2 Win-lose strategies: Recap Also known as bargaining, haggling or positional