2009 Bird. Not be used or reproduced without permission. International Negotiations - Day One Professor Allan Bird, Ph.D. University of Missouri-St. Louis St. Louis, MO USA 2 I. Before we get to work Everyone Negotiates Everyone Negotiates Buying a car, house or other object for which the price may not be fixed Establishing a salary, workplace tasks, office conditions, etc. Organizing team tasks or priorities Allocating household tasks Deciding how to spend a free evening 4 Think of a recent negotiating experience Think of a recent experience where you bought or sold something, or where you had resolve a difference with someone else. What goal were you trying to achieve? Did you achieve it? How? How did you try to persuade the other party to accept your position? Were all of your tactics effective? What could you have done to be more effective? 5 Share your experience with a partner Find a partner nearby and: Briefly recount your negotiating experience to your partner. Explain your answers to the questions on the previous slide. Listen to your partners experience and explanations. Discuss any similarities or differences between your two experiences. Be prepared to your share insights with the class as a whole. Conventional Negotiations Focus on winning Assert positions/personal preferences Concede stubbornly Seek compromises based on arbitrary divisions (e.g. split the difference) Engage in threats, bluffs or other negotiation tactics Conventional Negotiation Tactics Good cop/bad cop Highball/lowball Bluff Threats Nibble Appeals to reason 8 II. Framework for Negotiations 9 Distributive Negotiations Gains from negotiation are fixed. Negotiations are over how to divide gains. Allan Diane Allan Diane Allan Diane 10 Integrative Negotiations Gains from negotiation are not fixed. Negotiations are over how to increase or decrease gains. Allan Diane Allan Diane Allan Diane 11 BATNA Your Best Alternative to Negotiated Agreement is the course of action you would take if you do not reach an agreement. There may be several alternatives, the BATNA is the one you would choose. The BATNA may be a course of action or a set of decisions contingent on the resolution of uncertainty. 12 BATNA 13 Anchors Base figures from which negotiators add or subtract to judge offers. Signposts and guides to aid in judgment. Predisposition to reference subsequent offers in terms of the anchor. 14 Frames The parameters applied to the negotiation, thereby directing attention and focus. Risks vs. opportunities; costs vs. benefits. Word choices and phrasing are often determining framers. 15 Reservation Price The point at which you are indifferent in choosing between a negotiated agreement and your BATNA. A reservation price establishes a threshold beyond which negotiation is not possible A reservation price requires that you place a value on your BATNA 16 Bs Target Bs Reservation Price B would like to pay $10 for a hamburger This is the Zone of Possible Agreement. If negotiations do not fall apart for other reasons, the sale price will fall between $15 and $20. As Target As Reservation Price A will not accept less than $15 for a hamburger A would like to get $25 for a hamburger. B will not pay more than $20 for a hamburger. Zone of Possible Agreement (ZOPA) 17 Zone of Possible Agreement (ZOPA) ZOPA As Target- BATNA range Bs Target- BATNA range 18 Pareto Efficiency All of the negotiators prefer one possible deal above others. An agreement is Pareto Efficient if one party cannot do better without another party doing worse. Negotiators collectively leave money on the table if they settle for a deal in which one or more parties could have done better without others doing worse -- Pareto Inefficient. 19 The Principled Method of Negotiation Two assumptions: Participants are problem solvers; The goal is a wise outcome reached efficiently and amicably. Key elements: Separate the PEOPLE from the problem; Focus on INTERESTS, not positions; Invent OPTIONS for mutual gains; Insist on objective CRITERIA. 20 III. Interest-based Negotiation An Alternative: Interest-Based Negotiation Four Principles Separate the people from the problem Focus on interests, not positions Invent options for mutual gain Insist on objective criteria Roger Fisher & William Ury Getting to Yes. 2 nd ed. New York: Penguin. Principle 1: Separate the people from the problem Disentangle the people from the problem Deal with the people problem: acknowledge perceptions, emotions Listen actively Speak to be understood Speak about yourself, not them Principle 2: Focus on interests, not positions Positions: What disputants say they want in a negotiation: a particular price, job, work schedule, change in someone elses behavior, revised contract provision, etc. Interests: Underlying desires or concerns that motivate people in particular situations (May sometimes be the same as their positions!) Focusing on Interests Problem: barking dog My interpretation: my neighbor doesnt care about my needs My position: quiet the dog My interest: I need sleep Issue: how to control the barking Types of Interests Substantive: How people describe the issue: barking dogs, cars blocking driveway, dying reefs Relational: How people think they should be treated or acknowledged. Procedural: How people think issues should be addressed (e.g. courts, arbitration) Principle 3: Invent options for mutual gain Focus on the variety of ways issues/ interests (yours/theirs) might be addressed? Avoid assuming theres a single solution Separate brainstorming from evaluation of options Dont assume zero-sum conditions Think creatively Principle 4: Insist on objective criteria Fair standards: market value, precedent, blue book value, professional standards, best practice, industry average, equal treatment, etc. Fair procedures: e.g. last best offers, taking turns, drawing lots When is interest-based Appropriate? Other party is willing to problem-solve There is sufficient trust and informationor a willingness to develop them On-going relationships are important Commitment to carry out the agreement is needed Quality agreement is more important than an expedient one When is interest-based Unnecessary? On-going relationships are not important Negotiation is viewed as strictly distributive (e.g. buying a car) Lack of commitment to problem-solving on the part of one or more parties One or more parties see the negotiation as involving fundamental rights (but some contention about this) 30 IV. Arak-Barkan Negotiation 31 Simulation Objectives Develop analytical skills appropriate to negotiations Practice working negotiating under time constraints Gain insights into the structuring of negotiations 32 Team Assignments Run #1 Room XXX Run #2 Room XXX Run #3 Room XXX Run #4 Room XXX Run #5 Room XXX Run #6 Room XXX 33 Simulation Assignments Meet in your groups for 30 minutes and discuss strategy. You may write on the negotiation exercise sheets Ive given you -- except for the Official Copy of the Treaty (Appendix L) Negotiate with partner team for 30 minutes. Write ONE agreement sheet Official Copy of the Treaty (Appendix L) per Arak/Barkan group. 34 What was your BATNA? What was your reservation price? What was your ZOPA? Is there a Pareto Efficient agreement possibility? What types of influence did you use? Were your influence attempts successful? Why? Debriefing Questions 35 Debriefing Questions cont. What were your interests? What were your partners interests? What options did you invent to create mutual gain? Did you insist on objective criteria? 36 Debriefing Questions cont. Did running short of time influence your negotiation tactics? Would the outcome have been different if you had negotiated Area II before Area I? Can you be perceptive enough and flexible enough to recognize different kinds of issues and act appropriately? 37 Team & Personal Reflection In what area of the negotiation were you more effective? Describe it; why? In what area of the negotiation were you less effective? Describe it; Why? What can you learn from this negotiation experience? What will you do differently the next time you are in a negotiation situation? 38 V. Negotiation Plans & Logs 39 Negotiation Log After each negotiation exercise, do the following Narrative Section: Whether and how your actual negotiation deviated from your plan and why; Details describing the negotiation outcome; Your assessment of any deal reached; Log Section: Negotiation Context/Point/ Learning Event Your Role/Action Counterpart(s) Role/Action Your Assessment of What happened Implication(s) for future IBN (Lesson/take- away) Beginning of negotiation. Host team was not talking. I took control and began to state our needs and question the needs of Barkan. Slowly they began tanswering questions. My interpretation is that we were trying to establish if we could trust each other. Building the relationship from the beginning is crucial to success in the end. Sitting down for a 40 Negotiation Plan Before each negotiation, do the following for each team: Identify: Position Interests BATNA Reservation Point Aspiration/Target Other key facts Issues, plans ItemAlphaBeta Position Interests 41 VI. Next Session Assignments Read: Chs. 1 & 2 Complete Exercise 1.1- Personal Choices in Decision Making on the CD-ROM. Prepare Negotiation Plan for Alpha-Beta Negotiation exercise.