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“In the name of God”

University Technology Malaysia


MBA course

NEGOTIATION SKILLS
Assignment I
Effective Negotiation

Prof. Zulkifli
Maryam Emami
MR081094

I
.

This assignment must be submitted within 3


weeks from this date. The essay should be at
least five pages and not more than eight
pages, should be written using MS word or
equivalent, font size 12 and double spacing.

Write an essay on Effective Negotiation, and include what


you understand from the following terms or concepts:

a. Mythical Fixed Pie mind-set


b. Distributive Negotiation
c. Integrative Negotiation
d. The impact of framing on Negotiation
e. BATNA
f. ZOPA
g. Bargaining Range
h. Prisoner’s Dilemma
i. Social Dilemma
j. Winner’s Curse

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As we were sailing through the course of negotiation, I was always wondering how I
could ever try to persuade the idea I want in manipulative methods & I was picturing
how NEGO course could assist me in it. As far as my vantage point in this issue is
concerned, for going through the core of effective negotiation, we need to start with
explaining the term” negotiation”.

According to my researches, negotiation refers to the process in which people with


conflicting interests determine how they are going to allocate resources or work together
in the future. As it can be clearly seen in this definition, we can allot special attention to
the following concepts:
Conflicting interest: it means there is a subject that has disagreement as its inseparable
part. It also can be defined as the process by which two or more parties with different
needs and goals work to find a mutually acceptable solution to an issue. Because
negotiating is an inter-personal process, each negotiating situation is different, and is
influenced by each party's skills, attitudes, and style.

The second issue to be considered is allocating resources or work that represents


the idea of disagreement. Certainly, it takes some conflicting interests & interdependence
to be ready for such a predicament.
At the beginning, we need to have deeper look at negotiation. We can somehow
divide this term to two major parts:
1. interpersonal skills, personal attitude and approach to negotiation.

It is of crucial importance to know how to approach. It means you should have a clear
view toward the person whom you are negotiating.
How should you start a conversation?
Which strategies should you use?
How can you penetrate to the other side?

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How can you be persuasive without being pushy?

These are the kinds of questions, which cross your mind while you are thinking about
a successful negotiation.

2. An understanding of the negotiation process and strategies.

As much as you have to figure the person’s personality & your own
attitude toward him, you also need to consider the negotiation basics,
strategies, & process. You should know them all by heart & you have
to be aware of that particular circumstance. It means, you need to
comprehend the situation & utilize the right strategies.

Now, after we talk about negotiation, we are going to move forward to the
concept of effective negotiation. Effective negotiation will happen when the outcome is
winning for all including separating the people from the problem, focusing on mutual
interest, inventing options for mutual gain, and using objective criteria. In order to
have much more comprehensive perception toward this term, we are
about to define some important terms:

1. Mythical Fixed Pie mind-set:

There are two various situations, Win-lose situation & win-win


situation.
On win-lose, as the name stands, one party will win while the other will
not while in win-win situation both parties will gain benefits.
The mythical fixed pie mindset is a situation in which one party will paralyze its host
into a rigid mindset, blurring the host’s vision into a fixed stare where the other party can
see nothing more than what sits on the negotiation table. It is one of the most destructive
assumptions we can bring to negotiations since it is based on the fact that the pie of

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resources is fixed. The mythical fixed pie mindset leads us to interpret most competitive
situations as purely win-lose, for those who recognize opportunities to grow the pie of
value through mutually beneficial tradeoffs between issues, situations can become win-
win. Many agreements fail to materialize because of this limited vision.

2. Distributive Negotiation:

The term “distributive negotiation” can refer to a deal in, which we are negotiating
over a single issue, price, and in conflict over how much the person would pay and how
much he would get .In other words, a distributive negotiation type or process that
normally entails a single issue to be negotiated.
In distributive negotiations, parties assume a fixed pie of resources & negotiate about
how to cut up the pie (distribute resources) or claim value. As an instance, I can illustrate
an example in Iran‘s market. If you want to buy a good in Tehran, say a pair of jeans, as
you are walking through the shopping mall, you have to consider the element of
bargaining. While you are deciding on the style & color, you have to make up your
negotiation plan as well too. The strategy is that as you hear the offer, $40, you should
make an offer about $20 & try to stick to it. The seller will suggest $35 while you say
$25 .Finally; you can purchase it at $30.

3. Integrative Negotiation

Integrative negotiation concerns how the negotiators expand the


pie of resources or create value in negotiations. They typically do so
by identifying more than one single issue, so that issues can be
traded off. There are many opportunities for integrative
negotiations throughout global negotiations if negotiators are
motivated enough and the strategy to transform single issues into
multiple issues and make trade-offs. As an instance, back home in Iran, my

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mother needed to make a dress for my cousin’s wedding ceremony two years ago.
We visited various shops with the hopes of finding the suitable material. After we
spent huge amount of time on window-shopping, we finally found a store that had the
proper cloth. We needed 3 meters of that special cloth to make the right size. The
shopkeeper refused to sell us all 3 meters left holding the reason that he will not have
any sample left. As we were caught up in a predicament, we made an integrative
negotiation. He agreed to sell us all 3 meters if we bring him back some leftover from
the tailor, which can be used as a sample in his shop. The result was that we had the
dress & he had the sample.

4. The impact of framing on Negotiation:

In order to investigate the effects of framing on negotiation, it is better to provide a


brief definition of framing at the beginning. The use of framing dates back to the time of
Aristotle when he used framing very effectively to portray murdering villains. Framing
means to process and organize information, which provides a perspective of the problems
or issues for a decision maker. It is normally used to understand the importance of facts
or issues in relation to each other to determine possible outcomes and consider
contingency actions to solve a problem. We often use framing when we develop a
rationale why we should do something or acquire a certain product or service.

There are some positive points that framing will bring to a negotiation:

1. A frame offers perspective by managing the alignment of the observer in


relation to an issue.

2. A frame directs the observer to focus on a feature of an issue within the frame
and to disregard other features of the same issue, which fall outside this frame.

3. A frame influences subsequent judgment in that it organizes and tailors


information to fit into it. It therefore not only contains, but also constrains.
Overall, using a framework can allow you to consider all potential gains and losses and
available options for any situation.

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5. BATNA:

This negation term BATNA is an acronym, which stands for Best Alternative To a
Negotiated Agreement. Fisher and Ury coined this term & it was recognized as one of the
main sources in negotiation. It is basically what you are going to do if you do not reach
an agreement. Your BATNA is your best option outside the current negotiation. Imagine
that you are negotiating a deal; your BATNA is an alternative buyer or seller. Your
BATNA is your source of power because the better your BATNA, the more you can
demand from the other party in the negotiation. They are critical to negotiation because
you cannot make a wise decision about whether to accept a negotiated agreement unless
you know what your alternatives are. The BATNA is the only standard that can protect
you both from accepting terms that are too unfavorable and from rejecting terms, it
would be in your interest to accept. In the simplest terms, if the proposed agreement is
better than your BATNA, then you should accept it. If the agreement is not better than
your BATNA, then you should reopen negotiations. If you are not able to improve the
agreement, then you should at least consider withdrawing from the negotiations and
pursuing your alternative considering the costs as well. It is of crucial importance to
improve your BATNA whenever it is possible. Good negotiators know when their
opponent is desperate for an agreement. When that takes place, they will demand much
more, knowing their opponent will have to give in. If the opponent apparently has many
options outside of negotiation, however, they are likely to get many more concessions, in
an effort to keep them at the negotiating table. The last but not the least to mention would
be the fact that if you make your BATNA as strong as possible before negotiating, you
will definitely strengthen your negotiation.

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6. ZOPA

ZOPA is an acronym, which refers to Zone of Possible Agreement. It is the range or


area in which an agreement is satisfactory to both parties involved in the negotiation
process. Another term is "Contracting Zone”. ZOPA is essentially the range between
each parties real base or bottom lines, and is the overlap area in the low and high range
that each party is willing to pay or find acceptable in a negotiation. .

The process in finding this zone requires a little bit of detective work in order to
make it work. It begins with a proposal by a person, commercial entity, or organization
known as a 'Proponent'. Essentially, this person puts an offer on the table. The receiving
end of a proposal is known as a 'Prospect'. This is the person or entity who considers the
merits of the offer or proposal. The prospect will accept the proposal, make a counter
proposal, offer, or outright reject it. This is where the game begins to get seriously fun.
The proponent is trying to sell us something. This can be a product, a business idea,
services, an organizational concept, or a combination of these things. The proponent is
more commonly called the 'seller'. The prospect, on the other hand, is more commonly
called the 'buyer'. The seller wants to get the maximum amount possible for their
proposal, but generally may also set a limit for the least amount they will accept. The
least amount they are willing to accept is known as the seller's 'Reservation Price'. This is
the amount where they draw the line; also know as the 'walk away' from the deal point.
The buyer, on the other hand, wants to pay the least amount possible, but may consider a
higher amount that they might be prepared to pay as well. The maximum amount they are
prepared to pay is also known as the buyer's 'Reservation Price' or 'walk away' from the
deal point.

The differences between these respective lows and highs of both the seller and buyer are
their range of expectations. When you have a common ground or overlap between these
two different ranges, this is known as ZOPA or the Zone of Possible Agreement.

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The ideal piece of information would be the other party's reservation price. It is
believed, that you should never reveal your own reservation price. The real trick is trying
to find that sweet range of ZOPA.

7. Bargaining Range:

Before I get to this concept, I will provide you with a brief review of bargaining.
The term “bargaining” can be defined as a means of reaching agreement or settlement
through give and take, often synonymous with negotiation. It normally refers to business
contexts, usually involving money, and negotiation refers to all other contexts.

Now with comprehending this item, we can go to bargaining range. In a single-issue


negotiation, the range of overlap in solutions where both parties would prefer a
settlement to no settlement is called bargaining range. as an instance, imagine that Party
A has a car to sell and is asking $5,000, but will actually be satisfied with as little as
$4,300. Party B wishes to purchase the car and has an initial desire to pay no more than
$4,000, but is willing to pay as much as $4,600.

8. Prisoner’s Dilemma:

Due to our reference book, in a prisoner’s dilemma, two parties get locked in a
competition, pitting self-interests against collective interests. The crux of the argument
that individuals are essentially motivated by self-interest in expressed in the famous
statement of Thomas Hobbes - life is “a war of all against all.” To comprehend the
concept more deeply, I am referring to an example here: Imagine that the District
Attorney had caught two suspects (who collaborated with each other) for a serious crime.
He hoped to be able to convict both the suspects but did not have adequate evidence.

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Determined to convict at least one of them, he decided to separate them and negotiate
with them separately. The scenario is summarized as follows:

• Both suspects confess - 10 years sentence each.


• Suspect A confess, Suspect B denied - "A" walks free, "B" gets 20 years
sentence.
• Suspect A denied, Suspect B confess - "A" gets 20 years sentence, "B" walks
free.
• Both denied - both get 3 years sentence.

9. Social Dilemma:

A situation in which a party’s pursuit of self-interest conflicts with the common good
of a collective to which the party belongs can be defined as social dilemma. In these
interdependent situations, incentives lead individuals to take from the common pool of
resources, but the more that individuals take, the more rapidly the resource disappears.
The common interest is to cooperate to maintain the resource. However, of course the
dilemma makes cooperation a negotiation challenge.

10. Winner’s Curse:

The winner‘s curse occurs when an under aspiring negotiator sets their target or
aspirations (goals or objectives) too low at the outset of a negotiation and is granted an
immediate agreement by their negotiating counterpart. In simpler words, winner's curse
is an offer that is immediately accepted by the other party. The term implies that although
the offer was accepted, the person making the offer failed to get as good a deal as
possible.

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References:

http://www.google.com.my/search?
hl=en&client=firefoxa&channel=s&rls=org.mozilla:enUS:official&defl=en&q=define:
distributive+negotiation&ei=VPa1So7xD5rW7AOhnZz_CQ&sa=X&oi=glossary_defini
tion&ct=title

http://harvardbusiness.org/product/mythical-fixed-pie/an/N0311A-PDF-ENG

http://www.negotiations.com/case/union-negotiation/

http://ezinearticles.com/?Effective-Negotiation-Skills:-A-Practical-
Application&type=sv&id=68611

http://www.negotiatormagazine.com/article224_1.html

http://www.negotiations.com/definition/framing/

http://www.beyondintractability.org/essay/batna/

http://www.negotiations.com/definition/zopa/

http://www.negotiations.com/articles/zopa/

http://www.cios.org/encyclopedia/conflict/glossary.htm

http://books.google.com/books?
id=TUnACyUGwpgC&pg=PA16&lpg=PA16&dq=bargaining+range+in+negotiation&
source=bl&ots=SbuONoP8bB&sig=X1SyVnwSPfnxqxH_gLfN3ogAp4&hl=en&ei=28e3
SpzpF5yDkAWD0rXTCw&sa=X&oi=book_result&ct=result&resnum=2#v=onepage&q
=bargaining%20range%20in%20negotiation&f=false

http://www.mediate.com/articles/parselle19.cfm

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http://hubpages.com/hub/Negotiation-Skill-Dilemma

http://www.negotiations.com/definition/winner-curse/

Negotiating Globally, How to Negotiate Deals, Resolve Disputes, and Make Decisions
Across Cultural Boundaries, Jeanne M. Brett, John Wiley

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