Dynamics of a Business Negotiation
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|✓ Wordcount: 3677 words||✓ Published: 26th Jul 2019|
Introduction (150-200 words)
Approaching an important negotiation is for anyone a process that sometimes comes with a few psychological challenges because of the many factors that are at play during the all process. For few reasons I found myself being emotionally and financially invested in a negotiation in which I was facing the same challenges. This experience represented one of many examples about the complexity of a negotiation between two or more parties with different goals, interests and resources but also with a certain level of interdependency about an outcome. After providing a brief description of my negotiation, this essay will refer to some moments which offer some valuable insights on the dynamics of the negotiation forming a basis for the analysis presented in this paper. The analysis will be firstly conducted through the lens of the seven elements framework of principled negotiation which stemmed from the book “Getting to Yes” written by Roger Fisher and William Ury from the Harvard Law School. The second part focuses on evaluating the relevance of the framework itself, introducing some suggestions on how this framework could be potentially improved given the lessons learned during the negotiation.
Body (1,500 words)
The case negotiation that is analysed in this essay involves what should be seeing as a pleasant experience such as buying a car. When I was ready to buy, I approached few car dealerships and I went through what I believed a good preparation before face to face negotiation with a car dealer by searching for the price range for the car I was after. My preparation involved gathering not only enough information about different prices that dealerships offered, but also different strategies that car dealers use in order to sell cars. Furthermore, although sifting through all the information could be overwhelming, this should clarify what is the type of car and the fair price for car buyers like myself. However, during the face to face negotiation with the actual car dealer, there were few moments where I felt in a disadvantage place compare to the car dealer who did not show any commitment in trying to make a good deal for both parties, but contrarily I was left with a feeling of having been cheated. As a result, the all process was not as pleasant one as one would expect and, I was left doubtful wondering if I achieved a good deal or not at the end.
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During the initial stage of the negotiation, the car dealer and I started a bargaining phase where the price was coming down after the car dealer gave me a few concessions. However, at every concession I had a feeling that his communication was somewhat the result of his strategy leaned toward pushing me to buy on the day, for example by saying: “The price is now the lowest we can offer you and the deal is only for today. I doubt no one else will give you the same price anyway”. This strategy is commonly used by those car dealers who are only concern with their own interests and little worry for their customers needs in which communication reflex this tendency “characterised by use of power, aggression and perseverance”.(Holmes, Beitelspacher, Hochstein, & Bolander, 2017, p. 84) As a result, this antagonist behaviour often seen in hard bargainers by the salesperson results in the type of communication that includes threats and confrontational remarks in order to get the customer to pay more.(Gross & Guerrero, 2000) Unfortunately, this kind of approach does not often appear to be very efficient or suitable if one tries to achieve a good deal through an effective communication. (Papa & Canary, 1995) As good negotiator, I should have perhaps taken more charge of the communication by diverging the course of the negotiation toward another way.
Over the years experts in negotiation have introduced different methods in defining the right process of communication to maximise the outcomes for two parties like in my situation that perhaps would have helped me with my negotiation as well. For example, according to Falcao, the basic notion for two parties to achieve a value-maximising outcome, is to create the best possible communication process based on a two-way communication instead of seeking control over the other.(Falcao, 2010, p. 91) As a result, this would facilitate more problem solving, including exchange of information about needs and priorities leading to higher joint outcome. (Weingart, Bennett, & Brett, 1993) As Fisher also suggests, I should have reiterated my feeling about being pushed to close the deal on the spot as it is often more impactful and persuasive to describe to the other party how one’s feeling about that problem and see the situation from another angle. (R. D. Fisher, 1983, p. 22) Furthermore, two-way communication underlines of course listening actively by way of asking question and seek more intelligence from the other party and talking less as the car dealer did more of. (Hron, 2013, p. 107) Consequently, a different communication should have opened my negotiation leading toward a better understanding of the other party goes beyond looking at conflicting position but rather focuses on interests which is what leads to a better negotiation.
Bargaining over our position was becoming a very long process which reached an impasse. For that reason, there was one moment when I tried to reiterate that we were close to a deal, but we needed to be more opened to sharing our interests instead of sticking to our position in regard to price. I mentioned that there was an opportunity for us to expand the deal and other factors than just the price were at play. For example, we needed to finance a portion of the transaction and we wanted to trade in our car. Unfortunately, I did not persevere as much as I should have to reconcile our interests and explore more about those needs behind our positions. I failed to realise that the other side could have multiple interests or we may have had shared interests that we never explored. (R. D. Fisher, 1983, p. 27) As a result, by talking more openly about our interests, we would have been more likely to reach a quicker and mutually favourable agreement. (Rahwan, Sonenberg, & Dignum, 2003, p. 386) Developing more of a win-win mindset would have allowed us not only to better identify and explore the others’ perspectives, but also to cooperate more with each other. (Ibid) At the same time adopting a more interest base way of negotiating would have opened us to develop more options by seeking alternative solutions.
However, instead of designing different options for ourselves to try and integrate our interests, we kept negotiating with a “fixed-pie” mindset by having a more competing approach, for example by challenging the other’s position. In a particular point, I asked a lower price in a sort of threat by way of saying “don’t make me go somewhere else and you know I can get slightly cheaper price”. My use of the alternative or BATNA (Best alternative to a negotiated agreement) as first introduced by Fisher and Ury (1981) was not treated as a strategy of last resort as theoretically suggested, but as a bargaining tool or all-or nothing power source which did not help breaking us from the bargaining scenario. Fortunately, the negotiation ended with an agreement because both our reservation prices were probably very close and fell within a range in which a deal could occur or so called Zone of possible agreement (ZOPA). (Falcao, 2010, p. 268) It would possibly have been achieved in better terms by exploring our various interests and options reflecting a more interest based negotiation and creating a scenario where both parties would have created . (Tao, Miao, Shen, Miao, & Yelland, 2006) As a result, forming a more integrative negotiation, the car dealer and I would have not only created more value for ourselves in fact “enlarged the pie” but also have presumably achieved a win-win agreement. (Pasquier, Hollands, Rahwan, Dignum, & Sonenberg, 2011) In addition, my BATNA was not as strong as I was assuming that knowing the hard competition between car dealers I could get a slight better deal with somewhere else. However, I still did not have any other concrete offers, which did not give me that standard that could have protected me both from accepting terms that were not favourable and from refusing terms that would have been in my interests to accept. (Watkins & Rosegrant, 2002) Nonetheless, developing a strong BATNA would have put less pressure on closing the deal that day and easing the stress by not being afraid to walk away.
That moment also had an important impact on our relationship. In fact, threatening to walk away as I allured during the negotiation it maybe got me a further concession but probably did not have a positive impact for a future relationship. Also, it is unsure whether the use of BATNA as a threat it does effectively result in an absolute value gain or loss.(J. F. Brett, Pinkley, & Jackofsky, 1996) Therefore, I should not have mixed relationship and value creation because according to some experts negotiators it tips behaviour from cooperation to competition, and it rewards “bad behaviour” by inviting more of it ultimately.(Falcao, 2010, p. 78) This could also be seen as an asymmetric relationship in which “the power balance between parties is unequal” resulting in only one party, generally the high-power one, to have his interests met during the negotiation.(Dalton & Dalton, 2009) Instead, the element of power should not be related to alternatives but much more as a “relational construct” in which each negotiator’s perception of the balance of power has an impact on the attractiveness of the agreement.(Alavoine & Estieu, 2015) This of course promotes the value of interdependence which focuses on the value that both parties can pursue together as a replacement for the power that separates the two sides. (Falcao, 2010, p. 117) Perceiving the negotiation as an interdependent act would have allowed me to reduce the negotiation power dynamics and thus reduce my temptation to use of power through the threat of walking away. As a result, by having an attitude toward sharing of values and pursuing a long-term relationship would have promoted for example certain dialogue patterns or the formation of effective connection with the car dealer and therefore helped build a stronger working relation between us.(Chang, 2005)
Framework analysis (750)
As first mentioned in the introduction, the above analysis on my case negotiation has been structured around the seven elements framework introduced by Robert Fisher and William Ury from the Harvard Law School in the book Getting to Yes. Not only in this case, but more in general this framework is used to better comprehend the dynamics and the flow of any negotiation. As the above analysis has partly presented, the seven elements being relationship, communication, interests, options, legitimacy, commitment and alternative (BATNA) are distinguishable but also interconnected. One of the benefits of this framework is its focus on a more integrative approach aimed toward a more interests-based negotiation. (R. Fisher, 1984) The above analysis showed few examples of how well this approach could benefit the parties if only negotiators’ focus would switch from positional bargaining by attempting to other party to accept your terms, to a more collaborative view of the negotiation. (J. Brett & Thompson, 2016) This style aims to achieve a win-win situation for all parties involved in the negotiation and this time the assumptions lean toward creating value for both sides by working together to find the best possible solution in order to achieve their own goals. (R. D. Fisher, 1983)
However, while this framework offers a variety of clever and practical negotiating techniques it may still be improved by considering other elements that could be added to it. For instance, some may see my style of negotiation as a reflection of the western culture being French, whereas my counterpart in the negotiation was Asian and hence from an eastern culture. It is important to consider culture as an extra element which any negotiator should be aware of, giving that the world is interconnected more than ever before. Perceiving culture as an element which influences processes and outcomes of any negotiation, but also helps us recognise other “factors that inhibit and facilitate intercultural negotiations”. (M. Brett & Gelfand, 2006) Culture generally shapes the way people see the world and as a result communication, behaviour and motivational orientations and so the value for both relations and economic outcomes. (Gunia, Brett, & Gelfand, 2016) Therefore studies show that different cultures express different approach in human interactions such as during a negotiation. For instance, strategy that negotiators employ for a negotiation may change with western culture negotiators more likely to count on “the information exchange strategy” than the Eastern counterpart who would adopt “the persuasion and offer-making strategy”. (Gunia, Brett, Nandkeolyar, & Kamdar, 2011) Furthermore, the East Asian negotiators place a heavier emphasis on relationships than Western negotiators which results in being less confrontational or less direct, in giving additional physical space to their counterpart and show less dominance over others. (J.-D. Zhang, Liu, & Liu, 2014) Consistent with this view, Eastern cultures emphasises altruism and putting trust toward other people first and so they are generally less comfortable with anger, they tend to apologise more and “construe aggression with more indirect behaviour”. (Severance et al., 2013) On the other hand, western cultures are more direct and “cost-benefit calculus rather than emotions” showing a lower degree of sensitivity toward others especially in a context of negotiation. (Fosse, Ogliastri, & Rendon, 2017)
In contrast, recent studies argue a different aspect of the above theory. Thinking that Eastern negotiators appear to be more pro-relationships and therefore more cooperative is not always true. (W. Liu, Friedman, & Hong, 2012) In fact, Liu argues that Chinese negotiators can be aggressive when deal-making. (M. Liu, 2011) Their great emphasis on competitive goals drives the more aggressive behaviour by means of more prominence and less on information sharing behaviours than Americans. (Ibid) This highlights the complexity of any intercultural negotiation and how negotiators should not underestimate the preparation that goes into any negotiation.
In that regard, by only looking at the framework provided by Fisher and Ury, a negotiator could fall in the trap of oversimplifying a negotiation. Following few steps given by a framework or buy those promises of universal solutions to any negotiation in order to achieve a successful agreement can be misleading. (S. Zhang & Constantinovits, 2016) It is important to follow a structure or a framework for personal reference, such as those of the 7 elements but maintaining that flexibility giving the unique nature of any negotiation.
Conclusion (150-200 words)
In conclusion, in a negotiation context, people face different challenges which are given by the complexity of elements that come into play within a setting where two parties with different ideas, goals and aspirations come together to potentially achieve a scenario that should benefit all parties involved. The case study presented in this paper has demonstrated that complexity highlighting some of the phases of a negotiation which could have been better conducted if both parties would have had more experience and possibly more knowledge on how to conduct negotiations more effectively. As a result, both parties would maybe have proposed better arguments rather than trying to convince the other party with use of power or influence. Negotiation assumes a level of interdependency between different parties and, as the above analysis shows, it is of the interest of negotiators to navigate around the different elements that make the all process difficult. The 7 elements framework presented in the book by Fisher and Uly from the Harvard Law School aims to shades some lights on what the components of a negotiation are to help better understand how negotiations work. However, as also outlined in the second part of this paper, this framework can be improved and should not be seen as the quick fix for any negotiation but a good reference point for any negotiator. Ultimately, adequate preparation and an ongoing learning of negotiation skills will be determined factors for anyone to attaining the best deal or falling short on specific goals.
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