The Nature of

Negotiation
Content adapted from
Essentials of Negotiation (2020)
by Lewicki et al.
Lecture Overview

1. Characteristics of
Negotiation
2. Interdependence
3. Mutual Adjustment
4. Value Claiming & Value
Creating
5. Conflict
Definition

• Negotiation: a decision-making situation in which two or more

interdependent parties attempt to reach agreement
• We negotiate when we cannot reach our objectives on our own
• What are some reasons we negotiate?
• Quick Brainstorm → turn to the people closest to you and spend 1
minute generating as many responses as you can
• Answer → Broadly speaking, we may negotiate to:
• share or divide limited resource
• create something new neither could attain on their own
• resolve problems/disputes between parties
In-class Exercise: Vacation Anyone?
On your own:
• What’s your worst nightmare for a place to go on vacation? That’s where
your partner wants to go. They want to go about as much as you don’t.
• You each have $1,000 and one week off work/school.
• What are your alternatives, if you and your partner cannot agree on where
to go?
• Make a list of your options
• Select the best option
With your neighbour:
• Share your list and best choice.
• Is your best alternative a good one?
• How will this affect your negotiation with your partner?
Characteristics of Negotiation
Situations

1. 2+ parties
2. Conflict of needs & desires
3. Think you can get a better deal than
was initially offered
4. Expect “give and take” – concession
making
Characteristics of Negotiation
Situations

5. Prefer negotiation to open fighting, giving in, ending

relationship, or engaging a third-party (mediation/
arbitration/adjudication)
6. Successful negotiation involves:
• management of tangibles (e.g., the price or the
terms of the agreement)
• resolution of intangibles (underlying psychological
motivations that directly/indirectly influence the
parties)
Examples of Intangibles
underlying psychological motivations that directly/indirectly influence the parties

What are some intangible factors that influence negotiation

outcomes?
• Quick Brainstorm → turn to the people closest to you and
spend 1 minute generating as many responses as you can
Examples of intangible factors:
• The need to win or avoid losing
• The need to look good, competent, or tough to those you’re
representing
• The need to defend an important principle or precedent
• The need to appear fair or honourable or protect reputation
 Negotiation on the Big
Screen – Intangibles

• IMDB Overview of Saving Mr. Banks

Scroll down to Storyline for a synopsis

• Saving Mr. Banks – “The Story”

• Saving Mr. Banks – “Walt Addresses the

Intangible”
Interdependence

• Most relationships between parties may be characterized in

one of 3 ways:
• Dependent
• Independent
• Interdependent
• In negotiation, parties need each other to achieve their
preferred outcomes or objectives - Mutual dependency =
interdependence
• Interlocking goals are an important aspect of negotiation
• Win-lose: I win, you lose/zero-sum
• Win-win: Opportunities for both parties to gain/non-zero-sum
Alternatives Shape Interdependence

• Evaluating interdependence depends heavily on

the alternatives to working together
• The desirability to work together is better for
outcomes
• BATNA = Best Alternative to a Negotiated
Agreement
• Whether you should or should not agree on
something in a negotiation depends upon the
attractiveness of your BATNA
Mutual Adjustment & Concession
Making

• Both parties engage in mutual adjustment as each

attempts to have an influence on the other
• Negotiation is a process that transforms over
time by mutual adjustment
• Effective negotiators must understand how
people will adjust and readjust
• Concessions occur when one party alters his/her
position based on the other party’s suggestion to
do so
• Concessions constrain the bargaining range
Dilemmas in Mutual Adjustment

• Dilemma of honesty
• Concern about how much of the truth to
tell the other party
• Dilemma of trust
• Concern about how much negotiators
should believe of what the other party
tells them
Value Claiming & Value Creating

• Value Claiming = Distributive Bargaining

• Purpose is to claim value
• Obtain the largest piece of the pie
• Value Creating = Integrative Negotiation
• Purpose is to create value
• Find a way for all parties to meet their goals
and share the reward
• Expansion of the pie
Quick In-class Exercise

On your own:
• Would you approach these scenarios as opportunities for distributive
bargaining or integrative negotiation? WHY?
a) Tourist purchasing a souvenir from a street vendor while on vacation
b) Consumer visits a car dealership to buy a new car
c) Owner of a car rental company visits a car dealership to buy new cars
d) Company needs to downsize and lay-off workers, but is unsure of how
many and from which departments
With your neighbours:
• Compare your notes and see if you can reach consensus.
Value Claiming & Value Creating

• Most actual negotiations are a combination of

claiming and creating value processes
• Negotiators must be able to recognize
situations that require more of one approach
than the other
• Negotiators must be versatile in their comfort
and use of both major strategic approaches
• Negotiator perceptions of situations tend to
be biased toward seeing problems as more
distributive/ competitive than they really
are
Conflict

Conflict may be defined as a

"sharp disagreement or opposition" and
includes "the perceived divergence of
interest, or a belief that the parties'
current aspirations cannot be achieved
simultaneously"
Managing Conflict

• Dual Concerns Model –

people in conflict have 2
independent types of
concern:
1) Concerns about their
own outcome
(assertiveness)

2) Concern about the

other’s outcome
(cooperativeness)
5 Major Strategies for Managing
Conflict

• Forcing
• Competing or dominating
• Yielding
• Accommodating or obliging
• Avoiding
• Inaction
• Problem solving
• Collaborating or integrating
• Compromising
In-class Exercise: Is Conflict Good
or Bad?
On your own:
• Think of a time you had conflict and it had a negative
effect
• Think of a time you had conflict and it had a positive
effect
With your neighbour:
• In no more than 3 sentences to describe the good and
3 sentences to describe the bad, share your
experiences
• Try to reach consensus – is conflict good or bad? Why?
Functions of Conflict

1. Increases awareness and ability to cope with

problems through discussion
2. Promises organizational change and adaptation
3. Strengthens relationships and heightens morale
4. Promotes awareness of self and others
5. Enhances personal development
6. Encourages psychological development—it helps
people become more accurate and realistic in their
self-appraisals
7. Can be stimulating and fun
Dysfunctions of Conflict

1. Competitive, win-lose goals

2. Misperception and bias
3. Emotionality
4. Decreased communication
5. Blurred issues
6. Rigid commitments – missed opportunities for
cooperation
7. Magnified differences, minimized similarities
8. Escalation of conflict
Next Class
• Monday, September 9 in
building 255 – room 140.
• We will spend some time getting
to know one another and “cold”
practice with a quick, fun,
negotiation-based game.
• I will provide more information
on the assignments and
workload for the term.
• In the meantime, log in to
VIULearn have a look around and
introduce yourself in the Hello,
my name is… discussion forum.