Question

Entrepreneurs and innovators need to persuade other people to become involved, create effective teams, make new network connections and negotiate the terms of the resulting relationships.

I. Discuss the concept of positional negotiation/ bargaining

II. Discuss the different types of positional negotiation/ bargaining

III. Discuss the different flaws and limitations of positional negotiation/ bargaining

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Answer 1

Solution :-

1) What is Positional Bargaining?

Positional bargaining is a negotiation strategy that involves holding on to a fixed idea, or position, of what you want and arguing for it and it alone, regardless of any underlying interests. The classic example of positional bargaining is the haggling that takes place between proprietor and customer over the price of an item. The customer has a maximum amount she will pay and the proprietor will only sell something over a certain minimum amount. Each side starts with an extreme position, which in this case is a monetary value, and proceeds from there to negotiate and make concessions. Eventually a compromise may be reached. For example, a man offers a vendor at the flea market $10 for a rug he has for sale. The vendor asks for $30, so the customer offers $15. The merchant then says he will accept $25, but the customer says the highest he will go is $20. The vendor agrees that $20 is acceptable and the sale is made at $20. So the customer pays $10 more than he originally wanted and the vendor receives $10 less.

Why is Positional Bargaining Important?

Positional bargaining tends to be the first strategy people adopt when entering a negotiation. This is often problematic, because as the negotiation advances, the negotiators become more and more committed to their positions, continually restating and defending them. A strong commitment to defending a position usually leads to a lack of attention to both parties' underlying interests. Therefore, any agreement that is reached will "probably reflect a mechanical splitting of the difference between final positions rather than a solution carefully crafted to meet the legitimate interests of the parties."[1]

Therefore, positional bargaining is often considered a less constructive and less efficient strategy for negotiation than integrative negotiation.[2] Positional bargaining is less likely to result in a win-win outcome and may also result in bad feelings between the parties, possibly arising out of the adversarial, "you vs. me" approach or simply a result of one side not being truly satisfied with their end of the outcome. Positional bargaining is inefficient in terms of the number of decisions that must be made. The example above demonstrates the back-and-forth nature of positional bargaining. The more extreme the opening positions are, the longer it will take to reach a compromise.

Can Positional Bargaining Be Good?

Despite criticism of positional bargaining, supporters of this negotiation strategy do exist.

It has been argued that consideration of all underlying interests in a negotiation process is unnecessary. In fact it may sometimes be counterproductive. This is because of the distinction and relationship between issues and interests. Issues are universal; they are shared between each party in a conflict. Interests, on the other hand, are specific to each party: what the buyer of the rug in the market wants is a bargain, what the seller wants is profit. This relationship is quite simple. The problem arises when the issue at hand stirs up dramatically opposing interests between the parties, a situation in which it would be very difficult to bring them into agreement. If this is the case, it may sometimes be better to negotiate in terms of positions and go for a compromise.

2)  Discuss the different types of positional negotiation/ bargaining

Ever wonder why some negotiators approach the situation from completely different viewpoints and with others it goes easily and smoothly? It might be that they have similar or very different styles. Without awareness of one’s own style, and idea of what style a negotiation counterpart brings and the advantages and disadvantages of working with differing styles, it may make for a bumpier road to successful outcomes.

Negotiators have a tendency to negotiate from one of five styles: competing, accommodating, avoiding, compromising, or collaborative. These are adapted from Thomas Kilmann’s conflict styles and tend to correlate well in negotiation, especially given that there is sometimes tension when two or more parties are trying to meet their differing or conflicting needs.

According to observation over the last two decades of hundreds of negotiator behaviors and perspectives and confirmed through negotiation literature, generally people approach negotiations from one of these five styles and exhibit the certain characteristics.

Competing: Negotiators that exhibit this style are assertive, self-confident, and focused on the deal and results. These individuals tend to pursue their own concerns, sometimes at their counterpart’s expense, and in the extreme can become aggressive and domineering. On the assertive vs. cooperative scale, this style is higher in assertiveness and lower in cooperativeness. Using the substance vs. relationship axes, competing negotiators tend to be more focused on the substance than the relationship.

Avoiding: Negotiators that exhibit this style are generally less assertive and apprehensive. They prefer to avoid stepping into or creating tension. They stay neutral, objective or removed from the situation or leave responsibility to their counterpart. The individual does not immediately pursue their own interests or those of the other person and there is an element of self-sacrifice in this mode. This style is low in assertiveness and in cooperativeness, and not focused on either the substance of the agreement or the relationship.

Accommodating: Negotiators that exhibit this style focus on maintaining relationships with the other party. They tend to smooth over tensions, minimize differences, and are most concerned with maintaining a good rapport and satisfying the needs of the other party. This style is lower in assertiveness and higher in cooperativeness. These negotiators tend to emphasize the relationship as more important than the substance of the agreement.

Compromising: Negotiators that exhibit this style often split the difference, exchange concessions, and seek a quick middle-ground solution, which tends to end in moderate satisfaction of both parties’ needs. This style is intermediate in assertiveness and cooperativeness and more focused on creating a decent agreement relatively efficiently while maintaining some relationship.

Collaborating: Negotiators that exhibit this style are often honest and communicative. They focus on finding novel and creative solutions that fully satisfy the concerns of all parties, and suggest many ideas for consideration before deciding. This style is high in assertiveness and in cooperativeness, promoting both the relationship and the substance of the agreement at hand as very important. These negotiators tend to value taking the time to create optimal long-term outcomes over efficiency and leaving value on the table.

All styles serve, and each has advantages and risks. And sometimes one style may be more useful in certain situations than in others. For example, as an accommodating negotiator, one should recognize that with more transactional discussions, they may not need to take as much time to build a relationship, if the deal works with their own interests. On the other hand, if they are negotiating with someone they will be involved with for the long-term, whether that is a new client or recent hire at the company, they will want to work on ways to develop a strong working relationship and strive for the best deal to avoid setting a bad precedent.

In order to be the most effective negotiator, one must recognize one’s own tendency, assess as best as possible their counterpart’s style, and adjust their own to allow for smoother negotiations.

In general, if negotiators strive for using a collaborative style, they incorporate the relationship focus of an accommodating style, the assertiveness on own needs of a competitive style, the caution and observational skills of the avoiding style, and value maximization often neglected by the compromising style. While the collaborative style may not make sense in all negotiations, this mode can be especially effective with business situations because of the long-term nature of the relationships internally and externally, as well as the need for strong substantive negotiation outcomes.

3) Discuss the different flaws and limitations of positional negotiation/ bargaining

Negotiation Skills

Negotiations are formal discussions between people who have different aims or intentions, especially in business or politics, during which they try to reach an agreement. They try to reach a common ground eliminating their differences.

Negotiation in business has become one of the most important skills and abilities. While negotiation will happen between two parties for reaching an agreement, it is said that the most effective negotiator will be both competing as well as collaborating. An effective negotiator is one who creates value for the other while claiming value for the self. There must be meaningful give and take that should happen in negotiation.

Negotiation should always be win-win, where agreements are created by taking care of the interests of both the sides. Negotiation requires interpersonal skills, communication skills as well as problem solving skills.

Types of negotiation

There are broadly two types of negotiation namely distributive negotiation and integrative negotiation.

In distributive negotiation, the parties area only looking for their gain. It leads to a win-lose kind of outcome. In distributive negotiation, negotiation is carried out more as an one time transaction, not keeping in mind any kind of long term relationship.

While in integrative negotiation, the negotiators look for long term relationships and they try to ensure value for both sides. It leads to a win-win outcome.

Approach for negotiation

Negotiation can always be sensitive and should be carries out in a planned manner keeping in mind the end goals to be achieved. We should take care to ensure that negotiation does not get into an argumentative situation.

The negotiations process is made up of five stages:

1. Preparation and planning
2. Definition of ground rules
3. Clarification and justification
4. Bargaining and problem solving and
5. Closure and implementation

In order to achieve the desired outcomes from negotiation, it will be extremely important to do the initial homework. We must identify what we are looking at achieving from the negotiation. What are our best alternatives to a negotiated agreement (BATNA). It is also important for us to understand about the expectations of the other party and more information about their BATNA.

It is important to lay down the procedures for carrying out the negotiation, such as who will be part of negotiation, where the negotiation will happen and some basic ground rules to be followed.

Then the actual information and offers must be exchanged between the parties. Arguments and confrontations must be avoided in the process. At this stage the required bargaining should be done keeping good faith. Negotiation should always be done as a win-win outcome for both sides.

Once agreement is reached, the same should be implemented.

Skills in Negotiation

An effective negotiator will be using some of the below skills during the process of negotiation.

1. Active listening
2. Asking good questions
3. Communication skills (Specially verbal communication)
4. Decision making ability
5. Emotional control
6. Interpersonal skills
7. Preparing BATNA (Best alternative to a negotiated agreement, your alternatives)
8. Problem solving
9. Smart trade-off development
10. Ethics and collaboration

Conclusion

Negotiation skill is one of the most important skills. It is through effective negotiation we are able to eliminate differences and we arrive at common agreements. While we can adopt a structured approach for negotiation, but negotiation is an art which one can master only with time and experience.