CHAPTER ONE

THE NATURE OF NEGOTIATION

Session 1
Hello everyone welcome to chapter 1, session 1. In this session we delve into the Characteristics
of a Negotiation Situation, the Interdependence, Mutual Adjustment and the Value Claiming and
Value Creation.
1.1 Introduction
Negotiation is a process by which two or more parties attempt to resolve their opposing interests.
It is a social process by which interdependent people with conflicting interests determine how
they are going to allocate resources or work together in the future.
We interact with others because we are interdependent we have something they need or they
have something we need. Knowledge, information, skills, abilities, access to important people
and, money are a few examples. Interdependence often requires an organized approach in a
clever way as well. How we initiate an interaction depends upon the nature of our prior
interactions with the other party, and the manner in which we convey information to him or her
influences how he or she responds.
1.2 Characteristics of a Negotiation Situation

Negotiation situations have fundamentally the same characteristics, whether they are peace
negotiations between countries at war, business negotiations between buyer and seller or labor
and management, or an angry guest trying to figure out how to get a hot shower before a critical
interview.
1. There are two or more parties: that is, two or more individuals, groups, or
organizations.

2. There is a conflict of needs and desires between two or more parties that is, what
one wants is not necessarily what the other one wants and the parties must search for a way to
resolve the conflict.
3. The parties negotiate by choice! That is, they negotiate because they think they can
get a better deal by negotiating than by simply accepting what the other side will voluntarily give
them or let them have.
4. When we negotiate, we expect a “give-and-take” process that is fundamental to
our understanding of the word “negotiation.” We expect that both sides will modify or move
away from their opening statements, requests, or demands.
5. The parties prefer to negotiate and search for agreement rather than to fight
openly, have one side dominate and the other capitulate, permanently break off contact, or take
their dispute to a higher authority to resolve it.
6. Successful negotiation involves the management of tangibles (e.g., the price or
the terms of agreement) and also the resolution of intangibles.
1.3 Interdependence

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One of the key characteristics of a negotiation situation is that the parties need each other in
order to achieve their preferred objectives or outcomes. That is, either they must coordinate with
each other to achieve their own objectives, or they choose to work together because the possible
outcome is better than they can achieve by working on their own.

Interdependent parties, however, are characterized by interlocking goals—the parties need each
other in order to accomplish their objectives, and hence have the potential to influence each
other.
1.4 Mutual Adjustment

When parties are interdependent, they have to find a way to resolve their differences. Both
parties can influence the other’s outcomes and decisions, and their own outcomes and decisions
can be influenced by the other. This mutual adjustment continues throughout the negotiation as
both parties act to influence the other.
1.5 . Value Claiming and Value Creation

Earlier, we identified two types of interdependent situations—zero-sum and non-zero-sum. Zero-

sum or distributive situations are ones in which there can be only one winner or where the parties
are attempting to get the larger share or piece of a fixed resource, such as an amount of raw
material, money, time, and the like.

The structure of the interdependence shapes the strategies and tactics that negotiators employ. In
distributive situations, negotiators are motivated to win the competition and beat the other party
or to gain the largest piece of the fixed resource that they can. To
achieve these objectives, negotiators usually employ win–lose strategies and tactics. This
approach to negotiation—called distributive bargaining —accepts the fact that there can only be
one winner given the situation and pursues a course of action to be that winner. The purpose of
the negotiation is to claim value —that is, to do whatever is necessary to claim the reward, gain
the lion’s share of the prize, or gain the largest piece possible.
Negotiators must be able to recognize situations that require more of one approach than the
other: those that require predominantly distributive strategy and tactics, and those that require
integrative strategy and tactics.
1. Negotiators must be versatile in their comfort and use of both major strategic
approaches. Not only must negotiators be able to recognize which strategy is most appropriate,
but they must be able to employ both approaches with equal versatility. There
is no single “best,” “preferred,” or “right” way to negotiate; the choice of negotiation strategy
requires adaptation to the situation, as we will explain more fully in the next section on conflict.
Moreover, if most negotiation issues or problems have components of both claiming and creating
values, then negotiators must be able to use both approaches in the same deliberation.
Negotiator perceptions of situations tend to be biased toward seeing problems as more

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distributive/competitive than they really are. Accurately perceiving the nature of the
interdependence between the parties is critical for successful negotiation. Unfortunately, most
negotiators do not accurately perceive these situations. People bring baggage with them to a
negotiation: past experience, personality, moods, assumptions about the other party, and beliefs
about how to negotiate.
Value may be created in numerous ways, and the heart of the process lies in exploiting the
differences that exist between the negotiators. The key differences among negotiators include
these:
1. Differences in interests. Negotiators seldom value all items in a negotiation equally.
For instance, in discussing a compensation package, a company may be more willing to concede
on the amount of a signing bonus than on salary because the bonus occurs only in the first year,
while salary is a permanent expense. An advertising company may be quite willing to bend on
creative control of a project, but very protective of control over advertising placement.
2. Differences in judgments about the future. People differ in their evaluation of what
something is worth or the future value of an item. For instance, is that piece of swamp land a
valuable wetland to preserve, or a bug-infested flood control problem near a housing
development, or a swamp that needs to be drained to build a shopping center? How parties see
the present and what is possible that needs to be created—or avoided—can create opportunities
for the parties to get together.
Differences in risk tolerance: People differ in the amount of risk they are comfortable
assuming. A young, single-income family with three children can probably sustain less risk than
mature, dual-income couples near retirement. A company with a cash flow problem can assume
less risk of expanding its operations than one that is cash-rich.
Differences in time preference: Negotiators frequently differ in how time affects them. One
negotiator may want to realize gains now while the other may be happy to defer gains into the
future; one needs a quick settlement while the other has no need for any change in the status quo.
Differences in time preferences have the potential to create value in a negotiation.

In this session we have discussed the Characteristics of a Negotiation Situation, the

Interdependence, Mutual Adjustment and the Value Claiming and Value Creation.
Thank you and see you in the next session!

Session 2
Hello everyone welcome to chapter 1, session 2. In this session we delve into the Levels of
Conflict and Conflict Management.

The Levels of Conflict

As we have been discussing, a potential consequence of interdependent relationships is conflict.
Conflict can result from the strongly divergent needs of the two parties or from misperceptions

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and misunderstandings. Conflict can occur when the two parties are working toward the same
goal and generally want the same outcome or when both parties want very different outcomes.

Levels of Conflict
One way to understand conflict is to distinguish it by level. Four levels of conflict are commonly
identified:
1. Intrapersonal or intra-psychic conflict. These conflicts occur within an
individual. Sources of conflict can include ideas, thoughts, emotions, values, predispositions, or
drives that are in conflict with each other. We want an ice cream cone badly, but we know that
ice cream is very fattening.
2. Interpersonal conflict. A second major level of conflict is between individuals.
Interpersonal conflict occurs between co-workers, spouses, siblings, roommates, or neighbors.
3. Intra-group conflict. A third major level of conflict is within a group among team
and work group members and within families, classes, living units, and tribes. At the intra-group
level, we analyze conflict as it affects the ability of the group to make decisions, work
productively, resolve its differences, and continue to achieve its goals effectively.
4. Intergroup conflict. The final level of conflict is intergroup between organizations,
ethnic groups, warring nations, or feuding families or within splintered, fragmented
communities. At this level, conflict is quite intricate because of the large number of people
involved and the multitudinous ways they can interact with each other.

Conflict Management

Many frameworks for managing conflict have been suggested, and inventories have been
constructed to measure negotiator tendencies to use these approaches. Each approach begins with
a similar two-dimensional framework and then applies different labels and descriptions to five
key points. We will describe these points using the framework proposed.

The two-dimensional framework presented in Figure 1.1 below is called the dual concerns
model. The model postulates that people in conflict have two independent types of concern:
concern about their own outcomes (shown on the horizontal dimension of the figure) and

concern about the other’s outcomes (shown on the vertical dimension of the figure).

Fig. 1.1: The Dual Concerns Model

These concerns can be represented at any point from none (representing very low concern) to
high (representing very high concern). The vertical dimension is often referred to as the
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cooperativeness dimension, and the horizontal dimension as the assertiveness dimension.
Although we can theoretically identify an almost infinite number of points within the two-
dimensional space based on the level of concern for pursuing one’s own and the other’s
outcomes, five major strategies for conflict management have been commonly identified in the
dual concerns model:
1. Contending (also called competing or dominating) is the strategy in the lower
right hand corner. Actors pursuing the contending strategy pursue their own outcomes strongly
and show little concern for whether the other party obtains his or her desired outcomes. As Pruitt
and Rubin (1986) state, parties who employ this strategy maintain their own aspirations and try
to persuade the other party to yield.
2. Yielding (also called accommodating or obliging) is the strategy in the upper left
hand corner. Actors pursuing the yielding strategy show little interest or concern in whether they
attain their own outcomes, but they are quite interested in whether the other party attains his or
her outcomes.
3. Inaction (also called avoiding) is the strategy in the lower left-hand corner. Actors
pursuing the inaction strategy show little interest in whether they attain their own outcomes, as
well as little concern about whether the other party obtains his or her outcomes.
4. Problem solving (also called collaborating or integrating) is the strategy in the
upper right-hand corner. Actors pursuing the problem-solving strategy show high concern
for attaining their own outcomes and high concern for whether the other party attains his or her
outcomes. In problem solving, the two parties actively pursue approaches to maximize their joint
outcome from the conflict.
5. Compromising is the strategy located in the middle of Figure 1.1. As a conflict
management strategy, it represents a moderate effort to pursue one’s own outcomes and a
moderate effort to help the other party achieve his or her outcomes.

In this session we have discussed the Levels of Conflict and Conflict Management.
Thank you and see you in the next chapter!