Chapter 13.4 - Negotiation

Question 1

What is negotiation?

Answer 1

A decision-making process among interdependent parties who do not share identical preferences

Question 2

What is distributive negotiation?

Answer 2

Win-lose negotiation in which a fixed number of assets is divided between parties

Question 3

What is integrative negotiation?

Answer 3

Win-win negotiation that assumes that mutual problem solving can enlarge the assets to be divided between parties

Question 4

What is position based bargaining?

Answer 4

A competitive negotiation where each side sticks to fixed demands and makes concessions to reach a compromise. It focuses on winning over the other party rather than finding mutual benefit.

Question 5

What is interest based bargaining?

Answer 5

A collaborative negotiation approach where parties focus on understanding and satisfying each other’s underlying needs and interests, not fixed positions. The goal is to find win–win solutions that benefit both sides.

Question 6

What are the characteristics of negotiation?

Answer 6

I. Belief that conflicting interests exist
II. Parties have incomplete knowledge
about each other’s interests
III. Parties engage in communication to
divide and exchange resources
IV. Parties make offers and
counteroffers
V. Compromises are possible
VI. Parties are interdependent;
outcomes determined jointly

Question 7

What is a zone of possible agreement?

Answer 7

The range of outcomes that both negotiating parties find acceptable. It’s the overlap between the buyer’s maximum and the seller’s minimum—where a deal can be made.

Question 8

What is a BATNA?

Answer 8

Means the best alternative to a negotiated agreement

Question 9

What are strategies to distributive negotiation?

Answer 9

• Threat
• Promises
• Firmness
• Persuasion

Question 10

What are strategies for integrative negotiation?

Answer 10

• Exchanging Information
• Framing differences as opportunities
• Building Trust
• “Integrating” multiple issues and searching for a novel solution that benefits both parties

Question 11

What are some common mistakes in negotiation?

Answer 11

1. Insufficient preparation
2. Belief in mythical fixed-pie
3. Irrational escalation of commitment