Page 562 - Encyclopedia of Business and Finance

eobf_N 7/5/06 3:16 PM Page 539

Negotiation

open and succinct communication, and application of They are more interested in the bargaining position and
evaluative techniques. This is accomplished through acci- bottom line of the other negotiating party, and they pre-
dent reconstruction and the collaborative efforts of first pare for negotiations by developing strategy, planning
responders and compatible federal and state activities. answers to weak points, and preparing alternate strategies.
Additional information on the NTSB and other A buyer-seller home purchase transaction illustrates
actions resulting from NTSB recommendations is avail-
competitive negotiating. The buyer gathers information
able from NTSB at 490 L’Enfant Plaza SW, Washington,
to determine home value, quality, expenses, and title sta-
DC 20594; 202-314-6000; or http://www.ntsb.gov.
tus. The seller gathers information to ensure that the
SEE ALSO Consumer Advocacy and Protection; Trans- prospective buyer qualifies for the loan. The parties nego-
portation tiate concessions regarding home repairs, items to remain
in the house, closing dates, and price. The negotiations
Mary Jean Lush stall as the buyer and seller disagree on a closing date; the
Val Hinton seller retaliates by keeping the buyer out of the home for
several days after the closing date. As a consequence of the
competitive strategies used, the relationship between the
buyer and seller suffers; however, the end result (sale and
NEGOTIATION purchase of a home) satisfies both parties.
Negotiation is the process of two individuals or groups On the other end of the negotiating style continuum
reaching joint agreement about differing needs or ideas. is cooperative negotiating, also called integrative problem
Oliver (1996) described negotiation as “negotiators jointly solving or soft bargaining. Cooperative-negotiation is
searching a multi-dimensional space and then agreeing to based on a win-win mentality and is designed to increase
a single point in the space.”
joint gain; the pie to be divided is perceived as expanding.
Negotiation applies knowledge from the fields of
Attributes include reasonable and open communication;
communications, sales, marketing, psychology, sociology,
politics, and conflict resolution. Whenever an economic an assumption that common interests, benefits, and needs
transaction takes place or a dispute is settled, negotiation exist; trust building; thorough and accurate exchange of
occurs; for example, when consumers purchase automo- information; exploration of issues presented as problems
biles or businesses negotiate salaries with employees. and solutions; mediated discussion; emphasis on coalition
formation; prenegotiation binding agreements; and a
NEGOTIATION STYLES search for creative alternative solutions that bring benefits
to all players. The risk in cooperative negotiating is vul-
Two styles of negotiating, competitive and cooperative,
are commonly recognized. No negotiation is purely one nerability to a competitive opponent.
type or the other. Instead, negotiators typically move back Cooperative negotiators require skills in patience; lis-
and forth between the two styles based on the situation. tening; and identification and isolation of cooperative
On one end of the negotiation continuum is the issues, goals, problems, and priorities. Additionally, coop-
competitive style. Competitive negotiation—also called erative negotiators need skills in clarifying similarities and
adversarial, noncooperative, distributive bargaining, posi- differences in goals and priorities and the ability to trade
tional, or hard bargaining—is used to divide limited intelligently, propose many alternatives, and select the
resources; the assumption is that the pie to be divided is best alternative based on quality and mutual acceptability.
finite.
Cooperative negotiating might be used, for example,
Competitive strategies assume a “win-lose” situation
in a hiring situation. An employer contacts a candidate to
in which the negotiating parties have opposing interests.
encourage the candidate to submit his or her credentials
Hostile, coercive negotiation tactics are used to force an
for a job opening. Trust is built and common interests are
advantage, and prenegotiation binding agreements are not
allowed. Concessions, distorted communication, con- explored as the employer and candidate exchange infor-
frontational tactics, and emotional ploys are used. mation about the company and the candidate’s qualifica-
Skilled competitive negotiators give away less infor- tions. Creative solutions are explored to accommodate the
mation while acquiring more information, ask more ques- candidate’s and employer’s special circumstances, includ-
tions, create strategies to get information, act firm, offer ing work at home, flexible scheduling, salary, and benefits.
less generous opening offers, are slower to give conces- The two parties successfully culminate the negotiations
sions, use confident body language, and conceal feelings. with a signed job contract.

ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION 539