Business Negotiation Strategies and Tactics
Negotiation in Business
Item 11
Negotiation is a fundamental aspect of social interaction today. It occurs within families, between companies, wholesalers, retailers, suppliers, clients, unions, coworkers, and governments. In the context of trading companies, negotiation refers to the interactive process where different parties attempt to resolve conflicts through dialogue. This involves a gradual approach, mutual concessions, and a solution that satisfies both parties. It fosters long-term relationships and is crucial in most company activities. Negotiation is a process where one person or group tries to influence another, offering a more effective conflict resolution method than imposition. It’s the optimal solution when balancing two options: the cost of agreement versus the cost of disagreement.
People negotiate when there’s a conflict of interest and they want a resolution as advantageous as possible for all sides.
Key Features of Negotiation
- Two or more parties, each aiming to maximize profits and minimize losses.
- Voluntary participation to resolve differences.
- Universality across all areas of interpersonal relations.
- Negotiators share common interests but also have dissenting ones.
- A relative balance of power between parties.
- Interdependence, where each party’s outcome is linked to their own and the other party’s conduct.
- Each party has a specific purpose and scope for action.
- Each party seeks maximum gain while ensuring the system’s survival.
The Negotiators’ Personality
Item 4
The negotiators’ personal characteristics significantly impact the process’s effectiveness. These characteristics influence the initial stage and subsequent development by shaping the interaction between parties.
Following the diagram by G. Serrano and D. Rodriguez, several personality variables decisively affect negotiation conduct:
- Predisposition: The tendency to perceive facts in a particular way, stemming from limitations in attention, storage, retrieval, and information processing.
- Motivational Orientation: Affiliation-motivated negotiators tend towards collaboration, while power-motivated negotiators often act systematically.
- Attitudes: Including tendencies towards trust or distrust, authoritarianism (leading to a more competitive orientation), Machiavellianism (also promoting competitive negotiation), and a tendency towards reconciliation (favoring a cooperative approach).
- Self-Concept: Individuals with a negative self-view tend to be more competitive.
- Social Anxiety: People fearing social evaluation are more competitive, adopting a competitive strategy to minimize potential losses.
- Assertiveness: Assertive negotiators handle situations more effectively.
Collective Bargaining in the Company
Collective bargaining is a negotiation process within a business, involving two or more interdependent parties with conflicting interests. Resolution requires action from all sides. It’s an explicit and formal negotiation with offers and counter-offers to find an acceptable solution.
Collective bargaining involves two parties: worker representatives and the employer (or their representative).
- Worker Representatives:
- Works Councils
- Staff Delegates
- Union Representatives
- Unions, federations, and associations
- Employer Representatives:
- The employer or their representatives
- Business federations and confederations
Collective agreements can regulate matters such as:
- Economic: Wages, restructuring, investment policy
- Working Conditions: Breaks, holidays, working days
- Association: Employee participation rules, committee member guarantees
- Healthcare
In collective bargaining, each party has a cost for reaching an agreement and a cost for not reaching one. The balance is influenced by internal and external company factors. The key is to make the agreement cost less than the disagreement, but not so favorable that it harms one party’s interests. The importance of collective bargaining lies in the frequency of social contact and closeness between parties.
Types of Negotiation
Negotiations can be categorized in various ways:
- By Expression:
- Explicit: A clear exchange of offers and counter-offers.
- Tacit: Parties may not explicitly frame the interaction as negotiation.
- By Interaction:
- Competitive (win-lose): One party gains at the other’s expense.
- Cooperative (win-win): Both parties can benefit.
- Joint: A combination of competitive and cooperative elements.
- By Levels of Analysis:
- Interpersonal: Two individuals with differing views negotiate incompatible roles.
- Intergroup: Opposing preferences or priorities lead to conflict.
- By Parties Involved:
- Bilateral: Two parties involved.
- Multilateral: More than two parties, potentially forming alliances.
- By Composition:
- Direct: Individuals defend their own interests.
- Representative: Individuals represent the interests of others.
- By Field:
- Diplomatic: Negotiations on complex issues, potentially influenced by cultural differences.
- Commercial: Negotiations related to buying or selling activities.
- Everyday: Interpersonal negotiations in social or organizational settings.