UNIT TWO: NEGOTIATION STRATEGY

I) Learning Objectives
The main objective of this unit is to provide understanding about negotiation strategies, more
specifically the unit aims:
 To create understanding on factors affecting types of negotiation strategies
 To explain about alternative negotiation strategies
 To describe situation when to choose among the alternative strategies
2.1. Key Factors that Determine the types of Strategies
The five basic types of negotiating strategies depend on your combination of preferences for
two basic concerns: the relationship with the other negotiator and the outcome of the
negotiation itself. The strength or importance of each of these two concerns, and their relative
priority, should direct the selection of the optimal negotiation strategy.
2.1.1. Relationship Concerns
First, how important is your past and future relationship with the other party?
The importance of the relationship between the two parties will be affected by a number of
factors:
(1) whether there is a relationship at all;
(2) whether that relationship is generally positive or negative (whether the two of you
have gotten along well or poorly in the past);
(3) whether a future relationship is desirable;
(4) the length of the relationship and its history, if one exists;
(5) the level of and commitment to the relationship;
(6) the degree of interdependence in the relationship; and
(7) the amount and extent of free, open communication between the parties.
For example, if you are negotiating the purchase of a new car, you may never have met the
salesperson before and may not expect to have a continuing relationship. Therefore, your
relationship concerns are low. However, if your business uses a fleet of cars and you expect
to work with this person on deals in the future, your relationship concerns are high, and this
will affect negotiations. Or if you are buying the car from your neighbor, and want to
continue to have a good relationship with that person, you may negotiate differently than if
you are buying it from a stranger.

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 2.1.2. Outcome Concerns
The second factor affecting negotiating strategy is the importance of the outcome of the
negotiation. How important is it for you to achieve a good outcome in this negotiation? Do
you need to win on all points to gain the advantage? Or is the outcome of only moderate
importance? Or does the outcome not really matter in this negotiation?

For example, let us return to the car buying example. If you are buying a car from a dealer,
price may be the most important factor, and you may have absolutely no interest at all in the
relationship. If you are buying the car from your neighbor, and you want to keep a good
relationship with your neighbor, then you might not press as hard to get a good price.
Finally, if you are buying the car from your mother simply so that she doesn’t have to worry
about it anymore, you probably are most concerned about the relationship and care very little
about the outcome.

Relationship and outcome may both be important. This will require working together with the
other party in some fashion to affect a result. If the relationship concerns have a strong
influence on the matter at hand, and you decide to emphasize them over the outcome, then
you will select a different strategy than you would select where the outcome is more
important.
When we assess different levels of concern for relationship and outcome, five distinctly
different strategies emerge (Avoiding, Accommodating, competitive, collaborative and
compromising) let us see them in detail.
2.2. Alternative Negotiation Strategies
We now look at the five basic negotiating strategies in detail. Although you may be inclined
to use one particular strategy, it is a good idea to study the components of each strategy
carefully
2.2.1. Avoiding Strategy (lose–lose)
The avoiding strategy is used infrequently, but has merit in certain situations. Our nickname
of this strategy is actually a misnomer, since an active choice of an avoiding strategy is not
necessarily a “loss” on either the relationship or the outcome. However, since we tend to refer
to the more active pursuits of relationship and outcomes as “winning,” we will call the
avoiding strategy a “loss” in terms of the outcome and the relationship.
Why would one choose an avoiding strategy?
 Because negotiations can be costly (in time, money, and relationships).
 Negotiators would have been better off to drop the matter entirely.

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  The person employing an avoiding strategy basically sees negotiation as a waste
of time or not worth pursuing. This person may feel that his or her needs can be
met without negotiating.
 the outcome has very low value and
 that the relationship is not important enough to develop through the negotiation.
As a result, the party reasons that neither the relationship nor the outcome is sufficiently
important (at least compared with the costs) and so takes no action or simply refuses to
negotiate. If the “avoider” refuses to negotiate when the other party wants to, this may have a
negative effect on the relationship. The avoiding strategy also is a possibility when a party
can pursue a very strong alternative outcome. If a strong alternative is available, the person
may choose not to negotiate. For example, if you are looking at two different houses to buy,
and both meet your needs, you may choose not to negotiate with one seller because you feel
the price is too high and the person is inflexible.
2.2.2. Accommodating Strategy (lose to win)
An accommodating strategy is used when the relationship is more important than the
outcome of the negotiation. The person using this strategy may prefer to primarily
concentrate on building or strengthening a relationship. Since other people are usually happy
when we give them what they want, we may simply choose to avoid focusing on the outcome
and give it to the other side, thus making them happy. A second reason is that we may want
something else in the future. So, we give them their preferences now to obtain a better future
outcome. A short-term loss is exchanged for a long-term gain.

For example, in a manager-employee relationship, the employee may want to establish a good
relationship with the boss now to have a good evaluation, a raise, or a better position in the
future. The employee may choose an accommodating strategy and not push for a salary
increase now, other three-month review, if it is expected that this will put her in a better
position for a raise at the six-month review.

The accommodating strategy may be used to encourage a more interdependent relationship,

to increase support and assistance from the other, or even to cool off hostile feelings if there
is tension in the relationship. If the relationship is ongoing, then it may be particularly
appropriate to “back down” now, to keep communication lines open and not pressure the
opponent to give in on something that they do not want to discuss. In most cases, this strategy
is short term it is expected that accommodation now will create a better opportunity to
achieve outcome goals in the future.

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The accommodating strategy is not usually considered a formal strategy in negotiation. There
are two important times to consider an accommodating strategy: first, if the outcome is not
very important to you, or pursuing the outcome is likely to create too much tension and
animosity, and second, if your primary objective is to improve the relationship.

2.2.3. Competitive Strategy (win–lose)

The competitive strategy is used frequently, so it is important to understand how it works,

even if you do not plan to use it yourself.

In a competitive strategy, the outcome of the negotiation is more important than the
relationship. Because the outcomes (resources, gains, profits, etc.) are seen as finite and
limited in amount or size, the person engaging in a competitive strategy wants to get as much
of those outcomes as possible. We will use the term competition to denote the person using
the competitive strategy. We call this strategy win to lose because it is likely that while
competitors may gain on the outcome, they strain and endanger the relationship between the
parties. The thinking and goals in this strategy are short term: to maximize the magnitude of
the outcome right now, and to not care about either the long-term consequences of this
strategy or the relationship.

The relationship with the other party does not matter, for one of several reasons:

1. this may be a one-time negotiation with no future relationship,

2. the future relationship may not be important,
3. the relationship exists, but was poor to begin with, or
4. the other party may have a reputation for hard bargaining or dishonesty, and this
strategy is adopted for defensive reasons.

At any rate, this strategy is undertaken with the assumption that the future relationship with
the other party is unimportant, but the specific outcome is important. Thus, the relationship
during negotiation in a competitive situation will be characterized by lack of trust and even
by conflict. This contrasts with the collaborative strategy in which differences are minimized
and similarities emphasized.
The goal in the competitive strategy is to get the other party to give in, and thus to satisfy the
competitor’s needs now. It is based on the “I win, you lose” concept. The competitor will do
anything to accomplish the objectives and obtain as much of the pie as possible. This can
include a variety of behaviors, including hardball tactics.

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 i. Critical Factors in a Competitive Strategy
a. A Well-Defined Bargaining Range:
In a competitive strategy, each side has a bargaining range, which consists of a starting point,
a target, and an ending point or walk away. Bargaining occurs because the line bargaining
range for each party is different. During bargaining, you attempt to bring the two ranges into
overlap so that each party is satisfied.

The starting point is announced or inferred as the negotiations begin. Starting points will be
different for the two parties. In labor negotiations, labor is usually expected to ask “high” and
management to offer “low,” again with the expectation that concessions on each side will
result in finding a meeting ground.

Both parties will have a walk away point, which is the cutoff point, beyond which they will
not go. The walk away point of the other party is usually not known, and is not stated.
b. A Good Alternative:
An alternative or BATNA (best alternative to a negotiated agreement) is an option that can be
pursued if the current negotiation fails. It is an outcome outside the scope of the negotiation
with this other party, and can be pursued if it appears more attractive than any potential
outcome from this negotiation. Alternatives are good to have because they can be weighed
against the value of any particular outcome from this negotiation, to decide which is most
advantageous. Alternatives interact with walk away points to influence the choices you make.

c. Tactics:
The competitive strategy is also characterized by a number of tactics calculated to enhance
the competitor’s position and place the other party at a disadvantage. These include
behavioral tactics such as bluffing, being aggressive, and threatening, which can give the
competitor power over the other party.

ii. Results and Drawbacks of Using a Competitive Strategy

Negotiations that rely on a competitive strategy can be costly and time-consuming, especially
if each party holds out for all its demands. Much time is spent researching, pressuring, and
“psyching out” the other party. Competitive strategies are often compared with strategies
used in chess, military warfare, and other tactical, competitive battles.

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A major problem with the competitive strategy is that it is frequently used by inexperienced
or untrained negotiators who believe that competition is the only viable strategy. They may be
missing opportunities by automatically selecting the competitive strategy.

When using a competitive strategy, we tend to underestimate the strength, wisdom, planning,
and effectiveness of the other party and assume that even though they are preparing to be
competitive too, we can beat them at their game! If you do not pay close attention to their
behavioral and verbal clues, you may set yourself up for manipulation by the other party.
Finally, we need to beware of something called the self-fulfilling prophecy. A self-fulfilling
prophecy is something we believe so strongly that we actually make it come true.
2.2.4. Collaborative Strategy (win–win)

A strategy where there is a high priority for both the relationship and the outcome. In this
strategy, the parties attempt to maximize their outcomes while preserving or enhancing the
relationship. This result is most likely when both parties can find a resolution that meets the
needs of each.

A collaborative strategy is one in which both parties consider the relationship and the
outcome to be equally important. This strategy is also referred to as cooperative or win–win.
In a collaborative strategy, the parties to the negotiation either begin with compatible goals or
are willing to search for ways to pursue their goals so that both can gain. This is in sharp
contrast to the competitive strategy, in which the parties believe their goals are mutually
exclusive, and only one side can win. The relationship between the parties is very likely an
ongoing one, with some established history of give-and-take, so that the parties trust each
other and know that they can work together.

To make this strategy work, both parties to the negotiation must be willing to use the
collaborative strategy; if only one side employs it, and the other uses a different one, the
chances are that both parties cannot achieve both an optimal outcome and preserve or
enhance their working relationship. In any of these cases, the parties have or want to establish
a working relationship, and to keep it working smoothly.

For a collaborative strategy to work there must be a high degree of trust, openness, and
cooperation. Both parties realize that they are interdependent and that their cooperative effort
can solve the problems and meet the needs of both sides.

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In collaboration, communication between parties is open and accurate. This contrasts greatly
with the competitive strategy, in which the negotiators have a high level of distrust and guard
information carefully to prevent the other side from obtaining the advantage. Collaborating
parties respect deadlines and are willing to renegotiate the time frame if necessary to achieve
their goals.

Keys to Successful Collaboration

Of key importance in a collaborative strategy is commitment. Both parties need to be

committed to (A) understanding the other party’s needs and objectives; (B) providing a free
flow of information, both ways; and (C) finding the best solution(s) to meet the needs of both
sides.
A. Understanding the other party’s goals and needs:

In a competitive strategy, you may know or think you know what the other party wants; and
also, to strategize how to beat the other side by doing better than them or denying them what
they want to achieve. In a collaborative strategy, your objective is to understand their goals
and needs so that you can work with them to achieve their goals as well as your own. In this,
both parties must be willing to ask questions and listen carefully to the answers, to learn
about the other’s needs.
B. Provide a free flow of information

Second, to provide a free flow of information, both parties must be willing to volunteer
information. The information has to be as accurate and as comprehensive as possible. Both
sides need to understand the issues, the problems, the priorities, and the goals of the other.

C. Finding the best solution(s) to meet the needs of both sides

Finally, having listened closely to each other, the parties can then work toward achieving
mutual goals that will satisfy both parties. To do this, the parties will need to minimize their
differences and emphasize their similarities. Collaborative goals differ from competitive
goals. In competition, the goal is obtaining the largest share of the pie, at any cost, without
giving away any information or conceding on any issue. In collaboration, each party must be
willing to redefine its perspective in light of the collaboration, knowing that the whole can be
greater than the sum of the parts.

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Obstacles to the Collaborative Strategy

Both parties to a negotiation must be willing to collaborate if this strategy is to be successful.

It will be difficult, if not impossible, to employ collaborative strategy under the following
circumstances:

 One party does not see the situation as having the potential for collaboration.
 One party is motivated only to accomplish its own ends.
 One party has historically been competitive; this behavior may be hard to change.
 One party expects the other to be competitive and prepares for negotiation based on
this expectation.
 One party wants to be competitive and rationalizes this behavior.
 One party may be accountable to a constituency that prefers the competitive strategy.
 One party is not willing to take the time to search for collaborative items.
 The negotiation or bargaining mix may include both competitive and collaborative
issues.

Communication is of major importance when you are trying to establish a collaborative

relationship.
2.2.5. Compromising Strategy (split the difference)
It represents a combination approach that is used in a variety of situations. For example, it is
often used when the parties cannot achieve good collaboration, but still want to achieve some
outcomes and/or preserve the relationship.
It is also often used when the parties are under time pressure and need to come to a resolution
quickly. Each party will give in somewhat to find a common ground.
These brief descriptions are ideal or “pure” negotiating situations where there may be only
one issue at stake. In contrast, most real-life negotiation situations are frequently complex,
and thus are often best addressed by using a mix of strategies. If the parties are able to agree
on one strategy, negotiations will be easier. In real-life situations, however, each party may
start with a different strategy.
Ultimately, most negotiating situations are mixed; some bargaining elements are competitive
in nature, and others can be approached collaboratively. In both cases, the parties are making
a decision that compromising is preferred because, on the one hand, both parties gain
something (an advantage over accommodation or competition), both parties gain something

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(as opposed to nothing an advantage over avoiding), and yet compromising does not require
all the intentional effort required for collaboration.
While negotiators usually don’t start off planning a compromise (particularly if a competitive
or collaborative strategy is possible), compromising is often seen as an acceptable “second
choice.” There are three major reasons to choose a compromising strategy (particularly as a
“default” alternative to other strategies):
i. A true collaborative strategy does not seem to be possible
One or both parties don’t believe that true win–win can be achieved because it is simply too
complex or too difficult. Or the relationship may already be too strained for the parties to
work together in a manner that fosters and supports good collaboration.
ii. The parties are short of time or other critical resources necessary to get to
collaboration.
Compromising is usually quick and efficient. While it may be sub-optimal on the quality of
the outcomes achieved, the trade-off between achieving a great outcome and the time
required to do it may force one to pick time over quality.
iii. Both parties gain something (or don’t lose anything) on both dimensions
As opposed to pursuing a competitive strategy (and maximizing outcomes at the expense of
the relationship) or an accommodating strategy (and sacrificing outcomes for the
relationship), compromising assures some gain on both the outcome and relationship
dimensions.
2.2.6. When to Choose Which Strategy
Now that we have reviewed the five basic strategies, we come to an important part of this
Unit: how to decide which strategy you should use for a negotiation. There are two key
factors to consider:
 How important is the outcome to be gained from this negotiation?
 How important is the past, present, and future relationship with the opponent?
The following paragraphs describe ways to decide about these two questions and other
factors to consider in answering them.
i. Situation
Look at the situation and try to figure out which strategy might be best in those
circumstances. Do I care a lot about the outcomes in this situation? If I do, am I willing to
sacrifice my relationship with the other person? Or, conversely, is the relationship so
important that I am unwilling to endanger it by pursuing the outcome? Alternatively, consider

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the conditions under which each strategy is most effective Remember that each strategy has
both advantages and disadvantages. One strategy is more or less appropriate depending on the
type of conflict and the situation.
ii. Preferences
Analyze your personal preferences for the various strategies. You will probably be more
successful using a strategy that feels comfortable. preferences lead individuals to develop
distinct styles with which they approach many situations. Based on past experience and
history, some people have strong biases toward being competitive, collaborative,
compromising, accommodating, or avoiding in conflict situations.
The stronger your preference for a particular conflict management strategy (style), the more
often you will choose it, the more “biased” you become in seeing it as an advantageous
strategy, and the more likely you will be to see that strategy (style) as appropriate in a variety
of situations. Thus, if you normally respond to conflict (and negotiation) situations in a
competitive manner, then you are more likely to see the competitive strategy as widely
appropriate even when it may not be.
Your preferences for a particular strategy are also influenced by subtle issues such as your
values and principles. These may be harder, in some ways, to define than your goals,
priorities, or limits. But how you evaluate the following will have a great impact on your
willingness to use (or not use) certain strategies:
 How much do you value truth, integrity, manners, courtesy?
 Is respect an important issue for you?
 How important is fair play? (And, for that matter, how do you define fair?)
 How much of your ego is involved in this your reputation, your image?
 How concerned are you about how you will see yourself or others will see you if
you get what you want, or don’t get what you want?
iii. Experience
Next, consider your experience using the various strategies. The more experience you have,
the better you become at using that strategy and, probably, the more likely you are to use it.
Experience is one of the key factors that work to shape your preferences.

iv. Style
Think about your own style as it interacts with the other party’s style, and consider the
possible consequences. What will be the effect of such a combination? For example, two

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competitive parties might have more conflict in their negotiation than a competitive party
negotiating with a party that usually yields.

v. Perceptions and Past Experience

Consider your perceptions and past experience with the other party. How you feel about the
other party, and what you want to have happen in that relationship in the future, will drive
your strategy. Your level of trust with the other party will be based on your past experience
with them, and on the history and results of other negotiations they have conducted with you
or with other parties in the past.
vi. Other Factors
Finally, there are other factors that may affect the selection of strategy but that might be less
in your control. Nevertheless, they should be part of the planning process. These reflect the
following situational or context issues:
 Is this negotiation voluntary or imposed? Are both parties going into it willingly, or
has it been assigned by a manager or some other constituency whose voice and
support are influential?
 Is the situation highly structured? Are there rules, laws, and management mandates
that will direct the negotiation?
 Is the agenda already established? (Can it be changed if necessary?)
 Finally, realize that the setting plays an important part in the proceedings and in the
results. Consider not only the physical environment but elements of the psychological
setting, including the players, both individuals and groups; their cultures and
behavior; and established norms, standards, and processes.

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