Importance of Negotiation Skills in Business Environment - Essay Example

IMPORTANCE OF NEGOTIATION SKILLS IN BUSINESS Report Student’s Name Instructor’s Name Course Title Date Table of Contents Table of Contents 2 EXECUTIVE SUMMARY 3 OVERVIEW OF NEGOTIATING SKILLS 4 TYPES OF NEGOTIATION 4 Distributive Negotiation 5 Integrative Negotiation 5 Rational Negotiation 6 CASE ANALYSIS 7 The Camp David Accords: a case study on international negotiation 7 The UPS Strike of 1996 Win-Lose Negotiation 8 ANALYSIS OF INDIVIDUAL NEGOTIATING SKILLLS 9 Jimmy Carter 9 Menachem Begin 10 CONCLUSION AND RECOMMENDATIONS 10 References 12 EXECUTIVE SUMMARY Negotiation is an integral part of business as it helps to solve ambiguities and defines the terms of the negotiating parties. There are different types of negotiations which can be used. This paper considers the three major types of negotiations, their uses in the business world and also both the advantages and disadvantages of using either type of negotiation. Two cases of negotiation have also been analysed so as to illustrate better the different uses of the negotiation types. Engaging in any form of negotiation calls for a height of negotiation skills. The skills of great negotiators are also considered in this paper. The choice of the negotiators analysed was based on the way they guided the negotiation process and the results they obtained. OVERVIEW OF NEGOTIATING SKILLS To better appreciate what negotiation skills are it is important that we begin by defining what is negotiation. Negotiation can be simply defined as a process of settling differences between parties with conflicting ideas, and with which the parties reach an agreement while avoiding an argument (Bezerman et al, 2000). While negotiating, individuals in business try to reach the best possible outcomes that suits their organisations. However, during the process of negotiation principles of mutual benefit and seeking fairness are upheld so as to maintain good business relationships between the different parties and ensure that the desired outcome is achieved. Individuals that engage in any form of negotiation, must possess a particular set of skills so as to represent their organization well. According to Fisher et al (1991), during the negotiation process one needs to capture the attention of the other party so that they can have them listen to their ideas. The negotiation process may also put one at the receiving end and hence skills are required to ensure that they are able to react calmly when this occurs. Without good negotiation skills an individual is bound to misrepresent his organisation hence making it lose out at the end (Fisher et al, 1991). TYPES OF NEGOTIATION In business there are three major types of negotiation. The three differ in many ways and find use in different business settings and give the negotiating parties different results. The following is a description of the different types of negotiation. Distributive Negotiation This is a type of negotiation in which the parties engage in with the determination of getting as much as they can out of the process (Bazerman et al, 2000). When engaging in this type of negotiation it is impossible for a party to win without the other loosing. Concession is usually viewed as a sign of weakness and a successful attack on the other party is viewed as a sign of strength. With such opposing interests the negotiation ends up being a confrontation. Paquet et al (2000), states that in the process the parties try to anticipate the opponents tactics and ensure they bounce them off in a way that makes them to lose effectiveness. The parties will try and avoid a display of being eager so as not to come off as the weak party which could be exploited to their disadvantage (Hampson, 1998). This type of negotiation finds use in many business environments. Distributive negotiation is used mainly by people who have never had any business interaction before and are very unlikely to have one in the future. Daily business transactions such as buying a car or a house fall under this category. Eaton and Kochan (1998), asserts that in these negotiations, the relationship has no meaning since the desire to ensure one ends being victorious dominates. The major disadvantage of this type of negotiation is that the party which looses may decline to comply, with the most likely reaction being to attempt to revenge (Richard, 1994). This type of negotiation does have the advantage of helping to bring to a consensus parties with great opposing interests. Integrative Negotiation This can be simply described as win-win situation for the parties that are negotiating. The aspirations and interests of each party are respected. For this reason this type of negotiation is seen as being based on tolerance and mutual respect for the aspiration and the opinion of the different parties (Bazerman et al, 2000). When engaging in this type of negotiation, relationship between the two parties is of much importance. This type of negotiation finds use when parties are negotiating with the aim of establishing a long term business relationship, based on mutual gain (Albarracin & Kumkale, 2003). Integrative negotiation has several advantages. For example once the process of negotiation is completed, the parties are left feeling satisfied and their relationship enhanced. The two parties support the agreement hence minimise the risk of developing conflicts between the parties. An agreement based on on integrative negotiation, is bound to be respected by both parties. This type of negotiation does however present one major disadvantage. According to Richard (1994), in a real situation in the business world it is highly unlikely that the negotiating parties will present at the negotiation table with an even strength for the talks. Therefore it is highly likely that one party is going to leave the negotiation table having not met all they would have liked to achieve. Rational Negotiation In this type of negotiation the parties seek not only to obtain consensus on different issues, but to also resolve disputes in an objective position rather than the one the two parties propose. This calls for transparency and a clearly defined interest without concealing anything from either party. The negotiation process involves identifying the problems that exist. The next step is to seek ways and means of preventing the problems. Unresolved issues may call for the use of a neutral arbitrator and the use of research findings (Fisher et al, 1991). This type of negotiation does have its limitation as it's not easy to solve all the diverse interests by the use of good principles of effective communication and negotiation. This type also does not deliver on the sole objective of engaging in an a process of negotiation. CASE ANALYSIS The Camp David Accords: a case study on international negotiation At the end of the 19th Century, an Arab-Israeli conflict began. The forces involved fought over the issue of existance of a Jewish state in the middle of the Muslim-Arab world and the control of Palestine (Quand, 1986). The state of Israel came into being when the UN divided the former British protectorate into a Jewish and an Arab state of Palestine. In the year 1973, Egypt joined forces with Syria to wage war over Israel. Holbrooke (1998), states that this was the first stage in the negotiation process. The war raised awareness on the need to establish a lasting solution to the existing conflict. Three years later, in 1977 President Anwar Sadat traveled to Jerusalem to begin the negotiation process. The need to bring peace was motivated by the spiraling defense budgets which caused both Egypt and Israel a headache as it was throwing both countries in a state of inflation (Toural, 1982). The need to establish security so as to attract investors was also a motivational factor. The negotiations took 31 days within which all concerned parties had members accompanying the chief negotiators. The members of the two parties did not interact except when the negotiation was in session, the members of the press were excluded from the following the proceedings (Quand, 1986). The United States was brought on board to act as a mediator, though some writers argue that it had vested interest in the negotiation process. Within the first few days it had become evident that the two parties could not be able to interact in a constructive manner at a personal level making the teams be separated and hence the U.S end up playing shuttle diplomacy between the two parties. Midway through the negotiations, the fundamental gaps were evident causing a stalemate during the negotiation process. At some point the Egyptian delegation even packed their bags ready to leave the negotiation process. The process however did proceed to the end and a peace treaty was signed. The type of negotiation that was applied here was both an integrative negotiation and a rational negotiation (Telhami, 1992). It was integrated in the manner that both parties were engaging in the negotiations with the hope of establishing a close relationship. At the onset the parties went to the negotiating table with the mentality that it was going to be a win-win situation. According to Prince (1994), aspects of rational negotiation were evident as the two parties agreed to have a third party in the form of the U.S to act as a mediator during the negotiation process. The end result of the negotiation was that the treaties were signed in favour of the Israel nation, as many historians argue (Holbrooke, 1998). Had the motives of the two negotiating parties been a bit clearer, the result of the negotiation would have been better . The UPS Strike of 1996 Win-Lose Negotiation The United Parcel Services (UPS) is a messenger company founded in the year 1907 and has grown to be among the largest logistic services and package delivery services companies. In its inception the company had a strategy of hiring a big number of part-time workers. This offer was attractive to the young people entering the job market as it allowed them to do off-time shifts and earn more wage. Working part time was however not beneficial in the long run as it denied the employees a chance to advance in their jobs. In the year 1996 the Teamster Union launched a serious case against UPS on the same. Both parties researched the statutory rights of part time workers. The issues in question included the ratio of part-time workers to full-time workers, disparities in salaries and retirement benefits (Dresang, 2003). The Teamster Union sort to present UPS as an employer who exploits its employees with the intention of cutting costs, a claim that UPS was bent on proving that it was wrong. The union negotiators came up with a list of their demands which included creation of full-time jobs, job security, reduction of salary difference and increase in safety in the workplace. Most of the counter bargains by the UPS team were shot down on the basis of not being in the interest of the employees (Preuss & Frost, 2003). The union sort the support of the public so as to ensure that they got the best collective bargain from the case. At the end of the process it turned out that the Union got its way and even ended up causing UPS big losses in terms of dollars. The type of negotiation used was mainly distributive negotiation as it was not possible to let the Union demands were met without UPS losing. Walton and McKersie (1991), states that rhetorical maneuvers and polarised discussions dominated the negotiation process. ANALYSIS OF INDIVIDUAL NEGOTIATING SKILLLS Jimmy Carter Carter was the president of the United States during the negotiations between Israel and Egypt. Though he played the role of a mediator, his negotiation skills were brought to the fore during the process. He employed an approach that was bent on problem solving while maintaining a moralistic standpoint (Stein, 1999). Carter demonstrated great analytical skills as he was able to analyse the real problem and identify the interests of both parties. Being a trained engineer Carter was able to approach the issue as a problem solver, a skill that is of importance to all negotiators. Telhami (1992), states that Carter demonstrated strong interpersonal skills midway through the process when the negotiation talks had hit a deadlock. He exhibited patience and was able to ensure the talks were resumed and sustained to the end. Menachem Begin Begin was the Israeli Prime Minister during the peace talks with Egypt. As a great negotiator he demonstrated the need to be well prepared before engaging in any negotiation process (Stein, 1999). He was well versed not only with his own issues but also those of his opponent and hence he approached the negotiations from a technical aspect with a master strategy. He demonstrated emotional control during the negotiation process and hence he was able to go through the negotiate without revealing information that could lead to his bargain being undercut (Telhami, 1992). Begin collaborated with his team of negotiators and hence was able to drive a hard bargain, eventually emerging as the winner. CONCLUSION AND RECOMMENDATIONS The ability to negotiate effectively requires a collection of good interpersonal skills and communication skills combined well to bring out the desired results. Successful negotiation occurs when two parties come together and seek an agreeable solution to an existing problem. Theoretically negotiating parties are supposed to reach an agreement that is acceptable to both parties. However, in real life situations this never happens since parties present at the negotiation table with different strengths (Kolb & Williams, 2000). Since disputes will always arise in the different spheres of life, it is of utter importance to arm oneself with negotiation skills. In business negotiations one needs to determine whether they want to establish a lasting relationship with the other party. This goes a long way in choosing the type of negotiation to use. For those who want to have a lasting business relationship, integrative negotiation is used. In business negotiations intelligence should be considered so as to ensure that both parties find the real value of the relationship. Since negotiation is central to business relationship, those who have taken the task of learning negotiation skills will have better defined responsibilities and an easy time when clarifying ambiguities. References Albarracin, D. & Kumkale, G 2003, Affect as Information in Persuasion: A Model of Affect Identification and Discounting. Journal of Personality and Social Psychology, 84(3), p. 453-469. Bazerman, M. H., et al., 2000, Negotiation. Annual Review of Psychology, 51, p. 279–314. Eaton, S., & Kochan, T 1998, A grass-roots experiment to resolve workplace problems. Negotiation Journal, 12(2), p.169–172. Fisher, R., Ury, W., & Patton, B 1991, Getting to YES: Negotiating agreement without giving in.Penguin: New York. Paquet, R., Gaetan, I., & Bergeron, J 2000, Does interest-based bargaining (IBB) really make a difference in collective bargaining outcomes? Negotiation Journal, 16(3), p. 281–296. Preuss, G., & Frost. A., 2003.The rise and decline of labor–management cooperation: Lessons from health care in the Twin Cities. California Management Review, 45(2), p. 85–106. Quand, B., 1986, Camp David and Peacemaking in the Middle East. Political Science Quarterly, 101(3), pp. 357-77. Stein, K 1999, Heroic Diplomacy, Routledge, New York. Telhami, S., 1992, Evaluating Bargaining Performance: The Case of Camp David. Political Science Quarterly, 107(4), pp. 629-53. Princen, T 1994, Camp David: Problem-Solving or Power Politics as Usual? Journal of Peace Research. 28(1), pp. 57-69. Touval, S 1982, The Peace Brokers, Princeton UP, Princeton, NJ. Walton, R., & McKersie, B 1991, A behavioral theory of labor negotiations: An analysis of a social interaction, McGraw Hill, New York. Kolb, D., & Williams, J 2000, The shadow negotiation: How women can master the hidden agendas that determine bargaining success, Simon & Schuster, New York. Dresang, J 2003, Wisconsin’s union workers find they have little bargaining clout, experts say. Milwaukee Journal Sentinel, 2(3), pp.45-51. Holbrooke, R 1998, To End a War, Random House, New York. Hampson, F 1998, Barriers to Negotiation in International Multilateral Negotiation, John Hopkins University Press, Baltimore. Richard, K 1994, The Delusion of Impartial Intervention, Foreign Affairs, 73, pp. 24. Read More