Negotiation Reflection Essay

Posted: November 7th, 2023

Negotiation Reflection Essay

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Negotiation Reflection Essay

In this essay, I will echo my position as director of sales and marketing during negotiations with a privately-owned soft drinks company called Bakra. I will explain how the adoption of Armstrong’s negotiation framework (Prepare, Open, Bargain and Close) and McGraw’s model (Prepare, Persuasion and Compromise) guided the structuring of our team’s enterprise bargaining strategies. The explanation will also outline how the two frameworks influenced the choice of communication strategies and how they facilitated the identification of different elements of power between the bargaining parties. Moreover, the report will highlight how the team was able to negotiate a favourable enterprise agreement through the combination of integrative and distributive negotiation techniques. The discussion will expound on the formulation process for SMART objectives, WATNA (worst alternative to a negotiated agreement), ZOPA (zone of possible agreements) and BATNA (best alternative to a negotiated agreement). While each business negotiation is unique, adequate preparation through the amalgamation of experiences, beliefs, expectations, and hidden goals will drive the attainment of the best possible outcome.

Both Armstrong and McGraw outline that the first step in the negotiation process is planning. According to Peleckis (2016), planning entails properly assessing what corporate board members, the CEO and employees want from a negotiation. Planning also involves the formal design of the negotiation process, including location, timing and participating individuals. As I reflect on the planning stage, I better understand the various considerations needed to be taken into account before designing a negotiation plan. Out of the possible companies that we could partner with to foster our business expansion, I remember the team basing their decision on key issues, such as employee rights, salaries and wages and occupational health. Peleckis (2016) states that each position must be based on a justifiable measurement. The requirement created room for the application of SMART objectives. Each response to the choice of the preferred company had to be supported by recent, accurate and relevant information. The experience teaches that preparation in negotiation revolves around collecting and analyzing data about the company and on your opponent.

As we progressed through the course, we learned about the use of BATNA and WATNA in value creation. The two models empower a negotiation with sufficient information to drive some major concession from the other negotiating party (Goldberg et al. 2017). Looking back at the planning process, the team used BATNA and WATNA to identify and justify their positions on how best to expand Bebsico and which type of juices the company should specialize in to concentrate its brand value. One interesting finding during the adoption of the two models is how it makes it easier to compare two or more alternatives. BATNA and WATNA increase a person’s confidence that the choice of action they are selecting will result in the best possible outcome (Goldberg et al. 2017). The two models facilitated the identification of the best company to partner with based on associated levels of risk associated with employee rights, production standards and regulatory compliance.

BATNA and WATNA reinforce the need for negotiating teams to undertake comprehensive market research and internal analysis before the commencement of negotiations. During the talks, it was my experience that information was the single greatest source of confidence to push for better terms and conditions. Goldberg et al. (2017) state that negotiating teams should have access to quantitative information, including past and present company financial reports, human resource policies and redundancy reports. Only with access to a sufficient amount of quantitative data can teams make appropriately informed decisions. I remember team members out-positioning each other on the choice of partner company using information from Middle Eastern news articles and financial statements. A negotiator must support his or her understanding of issues, interests and positions with information throughout the negotiation process.

While negotiations are primarily driven by the need to reduce operational costs, it also involves mainly considering which decision is the right fit for the company. Our planning process used four criteria, namely financial stability, market capture, brand value and employee rights, to justify the choice of partnering company. Upon using the WATNA and BATNA tools, Kabir Cola and Jayyid Juices were in a stronger position than Bakra because they did not have any financial instability. Quantitative data on financial insolvency rendered Bebsico the worst alternative of the three. However, the application of the ZOPA tool showed the two companies would not be the right fit. The ZOPA tool outlines the range in a negotiation when contracting parties can find common ground (Merino, 2017). While Bakra had the least favourable financial position, it had the greatest market capture out of the three companies. Bebsico’s major problem while expanding is market exposure for sufficient market entry. Therefore, Bakra’s market capture is more beneficial to the company’s growth strategy. Learned from the exercise is what serves as the best interest for a company does not always stem from the financial offerings identified in a negotiation.

            An integrative approach is more likely to result in a successful conclusion when negotiating teams share almost similar claims. Lewicki et al. (2010) inform that the negotiation approach involves establishing a spirit of collaboration and cooperation between contracting parties. As I recall the persuasion phase of McGraw’s model, it was easier to enter the negotiations if there was a win-win situation for both parties. I now have a comprehensive understanding of how simple concessions can determine the success of negotiations. For instance, Bebisco wanted a company with solid market capture in the Middle East. On the other hand, Bakra preferred a company that could lift it out of its financial turmoil. The win-win scenario made the selection process more straightforward. Left was for the team to determine if Bakra’s financial claims were reasonable and appropriate based on their degree of market penetration. The use of an integrative approach helped maximize the potential benefits for both parties, fostering a more sustainable partnership.

            Negotiation teams have to comprise individuals with different negotiation styles or qualities. It was my perception bargaining with Bakra that having diverse personalities is strategic in McGraw’s persuasion phase. Even though negotiation teams have the same number of individuals, having people with dominant personalities can be a competitive edge in the bargaining process (Lewicki et al. 2010). For instance, Bakra’s negotiation team had two principal negotiators, a female with referent power and a male with coercive power. The woman would use her charisma and humour to sway us, especially when we had stronger arguments. On the other hand, the man used his authoritative demeanour to introduce and argue their points. The balance between the two personalities was a substantial source of bargaining power for Bakra. The diversity in negotiation styles allowed the firm to underplay the risks associated with its adverse financial position. Diversity in negotiation teams does not stem only from the need to have superior bargaining power but also from the ability to respond to cultural differences.

            Culture can be an impediment or enabler of integrative bargaining. As I recall class concepts, specifically the Persuasion theory, the ability to persuade is determined by the ability to predict behaviour based on external stimuli (Brinol et al. 2019). The theory assumes that people prefer coherence, equilibrium and consistency in interpersonal relationships. Even though both negotiating teams used integrative bargaining to pursue a win-win scenario, cultural differences made it difficult to understand what a ‘win’ means for the other party. While Bebsico and Bakra are both Middle Eastern firms, one is based on a corporate structure while the other is family-owned. Therefore, there are cultural or philosophical differences between the two firms. The gap explains why I believe negotiating teams should comprise individuals with diverse personalities. Such an approach implies different cultural backgrounds, enhancing the team’s ability to respond to cultural differences.

During the negotiation exercise, one key learning point is to never underplay the complexity of negotiation discussions. In all my negotiation experiences, I have found it easier to assess and generate arguments in multi-issue conversations. The cognitive theory highlights the ability of information or cognitive overload to negate an individual’s ability to make accurate and reliable decisions (Lee & Yan, 2019). Bakra’s lead negotiator would include additional justifications and points to establish a deeper sense of weight or support for his arguments during the bargaining process. Whenever I recall his approach, I acknowledge how multi-issue negotiating includes tiny sub-sections into the main negotiation to supplement arguments. Even though multi-issue negotiating results in a bigger cognitive load, negotiators should be sufficiently prepared for it (Lee & Yan, 2019). Teams should first sit down and generate potential problems to identify how they can best defend their positions if the other party raise similar arguments. Paying attention to each potential concern is critical to succeeding in multi-issue negotiations.

The success of integrative training is dependent on trust built between management teams. Goldberg et al. (2017) talk about three types of trust in relationships, deterrence-based, knowledge-based and identification based. Looking back at the negotiation exercise, I believe we succeeded because all three forms of trust were present. Deterrence-based trust looks at the consistency of behaviour, assuming people will complete what they say they will do (Goldberg et al. 2017). We negotiated in good faith because we knew Bakra had the expertise to help Bebsico penetrate the Middle East juice market. Knowledge-based trust is based on parties having sufficient information to predict the behaviour of one another. We already knew Bakra was in a bad financial position and would do almost anything to secure our financial backing. Such conditions removed any fear of deceit, facilitating the establishment of trust. Identification-based trust is dependent on an understanding of the other party’s goals, commitments and intentions (Goldberg et al. 2017). Bakra’s financial reports made it easy for the team to find a balance between empathy and projection. Understanding the different forms of trust justified and reinforced our use of integrative bargaining, allowing us to reach an agreement satisfactorily.

The last phase of any negotiation is the closing phase. According to McGraw’s framework, the stage entails providing feedback to management and board members (Lewicki et al. 2010). As I reflect on how the team was charged with identifying a suitable partner company and the negotiation plan required to lure the firm, I believe we did above average in preparing for the bargaining. Even though Bakra’s negotiators came with experience, the report showed we were on the right path to achieving the best terms. However, I now have a better understanding of negotiating from a practical standpoint. It will take years of practice working with different individuals to generate a level of confidence that is consistent with achieving favourable agreements. Information and practice are the two most important factors in influencing the progress and nature of outcomes in negotiations (Lewicki et al. 2010). While the negotiating team adequately prepared for the theoretical foundations of the negotiations, practice is still required to ensure Bebsico maximizes its position.

A possible downside of the negotiation exercise was a lack of experience with ethics. One of the main challenges to arbitration highlighted throughout the course is unethical conduct. According to Gerdeman (2018), ethics revolves around expectations of equity, honesty, transparency and fairness in negotiations, even when one party has a dominant hand. People might believe that there are ethical, but self-interests often cloud their judgment during discussions. As I look back at the negotiations, there was sufficient reason to believe that Bakra would engage in unethical practices given their adverse financial situation. However, there was no fear of deceit because the bargaining process was highly evidence-based. The team had conducted extensive research into Bakra’s financial performance and internal operations to prepare for their arguments. To succeed in the future as a private negotiator, I will need to develop a strong sense of perception to enhance my ability to identify the other party’s negotiation tactics.

While our opponent’s approach during the bargaining process was sincere, their stronger sense of perception enabled them to persuade us more than we had prepared for. The cognitive theory posits that information overload can negate a person’s ability to process information and generate cohesive arguments (Lee & Yan, 2019). I believe that our opponent knew we would struggle with multi-issue discussions if they were done within a short time. The gamble could have been based on the fact that we were younger negotiators. Given that I am still unable to discern the basis of their use of multi-issue discussions underpins why I should develop a stronger sense of perception. Negotiators should remove themselves from situations where they will be forced to use bluffing tactics due to inadequate practice (Goldberg et al. 2017). A strong sense of perception can make a person appear more prepared and powerful than they actually are during a negotiation.

The greatest lesson from the negotiation exercise was my opponent’s behaviour. In his analysis of the influence of culture on business negotiations, Graham (1985) claims it is often the case that people can rely on good faith. According to the author, planning only increases the odds of securing a better deal. My experience with Bakra affirms Graham’s belief. For instance, we avoided forming biases about our opponent with our research into the company. The approach forced any of our opponents to prepare well for the discussion. Bakra’s use of negotiators with diverse negotiating styles was an effective strategy that eventually led to a fair deal. Looking back at the conclusion of the negotiations, I would include a backup negotiation plan. Overall, the lesson is to always prepare for the human factor, even with sufficient access to information (Graham, 1985). The realities of negotiating in business will only become clearer as I continue to practice and expose myself to different cultures and business challenges.

In conclusion, this report outlines my experience with the negotiation exercise, highlighting my new understanding of an effective business negotiation. While conventional bargaining emphasizes the personality aspect, contemporary negotiation relies on extensive research. Negotiators must spend a considerable amount of time going through each detail and possible scenario that could influence the outcomes of a negotiation. Learned is the importance of establishing a collaborative environment characterized by a mutually benefiting arrangement. Cultural analysis has to be performed to negate any misunderstandings during the persuasion phase of the bargaining process. The assessment helps the negotiator predict the extent to which they should compromise to avoid the negotiations breaking down. Effective negotiations involve the use of suitable communication techniques and concession strategies to persuade the opposing party. I acknowledge a personal skill gap associated with perception. I will have to read and practice more on negotiation behaviours to enhance my ability to impact the persuasion and closing phases of the bargaining process.

References

Brinol, P., Petty, R. & Guyer, J. (2019). A historical view on attitudes and persuasion. In Oxford Research Encyclopedia of Psychology. Oxford University Press.

Gerdeman, D. (2018, July 30). Why ethical people become unethical negotiators. Harvard Business Review, https://hbswk.hbs.edu/item/why-ethical-people-become-unethical-negotiators

Goldberg, S., Brett, J., & Rogers, N. (2017). How mediation works: Theory, research and practice. Emerald Group Publishing.

Graham, J. (1985). The influence of culture on business negotiations: An exploratory study. Journal of International Business Studies, 16(1), 81-96. http://www.jstor.org/stable/154485

Lee, Y. H. & Yan, M. R. (2019). Factors influencing agents’ bargaining power and collaborative innovation. Journal of Marketing and Logistics, 31(2), 559-574.

Lewicki, R. J., Barry, B. & Saunders, D. (2010). Negotiation [6^th Ed]. McGraw Hill Irwin.

Merino, M. (2017, September 14). Understanding ZOPA: The zone of possible agreement. Harvard Business Review, https://online.hbs.edu/post/understanding-zopa

Peleckis, K. (2016). International business negotiation strategies based on bargaining power assessment: the case of attracting investments. Journal of Business Economics and Management, 17(6), 882-900. https://doi.org/10.3846/16111699.2016.1233511