Negotiation: A Critical Evaluation Of Its Ubiquity

‘Negotiation is not a process reserved only for the skilled diplomat, top salesperson, or ardent advocate for an organized lobby; it is something that everyone does, almost daily’ (Lewicki et al 2011: 2). Critically evaluate this statement, does it mean that Negotiation skills are basically the same wherever they are practised?

With time, organizations have evolved and expanded in different parts of the world. the organizations like Google, Amazon and Microsoft has expanded across the world. The penetration of e-commerce, computers and Internet have further pushed the agenda of international business. It is expected that the transactions in the international market would continue to grow (Ting?Toomey, 2015). Amidst all these, organizations have realized the importance of negotiations. As more businesses expand their focus to include foreign markets, the demand for competent international management professionals, who can negotiate better, increases. The objective of this paper is to discuss the statement ‘Negotiation is not a process reserved only for the skilled diplomat, top salesperson, or ardent advocate for an organized lobby; it is something that everyone does, almost daily’ (Lewicki et al 2011: 2).

Simply defined, negotiation is “bargaining (give and take) process between two or more parties (each with its own aims, needs, and viewpoints) seeking to discover a common ground and reach an agreement to settle a matter of mutual concern or resolve a conflict”. It is something that people across different cadre and position do. In fact, negotiation is something that is practices not only in professional life but also in personal life. it would be correct to say that negotiation is a powerful instrument that is used by skilled diplomat as well as a housewife. The general rule of negotiation is that it includes two or more than two parties (Franke & Richey, 2010).

The power of international business negotiation is evident from the fact that the institutions that once competed heavily with each other now share data and information relative to the ever-changing collegiate business world. There are steps that organizations go through starting from the very inception (Groves & Feyerherm, 2015).  This is known as organizational life cycle and it continues to the termination. These steps are sequences of advancements that are not random events. It would be correct to say that organizations and business professionals would need the skills of negotiation at each of these steps. One of the basic and fundamental objective of negotiation is to get more (Zheng & Martin, 2014). It can happen only when negotiators and leaders focuses on 4C’s of negotiation. These can be discussed as:

Context of Negotiation

The four C’s of negotiation ensures that people gain during any negotiation process. These four C’s should be considered as different strategy for negotiation. It is generally advised to use a sequence or pattern while using these negotiation strategies. Each of the four C’s of negotiation in the preferred sequence can be discussed as:

Compelling

This strategy means that the party should insist the other party to accept the terms. In case of a business scenario, the organization or sales person would force supplier to accept the terms of purchase (Mircica, 2014). This type of negotiation strategy is used when one party has more power over other.

Collaborating

This strategy comes into picture when the compelling approach does not work. In this strategy of negotiation, the focus is on mutual benefit. This type of negotiation strategy is used when both the parties has more or less equal power.

Compromising

This strategy is generally used when the above two strategies have failed and still one of the party wants negotiation to happen. The output in this negotiation strategy is that one of the party ends up compromising on some parts. For example, a deal with two businesses can be compromised on price levels.

Caving In

This type of negotiation strategy is practiced only when the above three strategies are not able to provide any fruitful results. This strategy means that negotiation has failed and the process need to be started again from scratch (Long & Javidi, 2016).

The terms Distributive & Interactive Negotiation coins from the terms of Distributive & Interactive bargain. In distributive negotiation, the outcome is generally a win lose situation as the benefit of one party is at the cost of loss of other party. In interactive negotiation, the outcome is generally a win-win situation as the benefit of one party is dependent on the benefit of another party (Cseh & Davis, 2013).

Context of Negotiation in today’s Globalized Environment

Negotiation is something that is not only limited to business world or sales person. People can also do, or in fact, people have to do negotiation in daily life also. The housewife who would purchase the daily household needs may also negotiate a deal with the vendor or service provider (Mor & Morris, 2013). A child can also negotiate with parents for a perfect summer break. Likewise, there can be various examples of negotiation happening in the day-to-day life. It means that negotiation is something that is fundamental to life. However, it is important to mention that the process of negotiation could change across different situations (Louhiala-Salminen & Kankaanranta, 2011). The process of negotiation between the diplomats of two countries would be completely different than the process of negotiation between sales persons and the process of negotiation between a family. The process of negotiation would also depend on the objective that the parties wish to achieve. The process of negotiation could be smoother if both the parties want win-win situation. The process of negotiation would also depend on the gravity of situation and the owner. Various business or other meetings can fail because there is no owner. For example, the negotiation around environmental preservation across the nations has not resulted into powerful results because there is no owner who can actually get the negotiation done (Dygert & Barrett, 2016).

Four C’s of negotiation

The specifics of negotiation process and issue linkage can be discussed as:

Negotiation process

The process of negotiation is a very open process. Generally, every negotiation process would have five phases. These phases can be discussed as:

This is the phase in which all the parties involved in the negotiation process would plan for the negotiation. In this phase, the focus is on the expected outcome from the negotiation process (Saunders, 2012).

Phase 2: Defining the ground rules

This is the phase in which all the parties agree on the defined ground rules. This phase could be considered as the phase in which the boundary condition to the negotiation process are established (Lin & Kraus, 2014).

Phase 3: Clarification & Justification

This is the phase in which parties seeks and justification or clarification that they want from the other parties involved in the negotiation process (Beenen & Barbuto, 2014).

Phase 4: Bargaining & problem solving

This is the phase in which actual bargain happens. This is the phase in which one of the 4C’s of negotiation would be actually implemented. It can be said that this is one of the most important phase of entire negotiation process (Donahue, 2013).

This is the phase in which both the parties agree upon a common solution. As an output of this phase the parties involved in the negotiation process finalized and closed the terms and conditions of negotiation (Acheson, 2016).

The process and success of negotiation in the business world would also depend on the skills of managers and leaders. When managers receive feedback internally and externally, it is important to analyze the information in order to make informed decisions about future actions. When there is a vast amount of information available to managers, they should try to implement filters so that information is disseminated to the proper channels to be utilized in helpful ways. Luo & Shenkar (2011) mentioned that the use of liaisons can be helpful to filter and communicate changes with teams in order to keep everyone aligned toward specific goals. The learning from the negotiation in business world is that successful negotiation depends a lot on communication.

Issue Linkage

It is also important to highlight that the negotiation skills may not be same across different types of negotiation. The negotiation in business world and diplomat is more formal in nature as compared to the negotiation in personal life. The difference in the negotiation style can also arise from cultural background (Phelps & Adams, 2007). While doing negotiations, there could be a linkage among various issues. Therefore, it is important that the parties involved in the negotiation process should first understand the linked or associated variables (Huffmeier & Mazei, 2015). The understanding of various linked and associated variables and factors would enable the parties involved in the negotiation process to take good measures to succeed and move forward in the negotiation.

BATNA in linked negotiation process

BATNA or best alternative to a negotiated agreement is the most beneficial course of action in a negotiation process. The role of BATNA particularly increases when the parties have the options to explore multiple options (Fischer & Bajaj, 2017). For example, is a startup has to sell its business and the company has the offer form one domestic player and two international players. The linked alternatives could be:

1. Alternative 1: The domestic player would but the small firm in an equity payment of 10 installments
2. Alterative 2: The international player would buy the firm at a 20% mark up for 15 installments
3. Alternative 3: The other international firm would buy the firm with all-cash deal at 90% of the market price

There are various factors that affect the negotiation process (Patriotta & Kumar, 2011). These are the factors like expected outcome from the negotiation, parties involved in the negotiation, etc. The specific aspects of factors affecting the negotiation process can be discussed as:

Cultural impact on negotiation

One of the most important thing about negotiation is that the people involved in the negotiation process should be aware that cultural differences can make or break the negotiation. The way business negotiation is done in Australia may be completely different than the way negotiation is done in Pakistan or India (Druckman & Wagner, 2016).

Effect of trust, Aspiration and Gender on Negotiation

The things like trust, gender, biasness and aspirations also have a direct impact on negotiation process. The negotiation process could be effective when parties have trust in each other. Likewise, the output of negotiation could also depend on personal aspiration of people. If people have personal aspiration to close the deal then they would work hard to close the negotiation process (Schoop & Kohne, 2010).

Effect of Demography, culture, economic barriers on ethicality of negotiation Behavior

The factors like demography, economic conditions, ethical outlook and culture can also affect negotiation process. The negotiation process could be easy when the parties belong to same culture (Brett, 2017).

The negotiation skills are basically not same wherever they are practiced because the required negotiation skills would differ on number of factors like expected outcome from the negotiation, parties involved in the negotiation, etc. Therefore, it would be correct to say that any diplomat may need more formal skills as compared to a parent (Shell, 2011). A sales person may need cunning negotiation skills and a leader or a manager may need collaborative negotiation skills. The need of specific skills for negotiation would also depend on the type of negotiation. The stakeholders tend to be more relaxed when negotiation is internal in nature and the stakeholders tend to more aggressive when negotiation is external in nature. It is important that both the parties involved in the negotiation should first learn about the other party. Jennings & Faratin (2001) argued that the process of negotiation is easy when the parties involved in the negotiation process know each other. Thus, as leadership reflects leader and followers in terms of trust and building relationships, the occurrence of organizational members that are interested in only doing their tasks and duties, is also a possibility. They are strictly contractual and job focused without personal relationships with the leader (formal responsibilities and defined roles), in the workplace (Fisher, 2016). This group is not willing to accept expanded responsibilities and new roles to make extra efforts. Task- or relationship motivated negotiation can be derived from this perspective. This is down to the way in which the leader views the capabilities of this culture, with a certain need to overcome prejudices apparent in this study. If we look at Satya Nadella, he has done very well since taking charge at Microsoft in 2014, and is of Indian background (Haselhuhn & Wong, 2014). Long-time employees assert that morale has been better than in previous years since he has taken over and this has been possible only because of his excellent business negotiation skills.

Context of Negotiation in today’s Globalized Environment

Conclusion

The above paper discusses the process of negotiation and various intricacies involved in the negotiation process. With the above discussion, it can be said that negotiation is a key skill that could be utilized at various levels. The term ‘negotiation’ is a generic term; however, it has vast implications. The conclusion achieved from above discussion is that ‘Negotiation is not a process reserved only for the skilled diplomat, top salesperson, or ardent advocate for an organized lobby; it is something that everyone does, almost daily’. However, the negotiation skills are not the same basically everywhere. The negotiation skills depend a lot on the external environment. Precisely, the negotiation skills in corporate world would be different than the negotiation skills at a war front or within a family. Therefore, it is important that negotiation should be learned and practiced within the given eco-system. It is also possible that the negotiators that are good in one of the situation may not perform well in different situations. Therefore, negotiation must be practiced within the context and as per the external variables and factors.

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