Negotiation is not limited to buying and sellingâdeal-making negotiations. People negotiate to resolve disputes, and to reach decisions in teams and other multiparty environments. The following paragraphs briefly consider these contexts for negotiation.
Deal Making
Deal-making negotiations are usually categorized as distributive or integrative.
Distributive Deal Making
People throughout the world negotiate deals the same way: the buyer makes a low offer, the seller a high offer, and they trade offers and counteroffers until they reach an agreement or decide to walk away. After viewing the terracotta warriors in Xian, China, a friend and I visited the Muslim market or souk. A small brass incense burner caught my eye. I asked the shopkeeper the price and offered him half the amount he named. He came down and I came up. When he didn't counter, I started to walk out of his shop, but he followed me, making a concession. I then suggested we split the difference between my second and his third price, and he agreed.
In Xian the shopkeeper and I were engaged in what is called distributive negotiation, meaning negotiating over a single issue, in this case price: how much I would pay and how much he would get for the small incense burner. In making distributive deals, parties assume a fixed pie or fixed amount of resources and negotiate about how to split the resources (cut up the pie, claim value, distribute resources). The shopkeeper in the souk started high, I countered low, and we made reciprocal concessions until we reached an agreement that, to each of us, was better than no deal at all.
Integrative Deal Making
Although dividing resources is an important part of negotiating, there is a lot more to negotiation strategy than âstart high if selling, counter low if buying.â In reading the next example, about my negotiating for pumpkins with a woman at a roadside stand, consider how and why we moved away from distributive negotiation. When my daughters were in grade school in a small village in the south of France, the teacher asked my husband and me to plan a Halloween party. My job was to buy the pumpkins for the thirty-two children to carve. I looked everywhere for pumpkins and could not find any. Finally, my husband heard of a roadside stand with pumpkins! I immediately drove over to buy pumpkins. I did not negotiate the price, because I had no other source of pumpkins; I also knew it's not customary in outdoor French food markets to negotiate prices. But when I told the seller that I wanted to buy all her stock, she shook her head no. What to do? My alternative to buying was terrible. Offer her more money? Try sympathy? Tell her why I wanted all her pumpkins? Instead, I asked her why she wouldn't sell me all her pumpkins. She said if she sold all her pumpkins to me, she would have no seeds to plant the next year. âChere Madame,â said I, âif I bring you all the seeds November 1, will you sell me all your pumpkins?â She said yes, each child got a pumpkin to carve, and a picture of the children and Mme. Petit's pumpkins, as I later learned her name was, graced the front page of the local newspaper.
Mme. Petit and I engaged in integrative deal making. We refocused the negotiation from the single issue of how many pumpkins I could purchase at her price by identifying the multiple issues of pumpkin seeds and pumpkin rind that turned out to be the real issues in our negotiation. In our agreement, Mme. Petit got the seeds, which were more important to her than to me, and I got the rind, which was more important to me than to her.
Integrative negotiation occurs when negotiators expand the pieâactually create value in negotiations. They typically do so either by breaking a single issue into multiple issues or by adding issues. In either case, when one issue is more important to one partyâthe seeds to Mme. Petitâand another issue is more important to the other partyâthe rind to meâthe parties can negotiate a trade-off that meets both parties' goals.
There are many opportunities for negotiators to create value if they have the motivation and the strategy to get information about priorities (what is more and less important to the other party) and interests (what is motivating the other party's positions) and use that information to make trade-offs that create value.
Conflict Management and Dispute Resolution
No culture is immune to conflictâthe perception of opposing interests, with respect to resources, goals, or even procedures. Disputes arise when conflict turns into a claim that one party makes but an opposing party rejects. People everywhere negotiate to resolve disputes. How they do so, however, often depends on whether it is culturally appropriate to confront other people directly or indirectly. Here are two examples in which negotiation took a path it might not have taken had both parties been American.
An American entrepreneur had a contract to sell bicycles to a German buyer. The American was having the bikes manufactured in China. When the first shipment was ready, the entrepreneur went to the Chinese plant, inspected the bicycles, rode a few, and realized there was a problem. The bikes rattled. Knowing that rattling bikes would not be acceptable to the German buyer, he asked the Chinese manager about the rattle. âIs this rattle normal?â âDo all the bikes rattle?â âWill the German buyer think there is something wrong with the bikes if they rattle?â The bikes were shipped to Germany on time, and the German buyer never mentioned anything about rattling bicycles.
In U.S. culture the normal approach to the problem of the rattling bicycles would be to tell the plant manager that rattling bicycles were unacceptable, and that the rattles had to be fixed before the bikes were shipped. In China, such direct confrontation would be extremely rude and would cause the plant manager much loss of face and possible reactance. Knowing this, the American entrepreneur used indirect confrontation. He made it clear to the Chinese manager that the rattling bicycles needed to be fixed, but he did so indirectly. He did not tell the Chinese manager what to do, he respected the Chinese manager by assuming he would recognize and resolve the problem, which the Chinese manager did.
Third parties may also become involved in dispute resolution in more or less direct ways depending on culture. For example, an American manager was working in China for a U.S.-Chinese joint venture. When he did not receive the information he expected to find in a report, he asked his counterpart, a Chinese woman who was apparently responsible for the report, for a meeting to discuss his needs. She politely put him off. A day later he was called into her manager's office and told there was no problem with the report: it had the information it always had and could not be changed. From the U.S. manager's perspective, his Chinese counterpart's behaviorârefusing to meet with him, getting her superior involved, stimulating a reprimand from the superiorâwas inappropriate. He had wanted to talk to her directly about his interests; he thought she had turned the situation into a power play that he lost. But her perspective was different: she knew that she did not have the authority to change the report. She did not want to jeopardize her relationship with her American counterpart by rejecting his claim for data directly. Instead, she involved her superior to deliver the rejection.
In the United States, culture dispute resolution negotiations tend to be direct verbal interactions between principals. There is a tolerance for conflict and an expectation that managers are supposed to be able to resolve conflicts with counterparts without involving higher-ups. But in many cultures, the expectations are just the opposite. Managing conflict is the boss's responsibility. Involving a third party early in the dispute resolution process, especially a third party with the status and authority to impose an outcome, expedites dispute resolution and allows conflicting parties to save face, since neither has to back down to the other.
Multiparty Negotiation and Team Decision Making
Negotiation strategy is particularly relevant to reaching agreement in teams when members have different goals, there are multiple issues to be decided, and there is not a simple majority of team members who agree on all the issues. Multicultural teams have another obstacle to overcome, as culture affects how people go about decision making. The following example illustrates many of the challenges associated with being a member of a multicultural team. A UN peacekeeping task force consisting of army officers from Russia, Germany, Turkey, and the United States was charged with preparing for the exhumation of a mass grave in Bosnia. âEveryone kind of viewed the Turks as a second-class military. The Germans and the Russians didn't really hit it off too well. And we [Americans] were viewed with kind of different levels of trust or skepticism by everybody else.â1 The task force leader, a Russian major, realized that the task force had to find a way to work together. So he separated the task into four subtasks and then assigned a multicultural team of one Russian, one U.S., one Turkish, and one German officer to each subtask. Each day four Russians, four Americans, four Turks, and four Germans would drive from their respective camps to a central meeting place, split up to work in their assigned subgroups, and then regroup at the end of the day to drive back to their respective camps. Inevitably the talk on the way home was, How did it go today? And surprisingly, everyone began to recognize the value of the Turkish team members, whose experience in earthquake relief was more relevant to the task than any of the other officers' experience. The subgroups still had to negotiate with each other to coordinate the execution of their different subtasks, but the multicultural structure of the subgroups transformed that negotiation from being one army's way versus another to a cooperative effort that respected expertise.
Negotiation strategy is particularly relevant to decision ...