Case Analysis #1 Fiji vs. FIJI

Hello, in the attachment the case study ( Fiji vs. FIJI), and the text book, ((Establishing Trust and Building a Relationship, page125) and (Power, Persuasion, and Ethics page 153)1. Please read textbook chapters on “Establishing Trust and Building a Relationship” and “Power, Persuasion, and Ethics”. 2. Read the case Fiji vs. FIJI Negotiating Over Water.3. Re-read the case and answer the following 4 questions. (1) In the negotiations between FIJI Water and the Fiji government over the proposed tax increase on water extraction, which party is in a stronger position? Why?(2) In what ways can each party leverage power to force a deal on favorable terms? Provide examples of power-based moves that each party could employ.(3) FIJI Water relies on the Fijian government to access Fijian Water. How can the company build a trusting relationship with a government that has been unstable and is likely to continue being unstable?(4) Suppose that just after the tax increase on water extraction was announced, you were hired to provide professional negotiation advice. What advice would you give to FIJI water? What advice would you give to Fijian government?
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Fifth Edition
The Mind and Heart of the
Negotiator
Leigh L. Thompson
Kellogg School of Management
Northwestern University
Boston Columbus Indianapolis New York San Francisco Upper Saddle River
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Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook
appear on appropriate page in text.
Copyright © 2012, 2009, 2005, 2001 Pearson Education, Inc., publishing as Prentice Hall.
All rights reserved. Manufactured in the United States of America. This publication is protected by Copyright,
and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval
system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise.
To obtain permission(s) to use material from this work, please submit a written request to Pearson Education, Inc.,
Permissions Department, One Lake Street, Upper Saddle River, New Jersey 07458 or you may fax your request to
201-236-3290.
Library of Congress Cataloging-in-Publication Data
Thompson, Leigh L.
The mind and heart of the negotiator / Leigh L. Thompson. — 5th ed.
p. cm.
ISBN-13: 978-0-13-254386-6
ISBN-10: 0-13-254386-9
1. Negotiation in business. 2. Negotiation. I. Title.
HD58.6.T478 2012
658.4’052—dc22
2011014992
10 9 8 7 6 5 4 3 2 1
ISBN 10:
0-13-254386-9
ISBN 13: 978-0-13-254386-6
To the loves of my life:
Bob, Sam, Ray, and Anna
BRIEF CONTENTS
PART I
Essentials of Negotiation 1
Chapter 1
Chapter 2
Chapter 3
Chapter 4
PART II
Advanced Negotiation Skills 92
Chapter 5
Chapter 6
Chapter 7
Chapter 8
PART III
Negotiation: The Mind and The Heart 1
Preparation: What to Do Before Negotiation 12
Distributive Negotiation: Slicing the Pie 38
Win-Win Negotiation: Expanding the Pie 69
Developing a Negotiating Style 92
Establishing Trust and Building a Relationship 125
Power, Persuasion, and Ethics 153
Creativity and Problem Solving in Negotiations 179
Applications and Special Scenarios 215
Chapter 9
Chapter 10
Chapter 11
Chapter 12
Multiple Parties, Coalitions, and Teams 215
Cross-Cultural Negotiation 252
Tacit Negotiations and Social Dilemmas 285
Negotiating Via Information Technology 312
APPENDICES
Appendix 1
Appendix 2
Appendix 3
Appendix 4
iv
Are You a Rational Person? Check Yourself 329
Nonverbal Communication and Lie Detection 351
Third-Party Intervention 361
Negotiating a Job Offer 370
CONTENTS
Preface xvii
Overview xix
Part I
Essentials of Negotiation 1
Chapter 1 NEGOTIATION: THE MIND AND THE HEART 1
Negotiation: Definition and Scope 2
Negotiation as a Core Management Competency 3
Dynamic Nature of Business 3
Interdependence 3
Economic Forces 4
Information Technology 4
Globalization 4
Most People Are Ineffective Negotiators 5
Negotiation Traps 5
Why People Are Ineffective Negotiators 6
Egocentrism 6
Confirmation Bias 6
Satisficing 7
Self-Reinforcing Incompetence 7
Debunking Negotiation Myths 8
Myth 1: Negotiations Are Fixed-Sum 8
Myth 2: You Need to Be Either Tough or Soft 8
Myth 3: Good Negotiators Are Born 8
Myth 4: Life Experience Is a Great Teacher 9
Myth 5: Good Negotiators Take Risks 9
Myth 6: Good Negotiators Rely on Intuition 9
Learning Objectives 10
The Mind and Heart 11
Chapter 2 PREPARATION: WHAT TO DO BEFORE
NEGOTIATION 12
Self-Assessment 13
What Do I Want? 14
What Is My Alternative to Reaching Agreement in This
Situation? 15
Determine Your Reservation Point 16
v
vi
Contents
Be Aware of Focal Points 19
Beware of Sunk Costs 19
Do Not Confuse the Target Point with Your Reservation Point 19
Identify the Issues in the Negotiation 19
Identify the Alternatives for Each Issue 20
Identify Equivalent Multi-Issue Proposals 20
Assess Your Risk Propensity 20
Endowment Effects 23
Am I Going to Regret This? 24
Violations of the Sure Thing Principle 25
Do I Have an Appropriate Level of Confidence? 26
Sizing Up the Other Party 26
Who Are the Other Parties? 27
Are the Parties Monolithic? 27
Counterparties’ Interests and Position 27
Counterparties’ BATNAs 27
Situation Assessment 28
Is the Negotiation One Shot, Long Term, or Repetitive? 28
Do the Negotiations Involve Scarce Resources, Ideologies, or
Both? 28
Is the Negotiation One of Necessity or Opportunity? 29
Is the Negotiation a Transaction or Dispute Situation? 30
Are Linkage Effects Present? 30
Is Agreement Required? 30
Is It Legal to Negotiate? 31
Is Ratification Required? 32
Are Time Constraints or Other Time-Related Costs Involved? 32
Are Contracts Official or Unofficial? 34
Where Do the Negotiations Take Place? 34
Are Negotiations Public or Private? 34
Is Third-Party Intervention a Possibility? 35
What Conventions Guide the Process of Negotiation (Such as Who
Makes the First Offer)? 35
Do Negotiations Involve More Than One Offer? 35
Do Negotiators Communicate Explicitly or Tacitly? 36
Is There a Power Differential Between Parties? 36
Is Precedent Important? 36
Conclusion 36
Contents
Chapter 3 DISTRIBUTIVE NEGOTIATION: SLICING THE PIE 38
The Bargaining Zone 39
Bargaining Surplus 41
Negotiator’s Surplus 41
Pie-Slicing Strategies 42
Strategy 1: Assess Your BATNA and Improve It 43
Strategy 2: Determine Your Reservation Point, but Do Not
Reveal It 43
Strategy 3: Research the Other Party’s BATNA and Estimate Their
Reservation Point 44
Strategy 4: Set High Aspirations (Be Realistic but Optimistic) 44
Strategy 5: Make the First Offer (If You Are Prepared) 46
Strategy 6: Immediately Reanchor if the Other Party Opens
First 47
Strategy 7: Plan Your Concessions 47
Strategy 8: Support Your Offer with Facts 49
Strategy 9: Appeal to Norms of Fairness 49
Strategy 10: Do Not Fall for the “Even Split” Ploy 50
The Most Commonly Asked Questions 50
Should I Reveal My Reservation Point? 50
Should I Lie About My Reservation Point? 50
Should I Try to Manipulate the Counterparty’s Reservation
Point? 52
Should I Make a “Final Offer” or Commit to a Position? 52
Saving Face 52
The Power of Fairness 53
Multiple Methods of Fair Division 54
Situation-Specific Rules of Fairness 54
Social Comparison 56
The Equity Principle 58
Restoring Equity 59
Procedural Justice 60
Fairness in Relationships 62
Egocentrism 62
Wise Pie-Slicing 66
Consistency 67
Simplicity 67
Effectiveness 67
vii
viii
Contents
Justifiability 67
Consensus 67
Generalizability 67
Satisfaction 68
Conclusion 68
Chapter 4 WIN-WIN NEGOTIATION: EXPANDING THE PIE 69
What Is Win-Win Negotiation? 70
Telltale Signs Of Win-Win Potential 70
Does the Negotiation Contain More Than One Issue? 70
Can Other Issues Be Brought In? 71
Can Side Deals Be Made? 71
Do Parties Have Different Preferences Across Negotiation
Issues? 71
A Pyramid Model 72
Most Common Pie-Expanding Errors 73
False Conflict 73
Fixed-Pie Perception 74
Strategies That Do Not Really Work 75
Commitment to Reaching a Win-Win Deal 75
Compromise 75
Focusing on a Long-Term Relationship 75
Adopting a Cooperative Orientation 75
Taking Extra Time to Negotiate 75
Effective Pie-Expanding Strategies 76
Perspective-Taking 76
Ask Questions About Interests and Priorities 77
Provide Information About Your Interests and Priorities 79
Unbundle the Issues 81
Make Package Deals, Not Single-Issue Offers 81
Make Multiple Offers of Equivalent Value Simultaneously 82
Structure Contingency Contracts by Capitalizing on Differences 85
Presettlement Settlements (PreSS) 87
Search for Postsettlement Settlements 87
A Strategic Framework for Reaching Integrative Agreements 88
Resource Assessment 88
Assessment of Differences 89
Contents
Offers and Trade-Offs 90
Acceptance/Rejection Decision 90
Prolonging Negotiation and Renegotiation 90
Do Not Forget About Claiming 90
Conclusion 91
Part II Advanced Negotiation Skills 92
Chapter 5 DEVELOPING A NEGOTIATING STYLE 92
Motivational Orientation 94
Assessing Your Motivational Style 95
Strategic Issues Concerning Motivational Style 98
Interests, Rights, and Power Model of Disputing 102
Assessing Your Approach 104
Strategic Issues Concerning Approaches 108
Emotions and Emotional Knowledge 114
Emotions and Moods 114
Expressed Versus Felt Emotion 115
Genuine Versus Strategic Emotion 116
Negative Emotion 118
Emotional Intelligence 119
Positive Emotion 120
Emotional Intelligence and Negotiated Outcomes 121
Strategic Advice for Dealing with Emotions at the Table 122
Conclusion 124
Chapter 6 ESTABLISHING TRUST AND BUILDING A
RELATIONSHIP 125
The People Side of Win-Win 126
Trust as the Bedrock of Relationships 128
Three Types of Trust in Relationships 128
Building Trust: Rational and Deliberate Mechanisms 131
Building Trust: Psychological Strategies 134
What Leads to Mistrust? 138
Repairing Broken Trust 139
Reputation 142
Relationships in Negotiation 143
Negotiating with Friends 145
ix
x
Contents
Negotiating with Businesspeople 148
When in Business with Friends and Family 150
Conclusion 151
Chapter 7 POWER, PERSUASION, AND ETHICS 153
Your BATNA Is Your Most Important Source of Power in
Negotiation 154
Sources of Power 155
Analyzing Your Power 155
Persuasion Tactics 156
Two Routes to Persuasion 156
Central Route Persuasion Tactics 156
Peripheral Route Persuasion Tactics 160
The Effects of Power on Those Who Hold Power 168
The Effects of Power on Those with Less Power 168
Negotiation Ethics 169
Lying 169
Other Questionable Negotiation Strategies 171
Sins of Omission and Commission 172
Costs of Lying 175
Under What Conditions Do People Engage in Deception? 175
Psychological Bias and Unethical Behavior 175
Conclusion 178
Chapter 8 CREATIVITY AND PROBLEM SOLVING IN
NEGOTIATIONS 179
Creativity in Negotiation 180
Test Your Own Creativity 180
What Is Your Mental Model of Negotiation? 180
Haggling 180
Cost-Benefit Analysis 184
Game Playing 184
Partnership 185
Problem Solving 185
Creative Negotiation Agreements 185
Fractionating Problems into Solvable Parts 185
Finding Differences: Issue Alignment and
Realignment 186
Expanding the Pie 186
Contents
Bridging 187
Cost Cutting 187
Nonspecific Compensation 188
Structuring Contingencies 188
Threats to Effective Problem Solving and Creativity 191
The Inert Knowledge Problem 191
Availability Heuristic 193
Representativeness 194
Anchoring and Adjustment 195
Unwarranted Causation 195
Belief Perseverance 196
Illusory Correlation 196
Just World 197
Hindsight Bias 197
Functional Fixedness 197
Set Effect 198
Selective Attention 199
Overconfidence 199
The Limits of Short-Term Memory 200
Creative Negotiation Strategies 200
Analogical Training 200
Feedback 201
Counter-Factual Reflection 202
Incubation 202
Rational Problem-Solving Model 204
Fluency, Flexibility, and Originality 205
Brainstorming 205
Convergent Versus Divergent Thinking 206
Deductive Reasoning 207
Inductive Reasoning 207
Flow 209
Conclusion 210
Part III Applications and Special Scenarios 215
Chapter 9 MULTIPLE PARTIES, COALITIONS, AND TEAMS 215
Analyzing Multiparty Negotiations 216
Multiparty Negotiations 217
xi
xii
Contents
Key Challenges of Multiparty Negotiations 217
Key Strategies for Multiparty Negotiations 224
Coalitions 226
Key Challenges of Coalitions 226
Strategies for Maximizing Coalitional Effectiveness 231
Principal-Agent Negotiations 231
Disadvantages of Agents 233
Strategies for Working Effectively with Agents 235
Constituent Relationships 236
Challenges for Constituent Relationships 237
Strategies for Improving Constituent Relationships 239
Team Negotiation 240
Challenges That Face Negotiating Teams 241
Strategies for Improving Team Negotiations 242
Intergroup Negotiation 244
Challenges of Intergroup Negotiations 244
Strategies for Optimizing Intergroup Negotiations 246
Conclusion 249
Chapter 10 CROSS-CULTURAL NEGOTIATION 252
Learning About Cultures 253
Defining Culture 253
Culture as an Iceberg 254
Cultural Values and Negotiation Norms 255
Individualism Versus Collectivism 256
Egalitarianism Versus Hierarchy 265
Direct Versus Indirect Communications 268
Key Challenges of Intercultural Negotiation 271
Expanding the Pie 271
Dividing the Pie 271
Sacred Values and Taboo Trade-Offs 272
Biased Punctuation of Conflict 274
Ethnocentrism 275
Affiliation Bias 275
Faulty Perceptions of Conciliation and Coercion 276
Naïve Realism 277
Predictors of Success in Intercultural Interactions 278
Contents
Advice for Cross-Cultural Negotiations 279
Anticipate Differences in Strategy and Tactics That May Cause
Misunderstandings 280
Analyze Cultural Differences to Identify Differences in Values That
Expand the Pie 280
Recognize That the Other Party May Not Share Your View of What
Constitutes Power 280
Avoid Attribution Errors 280
Find Out How to Show Respect in the Other Culture 281
Find Out How Time Is Perceived in the Other Culture 282
Know Your Options for Change 282
Conclusion 283
Chapter 11 TACIT NEGOTIATIONS AND SOCIAL DILEMMAS 285
Business as a Social Dilemma 287
The Prisoner’s Dilemma 287
Cooperation and Defection as Unilateral Choices 288
Rational Analysis 289
Psychological Analysis of Why Tit-for-Tat Is Effective 291
Social Dilemmas 295
The Tragedy of the Commons 297
Types of Social Dilemmas 298
How to Build Cooperation in Social Dilemmas 301
How to Encourage Cooperation in Social Dilemmas When Parties
Should Not Collude 307
Escalation of Commitment 308
Avoiding the Escalation of Commitment in Negotiations 310
Conclusion 311
Chapter 12 NEGOTIATING VIA INFORMATION TECHNOLOGY 312
Place-Time Model of Social Interaction 313
Face-to-Face Communication 314
Same Time, Different Place 316
Different Time, Same Place 317
Different Place, Different Time 317
Information Technology and Its Effects on Social Behavior 322
Trust 322
xiii
xiv
Contents
Status and Power: The “Weak Get Strong” Effect 322
Social Networks 324
Risk Taking 324
Rapport and Social Norms 325
Paranoia 325
Strategies for Enhancing Technology-Mediated Negotiations 326
Initial Face-to-Face Experience 326
One-Day Videoconference/Teleconference 327
Schmoozing 327
Humor 328
Conclusion 328
Appendix 1 ARE YOU A RATIONAL PERSON? CHECK YOURSELF 329
Why Is It Important to Be Rational? 329
Individual Decision Making 330
Riskless Choice 330
Decision Making Under Uncertainty 332
Risky Choice 332
Summing Up: Individual Decision Making 345
Game Theoretic Rationality 345
Nash Bargaining Theory 346
Appendix 2 NONVERBAL COMMUNICATION AND LIE
DETECTION 351
What Are We Looking for in Nonverbal Communication? 351
Are Women More “Nonverbally Gifted” Than Men? 352
Dominance 353
Personal Charisma 354
Detecting Deception 355
Direct Methods 357
Indirect Methods 357
How Motivation and Temptation Affect Lying and Deception 359
Deception and Secrecy Can Create a Life of Their Own 360
Appendix 3 THIRD-PARTY INTERVENTION 361
Common Third-Party Roles 361
Mediation 361
Arbitration 362
Mediation-Arbitration 363
Arbitration-Mediation 363
Contents
Key Choice Points in Third-Party Intervention 363
Outcome Versus Process Control 363
Formal Versus Informal 364
Invited Versus Uninvited 364
Interpersonal Versus Intergroup 364
Content Versus Process Orientation 364
Facilitation, Formulation, or Manipulation 364
Disputant Preferences 365
Mediators and Gender 365
Challenges Facing Third Parties 365
Meeting Disputants’ Expectations 365
Increasing the Likelihood That Parties Reach an Agreement
if a Positive Bargaining Zone Exists 366
Promoting a Pareto-Efficient Outcome 366
Promoting Outcomes That Are Perceived as Fair in the Eyes of
Disputants 366
Improving the Relationship Between Parties 366
Empowering Parties in the Negotiation Process 366
Debiasing Negotiators 367
Maintaining Neutrality 368
Strategies for Enhancing Effectiveness of Third-Party Intervention 369
Accept Your Share of Responsibility 369
Test Your Own Position 369
Role-Play a Third Party in Your Own Dispute 369
Training in Win-Win Negotiation 369
Appendix 4 NEGOTIATING A JOB OFFER
370
Preparation 370
Step 1: Figure Out What You Really Want 370
Step 2: Do Your Homework 370
Step 3: Determine Your BATNA and Your Aspiration
Point 370
Step 4: Research the Employer’s BATNA 372
Step 5: Determine the Issue Mix 372
Step 6: Prepare Several Scenarios 372
Step 7: Consider Getting a “Coach” 372
In Vivo: During the Negotiation Itself 373
Think About the Best Way to Position and Present Your Opening
Offer 373
Assume the Offer Is Negotiable 373
xv
xvi
Contents
Immediately Reanchor the Interviewer by Reviewing Your Needs
and Your Rationale 374
Reveal Neither Your BATNA nor Your Reservation Point 375
Rehearse and Practice 375
Imagine You Are Negotiating on Behalf of Someone Else (Not Just
Yourself) 375
Comparables and Benchmarks 376
Post-Offer: You Have the Offer, Now What? 376
Do Not Immediately Agree to the Offer 376
Get the Offer in Writing 376
Be Enthusiastic and Gracious 377
Assess the Interviewer’s Power to Negotiate with You 377
State Exactly What Needs to Be Done for You to Agree 377
Do Not Negotiate If You Are Not or Could Not Be Interested 377
Exploding Offers 377
Do Not Try to Create a Bidding War 378
Know When to Stop Pushing 378
Use a Rational Strategy for Choosing Among Job Offers 378
Name Index
379
Subject Index 397
Note: Every effort has been made to provide accurate and current Internet information in this book.
However, the Internet and information posted on it are constantly changing, so it is inevitable that
some of the Internet addresses listed in this textbook will change.
PREFACE
This book is dedicated to negotiators who want to improve their ability to negotiate—whether
in multimillion-dollar business deals or personal interactions. It is possible for most people to
dramatically improve their ability to negotiate. You can improve your monetary returns and feel
better about yourself and the people with whom you deal. New to this edition is an integration of
theory, scientific research, and practical examples. Moreover, the practical examples—selected
from hundreds of real-world negotiations involving people from several organizations and many
different cultures—illustrate effective, as well as ineffective, negotiation skills.
Here is what you can expect when you read this book:
• Illustrative case studies. I include multiple examples and actual cases of negotiating in
managerial and executive contexts. Each chapter opens with a case study or actual business
situation (from business, government, world affairs, community, and personal life). New to
this edition, are more than 122 updated examples from the business world.
• Real-life negotiations. Furthermore, many of the points in the chapters are supplemented
with illustrations and examples drawn from actual negotiations, both contemporary and
historical. I do not use these examples to prove a theory; rather, I use them to illustrate how
many of the concepts in the book are borne out in real-world situations. New to this edition
are updated opening chapter vignettes derived from current business, political, and global
events that illustrate real world negotiations.
• Skills-based approach. In this edition I provide practical take-away points for the manager
and the executive. A good example is Chapter 4 on integrative negotiation. A series of handson principles that have been proven to increase the value of negotiated deals …
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