Whenever we try to influence another person through an exchange of ideas we are negotiating. Most of us knowingly or unknowingly are involved in one or the other form of negotiation. Examples include: drawing up contracts, fixing your salary for job, purchasing from roadside vendor etc. Even deciding on where to have lunch also uses negotiation process. This is the instance of a business deal going on where the representatives of two different firms are present. Negotiator 1 is the representative of company A and Negotiator 2 is representative of company B. Company A wants to sell a very precious piece of Art and has to pay a bank loan of Rs 5 lacs. Company B wants to buy the art but they have a budget constraint of Rs 5 Lacs above which they cannot pay. For company A itâ€™s urgent to repay the loan, so they cannot dismiss the deal and for B also the art is of absolute necessity and they must have it. The two negotiators are asked to negotiate as much as they can and come to a deal in 10 minutes. Given is the maximum bargain range is Rs 1 Lacs to Rs 10 Lacs. But after 2 minutes into the game, suddenly the two negotiators get some message from their companies regarding the deal. A informs that due to delay in loan payment there has been a penalty of 0.5 lacs and asks its representative to sell the art at not less than Rs 5.5 Lacs. B informs that due to high expense in other operations of the company their budget has reduced by Rs 0.5 Lacs and they cannot pay beyond 4.5 Lacs. The game was played twice between two different sets of people. In the first round all the information were public, so the player knew what are the constraint of the other player and what circumstances have changed. In the second round all information was private, so the player had no clue about other player except the fact that he wants to buy/sell a piece of art.
Findings of the study and Generalization: Round 1. (All information Public) Deal Price: Rs 4.9 Lacs In round 1 all the information were given to both the players. This also included the information given in between the game, which was announced to both players. The discussion went ahead very well as the first negotiator started with an offer of 7 Lacs to sell. The second negotiator demanded the art at 4 lacs saying the budget constraint and miscellaneous expenses. Finally after much discussion the deal was struck at 4.9. Round 2 (All information Private) Deal Price: Rs 5.3 Lacs In this case the information only specific to the company one belongs was passed to the players. The net result was that the first player asked for a price of 9 Lacs while player 2 was ready to give only 2 Lacs. It also must be noted that in this case people were very stubborn on their standings and it took a lot of time to reach to a final deal price. And finally the deal was struck at Rs 5.3 lacs. Below are the various findings in both the cases In round one, players were not very stubborn and they were ready to alter their stand. It was easier to come to a deal in round 1. And also it took lesser time to fix the deal. In round 2 the deal value is a lot biased towards one end. While in round one the deal price is almost the mean price of both players. The initial offer was too high/low in the second round compared to the first.
Implications: Round one seems to be a good example of integrative negotiation. In round one because players knew about the constraints of others they were flexible and also the expectations were not very high. This is substantiated with the low initial offers made. Round two seems to be a case of distributive negotiation. This is substantiated by the very high/low initial offers. Also it took a lot of time to come to a deal and each party was trying to achieve the maximum gain without thinking about the other.
Generalization: It is clear from the experiment that when each party discloses its constraints and the negotiation starts in a friendly note the outcome is preferable for both parties. Here generally the negotiators are open with their constraints and as a result the final deal is more aligned towards mutual benefit. Here the deal ends in a positive note and it gives a very good chance to build a relationship. Therefore integrative negotiation is always a better form of negotiation and it can be achieved with proper negotiation skills.
Implication of Group work: Generally while working in a group a lot of conflicts arise. But there could be circumstances where all members involved in the conflict could have their own justifiable reason. In this case good negotiation skills will ensure that the individual differences are resolved and the team focuses back on the primary work. Also in case of integrative negotiation the team performance rises as there is a sense of caring and mutual understanding in the team.
Contribution to OB: The study in this report tries to analyze the various types of negotiation and their implications. It tries to prove that with proper techniques how two parties in the negotiation table can make a better deal for both of them. In the end it also strengthens the belief that Integrative Negotiation being a case of win-win situation should be the essential mode of negotiation. It gives an example as to how a negotiation can be moved towards integrative negotiation with proper sharing of information.
Conclusion: Negotiation is a tool of human behaviour, a tool anyone can use effectively. And in our daily life there are hundreds of instances where we knowingly or unknowingly negotiate. Proper negotiation skills will give us the required advantage in real life. Therefore the definitions of negotiation is not only coming to a mutual agreement but coming to a mutual agreement where both party get benefitted with long term relationship.