Comparing And Contrasting Competitive Positional-Based And Problem-Solving Interest-Based Approaches In Negotiation

Competitive Positional Based Negotiation

Negotiation is a major management and business communication skill which helps an employee or manager in surging ahead and creating new opportunities in business contexts (Kasper, 2015). Negotiation is an art of coming to an agreement without disruption and in a way which is advantageous to the one or all of the negotiators (Maude, 2014). Negotiation in business is required in sales, marketing, teambuilding, employee compensation and other wide range of business situations. Therefore, it is a very important skill to have for a manager. Hence, negotiation training is important for the employees of United Beverages.

Negotiation is the art of striking a deal through conflict avoidance and agreement (Lewicki & Hiam, 2011). It is about agreeing upon and working towards an agreeable solution with one or more parties. In business situation negotiation skills are very important as these skills help in achieving best possible result in any business situation (Cellich, 2012). There are two major approaches to negotiation. These are competitive positional based negotiation approach and problem solving -interest based approach. These are two contrasting approaches on negotiation.  Business negotiators use these approaches based on the situation (Baum, 2013). Following is an assessment of the two approaches

Competitive positional approach to negotiation

Positional based approach is a strategy of negotiation where a negotiator starts with a fixed idea and argues in favour of that idea (Gates, 2011). Under this type of bargaining there is no regards to any underlying interests. This approach is based on win-loose principle and may involve hard bargaining, fear and threats (Cellich, 2012). An example is a salesman and a customer negotiating over the price of a product. The salesman has a minimum amount below which he will not sell and the customer has a maximum amount above which he will not pay. Both start the negotiation with an extreme position which is the monetary value of the product. They then start to negotiate and make concessions. Ultimately both parties will reach a compromise which will be nearer to their fixed position. In the case the gain of one will be the loss of the other as they were competing for the same monetary value (Hughes, et al., 2013) Therefore, a fixed position is a major characteristic of positional based negotiation.

Under interest based negotiation the two parties try to find a win-win solution to the dispute between them (Salacuse, 2010). Under this approach the negotiators try to find mutually beneficial solutions based on interests of the parties in the negotiation. In this approach interest means the concerns, fears and needs of the parties (Sarkar, 2010). Interests are the basic reasons why people enter into negotiation. Additionally, in this approach the parties try to join their interest together so that the problem of both is amicably solved (King, 2010). However, joint interest can be achieved only in case of negotiation with multiple issues. Multiple issues will allow parties to create trade-offs across these issues so that both parties get satisfactory outcomes (Lumineau, 2012). Therefore, satisfactory solution to the problem with satisfaction of both parties is a major characteristic of this negotiation approach.

Interest Based Negotiation

Both these approaches make certain assumptions about the situation of the negotiation (Cellich, 2012). Following is an assessment of these assumptions

The competitive positional approach is based on bargaining for a fixed position (Cellich, 2012). Following are the main assumptions of this approach-

• This approach is based on zero sum game. Zero sum game means that there is a fixed amount or value to be gained from a negotiation and one person’s gain leads to another person’s loss(Sarkar, 2012). For example, if a customer manages to bargain for more deduction in selling price of a product it automatically means loess of the seller.
• This approach also assumes that negotiation is being done because limited resources need to be divided.(Baum, 2013)
• It is further assumed that that the concern is only about the issue on which negotiation is being done (Kopelman, 2014).

Hence, positional based approach works under the win-lose concepts and uses hard bargaining as a major tool.

The Interest based approach holds the view that collaboration and discussion are the best way to negotiate (Kopelman, 2014). Following are the assumptions of this approach.

• The assumption of interest based negotiation is that there is an existence of some common interests between the parties (Coleman, 2014). Common solution is sought which leads to an amicable resolution to the issue on which negotiation is being done.
• It is assumed that each party’s perspective will be broadly discussed and interest of each party will be safeguarded(Feingold, 2016)
• Problems can be best resolved through discussion
• Win-win is the major aim of this approach(Baum, 2013).
• Another assumption of this approach is that result needs to be fair to each party of the negotiation.
• Generally many issues are involved in this negotiation style and it is assumed that trade-off is achieved among these issues.
• Collaboration is another assumption of this approach where joint problem solving is done by both parties(Baum, 2013).

If two parties are entering into an interest based negotiation it is assumed that there is trust and transparency between them (Feingold, 2016). Therefore, majorly collaborative methods of negotiation are assumed in this form of negotiation.

Risks of Competitive positional negotiation approach

Competitive position negotiation is effective if negotiation is being done with limited resource. However it has certain major risks involved (Cellich, 2012). Following is an assessment of these risks

• First major risk is that a lasting damage may be done to the relationship between the negotiators leading to reduction of likelihood of any feasible agreement(Baum, 2013).
• There is limited focus on posable other alternatives of the dispute which may also lead to breakdown of negotiation.
• Competitive negotiation may lead to confrontation which in turn may lead to rigidity.
• In a competitive negotiation there is limited prediction about outcome of the negotiation.
• There may be certain joint gains which may be totally ignored in this type of negotiation.
• In competitive negotiation a threat looms over the feasibility of any negotiation in the future(Feingold, 2016). Such type of negotiation may end the scope for any further negotiation or dispute settlement.
• Very hard competitive negotiation may lead to an impasse and no result or dispute settlement(Cellich, 2012).

Therefore this approach should be used only if there is a single issue, stakes are high and there is not much concern for future.

The inherent based- problem solving negotiation create certain risks for the negotiation (Feingold, 2016). These are-

• Interest based-Problem solving negotiation only works if both parties are willing to collaborate. Without the will of both parties this type of negotiation will fail.
• If one person or party fails to collaborate or give head to another person’s interest then the whole process will change into ether a complete compromise or a competitive negotiation.
• The time taken to reach an agreement may be large or one of the parties may create an impasse by not agreeing to a certain solution.
• Its not always easy to reach an amicable solution as the interest of the two parties might clash
• Negotiation may be considered a failure if an agreement is not reached(Sarkar, 2012).

Therefore, the negotiators must consider the issues of negotiation and then decide the approach to be used.

As both the approaches have contrasting methods of approaching an issue, the impact on relationships under both approaches is also different (Fisher, 2012)

Impact of relationships under competitive positional approach

Competitive position approach is based on win-loose principle (Feingold, 2016). One person’s gain is another person’s loss. Therefore, it contains hard bargaining, tension and threats. It has fixed goals hence negotiator may emerge a winner or a loser in the end (Kasper, 2015). Therefore, it can have a negative long term impact on the relationship between two parties. It can lead to bitterness and may create an impasse to any further negotiation. In this approach there is always a sense to outmanoeuvring the other. Therefore, this approach will only strengthen the competitive feeling between the parties (Fisher, 2012). Distrust and disregard may be the outcome of such a negotiation. It can close the door for an agreement to the issue where both parties can benefit.

Under interest based negotiation collaboration is given importance. Interest of all parties is guarded and mutually beneficial solution is sought (Kasper, 2015). Therefore, this approach leads to trust and transparency. It fosters stronger relationships and both parties may be willing to negotiate a point in the future as well (Baum, 2013). Better understanding emerges due to consensus leading to better satisfaction level. As interests will be guarded the parties may not hesitate in trading off on certain issues (Cellich, 2012). Therefore this approach is good for solidarity of relationships and dispute settlement in an amicable manner.

Assumptions of the Two Approaches

Both competitive position and interest based negotiation skills are used at different times as they have their own merits and demerits. United Beverages need to evolve negotiation strategy and has to choose one of these approaches. Therefore, the firm needs to understand the consequences of both approaches; Competitive position approach is based on win loose strategy and may lead to breakdown of talks in a business scenario (Cellich, 2012). However, it is effective in hard bargaining and effective negotiation may bring a better than fair result. On the other hand, interest based negotiation is better as it takes every one together and does not lead to dissatisfaction of either parties. This negotiation tries for an agreeable and mutually beneficial   solution (Baum, 2013). Therefore, collaborative or interest based approach is recommended for united beverages.

The employees of united Beverages will gain by developing skills for interest based negotiation because this negotiation has scope for relationship building. The employees can build collaborative and long term relationship with stakeholders like suppliers, customers, financiers, investors and shareholders. Additionally, interest based strategy will lead to collaboration and unity in stakeholders which can take the organisation forward. On the other hand, competitive strategy can harm stakeholder’s relationship as it can lead to lasting damage to interest of one of the parties (Baum, 2013). Therefore, competitive strategy is riskier then interest based strategy. Thus it is suggested to United Beverages to use interest based negotiation.

Effective interest based negotiation skills of the employees of United Beverages can be improved by making them learn to explore various alternatives to a situation (Coleman, 2014). They should be able to assess the interest of various parties inclusive their own interest. The knack of fair judgement should also be inculcated so that value of each position in negotiation can be assessed. Skills of convincing and making people realise their own interests in a certain negotiation should also be a part of the negotiation skill training (Baum, 2013). Interest based negotiation can also be made more effective if employees are given training on assessment of the long tern consequences of a course of action. This will help them in safeguarding the interests of all the parties involved in the negotiation. Additionally, analytical thinking and decision making skills training will help the employees in making the interest based negotiation more accretive.

Conclusion

Negotiation helps in creating dialogue for betterment of business situation. The competitive position approach to negotiation focuses on win of one party and the loss of the other. This is effective when resources are limited. However, in business situation interest based approach should be used because a firm has to guard the interests of all its stakeholders. By giving effective training on negotiation to its employees, United Beverages can enter into agreements based on collaboration.

References

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