Home » Business Administration and Innovation Management » Effective Negotiation and Decision-Making Processes

Effective Negotiation and Decision-Making Processes

Posted on Jan 26, 2026 in Business Administration and Innovation Management

Negotiation Process: Five Stages

Stage 1: Planning and Preparation	Stage 2: Relationship Building	Stage 3: Information Exchange	Stage 4: Persuasion Attempts	Stage 5: Concessions and Agreement
Advance planning and analysis Background research Gathering of relevant information Planning of strategies and tactics Setting objectives Predetermining possible concessions	Developing trust Developing personal rapport Establishing long-term association	Learning about the needs and demands of the other set of negotiators Acquiring and exchanging other information	American managers treat this as the most important step Mixture of approaches Assertive and straightforward Warnings of threats Calculated delays	Permit each party to take away something of value American managers tend to have less leeway for concessions Some use normative appeals such as “It’s your obligation.”

Mental Maps and Cognitive Frameworks

Mental maps: the internal, dynamic frameworks of knowledge, beliefs, and associations that individuals use to understand and navigate the world.

Factors That Inhibit Accurate Problem Analysis

Factors that inhibit accurate problem ID and analysis	Description
Information Bias	A reluctance to give or receive information
Uncertainty Absorption	A tendency for information to lose its certainty as it is passed along
Stress	Reduction of people’s ability to cope with information demands
Stereotyping	Deciding on an alternative based on characteristics ascribed by others
Selective Perception	Tendency to ignore or avoid certain information
Cognitive Complexity	Limits on the amount of information people can process at a time

Rational Decision Model Steps

Step 1: Identify Decision Situations	May be viewed as problems or opportunities Problem: when a manager detects a gap between existing and desired performance Opportunity: when a manager detects a chance to achieve a more desirable state than the current one
Step 2: Develop Objectives and Criteria	Identify specific criteria (i.e., what is important in the outcome) When several criteria are involved, assigning weights might be necessary Example: You are looking to hire a door-to-door salesperson for your vacuum cleaner company. What qualities should your ideal candidate possess?
Step 3: Generate Alternatives	Past solutions can often be effective But sometimes new situations require creative new solutions Example: product knowledge vs. interpersonal skills
Step 4: Analyze Alternatives	Determine which would produce minimally acceptable results Eliminate those that do not make the cut Examine the feasibility of remaining alternatives Determine which of these is likely to produce the best results
Step 5: Select Alternative	The model argues that managers will choose the alternative that maximizes the desired outcome — also known as Subjectively Expected Utility (SEU) Both expected outcome and the probability that an alternative can be implemented factor into the decision Example: If Marta is a better job candidate than Juan, but is unlikely to take the job, then she isn’t really the better candidate
Step 6: Implement Decision	Assess sources and reasons for potential resistance Determine chronology and sequence of actions needed to overcome resistance Determine required resources to implement the decision effectively Determine whether and how tasks can be delegated
Step 7: Monitor and Evaluate Results	Gather information Compare results to objectives and standards set at the beginning Evaluate how tasks can be delegated

Preventing Decision Errors

For the Company	Establish several groups to analyze the problem. Have trained managers with prevention techniques for these issues.
For the Leader	Assign everyone the role of critical evaluator Use outside experts to challenge the group Assign a devil’s advocate role to one member of the group Be impartial and refrain from stating your own views
For Group Members	Try to retain your objectivity and be a critical thinker. Discuss group deliberations with a trusted outsider and report back to the group.
For the Deliberation Process	At times, break the group into subgroups to discuss the problem Take time to study what other companies or groups have done in similar situations Schedule a second-chance meeting to provide an opportunity to rethink the issues before making a final decision