Negotiation and Decision-Making Processes

Posted on May 12, 2024 in Economy

1) Phases of the Negotiation Process

1. Preparatory
2. Antagonistic
3. Cooperative
4. Presentation of Alternatives
5. Closure

2) Types of Strategies

3) Negotiating Tactics

• Cooperative: Moderately firm. Minimum concessions. Tension-reduction.
• Competitive: Threats. Irrevocable stances. Aggressive positions.

4) Points to Achieve Efficient Trading

Achieve Substantial Results

Consists of minimizing costs and maximizing profits. It is necessary to share information on objectives, expectations, and possible solutions, presenting one’s position to influence the other party, progress towards the commitment to trade and concessions.

Influence the Balance of Power

We have to get some balance of power so that the negotiations make sense. Using the power of persuasion based on the capacity for argumentation. Using the power of expertise. Strengthen mutual relations, interests, and common objectives to restore the balance of power. Strengthen the starting position to begin negotiations with some dominance. Take the initiative and show no passivity.

Develop a Constructive Negotiating Climate

Communication is fluid and should not appear great interpersonal tensions that hinder the agreements.

Achieving a Dynamic Flexible with Regard to the Process

At each stage, there are different opportunities to achieve this flexibility:

• At first, in an open manner, looking for common interests and exchanging information.
• In the middle phase, alternating actions of pressure-limited and the use of conciliatory tactics.
• Before the end, trying to fight the final stiffness.

5) Points to Know How to Break Deadlocks in Negotiations

• Keep the dialogue open.
• Find new prospects.
• Threaten with the possibility of withdrawal of tenders.
• Replace the members of either party. This will tackle the problem from a new perspective.
• Identify the person who has real authority, if the representative could not make decisions or does not dare. The change of partner should be raised with the utmost diplomacy.
• Maintain indirect discussions through a neutral third party, when dialogue between the parties is interrupted.
• Leaving the negotiation. Should only be done in the most extreme case, leaving the door open to future negotiation.

6) Strategies and Tactics

Antitrust

• Expand beneficial aspects on which to negotiate.
• Reward opponent concessions.
• Making concessions in non-priority areas.
• Develop mutually satisfactory new options.

Rivalry

• Make unacceptable requests.
• Maintain and does not alter one’s own proposals.
• Threatening and punishing the other party for not making concessions.
• Act with pressure.
• Persuading the other party that making concessions is in their benefit.

Compliant or Flexible

• Pleasing to the other to finish the negotiations quickly.

Inaction

• No interest in the outcome for either party.

1 – Definition of Decision-Making Process

Decision-making in the company is a rational process by which one or more people are choosing between two or more solutions, to solve a problem. Based on some data, an analysis and an evaluation of the appropriateness of the possible alternatives and their consequences with regard to a specific objective, to have to make the final choice. The decisions are dictated by others or taken by people with higher hierarchical level within the company.

2 – Decision-Making Process

Phases & Content

1. Know and analyze the problem: Identify, define and place the problem.
2. Differentiate current as desirable: Describe the desirable situation and compare with the current.
3. Analyze possible causes and determine the most probable: Explain the causes of the differences between the actual and the desirable. Develop hypotheses about the likely cause.
4. Identify and weigh decision criteria: Establish rules for decision making by giving a specific value to each.
5. Search, evaluate and select the best alternative: List all possible alternative solutions. Evaluate critically the advantages and disadvantages of each alternative. Select one that can achieve maximum results.
6. Execute decision: Select persons responsible for implementing the decision. To carry out the decision on the agreed terms. Check results.
7. Control decision: Will contribute to solving the problem. Check that the person responsible for implementing compliance with the instructions received. Identify errors in implementation and change what is deemed necessary decisions. Distinguish between long or short term.

3 – Types of Problems and Decisions

Types of Problems

• Structured: It is characterized by known and usual. Information about the problem is easy to define and complete.
• Unstructured: Are new problems. The information about them is ambiguous or incomplete. Influence multitude of factors that do not have all the control and is not too clear cause-effect relationship.

Types of Decisions

• Scheduled: They are repetitive and routine decisions. They are set in advance.
• Non-scheduled: Unstructured problem requires a tailored treatment. Its features are unique and not repetitive.

Personal Factors

Factors Influencing the Decision

• Experience: The ability to decide increases with experience, since it learns from previous mistakes and successes. Experience reduces the potential for future mistakes. But also to new problems based on experience can lead to poor decisions.
• Trial: The term “trial” includes the person’s common sense, maturity, reasoning ability and the ability to evaluate information wisely. People who have good sense have the ability to collect relevant information, analyze it and evaluate its importance.
• Creativity: Refers to the ability to decide to combine or associate ideas in a unique way for a new and useful result. When problems are rare and experience does not help, it requires creative alternatives to resolve the problem.