Orthel Harris
FSE-650
December 04, 2010
Edward Smear
Claiming Value Mcdowall Rose
Value is defined by Malhotra and Bazerman (2007) as, "whatever people find useful or desirable". Negotiation is the vehicle by which parties obtain that which is useful and desirable through a series of tradeoffs with another party. At first glance this exercise would seem to be inward looking. However value is created by exploring alternatives with your opponent. A successful negotiator does not focus on her alternatives. By working with rather than against a negotiating partner she can obtain Pareto or more correctly near-Pareto outcomes. In such circumstances value is created. Both parties can then decide how to divide that value.
Successful negotiators consider the preferences of their opponents and do not assume that they implicitly know them, or that their interests are necessarily aligned. An example of the importance of exploring preferences can be seen in McDowall-Rose (2010), "I doubted any of our competition could put together a team as strong as ours with as much industry experience. I also knew the Saudi Airlines old guard wanted more industry insiders onboard." In this example from professional services, knowing a clients preference for specific industry experience provided both cost and differentiation advantages.
Fisher (1983) noted that, a more extreme starting position yields better outcomes. However, taking an extreme initial stance may alienate your opponent or damage the negotiators credibility. Deciding if one should make the first demand is often difficult. Carnevale and Pruitt (1992) noted that, "there is an inverted U-shaped relationship between level of demand and level of outcome. Negotiators who start with high demands and concede slowly often fail to reach agreement, which usually leads to inferior outcomes. Those who start with low demands and