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Negotiation Strategy, Research Paper Example

Pages: 1

Words: 973

Research Paper

Internet has emerged as another important avenue for negotiation besides face-to-face meeting. The rise of negotiation activities over the internet can be attributed to various benefits such as savings in terms of time and costs, overcoming differing time zones’ and distance barriers, and an inexpensive communication tool. In addition, negotiation on the internet allows direct interaction with the primary decision makers instead of dealing through representatives and is often more efficient form of negotiation when dealing with repeat trading partners or small-size business deals. But at the same time, negotiation on the internet also has its limitations and disadvantages. First of all, internet negotiations are less suitable for big deals where it is important to build a personal rapport face-to-face. Moreover, transactions involving significant exchange of financial and non-financial resources are also more suited to face-to-face negotiations. Internet negotiations do not allow building trust in the same manner as face-to-face negotiations do. There is also a greater risk involved due to the level of anonymity that internet provides to the participants (Cellich, 2001).

One more common problem with internet negotiations is that the participants take it less seriously than face-to-face preparations. They often prepare inadequately, mistakenly believe that internet negotiations should be completed within a short time frame, do not fully consider the potential implications of their written communication that could be taken more seriously than expected by the other party, and sometimes overly focus on pricing variable while ignoring other equally important variables such as delivery, negotiating party’s reliability and reputation, and quality of the products/services (Cellich, 2001).

The rules necessary for effective face-to-face negotiations also equally apply to effective internet negotiations. Internet also offers the possibility of negotiating with multiple potential trading parties at the same time (Cellich, 2001). Professor Daniel Z. Levin teaches a negotiation course at the Rutgers University and one of his students successfully used the rules of effective face-to-face negotiations to achieve his objective over the internet. The student found four individuals who were interested in his rental apartment but he felt that only one applicant matched all of his requirements. The student had a specific price range in mind but at the same time he didn’t want to lose the applicant as a customer. The applicant was also genuinely interested but patient at the same time. The student wanted to seal the deal quickly because his rental apartment was a sunk cost anyway but showed patience. The student carefully evaluated his own position as well as that of the applicant. Eventually, both the parties came to a mutually beneficial agreement (Levin). Had the student showed desperation in signing an agreement, he might have gotten a lower price. Thus, this story shows that the internet negotiations should also be taken seriously and proper preparation does help secure better deals. Another lesson from this story is that internet alone is not sufficient to build trust. The student first negotiated on the internet and then met with the applicant in person to build rapport.

In their research paper, Dr. Jehn and Dr. Weigelt study Chinese management philosophies which have been in existence for centuries now and attempt to identify the lessons that are equally beneficial to the West. The authors argue that every action during negotiation results in a reaction from the opponents. Thus, the negotiators should not only focus on their own strategies but also try to analyze the strategies being employed by the other party as well. The authors claim that the economic concept of game theory agrees with the Chinese belief that both parties react to each other. Thus, negotiations should be perceived as an evolving process rather than static in nature where each party may be forced to change its techniques depending on the changing circumstances. In addition, the game theory concept and the Chinese management philosophies also agree upon the fact that successful negotiators in the long run are those who understand their own strengths and weaknesses as well as of the other party in the negotiation process (Jehn & Weigelt, 1999). Dr. Jehn’s and Dr. Weigelt’s observations may be right on the spot because Phillip Morris successfully tried this strategy against its competitor R.J. Reynolds in 1993. Phillip Morris publicly announced price reductions as well as an increase in advertising budget. Just as the company expected, R. J. Reynolds responded by doing the same. The real motive of Phillip Morris was an aggressive expansion into the Eastern European markets and not increasing U.S. market share. Phillip Morris had greater resources than R. J. Reynolds thus, the fight proved more expensive to R. J. Reynolds which had depleted its resources by the time Phillip Morris began its Eastern European conquests (Macmillan, Putten, & McGrath, 2003). It is clear that Phillip Morris tried to understand the competitor as well as predict its actions while formulating its own strategy.

Both stories have similarities in that they imply that success depends on understanding the other party as much as it is about being aware of own strengths and weaknesses and preparing well. Both articles emphasize the fact that negotiation is an evolutionary process rather than a static process. These stories and articles have important implications for workplaces as they both emphasize the importance of being prepared, patient, and devise carefully planned responses. In addition, successful negotiation requires an effective and open communication from both parties. When parties try to understand each other, they build trust for each other and are more likely to reach mutually beneficial agreements.

References

Cellich, C. (2001). …about Business Negotiations on the Internet. International Trade Forum , pp. 10-11.

Jehn, K., & Weigelt, K. (1999). Chinese Thought, Game Theory, and Strategic International. International Negotiation , pp. 79-93.

Levin, D. Z. (n.d.). Negotiation Stories from Former Students. Retrieved September 17, 2011, from http://www.levin.rutgers.edu/negot-story-apt1.html

Macmillan, I. C., Putten, A. B., & McGrath, R. G. (2003, May). Global Gamesmanship. Retrieved September 17, 2011, from http://hbr.org/2003/05/global-gamesmanship/ar/1

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