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CHAPTER 10 INFLUENCE AND NEGOTIATION Learning Objectives • After studying this chapter, you should be able to explain: – What persuasion is and its role in the influence process – Six primary approaches to influence – Negotiations – International applications and concerns Persuasion • Persuasion and influence are not identical. • Persuasion is the effort to change people’s beliefs or attitudes. – A change in a private attitude or belief resulting from a receipt of a message • Influence is convincing people to actually do something – An action that leads to a change in behavior • Persuasion is a deeper form of change than influence. Persuasion • Cognitive response model of persuasion: A model that views the most direct cause of persuasion as the self-talk of the target audience, not the persuasion method itself or its deliverer. Persuasion • Reasons why people may respond to a persuasive message: – Many people would like to build a more accurate view of the world and how it works. – People would like to be consistent with their own values (the consistency principle) in order to avoid cognitive dissonance. – People also care about what others think. Influence • Influence or Social influence: Encouraging a change in behavior that was caused by real or imagined external pressure. • Three behavior outcomes deriving from a successful influence attempt: – Conformity – Compliance – Obedience Influence • Conformity: Changing one’s behavior to match the perceived requirements of others. • Compliance: The act of changing one’s behavior in response to a direct request, and the request may come from someone who is not in authority over you. • Obedience: Changing one’s behavior in response to a directive from an authority figure. Influence • Six universal principles of influence – Social proof: A principle of influence that states people are more likely to want to do something if they believe that many others are doing the same thing or buying the same product. – Authority: A principle of influence that states people are more likely to say yes to a request or purchase a product if an authority says it is good to do so. Influence • Six universal principles of influence (cont.) – Liking: A principle of influence that holds that people are more likely to be influenced by those whom they like or with whom they have similarities. – Consistency: A principle of influence that indicates how people are influenced by showing how their previous statements or stated values fit with a recommendation or request. Influence • Six universal principles of influence (cont.) – Reciprocation: A principle of influence that states people are more likely to say yes to a request when the requester has done something for that person in the past. – Scarcity: A principle of influence that argues that people are more likely to buy a product or want to do something that they perceive as scarce, unique, or dwindling in availability. Influence • Social proof – People like to follow the crowd. – It is helpful to appeal to what the larger group is doing. – Using an opinion leader (or two) is quite important. – People faced with strong group consensus sometimes go along even though they think the others may be incorrect. Influence • Social proof (cont.) – Social validation is important in cultures with high group cohesiveness (East Asia). – To encourage a behavior, show that many others are doing that same thing, particularly people who are similar to those you are trying to influence. – To discourage a behavior, do not say that many others are doing the action you want to discourage. Influence • Authority – The authority principle is helpful to some extent because we do not have time to evaluate every decision we make. – Studies by Stanley Milgram. – People are more influenced by those who display their credentials and awards as a signal of their authority. Influence • Liking – People seek opinions from and are thus influenced by those who they like, are similar to, or feel connected with in some way. – Similarity increases liking. – Differences decrease liking and thus influence. – Managers can use similarities to build relations with external and internal customers. Influence • Liking (cont.) – Praise can establish liking while criticism can have the opposite effect. – Able managers can use praise to repair an already damaged relationship. – There are cultures where negative comments may be even more damaging than in others. – Focusing on others’ needs instead of talking about what you want can establish liking. Influence • Consistency – Once individuals go on record in favor of an idea or product, they typically prefer to stick to that position. – Thus, seemingly insignificant commitments can lead to large behavior changes. – Decision makers have a tendency to escalate their commitments to decisions that are not working out and should be terminated. Influence • Reciprocation – People are more willing to comply with requests from those who have provided something to them first. – Gifts can increase the number of donations. – Balanced reciprocity: Securing a promise of a near-immediate return for a favor done or a gift given; thought to be particularly important in China and in ethnic Chinese communities around the world. Influence • Scarcity – People find objects and opportunities more attractive to the degree that they are scarce. – Reactance: When we are told that we cannot have or do something, then we want it more. – Scarcity does not just influence consumers but also can be influential inside firms as well. Negotiations • Negotiating: A process in which at least two partners with different needs and viewpoints try to reach agreement on matters of mutual interest. Negotiations • Cognitive shortcuts and negotiation – Even in the careful, studied process of a long negotiation, decisions can be affected by: • Availability • Loss aversion • Consistency • Other heuristics Negotiations • Balance of power – In any negotiation, one side may have more leverage. – It is not always clear which firm has the power in a relationship. – Negotiating skill is especially critical because it can help maximize what you receive from the negotiations. Negotiations • Types of negotiations – Distributive (or fixed-pie) negotiations: This type assumes a fixed set of resources to bargain over, although this assumption may not be accurate and should be challenged by the other side. – Integrative (or expanding-pie) negotiations: This type looks aggressively for win-win solutions that also enlarge the resources that both sides might capture in negotiations. The Negotiation Process • Common biases that appear at the start of a negotiation: – Unrealistic expectations – Anchors – Escalation of commitment The negotiation Process • Unrealistic Expectations – Unrealistic expectations include those that are too high or too low – An under-confident negotiator who starts out by undervaluing his/her position and bargaining power will make unnecessary concessions or choose a low starting point (anchor), consequently affecting the outcomes of negotiation. The Negotiation Process • Anchoring – A cognitive bias that describes the common human tendency to rely too heavily, or, anchor on one piece of information when making decision. – During negotiation process, individuals may anchor on specific topic or value such as a starting price, and then discussion may proceed around that value. The Negotiation Process • The Best Alternative to a Negotiated Agreement (BATNA) – Decisions should not be evaluated in isolation, but must be assessed in the context of other reasonable alternatives at hand. – It is not very helpful to say that certain decision is bad and that you disagreed with it without proposing what you would have recommended instead. – Negotiators must be fully aware of their alternatives. – It is better to quit a lengthy negotiation than to accept a deal at a loss just to show something for the effort (escalation of commitment). The Negotiation Process • The importance of information – Having well-organized and relevant information is crucial to effective negotiations. – It is important to collect as much information as possible because most negotiators will not offer the information up front. The Negotiation Process • The importance of information - Common biases: – Most people make decisions based on vivid experiences and events – Unfortunately, memory is often selective and subject to the availability heuristic. – Individuals are often as impressed by the theatricality of a presentation as its substance. The Negotiation Process • A reservation price is the firm’s absolute bottom price that is acceptable. • Target price is the value that you would like to have. • Impasse: When a manager and his or her negotiating partner cannot reach an agreement. • Ultimatum: Requiring someone or a group to do specific thing in a specific way in order for negotiations to continue. The Negotiation Process • Framing – Negotiators can react differently to identical proposals when the framing changes. – Loss framing and the scarcity principle. • Fairness and trust – Most people are very sensitive to fairness issues. – The ultimatum game. The Negotiation Process • Positive emotion – Anger, pride, overconfidence, and over- competitiveness can work against you. – Negotiators who are in positive moods are more likely to achieve integrative agreements. The Negotiation Process • Culture in negotiations – A negotiation becomes cross-cultural when the parties involved belong to different cultures and therefore do not share the same values and behaviors. – Effective cross-cultural negotiations contain all the complexity of domestic negotiations with the added dimension of cultural diversity.
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