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Management article
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Reference no. SMR3936
Authors: S Doctoroff
Published by: MIT Sloan School of Management
Published in: "MIT Sloan Management Review", 1998
Length: 11 pages

Abstract

How can organizations make their negotiations more efficient and rewarding? Managers must recognize that negotiations inside the organization strongly influence the outcome of negotiations outside the organization. Using the example of Alta Systems, an information technology consulting services company, the author illustrates how internal and external negotiations processes are integrally linked and describes how managers can enhance negotiation results by improving those processes. Alta''s difficult negotiations with an important client demonstrate the obstacles that arise when organizations are balancing internal and external negotiations: negotiators walk away from good deals because these do not match the organization''s stated position or they agree to suboptimal deals because the organization views any agreement as better than no agreement; negotiating parties fail to explore underlying interests and see the other''s perspective; negotiators function as advocates rather than as joint problem solvers; internal and external negotiations are compartmentalized; and the parties do not discuss the negotiations process. Managers of negotiators can take the following actions to overcome these obstacles: Choose wisely among options and alternatives. Use internal prenegotiations to gain agreement on the organization''s best alternatives and to clarify the negotiator''s role and authority in gathering information, sharing interests and alternatives, and committing to deals. Change the negotiator''s role. Treat negotiators as ''handymen'' who undertake different tasks at different times; negotiators may serve, for example, as meeting facilitators or problem solvers as the need arises. Integrate internal and external negotiations. Institute flexible processes that survey the interests of all parties and encourage ongoing interaction among internal and external groups. Explicitly discuss the negotiations process. Encourage negotiators to set meeting agendas that focus on establishing the long-term plans, goals, and purposes of the negotiations. Communications within organizations too often sabotage the success of negotiations with suppliers, customers, and clients. By taking steps to align internal and external negotiations, managers can significantly increase the value that their organizations derive from any agreement.

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Abstract

How can organizations make their negotiations more efficient and rewarding? Managers must recognize that negotiations inside the organization strongly influence the outcome of negotiations outside the organization. Using the example of Alta Systems, an information technology consulting services company, the author illustrates how internal and external negotiations processes are integrally linked and describes how managers can enhance negotiation results by improving those processes. Alta''s difficult negotiations with an important client demonstrate the obstacles that arise when organizations are balancing internal and external negotiations: negotiators walk away from good deals because these do not match the organization''s stated position or they agree to suboptimal deals because the organization views any agreement as better than no agreement; negotiating parties fail to explore underlying interests and see the other''s perspective; negotiators function as advocates rather than as joint problem solvers; internal and external negotiations are compartmentalized; and the parties do not discuss the negotiations process. Managers of negotiators can take the following actions to overcome these obstacles: Choose wisely among options and alternatives. Use internal prenegotiations to gain agreement on the organization''s best alternatives and to clarify the negotiator''s role and authority in gathering information, sharing interests and alternatives, and committing to deals. Change the negotiator''s role. Treat negotiators as ''handymen'' who undertake different tasks at different times; negotiators may serve, for example, as meeting facilitators or problem solvers as the need arises. Integrate internal and external negotiations. Institute flexible processes that survey the interests of all parties and encourage ongoing interaction among internal and external groups. Explicitly discuss the negotiations process. Encourage negotiators to set meeting agendas that focus on establishing the long-term plans, goals, and purposes of the negotiations. Communications within organizations too often sabotage the success of negotiations with suppliers, customers, and clients. By taking steps to align internal and external negotiations, managers can significantly increase the value that their organizations derive from any agreement.

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