Managerial Decision Making - Assignment Example

Managerial Decision making Managerial Decision making Question Eventually, the United s and Iran will have to sit down andnegotiate the use of nuclear power. Discuss the issues that could be involved in such a negotiation. What cognitive mistakes might be made by the negotiators in this case? How could these mistakes be overcome in order to reach an acceptable agreement? For a long time, the US and Iran have been at a stalemate on the Iran’s nuclear program. While the US pushes for abandonment of nuclear program in Iran for fear that the country may develop weapons of mass destruction, Iran has maintained its program is for civilian purposes only. Despite the enormous pressures through sanctions and other measures by the US and its allies, Iran has held ground that it will not stop its nuclear programs. After many rounds of negotiations, it is clear that the US cannot achieve its goal of convincing Iran to stop its nuclear programs and hence this stalemate will have to be addressed by approaching the negotiation table using other approaches. In a stalemate negotiation, the issues of concern must shift from hard-line positions to new ones, which will ensure that the fears of each group are met and addressed. In this case, the solution shifts from a competitive approach where each group wants to win, to a new approach where each group wins, that is, a win-win solution (Bazerman & Moore, 2009). In these negotiations, the issues always boil down to US wanting to reduce Iran’s nuclear infrastructure and Iran seeking to maintain them, which leads to a stalemate at the end. In such a negotiation, it is important to identify the issues of agreement between the two parties, then the issues of contention and hence decide where to compromise and also where necessary come up with new solutions discussed together on the table. Further the two groups must now frame the agendas of the negotiations in a more promising way. Like in any negotiation, cognitive mistakes can happen in such a negotiation. Such mistakes include irrational escalation of commitment, self –serving biases, negotiator overconfidence and issues and problem framing. To avoid irrational escalation of commitment, it is important to have an external advisor, who warns the group when they start acting irrationally when in the heat of the negotiations. In addition, to self-serving biases, it is important for negotiators to listen to others and consider their motivations for their positions in the process (Foreman & Selly, 2001). Negotiator overconfidence may lead negotiators to believe that their positions are more accurate than they are. In order to avoid this, the negotiators must need to come to the enable with open minds to hear the other side of the story from the other negotiators. Lastly, to avoid issues and problem framing, the negotiators must frame the agenda is such a way that will capture the desires of each group. Question 2: Assume that you are part of a mediation team that has been brought in to help overcome an impasse between negotiators who are deliberating the use of embryonic stem cells for a research project. The decision makers are polarized along ethical and religious lines. Since this is a potentially emotional issue, what would you do in order to break this impasse? How could the fixed pie concept come into play in this situation?  In the case where there is in impasse, it is important for the mediator to understand the main issues of contention and why there is a stalemate. In the case, of deliberating the use of embryonic stem cells, emotional, ethical and religious issues take a center stage resulting to a stalemate, which without a proper solution spells doom to the negotiations process (Frame, 2012). In the impasse above, it is evident that the two groups are approaching the issues in such a manner that bowing down to the other’s demand is accepting defeat. Such a case is reflective of a ‘fixed pie’ mentality, where the two sides assume that there is a fixed amount of what to be negotiated and hence for one to win, the other must lose. In order to break such an impasse, it is important for one or both to compromise and accepting promises that will enable them to expand the size of their pie. As a mediator in the case above, it is important to prevail over the groups to understand have a more in depth understanding of each others’ preferences and hence eliminate their invalid fixed positions, which may be irrelevant and affecting the discussion(Bazerman & Moore, 2009). The fixed pie mindset leads negotiators to assume that many competitive situations are win-lose, which effective deprives the process of valuable solutions, which can benefit the parties even higher than the win-lose solutions they may have preference for(Foreman & Selly, 2001). The mediator must therefore give the groups solutions and approaches that enable them to grow their pie of value in the negotiation process, by accepting compromises and mutually beneficial tradeoffs between the issues of contention and situations and hence resulting to a win-win situations. In the case of the deliberations on the use of the use of embryonic stem cells, the mediator can request the two groups to compromise on each other’s fixed positions by finding ways through which the research project can go on without rising emotions or touching on the religious views of those opposed to the project (Frame, 2012). Question 3: We have each had to negotiate during the process of purchasing a home or automobile. Analyze the last major purchase that you were involved with and discuss that purchase in terms of the decision-analytic approach. What was your BATNA and how did that come into play?  I recently purchased a car and this involved going to different car dealers to find a car I wanted at the price I had budgeted for. However, this process was not as easy as I had envisioned as the prices and the conditions of the car were not easy to match. In many cases, I would find a car in bad condition but the right price or a car in the right condition but the wrong price. I was able to find one car which was in the near right conditions and right prices but chose to look further for a better deal. When I finally found one whose price was higher than the other car, but the same condition, I decided to negotiate with the dealer to sell it to me at a lower price. I was only ready to buy the car at a lower or equal price to the other car. In this case, I had to think decision of whether to buy or not and what I stood to gain or lose if I chose to buy or not. The approach used is referred to as a decision-analytic approach, where a negotiator must think through his/her decisions and positions before going to the negotiation table (Frame, 2012). The approach allows negotiators to understand the motivations, preferences and options of the other negotiators and hence approach the process with a better mindset. In the process of negotiation, have a Best Alternative to a Negotiated Agreement (BATNA) is very important as it allows one to negotiate knowing that in the event on non-agreement, there is an alternative to fall to (Bazerman & Moore, 2009). In the case of purchasing the car, I had another car as a BATNA, where I was ready to go to in the event that the negotiations to buy the car from the second dealer failed. With this in mind, I was able to compromise less and pushed the dealer further to sell the car at a cheaper price than I had budgeted without compromising on the car’s quality. Question 4: Discuss the four ways, outlined in Chapter 9, in which contingent contracts can improve the outcomes of negotiations for both sides. Contingent contracts in negotiation allow negotiators to make agreement which have conditions on what to be done for the failure of any other the parties to follow through the agreement (Bazerman & Moore, 2009). Contingent contracts or agreements are important where negotiations reach a stalemate and its terms are not final but rather based on certain events happening or conditions occurring (Bazerman and Moore, 2009). They specify the outcomes of a contingent contract, which will happen if the two parties do or fail to do what they are expected to do. Contingent contracts are important in that they help the parties to reach an agreement and also to further them to comply with such agreements. Firstly, contingent contracts helps the two parties become more ethical negotiators. In this case, the negotiators are likely to think through their motivations for the negotiation. In addition, they are more likely to follow through their promises and agreement as they are aware of the repercussions of breaching the agreement (Foreman & Selly, 2001). Secondly, contingent contracts help negotiator agree to disagree. In this case, each party understands that there cannot be a satisfactory solution to the process (Frame, 2012). Consequently, setting out contingent contracts is a good option to help find better ways of going forward. Thirdly, it allows the negotiators to understand each other’s biases and finding ways to approach these biases in a way which will allow for a solution to be reached (Frame, 2012). Lastly, it helps promote trust among the parties as each understands that the other must comply or else the specified actions will effected. In many cases, the failure to comply leads to events or actions which the defaulter would not consider desirable to the set preferences, while compliance leads to better results. Therefore, each member is assured of the success of the agreement the other party will follow through the agreement for fear of the repercussions. It is therefore evident that contingent contracts are good in solving negotiations that have reached a stalemate.   References Bazerman, M., & Moore, D. (2009). Judgment in managerial decision making. Hoboken, NJ. Foreman, E., & Selly, M. (2001). Decision by objectives: How to convince others that you are right. River Edge, NJ: World Scientific Publishing Company. Frame, J. (2012). Decision-making that accounts for irrationality, people and constraints. Somerset, NJ: John Wiley & Sons. Read More