Page 239 - DMGT519_Conflict Management and Negotiation Skills

Unit 11: Gaining Leverage through Power and Persuasion

7. One’s BATNA and the ability to walk away from a negotiation are the same thing. Notes
8. The more intense your preference is for one alternative in a negotiation, the more power
you have because you are more committed.

9. Expert power in a negotiation is most often present if the parties have chosen skilled
negotiators to act on their behalf.
10. A persuasive argument can appeal to one’s rationality, motions or rely upon one’s
reputation.
11. Sarcastic or biting humor can relax the parties to a negotiation at tense moments.
12. In focusing one’s persuasive communication on the listener, the central route emphasizes
the analytical basis for the argument, the ideas, and the content of the message.



Case Study Power Negotiation

here are many occasions when a smaller company will want to form a partnership
with a larger organization to further their business objectives. There are two hurdles
Tthat the smaller company might have to overcome to succeed in the negotiation
process. The first problem is to get the larger organization’s attention as they may express
little or no interest in the partnership. The second problem revolves around the prickly
issue of negotiating from a much weaker power base. There exists the danger that the
smaller party’s business goals aren’t overwhelmed by the more powerful negotiating
partner during the negotiation process.
Although the following case study entails a similar problem faced by two countries, the
lessons learned can be applied to any similar business negotiation model. On October 3,
1987, The Free Trade Agreement (FTA) was signed by representatives of Canada and the
United States after two strenuous years of intense negotiations.

Canada could be described as a medium sized economy. Its population is 1/10th the size
of the U.S. which is considered an economic superpower in comparison. Canada is
economically dependent on the United States. The reason is mainly due to its small domestic
market, scattered over a vast geographical locale. More than 75% of its exports go to the
U.S. making the U.S. Canada’s prime trading partner. By contrast, the U.S. was exporting
less than 20% of its products to Canada.
In the 1970’s, Canada’s economic health rose and fell like the proverbial yo-yo. It was too
resource based and needed to add some meat to its manufacturing industry to stabilize the
economy. A Royal Commission concluded that Canada’s only means to achieve this
stability was to engage in an open free trade partnership with the United States.
The problem was that the United States wasn’t especially interested in such a free trade
partnership agreement. The U.S. was in addition also becoming increasingly protectionist
during this same time period. The result was that Canada was facing a whole host of
penalties and countervailing actions against Canadian goods. Canada clearly needed a
plan.

The first step that Canada took was in the form of preparation by developing a succinct
plan. A chief negotiator, Simon Reisman, was appointed by the Canadian Prime Minister
himself. He established an ad hoc organization called the trade negotiations office (TNO)

Contd....

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