negotiation

Question 1

negotiation definition

Answer 1

art and science of securing an agreement between two or more interdependent parties who are seeking to maximize their outcomes. the negotiated agreement will guide and regulate their future behavior

-multiple parites
-interaction based
-seeking to reach agreement
-formally/informally guides and regulates behavior

Question 2

basic concepts

Answer 2

BATNA (best alternative to a negotiated agreement)

aspiration level/ target

reservation price

bargaining zone

Question 3

BATNA

Answer 3

best alternative to a negotiated agreement

 What are you going to do if you do not
make a deal with this person?
 Determined by your available
alternatives
 Defines most you will pay (buyer) &
least you will accept (seller)
 Key source of power: Ability to walk
away

Question 4

batna = your ____

Answer 4

greatest source of power

do everything you can to improve your batna before you negotiate (e.g. alternative trading partners)

your counterparts’ perceptions of your BATNA are also very important
- give a positive impression about your batna, but dont disclose specific values of your batna

Question 5

aspiration level/target

Answer 5

your “ideal” settlement price or outcome

Question 6

RP = reservation price

Answer 6

point of indifference or “walk-away” point

Your BATNA +/- factors that make you want to do this deal (opportunity costs, switching costs, ego)

E.g., how much you are willing to spend (buyer); least you can accept (seller)

Never reveal your reservation point

Question 7

bargaining range (ZOPA)

Answer 7

zone of possible agreements

the ZOPA is the range between the buyer’s reservation price and the seller’s reservation price

Question 8

interests

Answer 8

central concerns underlying one’s preferences

e.g. profitability; quality; timing; sense of fairness

Question 9

additional basic concepts

Answer 9

interest

issues

distributive vs. integrative negotiations

Question 10

issues

Answer 10

specific items to be negotiated

e.g. price, delivery date, etc

Question 11

types of issues

Answer 11

compatible issues
- goals that exist in parallel
- my needs = your needs

options here:
momentum building
strategic misrepresentation

Question 12

types of issues

Answer 12

distributive/competitive issues

areas in which desires are directly opposed
“zero-sum” issues

options:
concession making
hardball negotiation
fairness

Question 13

types of issues

Answer 13

integrative issues
- goals are not completely in opposition
- may see beneficial trades and deals that vary in efficiency

options:
exchanging information and maximizing the pie
guarding information to avoid exploitation

Question 14

distributive negotiations

Answer 14

involve fixed-sum games - one person’s gain is another person’s loss

almost directly conflicting interest - each party is attempting to maximize his/her share of the fixed-sum payoff

simply dividing the “pie”
parties often dont know how large the “pie” actually is or how small a piece the other party will settle for

Question 15

Integrative Negotiations

Answer 15

Involves finding opportunities for both
parties to get more of what they want

Discovering opportunities to add more value
to the deal

Growing the pie
 Multiple Issues are present
 Participants are Cooperative; willing to share
information
 Multiple Solutions are considered
 Complex Packages are compared

Question 16

negotiation summary

Answer 16

negotiations are usually multi dimensional

claiming value is only half the story

focus on interest (80/20 rule)

balance cooperative and competitive components

Question 17

logrolling

Answer 17

Logrolling negotiation can make both parties feel seen, heard, and respected. For example, you can accept some of their terms such as the price of the product. However, in return, you will ask them for the delivery time to be much faster than before.