1. Building Blocks of Negotiation

2. What Is Negotiation?
Leigh Thompson: “An interpersonal decision-making process necessary whenever we cannot achieve our objectives single-handedly”
Ex. Buying a car; buying a house; things at work
Most people are not great negotiators b/c of:
Faulty feedback
Confirmation bias
Ego-centrism
Satisficing—settling for less
Self-Reinforcing Incompetence

3. Myths of Negotiation 1. Negotiations are fixed-sum.
2. You need to be either tough or soft.
3. Good negotiators are born.
4. Experience is a great teacher.
5. Good negotiators take risks.
6. Good negotiators rely on intuition.

4. Preparation Is the Key Situation & parties Issues & bargaining mix
Interests
Goals
Bids & tactics
Limits & alternatives

5. BATNA Best Alternative to a Negotiated Agreement (Fisher & Ury, 1981)
Good for:
Knowing when to walk away
Testing proposals
Accepting things that are superior to your BATNA and rejecting things that are inferior to your BATNA

6. BATNA
Realistic, not idealistic
Not static
Stick to it

7. Example: Car Buying How do you strengthen your BATNA?
What makes a dealer’s BATNA stronger?

8. Car Buying $19,000=compromise $15,000 $18,000 $20,000 $22,000
Your AP
Dealer’s RP
Your RP
Dealer’s AP
$15,000
$18,000
$20,000
$22,000
Bargaining Zone
$19,000=compromise

9. Example: Job Hunting Your BATNA Recruiter’s BATNA
How is it strengthened?
Recruiter’s BATNA
How is it weakened?

10. Reservation Point Lowest point you can go
Ex: If BP offered you a job, what would Exxon-Mobile have to offer to match it?
Includes any relevant issues
Determines when you should walk away

11. Reservation Point – Job Hunting
Exxon’s Offer?
Shell salary offer
BP salary offer
$46,000
$50,000

12. Target Point Your ideal goal Your RP - BP $50,000 Exxon’s TP $52,000
Your TP
$55,000
Exon’s RP
$57,000

13. Bargaining Range Exxon’s Bargaining Range Your Bargaining Range
Your RP - BP
$50,000
Your TP
$55,000
Exxon’s TP
$52,000
Exon’s RP
$57,000

14. Bargaining Zone
The range of negotiated outcomes that are acceptable to all parties
Your RP - BP
$50,000
Your TP
$55,000
Exxon’s TP
$52,000
Exon’s RP
$57,000
Your Bargaining Range
Exon’s Bargaining Range

15. Negative Bargaining Zone
Exxon’s Bargaining Range
Your Bargaining Range
Exxon’s TP
$40,000
Your RP
$50,000
Exxon’s RP
$45,000
Your TP
$57,000

16. So What? BATNA & Reservation Point Target Point Bargaining Range
Judge agreements
Improve agreements
No raw deals
Target Point
Something to shoot for
Bargaining Range
Determines flexibility in strategy & concessions
Bargaining Zone
Know if agreement is possible

17. Anchor Point Reference point Can be arbitrary
Adjusted as appropriate
Can be arbitrary
Set your anchor first!…sometimes
(Make the 1st offer w/ a good
anchor)

18. No preparation = no success.
The big idea
Preparation is the key.
No preparation = no success.