Presentation on theme: "Building Blocks of Negotiation. What Is Negotiation? Leigh Thompson: An interpersonal decision- making process necessary whenever we cannot achieve our."— Presentation transcript:
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 Satisficingsettling for less Self-Reinforcing Incompetence
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.
Preparation Is the Key Situation & parties Issues & bargaining mix Interests Goals Bids & tactics Limits & alternatives
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
BATNA Realistic, not idealistic Not static Stick to it
Example: Car Buying How do you strengthen your BATNA? What makes a dealers BATNA stronger?
Car Buying Your APDealers RPYour RPDealers AP $15,000 $18,000$20,000$22,000 Bargaining Zone $19,000=compromise
Example: Job Hunting Your BATNA How is it strengthened? Recruiters BATNA How is it weakened? How is it strengthened?
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
Reservation Point – Job Hunting Exxons Offer? BP salary offer $50,000 Shell salary offer $46,000
Target Point Your ideal goal Your TP $55,000 Exxons TP $52,000 Your RP - BP $50,000 Exons RP $57,000
Bargaining Range Your RP - BP $50,000 Your TP $55,000 Exxons TP $52,000 Exons RP $57,000 Your Bargaining Range Exxons Bargaining Range
Bargaining Zone The range of negotiated outcomes that are acceptable to all parties Your RP - BP $50,000 Your TP $55,000 Exxons TP $52,000 Exons RP $57,000 Your Bargaining Range Exons Bargaining Range
Negative Bargaining Zone Exxons TP $40,000 Your RP $50,000 Exxons RP $45,000 Your TP $57,000 Exxons Bargaining Range Your Bargaining Range
So What? BATNA & Reservation Point 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
Anchor Point Reference point Adjusted as appropriate Can be arbitrary Set your anchor first!…sometimes (Make the 1 st offer w/ a good anchor)
The big idea Preparation is the key. No preparation = no success.