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Building Blocks of Negotiation

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Presentation on theme: "Building Blocks of Negotiation"— Presentation transcript:

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.

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