L1 Introduction Flashcards
Why is negotiation so important in your career?
- Decision making in organizations is becoming decentralized: less hierarchy means continuous negotations.
- In an increasingly freelance economy you need to negotiate every gig/project.
- And in an entrepreneurial environment, you have to negotiate many deals.
Which interests interact during a negotation?
Organization & Individual
What is negotiation?
- A process in which two or more parties exchange goods or services and attempt to agree upon the exchange rate for them.
- Interpersonal decision-making process necessary whenever we cannot achieve our objectives single-handedly.
Which can be the different scopes of negotiation?
- One-on-one / Multiparty
- Few dollars / Billions of dollars
- Few minutes / Years
- Single encounter / Long-term relationship
- Single issue / Multiple issues
Explain the different types of negotations (depending on the parties involved in the negotation).
1) Between two or multiple persons (salary negotiations, division of tasks within a team)
2) Between two or multiple organizations (mergers and acquisitions, joint ventures)
3) Between two or multiple countries (border-conflicts, EU negotiations such as Brexit)
4) Between an organization and a social movement (Shell vs climate activists)
5) Between an organization and a state (UN vs Israel)
What is a single issue, distributive negotation?
One party’s gain is the other party’s loss.
What is the Target / Aspiration point?
The price you would be happy with.
What is the Reservation point?
The price at which you are indifferent between getting the deal or not getting it (worst acceptable outcome).
What is the Bargaining zone / Zone of possible agreements?
The range between reservation points of both negotiatiors (both coincide in this zone)
Which are the problems that might arise determining the Aspiration point?
1) Underaspiring negotiatior: settles for too low and the first offer is often accepted immediately.
2) Overaspiring negotiator: wants to settle for too high, refuses to make consessions.
3) Grass is greener negotiator: doesn’t know what s/he wants to settle for, only that it’s more/different than what the other party is willing to offer (reactive).
How do you determine the Reservation point?
1- Consider the consequences of failing to reach an agreement, and know your alternatives.
2- Determine your BATNA (Best Alternative To a Negotiated Agreement) and quantify it
It determines the lowest value acceptable (e.g., MBA student is offered 60.000€ by company A, but he is interested in company B. His BATNA = 60.000€ from company A).
(example) What would be your BATNA when trying to sell a house?
Your BATNA would be your best alternative to not selling the house by a certain time (e.g., rent it, tear it down and sell the land, keep the house on the market indefinitely, etc.)
What is the purpose of a BATNA?
Your BATNA protects you against:
- Accepting an agreement you should reject.
- Rejecting an agreement you should accept.
If you don’t reach an agreement, you should settle for your BATNA.
True / False
True - It is better than impasse
BATNAs are time-sensitive.
True / False
True
