lecture 4 : negotiation and communication

Question 1

structure of a negotiation

Answer 1

1. distributive bargaining (win/lose, single issue)
2. integrative bargaining (win/win, multiple issues)
3. congruent bargaining (similair preferences)

Question 2

distributive bargaining

Answer 2

• claim value is necessary in any negotiation
• if it is the only thing that negotiators do, we call it a purely distributive (zero-sum) negotiation
• cues for a purely distributive bargain = single issue (money), no (salient) future relationships, no side deals, money is lump sum (all up front)

Question 3

distributive strategies

Answer 3

1. BATNA –> best alternative to the negotiated agreement. we choose this if there is no deal
2. RP (reservation price) –> a good negotiator would agree to anything above the RP (bottom line), RP = BATNA + transaction costs –> objective walk away point, bottom line, final price, you are either going to accept the deal or go to BATNA
3. target –> ambitious realistic outcome, anything between the RP and target is good
4. aspiration –> best outcome imaginable even if it is unlikely

bottom target is not the same as RP

Question 4

strategic advice for expectation

Answer 4

set an ambitious target, but use your batna as an expectation, so you don’t get dissapointed

Question 5

zone of possible agreement

Answer 5

the zone between the seller’s BATNA + transaction costs and the buyer’s BATNA + transaction costs

Question 6

objective vs psychological reference points

Answer 6

beyond BATNAs there are multiple focal points :
- past purchased price
- past appraised value
- appraised value
- the selling price of comparable

Question 7

what if the other negotiator makes the first offer?

Answer 7

• don’t make a priori concession (compromise)
• respond with your strategically planned aspiration
• don’t punish with an even more extrem offer

Question 8

integrative bargaining

Answer 8

if the bargaianing zone or ZOPA of two parties doesn’t intersect, you have to shift from single issue to multiple issue
beware of the fixed pie bias (that there can only be one winner and the other must lose), create your own values

Question 9

sandwhich feedback technique

Answer 9

give praise –> give critique –> give praise

Question 10

congruent bargaining

Answer 10

a negotiation where both parties’ approach are align, there are a few factors :
- people : separate people from problems
- interests : focus on interests, not positions
- options : generate a lot before deciding
- criteria : generate result based on an objective standard

Question 11

6 steps of critical conversation

Answer 11

1. set up the conversation in a formal manner
   - prepare and review document
   - set up a private setting (1-1)
   - avoid walking the associate to the room and chit-chatting
2. describe the issue objectively
   - use professional tone
   - never use personal words
3. describe the consequences of their actions
4. provide feedback for improvement
5. active listening (repeat your points if necessary)
6. document and sign-off