Transcript Basics of Negotiation

Building Blocks of
Negotiation
What Is Negotiation?
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Leigh Thompson: “An interpersonal decisionmaking process necessary whenever we cannot
achieve our objectives single-handedly”
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Ex. Buying a car; buying a house; things at work
Most people are not great negotiators b/c of:
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Faulty feedback
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Confirmation bias
Ego-centrism
Satisficing—settling for less
Self-Reinforcing Incompetence
Myths of Negotiation
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1. Negotiations are fixed-sum.
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2. You need to be either tough or soft.
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3. Good negotiators are born.
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4. Experience is a great teacher.
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5. Good negotiators take risks.
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6. Good negotiators rely on intuition.
Preparation Is the Key
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Situation & parties
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Issues & bargaining mix
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Interests
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Goals
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Bids & tactics
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Limits & alternatives
BATNA
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Best Alternative to a Negotiated
Agreement (Fisher & Ury, 1981)
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Good for:
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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
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Realistic, not idealistic
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Not static
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Stick to it
Example: Car Buying
How do you strengthen your BATNA?
What makes a dealer’s BATNA stronger?
Car Buying
Your AP
$15,000
Dealer’s RP
$18,000
Your RP
$20,000
Bargaining Zone
$19,000=compromise
Dealer’s AP
$22,000
Example: Job Hunting
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Your BATNA
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How is it strengthened?
Recruiter’s BATNA
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How is it weakened?
How is it strengthened?
Reservation Point

Lowest point you can go

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Ex: If BP offered you a job, what would ExxonMobile have to offer to match it?
Includes any relevant issues
Determines when you should walk away
Reservation Point – Job Hunting
Exxon’s Offer?
Shell salary
offer
$46,000
BP salary
offer
$50,000
Target Point
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Your ideal goal
Your RP BP
$50,000
Exxon’s TP Your TP
$52,000
$55,000
Exon’s RP
$57,000
Bargaining Range
Exxon’s Bargaining Range
Your Bargaining Range
Your RP BP
$50,000
Exxon’s TP
Your TP
Exon’s RP
$52,000
$55,000
$57,000
Bargaining Zone

The range of negotiated outcomes that are
acceptable to all parties
Exon’s Bargaining Range
Your Bargaining Range
Your RP BP
$50,000
Exxon’s TP
Your TP
Exon’s RP
$52,000
$55,000
$57,000
Negative Bargaining Zone
Exxon’s
Bargaining
Range
Exxon’s TP
$40,000
Your
Bargaining
Range
Exxon’s RP
Your RP
Your TP
$45,000
$50,000
$57,000
So What?
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BATNA & Reservation Point
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Target Point
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Something to shoot for
Bargaining Range
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Judge agreements
Improve agreements
No raw deals
Determines flexibility in strategy & concessions
Bargaining Zone
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Know if agreement is possible
Anchor Point
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Reference point
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Adjusted as appropriate
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Can be arbitrary
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Set your anchor first!…sometimes
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(Make the 1st offer w/ a good
anchor)
The big idea
Preparation is the key.
No preparation = no success.