Negotiation Section 01: Negotiation Fundamentals

Transcript:Negotiation Section 01: Negotiation Fundamentals:
Negotiation Section 01: Negotiation Fundamentals Chapter 02: Strategy and Tactics of Distributive Bargaining © 2019 McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. The Distributive Bargaining Situation The target point is a negotiator’s optimal goal. Also called a negotiator’s aspiration. The resistance point is a negotiator’s bottom line. Also called a reservation price. The asking price is the initial price set by a seller. The buyer may counter with their initial offer. The spread between resistance points – the bargaining range, settlement range, or zone of potential agreement – is important. When the buyer’s resistance point is above the seller’s, there is a positive bargaining range. 2 The Role of Alternatives to a Negotiated Agreement What will you do if no agreement is reached? What is your best alternative to a negotiated agreement – BATNA? What is your worst alternative to a negotiated agreement – WATNA? Alternatives give negotiators the power to walk away. Negotiators can set their goals higher and make fewer concessions. Good bargainers know their realistic alternatives before starting discussions and try to improve their alternatives during negotiation. Strong BATNAs can influence how a negotiation unfolds. Negotiators with strong BATNAs usually make the first offer. Benefits of a good BATNA are strongest when the bargaining range is small and negotiations are competitive or unlikely to reach agreement. 3 Settlement Point The fundamental process of distributive bargaining is to reach a settlement within a positive bargaining range. Both sides want to claim as much of the bargaining range as possible. Both parties know they may have to settle for less than they prefer, but hope it is better than their own resistance point. Both must believe the settlement is the best they can get. Very important, both for the agreement and for the support of the agreement after negotiation ends. Another factor affecting satisfaction with the agreement is whether the parties will see each other again. Those expecting future negotiations with the other party are less likely to use distributive bargaining. 4 Bargaining Mix The package of issues for negotiation is the bargaining mix. Each item in the mix has its own starting, target, and resistance points. Some items are important to both parties, others only to one party. Negotiators need to understand what is important to them and