1 / 16

Negotiation

Negotiation. Distributive Bargaining (Continued). Distributive Bargaining (recap). This type of negotiation is called distributive bargaining. There is a fixed amount and you must negotiate. Know when you’re in a distributive bargaining situation. Gather information, develop BATNA

zeph-shields
Download Presentation

Negotiation

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Negotiation Distributive Bargaining (Continued)

  2. Distributive Bargaining (recap) • This type of negotiation is called distributive bargaining. There is a fixed amount and you must negotiate. • Know when you’re in a distributive bargaining situation. • Gather information, develop BATNA • Make the first offer, be aggressive • Know your reservation point and DO NOT go beyond it. • Engage in tit-for-tat concession-making.

  3. RP and BATNA • Are the Reservation Point and Best Alternative the same? • When might they not be?

  4. Anchors • Set the tone in a negotiation • Can be a random number (e.g., used car activity) or based on some piece of information (e.g., Kelly blue book) • Does it have to be a reliable piece of information? • From Ch 3: How did Peter Ueberroth use anchoring to make the 1984 Olympics profitable?

  5. Reference points • What do we do in the absence of credible reference points? • 1984 Olympics • Japanese baseball players • Libel case

  6. Key Concepts • Best alternative to a negotiated agreement (BATNA) – aka “best outside option” or “plan b” • Reservation Point (RP) – indifference point • Your bottom-line, walking away point • Your BATNA +/- things that make you want this deal • Target price or aspiration point • Sometimes people have two: “optimistic” and “realistic” – could focus on one: “ambitious yet imaginable” • Zone of potential agreement (ZOPA) or bargaining zone • Space between two party’s RP’s; can be negative.

  7. BATNA • Pawn Shop (Buyer) • BATNA is not buying the item • But their business depends on buying/pawning and selling, so they want to make deals • Seller • Not selling/pawing the item. Different for each seller. • Some want/need to sell the item to make money

  8. Target Price • Pawn Shop • A low amount, they want to make money selling the item • Seller • A high amount • Some times unreasonable, or inflated by their sentimental value

  9. Reservation Point • Pawn Shop (Buyer) • They need to make money selling the item. • Their RP is based on what they feel the item will sell for minus the profit they want to make selling it. • Desired Profit = (Retail Price) – (Reservation Point) • $300 = $1000 - 700 • Seller • Usually set their RP beforehand • May just be a number they feel the item is worth • Might be the money they need to buy something else

  10. Zone Of Potential Agreement • The area between the two RP’s • If the Pawn Shop is willing to take an item for as high as $500 and the seller will sell for as low as $300, then they will negotiate a price between $300-500. • An agreement can be made • If the Pawn Shop is only willing to buy for as high as $1000, and the seller won’t take less than $1500, then they can’t negotiate • Walk away, no deal

  11. Bargaining Zone – ZOPA Example Pawn Shop’s aspiration range Settlement range Seller aspiration range Pawn Shop’s aspiration level: $200 Seller reservation point: $300 Pawn Shop’s reservation point: $500 Seller aspiration level: $800

  12. Negative ZOPA Pawn Shop’s aspiration range Settlement range Seller aspiration range Pawn Shop’s aspiration level: $700 Pawn Shop’s reservation point: $1000 Seller reservation point: $1500 Seller aspiration level: $2000

  13. Pawn Stars – Concepts to watch for • Anchors • First offer, New information • Reservation Point • Do people stick to it? • ZOPA • Does one exist? Can we make a deal?

  14. More on Negotiation • Haggling 101 • Art of the Deal

  15. Take away from Pawn Stars • Develop a reservation point, stick to it. Be prepared to walk away if you can’t get it. • Sentimental value usually means nothing to the person you’re negotiating with. • Do your research on alternatives and value. • Make a strong, but reasonable, first offer (set an anchor). • Setting anchors is a skill

More Related