Managing Negotiations: Getting to Yes
Lecture 1 01-11-2022
Introduction and essentials
“There is dramatic (and disturbing) evidence that most people do not live up to their
negotiating potential.” (Thompson, 2015) Good news: You can do something about it!
Negotiating can be learned.
- Naturally gifted negotiators are rare
- Effective negotiation requires practice and feedback
Is negotiation about being becoming the smartest person in the room? No, you want to make
a deal in which both sides are happy.
- Course is not about outsmarting/tricking the other
- Ideal if your ‘opponent’ is also trained in negotiation.
- Finding a deal that is good for both sides is difficult.
- Best outcomes when both negotiators are experts
Multidisciplinary field:
Negotiation is everywhere
Importance of negotiation in career
- Average person stays in job 4.4 years (Meister, 2012)
- Decentralized decision making in businesses: less hierarchy means continuous
negotiations
- Freelance economy: negotiating every gig/project!
- Entrepreneurial environment: negotiating many deals!
1
,Integrating interests:
In the overlapping area is where you can make deals.
Definitions of negotiation:
- “A process in which two or more parties exchange goods or services and attempt to
agree upon the exchange rate for them” (Robbins, 2001) is a very narrow definition.
- “Negotiation is and interpersonal decision-making process necessary whenever we
cannot achieve our objectives single-handedly” (Thompson, 2015) is a more broad
definition.
Scope:
Types:
- Between two persons or multiple persons – salary negotiations, division of tasks
within a team
- Between two organizations or multiple organizations – mergers and acquisitions, joint
ventures
- Between two countries or multiple countries – border-conflicts, EU negotiations
- Between an organization and a social movement – e.g. shell vs climate activists
- Between an organization and a state – e.g. UN vs Israel
Single issue, distributive negotiation:
Here it’s true that one party wants to trick the other party. One party’s gain is the other party’s
loss.
2
,Target points, reservation points & bargaining zone:
Reservation point is the highest the buyer can go or the lowest the seller can go. Target
points are the goals of the buyer or seller. A deal in the bargaining zone is doable for both
sides, between reservation point seller and reservation point buyer.
- Target point = price you would be happy about
- Reservation point = price at which you are indifferent between getting the deal or not
getting the deal (worst acceptable outcome)
- Bargaining zone / zone of possible agreements = range between reservation points of
both negotiators
How to determine aspiration (target) point?
Three problems might arise when determining target point.
- Under-aspiring negotiator – settles for too low, often, first offer is accepted
immediately.
- Over-aspiring negotiator – wants to settle for too high, refuses to make concessions
- Grass is greener negotiator – doesn’t know what she/he wants to settle for, only that
it’s more/different than what the other party is willing to offer (reactive)
How to determine reservation point?
You need to know when to walk away! Before you start negotiating, you should determine
your reservation point (price at which you are indifferent between getting the deal or not
getting the deal)
Consider the consequences of failing to reach an agreement, and know your alternatives.
Determine your BATNA (= your Best Alternative To a Negotiated Agreement) and quantify it.
What is the purpose of a BATNA?
Your BATNA protects you against
- Accepting an agreement you should reject
- Rejecting an agreement you should accept
Characteristics of the BATNA:
- Determines lowest value acceptable
- If you don’t reach agreement, settle for your BATNA
- Any deal higher than your BATNA is better than impasse
3
, BATNA’s are time-sensitive!
The better your BATNA, the greater your power.
Negotiation power is NOT (directly) defined by:
- Wealth
- Political connections
- Physical strength
- Friends
- Military might
It is defined by: your alternative (attractiveness of not reaching this specific agreement)
Falling in love -rule:
Never fall in love with one job, house, etc
Always keep multiple options open
Constantly try to improve your BATNA
4
Lecture 1 01-11-2022
Introduction and essentials
“There is dramatic (and disturbing) evidence that most people do not live up to their
negotiating potential.” (Thompson, 2015) Good news: You can do something about it!
Negotiating can be learned.
- Naturally gifted negotiators are rare
- Effective negotiation requires practice and feedback
Is negotiation about being becoming the smartest person in the room? No, you want to make
a deal in which both sides are happy.
- Course is not about outsmarting/tricking the other
- Ideal if your ‘opponent’ is also trained in negotiation.
- Finding a deal that is good for both sides is difficult.
- Best outcomes when both negotiators are experts
Multidisciplinary field:
Negotiation is everywhere
Importance of negotiation in career
- Average person stays in job 4.4 years (Meister, 2012)
- Decentralized decision making in businesses: less hierarchy means continuous
negotiations
- Freelance economy: negotiating every gig/project!
- Entrepreneurial environment: negotiating many deals!
1
,Integrating interests:
In the overlapping area is where you can make deals.
Definitions of negotiation:
- “A process in which two or more parties exchange goods or services and attempt to
agree upon the exchange rate for them” (Robbins, 2001) is a very narrow definition.
- “Negotiation is and interpersonal decision-making process necessary whenever we
cannot achieve our objectives single-handedly” (Thompson, 2015) is a more broad
definition.
Scope:
Types:
- Between two persons or multiple persons – salary negotiations, division of tasks
within a team
- Between two organizations or multiple organizations – mergers and acquisitions, joint
ventures
- Between two countries or multiple countries – border-conflicts, EU negotiations
- Between an organization and a social movement – e.g. shell vs climate activists
- Between an organization and a state – e.g. UN vs Israel
Single issue, distributive negotiation:
Here it’s true that one party wants to trick the other party. One party’s gain is the other party’s
loss.
2
,Target points, reservation points & bargaining zone:
Reservation point is the highest the buyer can go or the lowest the seller can go. Target
points are the goals of the buyer or seller. A deal in the bargaining zone is doable for both
sides, between reservation point seller and reservation point buyer.
- Target point = price you would be happy about
- Reservation point = price at which you are indifferent between getting the deal or not
getting the deal (worst acceptable outcome)
- Bargaining zone / zone of possible agreements = range between reservation points of
both negotiators
How to determine aspiration (target) point?
Three problems might arise when determining target point.
- Under-aspiring negotiator – settles for too low, often, first offer is accepted
immediately.
- Over-aspiring negotiator – wants to settle for too high, refuses to make concessions
- Grass is greener negotiator – doesn’t know what she/he wants to settle for, only that
it’s more/different than what the other party is willing to offer (reactive)
How to determine reservation point?
You need to know when to walk away! Before you start negotiating, you should determine
your reservation point (price at which you are indifferent between getting the deal or not
getting the deal)
Consider the consequences of failing to reach an agreement, and know your alternatives.
Determine your BATNA (= your Best Alternative To a Negotiated Agreement) and quantify it.
What is the purpose of a BATNA?
Your BATNA protects you against
- Accepting an agreement you should reject
- Rejecting an agreement you should accept
Characteristics of the BATNA:
- Determines lowest value acceptable
- If you don’t reach agreement, settle for your BATNA
- Any deal higher than your BATNA is better than impasse
3
, BATNA’s are time-sensitive!
The better your BATNA, the greater your power.
Negotiation power is NOT (directly) defined by:
- Wealth
- Political connections
- Physical strength
- Friends
- Military might
It is defined by: your alternative (attractiveness of not reaching this specific agreement)
Falling in love -rule:
Never fall in love with one job, house, etc
Always keep multiple options open
Constantly try to improve your BATNA
4
