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Preparing To Negotiate

Preparing To Negotiate. MEET U.S. Program Professor David Schkade Rady School of Management University of California, San Diego. Three Essential Elements: BATNAs, Issues, and Priorities. BATNA = B est A lternative T o a N egotiated A greement

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Preparing To Negotiate

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  1. Preparing To Negotiate MEET U.S. Program Professor David Schkade Rady School of Management University of California, San Diego

  2. Three Essential Elements:BATNAs, Issues, and Priorities • BATNA = Best Alternative To a Negotiated Agreement • What will you do if you don't reach an agreement? • Your negotiating power depends on your BATNA • Can be a sure thing or a risky prospect • May take time and effort to develop a good one • Lay groundwork ahead of time; obtain backup agreement, if possible MEET U.S.

  3. BATNA Strategy • Don't over-estimate your BATNA • "I have lots of options” • "I can always get my old job back" • Don't under-estimate your BATNA • "What's the worst thing that can happen?" • "How bad would it really be?” Strong BATNA  Be sure to let the other side know Weak BATNA  Keep it to yourself! • What is their BATNA? • Can I weaken it? • Have they over- or under-estimated their BATNA? MEET U.S.

  4. Issues and Priorities • Issues — What are the underlying problem dimensions? • Issues vs. positions • Sometimes not explicitly stated • Usually there are several issues • Is the other party concerned with the same issues as you? • Priorities — What really matters to you? • Which issues are most, and least, important to you? • Your priorities are probably different than theirs • Options may (will) change during a negotiation MEET U.S.

  5. Other Key Considerations: • Bargaining Zone • Buying vs. selling prices • Resistance point = your “limit” on a given issue • Reservation price vs. BATNA The Bargaining Zone and the Problem MEET U.S.

  6. A Salary Negotiation Max Buying Price Min Selling Price Reservation Price Reservation Price Resistance Point Resistance Point $100,000 $80,000 The Bargaining Zone MEET U.S.

  7. A Two-Issue Job Negotiation ($85K, 14 days) ($85K, 14 days) 21 The BargainingZone Days of Vacation 7 ($95K, 7 days) $100,000 $80,000 Salary MEET U.S.

  8. Other Key Considerations: • Know Your Problem • A key to creative solutions is knowing what's possible • Helps to develop more attractive BATNAs, offers • Know your resources • budget • know what you can and can't deliver The Bargaining Zone and the Problem MEET U.S.

  9. Preparing to Negotiate: Summary • Know yourself. • BATNA, issues, priorities, resistance points • Know your opponent. • BATNA, issues, priorities, resistance points • Know your problem. "Successful" agreement  Both sides exceed their BATNAs If you can’t beat your BATNA, the best agreement is no agreement! MEET U.S.

  10. Notes on Negotiation Exercises • In these exercises your job is to assume the role of the person described in your packet to the fullest extent possible. • Inevitably, your own personality, feelings, and knowledge will influence how you play your role (you can't have a personality transplant every week). This is OK. But do your best to stay “in character”. • It’s hard work to play the role of a person who isn’t you and who you don’t know. But it is important to the learning process of your fellow students, as well as to your own. • Try not to invent information or circumstances that are not described in your role. • You may make reasonable inferences, e.g., • a company has more than one customer • people in the same company or industry may need to deal with each other again in the future • it is sometimes possible to make a case for an exception to company policy • Try to look at things through the eyes of your role, even if it seems at odds with your own personal thinking. MEET U.S.

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