MOR469 Final UPDATED ACTUAL Questions and CORRECT
Answers
Negotiation process by which people with conflicting interests determine how they are
going to allocate resources
BATNA best alternative to a negotiated agreement - what will i do if the current
negotiation ends in no deal
Aspiration Point The ideal you'd like to get - the best you want to achieve
Must do research, must be valid
Reservation Point The most you would pay if you're the buyer- The least you would accept if
you're the seller
ZOPA zone of possible agreement: Seller's LOWEST price - Buyer's HIGHEST price
Old vs. New approaches to Negotiation Outdated: acting toughing and scheming to derail counterparts. New:
brainstorming all issues and alternatives, prioritizing, and adding integrative
properties
Importance of Concessions High negotiator satisfaction when high number and size of concessions,
strategic planning should include an outline of what concessions you plan to
make
The anchoring effect the first piece of information you get about something will be the base value
that everything after will be COMPARED against
- High anchors direct attention towards positive attributes
Low anchors direct attention towards negative attributes
Should you make the first offer? Yes, if you have enough information - anchoring
, Should you reveal reservation price No! focus them on your target price.
Two circumstances in which you might reveal your RP
1. Time is up and you haven't reached a deal
2. You have a great BATNA and would be happy if the other side matched it
Distributive Negotiation Pie analogy: One party's gain is the other party's loss, but parties generally
don't know exactly how large the pie actually is
a. competitive b. Typically involves a single issue
Integrative Negotiation a negotiation approach in which the parties' goals are not seen as mutually
exclusive, but the focus is on both sides achieving their objectives
- consider a variety of issues
- learn interests and priorities
(texoil we did royalties, contingency plan, etc.)
Goal of Integrative Nego - Creating Value - Open communication & ask questions
- share info
- contingencies to create expected value (safety net, in the case that this
happens, then this)
- reach pareto efficiency
- logrolling/tradeoffs
Pareto efficiency - no money/value is left on the table at the end of the deal
- no way to make one party better off without hurting the other party
Logrolling/tradeoffs where parties trade concessions across multiple issues, trading off items that
are low priority to them but high priority to the other side
- CONGRUENT issues (both parties on same page)
- Differences are opportunities!
When the parties have different priorities and opposing preferences on some
issues, there is an opportunity for logrolling to create value.
Compromise - often doesn't work - Integrative issues, you lose the opportunity to create value through
logrolling.
- Congruent issues, you fail to choose the outcome that is preferred by both
parties
- Distributive issues, you are not competing effectively. There is no reason to
meet in the middle. You should win!
Investigative Negotiation - ask why not just what
- seek opportunities in demand
- don't dismiss their problem, seek solutions
- don't end with No, investigate further
Success strategies - build trust
- ask questions
- give away information incrementally, leverage reciprocity
- multiple issues/offers simultaneously
The negotiator's dilemma Negotiations involve simultaneously claiming value (distributive, competitive)
and creating value (integrative, cooperative)
- "Value that has been created must be claimed"
- this concept of "claiming" can impede value creation
Answers
Negotiation process by which people with conflicting interests determine how they are
going to allocate resources
BATNA best alternative to a negotiated agreement - what will i do if the current
negotiation ends in no deal
Aspiration Point The ideal you'd like to get - the best you want to achieve
Must do research, must be valid
Reservation Point The most you would pay if you're the buyer- The least you would accept if
you're the seller
ZOPA zone of possible agreement: Seller's LOWEST price - Buyer's HIGHEST price
Old vs. New approaches to Negotiation Outdated: acting toughing and scheming to derail counterparts. New:
brainstorming all issues and alternatives, prioritizing, and adding integrative
properties
Importance of Concessions High negotiator satisfaction when high number and size of concessions,
strategic planning should include an outline of what concessions you plan to
make
The anchoring effect the first piece of information you get about something will be the base value
that everything after will be COMPARED against
- High anchors direct attention towards positive attributes
Low anchors direct attention towards negative attributes
Should you make the first offer? Yes, if you have enough information - anchoring
, Should you reveal reservation price No! focus them on your target price.
Two circumstances in which you might reveal your RP
1. Time is up and you haven't reached a deal
2. You have a great BATNA and would be happy if the other side matched it
Distributive Negotiation Pie analogy: One party's gain is the other party's loss, but parties generally
don't know exactly how large the pie actually is
a. competitive b. Typically involves a single issue
Integrative Negotiation a negotiation approach in which the parties' goals are not seen as mutually
exclusive, but the focus is on both sides achieving their objectives
- consider a variety of issues
- learn interests and priorities
(texoil we did royalties, contingency plan, etc.)
Goal of Integrative Nego - Creating Value - Open communication & ask questions
- share info
- contingencies to create expected value (safety net, in the case that this
happens, then this)
- reach pareto efficiency
- logrolling/tradeoffs
Pareto efficiency - no money/value is left on the table at the end of the deal
- no way to make one party better off without hurting the other party
Logrolling/tradeoffs where parties trade concessions across multiple issues, trading off items that
are low priority to them but high priority to the other side
- CONGRUENT issues (both parties on same page)
- Differences are opportunities!
When the parties have different priorities and opposing preferences on some
issues, there is an opportunity for logrolling to create value.
Compromise - often doesn't work - Integrative issues, you lose the opportunity to create value through
logrolling.
- Congruent issues, you fail to choose the outcome that is preferred by both
parties
- Distributive issues, you are not competing effectively. There is no reason to
meet in the middle. You should win!
Investigative Negotiation - ask why not just what
- seek opportunities in demand
- don't dismiss their problem, seek solutions
- don't end with No, investigate further
Success strategies - build trust
- ask questions
- give away information incrementally, leverage reciprocity
- multiple issues/offers simultaneously
The negotiator's dilemma Negotiations involve simultaneously claiming value (distributive, competitive)
and creating value (integrative, cooperative)
- "Value that has been created must be claimed"
- this concept of "claiming" can impede value creation
