1. Negotiations and Distributive Negotiations

2. Agenda Admin: Theory: Debrief BioPharm-Seltek
Questions?
Theory:
Negotiation
Distributive negotiation
Tools for distributive negotiation
First offers
Debrief BioPharm-Seltek
First Quiz (normally will do it at the beginning but today we will do it at the end….You are welcome!!)

3. Negotiation A social process in which conflict is resolved
Results in an allocation of resources or an agreement on how individuals will work together in the future
Five characteristics of negotiation
Two or more parties
You anticipate a better outcome as a result of the negotiation
The parties involved prefer mutual agreement to other outcomes
The parties involved understand that there will be give and take
Tangible and intangible components are involved in the negotiation

4. When negotiating makes sense
When you need the help of others
When others can give you more than what you can get on your own
When you are willing to give up resources valued by others
When working with another party can help you overcome challenges with other parties

5. Distributive negotiation
Competitive
Win-lose
Focus on claiming value
Negotiators’ goals are in direct conflict
Resources are limited
Instrumental concerns only: do not care about the relationship with the other party
Pulled from 4th edition, pg 27
On instrumental concerns, note that they don’t care about the relationship with the other party

6. What are examples of distributive negotiation?
Pulled from 4th edition, pg 27
On instrumental concerns, note that they don’t care about the relationship with the other party

7. Tools for distributive negotiations
BATNA- Best Alternative To a Negotiated Agreement
What would you pursue if this negotiation doesn’t work?
Reservation value
What your BATNA is valued at in the negotiation
Can be dollars, points, land, flying pigs, etc…
Aspiration value
The value you aspire to in the negotiation
Pulled from 4th edition, pg 27
On instrumental concerns, note that they don’t care about the relationship with the other party

8. Zone Of Possible Agreement
The set of all possible deals that would be acceptable to both parties
Seller’s reservation value
Buyer’s reservation value
Pulled from 4th edition, pg 27
On instrumental concerns, note that they don’t care about the relationship with the other party
Bargaining Zone

9. Zone Of Possible Agreement
Aspiration values help a negotiator know how far they might try to stretch their outcome beyond the ZOPA
Seller’s aspiration value
Buyer’s aspiration value
Pulled from 4th edition, pg 27
On instrumental concerns, note that they don’t care about the relationship with the other party
Bargaining Zone

10. What was the Zone Of Possible Agreement in BioPharm-Seltek?
Pulled from 4th edition, pg 27
On instrumental concerns, note that they don’t care about the relationship with the other party

11. BioPharm What is BioPharm’s BATNA? Is this a strong BATNA?
What is BioPharm’s reservation price?

12. BioPharm What is BioPharm’s BATNA?
Buy a plot of land and build a new plant. Land will cost $500,000. Building will cost $25 million and will take 12 months.
For each month BioPharm is not producing product, it will lose $1million in profits. Note this is not a very strong BATNA
What is BioPharm’s reservation price?
Given the cost of building a new plant is $25 million that could be considered its BATNA.
However, factoring in lost profits, the FDA approval, and experienced workforce of Seltek, one could construct a reservation price closer to the $40 million available for investment.

13. Seltek What is Seltek’s BATNA? Is this a strong BATNA?
What is Seltek’s reservation price?

14. Seltek What is Seltek’s BATNA?
Reconfigure the plant for general manufacturing. This would cost $3 million and will take 6 months.
Doing so will give the plant an appraised value of $10 million. Note this is also not a very strong BATNA.
What is Seltek’s reservation price?
$7 million = $10 million (appraised value) minus $3 million (cost of reconfiguration)

15. BS ZOPA

16. Seller Name Buyer Name Price Patent Taxes EE Timing Extra Kayvon Josh$ No
N/S
1 month
Francesca
Alexandra and Jason $
Shirin
Victoria $
Buyer
Now
Rachelle
Shahnaz $
Riley
Tara $
Seller
Kaitlyn
Dennis $
Yes
Ashley
Stephane
Month
Mariam
Dylan
Will
Tess
Shau
sylvia nguyen
Shannon
Johnathan $
Split
Jasmine
Quinn $
Hiba
Leah $
Lukas
Lexi
Severence
Zaccaria
Dwight
Lynness
Tom $
Ben
David $
Keep
Marcel
Meryl $
Dina
Kate $
Spilt
Destanee
Breanna $
Renovations
Taylor
Zeinab $
Alex
Samantha
Insurance included
Lindsey
Hala $
Andrew
Saghar $
Rachel
Melissa $
Rasheed
Elizabeth $
Paten 5.5m
Michael
Arjun $
Chloe
Phil $
Watch this video clip if time at the end about Pawn stars and haggling.

17. Seller
Buyer
Sale Price (in dollars)
Patent
Taxes
EE's
Catherine
Chiara $ No
N/S
Michael
Tony $
Yes
Alex
Martin $
Viktor
Raluca $
Haya
Kelly $
Ariana
Hong $
Ziyaan
Mohamud $
Karli
Bojan $
William
Louise $
Hassan
Luc $
Split
yes
Roommate
Allie $
Scott & Adrian
Rasmus $
Fabian
Cayce $
Nolan & Zhaowei
Alex A.
No deal

18. Compatible Issues What were the compatible issues?
Did you use the compatible issues strategically?

19. Discussion Questions Comfort level in negotiations….
So many numbers……..How did you deal? How can you use the negotiation checklist?
Attempts to create value?

20. Seller Name
Buyer Name
Price
First Offer
Kayvon
Josh $ $
Francesca
Alexandra and Jason $ $
Shirin
Victoria $
Rachelle
Shahnaz $ $
Riley
Tara $ $
Kaitlyn
Dennis $
Ashley
Stephane $
Mariam
Dylan $
Will
Tess
Shau
sylvia nguyen
Shannon
Johnathan $ $
Jasmine
Quinn $ $
Hiba
Leah $
Lukas
Lexi $
Zaccaria
Dwight $
Lynness
Tom $
Ben
David $ $
Marcel
Meryl $
Dina
Kate $ $
Destanee
Breanna $
Taylor
Zeinab $ $
Alex
Samantha $
Lindsey
Hala $ $
Andrew
Saghar $
Rachel
Melissa $
Rasheed
Elizabeth $
Michael
Arjun $ $
Chloe
Phil $ $

21. Seller
Buyer
Sale Price (in dollars)
First offer
Catherine
Chiara $ $
Michael
Tony $ $
Alex
Martin $
Viktor
Raluca $ $
Haya
Kelly $ $
Ariana
Hong $ $
Ziyaan
Mohamud $ $
Karli
Bojan $
William
Louise $
Hassan
Luc $
Roommate
Allie $
Scott & Adrian
Rasmus $ $
Fabian
Cayce $ $
Nolan & Zhaowei
Alex A.
No deal $

22. First offers in negotiation
First offers can
Anchor a distributive negotiation
Help to define the ZOPA
Extreme first offers can let you make concessions (thus aggressive offers do not necessarily make you aggressive)….but it also can backfire
Make a first offer only when you have sufficient information about your own and the other party’s aspirations and walk away points
See galinsky’s article.

23. First offers in negotiation
What if they make the first offer????
Re-anchor with a counter offer
Typically sale price is at the mean of the two offers
Concessions are different when dealing with an extreme offer – make smaller concessions to give the impression that you are reaching your reservation point
See galinsky’s article.

24. Making & breaking a first offer
Ignore other anchors
Rely on information, not influence
Have a strong first offer, then allow for moderation
Avoid allowing your own or others’ emotions to interfere with the negotiation
See pg in genius

25. Quiz
Go to Ulearn!