1. Overview

2. Books like “Winning through Intimidation” May get a better deal some of the time. Damage Relationships Miss creative agreements Make a deadlock Win-Lose

3. Books like “Getting to Yes” Focus on creativity Have better relationships May give up achievable gains especially against tough negotiators Win-Win

4. Find opponents weak spots Who makes first offer Make demands Overcome objections Threaten Using tactics Win-Lose Playbook

5. Build trust Communicate clearly Probe for real interests Find common ground Brainstorm new options Cross-cultural communication Counter tactics Win-Win Playbook

6. Are you more of a win-win or win-lose negotiator? Question

7. 1. Tactics 2. Deal Design 3. Set-up 3-D negotiation

8. Drawing Board metaphor – Creativity, invention and fresh thinking Find hidden sources of economic and non-economic value. e.g. include risk sharing provisions Focus on substance and outcomes. Deal Design

9. Finding common ground and also analyzing differences. Egypt and Israel, Mount Sinai boundary negotiation Egypt – Sovereignty Israel – Security Solution – DMZ with Egyptian flag. Deal Design

10. Understanding differences can help to separate different parts and give each party what it wants at least cost to the other. An entrepreneur and a buyer have different forecasts for the future of a company. Buyer can pay based on future performance. Risk, Patience, costs, deal image. Deal Design

11. Negotiation moves away from the table that set-up the most promising situation once you’re at the table. If the set-up is not right they take action away from the table to make it better. Set-up

12. Right parties Right Sequence Right Issues Right set of interests Right table Right time Right expectations Right Consequences for walking away Set-up

13. Staples founder Thomas Stemberg wanted a second round of financing from venture capitalists. The VCs refused to value the company as highly as he hoped. How could he “break the VC cartel?” Ask who are the potential “high value players” and approach them directly to set-up the right players and interests. Set-up

14. Your negotiating objective should be to create and claim value for the long term by crafting and implementing a deal that is satisfactory for both or all parties One-shot negotiations - reputation Long-term relationships – parties live up to their side of the bargain Creating and claiming value

15. What kind of things can create value? Question

16. Discounted cash flow Precedent Relationships Reputation Political Appearance, Fairness Self-Image Creating value

17. Competitive side of negotiations where one side gets a bigger slice of the value pie. Claiming value

18. What are the barriers to creating value? What are the barriers to claiming value? Creating and claiming value

19. Preparing for a negotiation

20. Should we negotiate?

21. Have you ever tried to negotiate about a price where you normally don’t e.g. A restaurant or a department store? Question

22. Try to negotiate a lower price when purchasing something. It cannot be a place like a market where negotiating is normal. Tell us how you got on. Assignment

23. How do you feel when negotiating? Question

24. A negotiation professor buys a big screen TV, he does lots of research on different models and on dealer costs. He visits several dealers, and he packages, he bundles the price of the TV with installation, satellite dish and other features. And he obtains a last price concession, by mentioning a competitors offer and as a result he saved $120. Now, what do you think about this? Question

25. Some people love to negotiate, some people have no problem with this. Other people might ask, is this the way we want to spend our brief time on Earth

26. A college offering a job to a professor, and she replies by e-mail, granting some of the following provisions would make my decision whether to accept your job offer easier. Let me know what you think for example, she wondered if they would consider a higher salary, and she wondered if they would consider no more than three new class preparations per year for the first three years. Well, the college search committee received her e-mail and replied immediately, we have decided to withdraw the offer of employment to you Case

27. You have to consider the risks, and balance those against the benefits. You have to consider your feelings about negotiating in general Do a cost benefit analysis of the rewards Summary

28. Interest or Position based negotiations

29. Traditionally, negotiations were positional. I take one position. I want a high price. You take the other position, low price.

30. How would we divide a pizza that we both want? Question

31. I cut the Pizza and you decide which half to eat. Both of us could be happy Positional Answer

32. Find out why we want the pizza and what we like about it For example it’s a chicken pizza. You love chicken but don’t like the crust I like the crust but am not worried about the chiken. You get the centre part and I get the outside part. Interest based Answer

33. Competitive versus cooperative. Win-lose versus win-win. Zero sum negotiation versus non zero sum. Adversarial negotiation versus problem solving. Distributive versus integrated. Claiming value versus creating Value Which side is position based left or right? Vocabulary

34. Whether a negotiation appears to be position-based or interest-based, always try to search for the underlying interests in an attempt to build a larger pie. Always be ready for positional bargaining, even when you are able to build a larger pie Summary

35. Dispute Resolution Vs Deal Making

36. Forward looking. Focused on interest of the parties. Focused on problem solving Deal making

37. Positional Adversarial Focus on the interests of the parties to develop a solution that benefits both sides e.g. Joint Venture for Intellectual property dispute Dispute resolution

38. Write down a list of processes that might be possible for resolving any personal dispute or any business dispute Question

39. Avoidance Negotiation Mediation Arbitration Litigation Power Answer

40. Which of these processes would you call third party processes, that is involve a third person? Question

41. Mediation Arbitration Litigation Answer

42. Which of these processes are rights oriented (where the third person decides who's right or wrong usually based on a legal rule) Which of these processes are interests oriented? Question

43. Rights – Litigation and Arbitration Answer

44. Traditionally arbitration and mediation are seen as more useful for dispute resolution but they can also be used for deal making. We should search for interests, even when it is a dispute resolution negotiation. Summary

45. Negotiation Analysis: An introduction

46. Develop a strategic framework for a negotiation. Mapping, analyzing issues

47. 7 questions 1.BATNA – What will we do if there is no agreement? 2.Parties – Who are the real parties 3.Interests – What are their needs and priorities 4.Value – How can it be created and who gets it? 5.Barriers – What obstacles might prevent an agreement 6.Power – How can the different parties influence the outcome 7.Ethics – What is the right thing to do?

48. 1. BATNA Best Alternative to a Negotiated Agreement We either agree or walk away. If we walk away what is our preferred course of action?

49. BATNA factors Competing offer Time pressure Relationships Acceptance of Risk

50. BATNA considerations A rigid bottom line can be dangerous by getting a result close to the minimum or not think of creative solutions. Decision analysis tools such as decision trees can help in weighing alternatives. People are usually over-optimistic about their BATNA. The other parties BATNA should be guessed to try to give a picture of the ZOPA – Zone of potential agreement.

51. 2. Parties Who are the real parties in a negotiation? There may be influential players who are not visible at the table. For example car salesman and manager Can the representatives at the table make a binding commitment? List of negotiating parties can be expanded e.g. finding another bidder or purchasing competitors.

52. 3. Interests What are their fundamental needs and priorities? E.g. Timing might be important Probe for underlying interests Sometimes people lose focus of their own objectives and can miss opportunities.

53. 4. Value How can value be created and who is likely to get it? There is more at stake than just price Visualize how much value is generated and who gets what. It is possible to create a mutual gain. Manage the tension between creating and claiming value. Value is created by capitalizing on differences as well as common ground

54. 5. Barriers What obstacles might prevent an agreement and how can they be overcome? Strategic behavior e.g. hard bargaining Interpersonal e.g. stereotypes, emotions Institutional e.g. legal

55. 6. Power How can the various parties influence the negotiation process and its outcome? Bargaining power is assumed to be the strength of your BATNA. Try to favorably change the basic architecture of a negotiation. Sometimes people can try to weaken the others BATNA. Bargaining power can also be a reflection of your knowledge and skill.

56. What is the right thing to do? 1.How honest should you be? 2.How fair should you be? 3.How much pressure can we apply? 4.How much should we think about those n ot at the bargaining table? 5.If we are an agent should we do somethi ng against the wishes of our client if we f eel it is better for them? 7. Ethics

57. Effective negotiation needs a clear framework inclu ding –BATNAs –Identifying fundamental interests to create value –Recognizing barriers to agreement –Thinking about ethical issues You can develop your own framework through study and experience. The strategy must also be implemented with strong communication skills and creativity Summary

58. BATNA

59. A comparison of your options, your best option might be walking away. For example using another supplier, making something yourself, going to court etc. Perception and reality of BATNA play a key role in most negotiations. Often not given enough time by negotiators. BATNA

60. 1. Use your best BATNA and that of the other parties to find a ZOPA (Zone of potential agreement) 2. Make sure the other side sees you as able to walk away. 3. Protect your BATNA 4. Consider worsening your BATNA in carefully selected circumstances 5. Use your understanding of BATNAs to understand if negotiation can change things. BATNA

61. ZOPA means the set of possible agreements that is better for each side given its interests than their BATNA. Sellers minimum is lower than buyers maximum. Joe will sell his house for a min of $200,000 and Mary will buy it for a max of $250,000 ZOPA

62. Question Let's assume that you're preparing to negotiate the sale of your car to a possible buyer, John. John is the only person who responded to an ad that you posted a week ago. You need at least $4,000 from the sale to finance the purchase of a truck that you have ordered. You want to keep your car for three more weeks, which is when the truck will arrive. The reasonable value of the car is $5,000. You've done a lot of research on this. You've looked at a lot of online calculators in coming up with this value. If you can't find a buyer willing to pay at least $4,500, you'll sell the car to a friend, Mary for 4,000. You know that Mary will let you keep your car for the next three weeks.

63. Questions 1.What's your overall goal in reaching the negotiated agreement with John? 2.What issues are most important to you in reaching that goal? 3.What is your best alternative to a negotiated agreement? 4.what is your reservation price? (The lowest price That you will accept) 5. What is your most likely price? What's a reasonable price that you would be happy with? 6. And then finally what is your stretch goal?

64. Stretch Goal Negotiation research shows that the people who select the largest stretch goal Are the most successful in negotiations overall. If the stretch goal is completely unreasonable people might walk away from the deal.

65. Answers 1.Sell the car. 2.Price is an important issue and the reason is that you need the money to buy a truck. The transfer date is important, because you need the car in the next 3 weeks. 3.Selling the car to your friend, Mary 4.4,500. 5.5,000. 6.6,000.

66. ZOPA Johns reservation price is 5,500. Reasonable price is 4,500 Stretch goal is 3,500. What two numbers is the zone of potential agreement between?

67. Finding agreement What if John needs the car immediately? How can you respond? Ask why? Focus on his interests and maybe you can meet those interests e.g. give John a ride to work every day.