ILROB471_week2_used_car_2008

ILROB471_week2_used_car_2008 - ILROB 471 Organizations and...

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Professor Williams ILROB 471 Organizations and Negotiation
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Agenda Distributive Tactics Negotiation Exercise (Used Car) Fishbowl Negotiation Break Auction Netscape Case Discussion Wrap-up
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Focus Strategy Distributive (fixed-pie) Integrative (expanding the pie) Mixed-motive Style Competitive , Cooperative, Independent, Avoiding, Accommodating (giving-in) Process and Power Power of Preparation —”prepare, prepare, prepare”
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Distributive Bargaining Distributive Bargaining occurs when the goals of one party are in fundamental and direct conflict with the goals of the other party. a conflict situation
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Distributive Strategy Maximize the value obtained in a single deal and when the relationship is not important.
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Terms Target or aspiration BATNA Reservation price Bargaining zone (Positive or Negative) Bargaining Surplus Negotiator’s Surplus
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Class Average : $11,060 ($11,610 ) Class Standard Deviation: $ 1,725 ($3,033) 6000 20,000 Baker’s Reservation Point 9,300 Buyer surplus $10,700 Seller’s Surplus $3,300 Bargaining Surplus=$14,000 Appleton-Baker Appleton’s Reservation Point
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Distributive Example 6000 20,000 Appleton’s Reservation Point Baker’s Reservation Point 14,000 Buyer surplus $6,000 Seller’s Surplus $8,000 Bargaining Surplus=$14,000 Appleton-Baker
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Real World Negotiations Airline Pilots
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Pilots: Distributive Bargaining with a Twist
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Distributive Negotiations in the News: History of Threats 2005: On Labor Day, four pilot leaders blocked a vote on an offer from US Air . That offer was part of $800 million in concessions sought at the time. Then US Air filed for bankruptcy for the 2 nd time (employees had not made the $800M in concessions asked for)
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Distributive Negotiations: Management was playing Hardball! With a bankruptcy filing, a company is allowed to ask a judge to impose emergency pay cuts, if it can prove they are needed to finance its operations. But, US Air stated that it would not seek cuts for any union with which it has an agreement. Tentative deal: More hours per month, same pay =17.5 percent pay cut Reduced contribution to retirement plan 300 million in cuts, Worth 1.8 billion over 6 years The labor day offer included smaller cuts and was a better deal than the tentative deal reached a few weeks later after the bankruptcy file.
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2006 2006: Delta Air Lines , which is said to be on the brink of filing for bankruptcy protection, asked its pilots for a second round of wage and benefit cuts on Sept. 13th. “The company presented the union negotiators with a comprehensive, deeply concessionary contract proposal.” Delta obtained $1 billion in cuts in 2005. Before Pilots could vote, Delta and Northwest Airlines filed for bankruptcy (Hurricane Katrina)
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The remarkable turnaround of the airline industry has rewarded investors with rising share prices, and the $9.87 billion price tag that US Airways Group is offering for Delta Air Lines in a hostile takeover bid is further proof that the industry is again in favor with investors and lenders.
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