Lecture Session #4.3

Lecture Session #4.3 - BUAD304 LeadingOrganizations

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Click to edit Master subtitle style BUAD 304 Leading Organizations Lecture Session #4 Leader as Politician
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the process where two or more parties  decide what each will give and take in the  context of their relationship . . . Negotiation is . . .
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Increasing global emphasis that results  in more complex negotiations employees patients, customers, clients Organizational restructuring downsized flattened Why negotiate?
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To assess the quality of a proposed deal  accurately, you need to know (at a  minimum!): What are your alternatives if this deal  fails? What is your reservation point (bottom  line)? What is your aspiration? So what is a good deal?
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Reservation Prices, Aspirations,  Buyer’s Aspiration Seller’s Aspiration   |---------|-----------|------------|----------|-----------|----------|-----------|----------|-----------|  0 2             4            6             8          10          12         14 16 18 Buyer’s Reservation Price Seller’s Reservation Price Reservation Price:    Point at which one is indifferent between an impasse and an agreement Bargaining Zone: Overlap between the parties’ respective reservation prices
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Don’t know it’s an option Uncomfortable with negotiating        (it’s not part of our relationship!) Less than rational Why  not  negotiate?
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Linda Babcock examined the starting  salaries of CMU MBA graduates.  Starting  salaries of men were 7.6% (or almost  $4,000) higher than those of women. Only 7% of the women, but 57% of the men  had asked for more money (i.e., negotiated  on salary). Of those students who negotiated (most of  whom were men) were able to increase their  starting salaries by 7.4% (or just over $4,000) The Choice to Negotiate
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Suppose at age 30, two equally qualified applicants  (Chris and Fraser) get job offers for $100,000 per 
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Lecture Session #4.3 - BUAD304 LeadingOrganizations

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