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Unformatted text preview: Negotiations Study Guide Distributive Bargaining o Ones gain is anothers loss, the parties involved in the negotiation have conflicting interests, the issue is how to divide the pie when you dont know how large it is What do you prepare when you negotiate? o You should prepare goals & aspirations o BATNA- Best Alternative to a Negotiated Agreement (what youll do if you walk away from the negotiations without a settlement) o Reservation Price- your bottom line Reservation Price o The point of indifference between a negotiated agreement and an impasse o Beyond this point youd rather just not make a deal Bargaining Zone o The space between the buyers reservation point (B) and sellers reservation point (S) o If B>S then you have a positive bargaining zone and an agreement is possible since there is joint surplus to be shared between buyer and seller o If B<S you have a negative bargaining zone and no agreement is possible unless forced upon one of the parties o The size of the pie is B-S You Vs. the Other Side o You know your own reservation price but you only have probabilistic information regarding your opponents o You should reassess your opponents reservation price during the negotiation with new information you receive Do Not Reveal Your Reservation Price o If you reveal your reservation price your opponent can corner you into accepting a deal that is only marginally better than your reservation price Plan twice. o Plan once for you and then again for your opponent Things to Plan o Interests and relative importance (both parties if possible, deff. For yourself) o Alternatives to the negotiation, BATNA is your power, reservation point for yourself and your opponent if possible o Sources of Power- your bargaining chips, (standards, precedents, market rates, etc.) o Proposals- whats your target?,whats your minimum? Unilateral Concessions o Example: You have your car listed for $10,000, someone calls and says theyre interested and you say ill give it to you for $9000. o Should be avoided at all costs Buying a Car o The more things on the table at once, the harder it is to negotiate o Focus only on the purchase price o Understand the sellers interest Meeting quotas, bonuses, etc o Timing strategy- certain dates are more likely hits for you in terms of the sellers needs o BATNA- other dealerships or other cars o Dealers dont have a BATNA, their ideal option is to have you and someone else both buy a car o Most people do not have a RP when they buy a car but you should, use invoice prices and market data o Never look at the sticker price o Ask the dealer about their special incentives o Invoke ratification- leave someone at home you need to check with o Use time and excitement to your advantage Im going to buy a car from somewhere today given I get a good deal Raiffas Organizing Questions F rom Course Packet o Are there more than two parties involved and are they monolithic?...
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- Spring '08