R2. Creating value in negotiation - Chapter 2.pdf

You the total value in points or do llar terms of

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you the total value (in points or do llar terms) of that offer. This is your package reservation value (PRV). Now, in your current negotiation, you know not ro accept any offer that gives you a total value less than your PRV. The problem with having a separate reservation value for each is- sue is that your options become limited. You may not want a salary be- low $X, but are you sure you would not be willing to accept a lower salary if the other side made significant concessions on many or all of the other issues you value? Often, negotiators set arbitrary limits on individual issues (such as salary, bonus, stock options, delivery dates, closing dates, up-front payment, et cetera) because they think that any- thing beyond that limit would be "unfair" or "unreasonable." But doing
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74 {\,¡~i NEGOTlATION GENIUS so only limits the negotiator's flexibility. If the other party cannot stay within your limit on that one issue, but can more than make up for it with other concessions and guarantees, you both may stand to lose because of the limit you have set: For example, a consultant or contractor may not be able to lower their price enough to beat aH other offers, but if that consultant or contractor can provide much better service, give more comprehensive guarantees, and throw in additional work for free, you might want to reconsider the reservation value you placed on the issue of price. Unfortunately, far too many firms, organizations, and governments will make purchases or hire contractors arld consultants entirely based on the service provider's ability to compete on only one issue (price). This practice can be highly inefficient. STRATEGY 4: IDENTIFY THE OTHER PARTY'S MULTIPLE INTERESTS Innegotiation, there often will be issues that you do' not care about-but that the Qther side cares about very much! It iSicritical to identify these issues. For example, you may he indifferent between whether you start your new job in June or July. But if your potential employer strongly prefers that you start as soon as possible, that's a valuable piece of information. Now you are in a position to give them something that they value (at no cost to you) and get something of value in return. For example, you might start a month earlier and re- ceive a larger signing bonus for doing so. Similar1y, when Deepak was purchasing his home, he discovered that the seller was very interested in closing the deal as soon as possible. With far fewer constraints on his ability to close the deal early or late, Deepak was more than willing to oblige. He agreed to close one month earlier than originally offered, and theseller agreed to a lower price. EXECUTION STRATEGIES FOR VALUE CREATION Once talks begin, it is common for negotiators to focus primarily on value-daiming strategies and to forgo opportunities for value creation.
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