Negotiation

Basics
• BATNA: Best Alternative to negotiated
agreement i.e. the course you would
pursue if and when the current
negotiation ends in impasse.
• 1) Identify all the possible alternatives you
might pursue if you are unable to reach
an agreement
• 2) Estimate the value associated with each
alternative
• 3)Select the best alternative this is BATNA
• 4) BATNA is not what is fair or what u
originally paid for the item u are selling
but it is the reality u face when there is no
 Basics
• Reservation value: is the walk away
point in the current negotiation. i.e.
the minimum value you are willing
to accept for your product.
• 1)It is a range.
• 2) If u are risk averse the price is the
lower end of the band but if u are
optimistic u might lean towards the
upper band.
 Basics
• Assess the other parties BATNA
• Assess the other parties Reservation
Price
• Evaluate ZOPA: Zone of possible
agreement is the set of possible deals
which would be acceptable to both
parties.
• Making of the first offer is called
anchoring, Studies show that the
negotiation is completed around the
anchor.
• Your anchor should be the RV price of
the other party
 Common Negotiation
mistakes
. BUT


• 1)You made the first offer when you were not in

a strong position to do so.
• 2) You made the first offer but that was not
sufficiently aggressive.
• 3) You talked but did not listen
• 4)You tried to listen to the other party but not
try to learn from them.
• 5) you did not challenge your assunption about
the other parties RV.
• 6) You made greater concessions than the
other party did.
•
How should you respond to the
initial offer
• 1) ignore the Anchor
• 2)Separate information from influence
• Eg. Information and influence; We have
received a better offer from co. X as a
result we think your initial offer is low.
We would like u to increase it.
• Influence Only: “ As you know there are
other companies with whom we do
business. We have spoken with them.
As a result we think your initial offer is
low. We would like u to increase it.
 Contd.
• 3)Avoid Dwelling on the anchor: i.e.
do not discuss it, do not seek
reasons for it
• 4) Make an anchored counteroffer,
than propose moderation
• 5) Give them time to moderate their
offer with out loosing face; You can
give the counter party time to think
about it again
 What should be my first
offer?
• Keep the entire ZOPA in play.
• 2) Provide a justification for your
offer
• 3) Set high, but realistic aspirations
• 4) Consider the context and the
relationship: What type of the
relationship would u have with
other side? Will hard bargaining be
ill- received.
 How far can I push them
• 1) Exhaust all pre- negotiation source of
information: Try to find as much
information about the guy as possible.
• 2) Identify your assumptions prior to
the negotiation. i.e. on what basis
have you calculated the other parties
RV.
• 3) Ask Questions to challenge your
assumptions
• 4) Ask indirect questions
• 5) Protect yourself from lies and
uncertainties' with contingency
contracts
Effective haggling strategies
• 1) Focus on other party’s BATNA and RV
• 2)Avoid making unilateral concessions
• 3) Be comfortable with silence
• 4) Label your concessions: i.e. when you are
making concessions make it clear that it
is costly to u.
• 5) define what it means to reciprocate
• 6) Make contingent concessions: ie. I can
pay a higher price if you promise me early
delivery
• 7) Be aware of the effects of diminishing
rates of concessions