Negotiations:Negotiations:The Principles & Strategies of The Principles & Strategies of

Claiming ValueClaiming Value

Jose Jorge Saavedra

Zone of Possible Agreement: ZOPA

ZOPA

Minimum Price for Seller

Maximum Price for Buyer

Small ZOPA

ZOPAZOPA

Seller’s Reservation

Point

Buyer’s Reservation

Point

$68,000$66,000$60,000 64 65

Negative ZOPA

ZOPAZOPA

Buyer’s reservation

Point

Seller’sReservation

Point

$60,000 $66,000 $68,00064 65

Claiming Value

Seller’s arguments Buyer’s arguments

$70,000$58,000 $66,000$62,000

The Settlement Point• The point at which both parties feel

they have achieved the best deal for themselves that they can.

• This frequently means having a perception that the agreement is very close to the other’s reservation point.

Influencing The Other Party’s Perceptions of Your BATNA: The Negotiation Dance

• Opening offers

• Concession Making

• Final Offers or Commitments

STRATEGIES FOR CLAIMING VALUE

1) Know your BATNA2) Research The Other Party’s BATNA3) Set High Aspirations4) Make the First Offer5) Counteroffer Immediately6) Avoid Stating Ranges7) Make Bilateral (Not Unilateral) Concessions8) Use an Objective-Appearing Rationale to

Support your Offers9) Appeal to norms of fairness10) Do not fall for the “Even Split” Ploy

Bazerman, Neale &Thompson

The Principles and Strategies of The Principles and Strategies of Creating ValueCreating Value

Model of Integrative Negotiations

SupportingFactors

NegotiationProcesses

Solutions orAgreements

InhibitingFactors

Best Deal for Party B

Worst Deal for Party B

Part B ReservationPoint

Best Deal for Party A

Worst Deal for Party A

Party AReservation

Point

Pareto (Possibilities) Frontier

ZOPA

Flat Pareto Frontier: Claiming Value Situation

Best Deal for Party B

Worst Deal for Party B

Part B ReservationPoint

Worst Deal for Party A

Best Deal for Party A

ZOPAParty A

ReservationPoint

Best Deal for Other

Best Deal for Self

Worst Deal for Self

Own ReservationPoint

Worst Deal for Other

Convex Pareto Frontier: Creating Value Situation

ZOPA

Other’sReservation

Point

Best Deal for Self

Worst Deal for Self

Own ReservationPoint

ZOPA

Concave Pareto Frontier: Shrinking Value Situation

Best Deal for Other

Other’sReservation

Point

Worst Deal for Other

Creating-Value Solutions• 1) Bridging Solutions: Re-definitions of

the situation that are more mutually beneficial without the parties giving up something in return.

• 2) Trade-Off Solutions: Strategic compromises in which the parties each give up something of lesser value to gain something of greater value.– Logrolling Solutions– Turn-Taking Solutions

Trade-Off Solutions: LogrollingBased on DIFFERENCES in:• Relative Importance of Different Issues

Trade-Off Solutions: LogrollingBased on DIFFERENCES in:• Relative Importance of Different Issues• Probability Assessments: Contingent

Solutions

Trade-Off Solutions: Logrolling

Based on DIFFERENCES in:• Relative Importance of Different Issues• Probability Assessments: Contingent

Solutions• Risk Preference: Risk-Sharing

Solutions

Value Creating Processes: The Stages of Creative Problem Solving

1) Problem Identification and Definition

2) Solution Generation

3) Evaluation and Selection of Solutions

Dual-Concerns Models

Concern for Other Party’s Interests

High

Low

Low High

Inaction/Avoidance

Contending Problem Solving/Collaboration

Yielding

CompromisingConcernfor OwnInterests

TELLTALE SIGNS OF WIN-WIN POTENTIAL

1) Does the Negotiation Contain More Than a Single Issue?

2) Can Other Issues be Brought in3) Can Side Deals be made?4) Do Parties have different Preferences

Across Negotiation Issues?

Leigh Thompson

STRATEGIES FOR CLAIMING VALUE

1) Know your BATNA2) Research The Other Party’s BATNA3) Set High Aspirations4) Make the First Offer5) Counteroffer Immediately6) Avoid Stating Ranges7) Make Bilateral (Not Unilateral) Concessions8) Use an Objective-Appearing Rationale to

Support your Offers9) Appeal to norms of fairness10) Do not fall for the “Even Split” Ploy

Bazerman, Neale &Thompson

WIN-WIN STRATEGIES THAT WORK

1) Build Trust and Share Information 2) Ask Diagnostic Questions 3) Provide Information 4) Unbundle the Issues 5) Make Package Deals, not Single-Issue Offers6) Make Multiple Offers Simultaneously 7) Structure Contingency Contracts by Capitalizing

on Differences8) Presettlement Settlements (PreSS)9) Search for Postsettlement Settlements

Leigh Thompson

PREPARE, PREPARE AND PRERARE

• Before every meeting, prepare.• After the meeting, evaluate your

achievements and performance• Adapt your strategies and prepare again

• The majority of negotiations are won or lost before getting to the table.

PREPARE, PREPARE AND PRERARES

If you cannot afford the luxury of preparing, for certain you cannot afford the luxury of NOTpreparing