Negotiations Test 2 Review:1.1Story: • Minor had his boots stolen from locker room. • Policy says you are responsible for your own stuff, the company isn’t responsible.• Friends went on strike• Higher manager said he would have just replaced it• Cheaper to replace item than deal with a strike• But then you are setting president for all items that are stolen need to be replaced• Who is in the right?Three ways to solve a problem1. Reconcile interest: least expensive and highest satisfaction2. Who is right 3. Who has the most powerArbitration: binding mediation (court order)Lump it: drop your claim (in this case the minor)Withdrawal: minor would quit companyCost of Disputing:• Transaction cost: ex. $50 for boots or $1000 for strike• Satisfaction with the outcome: treated fairly, so happy• Effect on the relationship: don’t buy boots = employee holds a grudge• Reoccurrence: sometimes you have to figure out win/lose or then next time you would have to pay $200 for a missing watch.1.2Story:• Relationships: how important is it?• If it is a friend or you want to do business with them again the relationship matters• If it is a dealer then the outcome matters more than the relationshipFive Strategies (Chart)1. Avoiding: walk away, you have other alternatives2. Accommodating: Lose-Win3. Compromise• Both parties give in to reach agreement• When collaborative isn’t possible• Time restrictions• Give or lose some amount (evenly)4. Competitive: don’t care about the other party, only care about your outcome5. Collaborative: maximize outcome. Both parties must agree, there is trust and openness.• Understand the other’s needs and objectives• Information must flow freely• Work Jointly to meet both parties needs• Only care about self• Don’t see potential for collaboration.Baseball story (not in book)• Matt Herrington• 17 years old• #7 pick• His agent was new• He was offered $4 million for 2 years and he turned it down• He and his agent says he should get at least 4.5 millionCollaborative Win-WinAccommodatingLose-WinAvoidingLose-LoseCompetitiveWin at all costsCompromiseSplit the DifferenceHighLowLow HighRelationship ImportanceImportance of OutcomeKeysObstacles• He played independently• Drafter the next year at #58 for 1.28 million + signing bonus• Turned it down because of his pride• Played independently• #22 turned down Tampa• Longest holdout and dumbest5 mistakes1. Viewing negotiation as a fixed pie2. Anchoring on the first offer3. Escalating commitment (justifying his actions)4. Feeling too confident (still expected 4.5)5. Focusing too narrowly on the issue (not looking at the big pie)Solutions1. Share info (don’t lock yourself in)2. Respect anchors3. Don’t dwell on the past4. Consider the opposite (instead of thinking you’re worth more, maybe you are worth less)5. Ask questions and make multiple offers1.74 Keys of Negotiating: 1. Preparation (do your homework)2. Practice3. Patience (keep calm)4. PersistenceThree phases of negotiation:1. Information – a. Learn the other side’s circumstancesb. Get vital information (what they want, and the bottom prices)c. Order of presentation should be noticedd. Blocking technique (ask questions with another/then suggest alternative)2. Competitive phase – a. Make your case and claim your valueb. Tell what you’re looking forc. Principle offers a concessional (make your case legit and back with facts)d. Argument (articulate your side)e. Threats and promisesi. Affirmative promises are better than threatsii. Silence and patience (say what you have to say and be quiet)iii. Limited authority (what car lot you use is up to you)iv. Uproar (gain advantage by threatening important consequences)v. What the likelihood that the threat will actually happen?vi. If it does occur, how bad is it? What are the consequences?f. Boulwearism – take it or leave it?g. Briar rabbit – you care more about how bad your opponent does and not as much about how well you doh. Mutt & Jeff – good cop/bad cop (first person comes in as a mean, hardass. Second person comes in all nice and easy to work with.)i. Belly up – ask for mercy on your opponent3. Cooperative Phase – a. Once agreement is reached1.8 • Myth of Win-Win:• Most people think it’s Win-Lose• Power negotiations are where the loser even feels like they win• Ask for more than you expect (concessions)• Rule of thumb: the less you know about an opponent the more you should ask for• Maximum plausible position (MPP): max and min you can ask for without offending them and keeping your credibility• Never say yes to first offer: opponent will have to negative thoughtso “I could have done better”o or they will think something is wrong• Ex-president of Real Estate company story:o Quoted at $2,000 by dealing with him he got it down to 800. Then “the board” got it down to 500• “Flinch”: when told the original price, your reaction, “OH”• Avoid confrontation – no lawyers = they always win• Feel, felt, found formula. (I know how you feel, many people have felt like this before, I’ve found that this helps over time)• Claim reluctant buyer or seller: raise the price because it’s antique• Vice technique: “you’re going to have to do better” • Don’t split the difference, let the other person offer• Take a major disagreement off the table, do other agreements first• Art of concession – avoid a pattern, don’t be predictable • Set it aside (don’t make final offer a big one)• Make time your ally• Most dangerous moment in a negotiation is right after the deal closeso Buyers remorseo Nibbling occurs• Most powerful weapon: being able to walk awayGuest Speaker February 18, 2013Bob CrabtreeUniversity of VirginiaMasters at FSU LawNegotiates Settlements for a law firmo Civil defense worko Work for insurance – individual or company get suedo Most cases settle at mediationo Court orders mediation before seeing themo International mediationo Mediated for civil case goes through training and classes and has to become certifiedo If you can’t agree on a mediator – the court will assign you oneo 90% of civil cases settle shortly after mediationo Go through mediation because court is expensive and time consumingo Key factor = knowing the infoo Need to know your opponent and their motivationo Knowledge is powero Know your own goalso Respect the process and your opponentso Keep your wordo