Negotiations Test 2 Review 1 1 Story 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 problem 1 Reconcile interest least expensive and highest satisfaction 2 Who is right 3 Who has the most power Arbitration binding mediation court order Lump it drop your claim in this case the minor Withdrawal minor would quit company Cost 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 2 Story 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 relationship Five Strategies Chart 1 Avoiding walk away you have other alternatives 2 Accommodating Lose Win 3 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 outcome 5 Collaborative maximize outcome Both parties must agree there is trust and openness Understand the other s needs and objectives Work Jointly to meet both parties needs Information must flow freely Only care about self Don t see potential for collaboration Keys Obstacles High Accommodating Collaborative Lose Win Win Win Compromise Split the Difference Avoiding Lose Lose Competitive Win at all costs Low Importance of Outcome High Relationship Importance Low Baseball story not in book 17 years old 7 pick Matt Herrington 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 million He played independently Drafter the next year at 58 for 1 28 million signing bonus Turned it down because of his pride Played independently Longest holdout and dumbest 22 turned down Tampa 5 mistakes 1 Viewing negotiation as a fixed pie 2 Anchoring on the first offer 3 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 Solutions 1 Share info don t lock yourself in 2 Respect anchors 3 Don t dwell on the past 4 Consider the opposite instead of thinking you re worth more maybe you are worth less 5 Ask questions and make multiple offers 1 7 4 Keys of Negotiating 1 Preparation do your homework 2 Practice 3 Patience keep calm 4 Persistence Three phases of negotiation 1 Information 2 Competitive phase a Learn the other side s circumstances b Get vital information what they want and the bottom prices c Order of presentation should be noticed d Blocking technique ask questions with another then suggest alternative a Make your case and claim your value b Tell what you re looking for c Principle offers a concessional make your case legit and back with facts d Argument articulate your side e Threats and promises i Affirmative promises are better than threats ii 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 do h 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 opponent 3 Cooperative Phase a Once agreement is reached 1 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 thoughts o 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 closes o Buyers remorse o Nibbling occurs Most powerful weapon being able to walk away Guest Speaker February 18 2013 Bob Crabtree University of Virginia Masters at FSU Law Negotiates Settlements for a law firm o Civil defense work o Work for insurance individual or company get sued o Most cases settle at mediation o Court orders mediation before seeing them o International mediation o Mediated for civil case goes through training and classes and has to become certified o If you can t agree on a mediator the court will assign you one o 90 of civil cases settle shortly after mediation o Go through mediation because court is expensive and time consuming o Key factor knowing the info o Need to know your opponent and their motivation o Knowledge is power o Know your own goals o Respect the process and your opponents o Keep your word o Have patience o Go do a negotiation when you have time o Reduce the agreement to writing and make sure you read it