MAN4441 Exam 2 Study Guide Ex Minor gets a pare of boots stolen from work there s big sign that says company is not responsible for lost or stolen items the minor goes to the supervisor and supervisor says were not paying your boots Minor says fine I m organizing a strike If you re the supervisor a strike will cost thousands of dollars while repaying the boots only cost 50 The supervisor later said I am not paying for those boots 3 Ways You Should Solve Dispute in Order 1 Reconcile Interests we can try to work something out mutually that works for you and works for me satisfy peoples interests Interests is the cheapest and quickest ways to solve a dispute Can be measured in Transaction Costs 2 kinds of tenants to it 1 satisfaction with the outcomes 2 the effect on the relationship If the company doesn t pay for the employee s stolen boots the employee will become a bad employee over a pair of boots and he s going to convince his friends he was wronged 2 Who is right we determine who is right by the court system it s a win or lose situation Satisfying interests is better If you lose in court you are not happy 3 Determine who has more power you can have more power without being right the minor who wanted to strike was trying to prove had more power minor using strike as power If the employees go on strike that is going to be more costly Power is the last thing you want to try Power is a win or lose game 1 Interests 2 Who is right 3 Who has more power The shift boss was trying to say he was right and he was basing it on a company policy Generally a third party will decide who is right because rights are rarely clear Determining who s powerful is when you impost cost on the other side by threatening to do something 2 Resolutions the Minor Should have done You Can Withdraw in the strike case quit the company Pretty drastic measure Lump it you drop your claim in the strike case you know what 50 is not that much I m just going to drop my claim Cost to Disputing Transaction Costs usually very easily measurable the costs for the boots 50 if strike happens thousands of dollars Satisfaction with Outcome sometimes your not going to get your way but if you feel like you were treated fairly in the process your going to be more accepting of the outcome In court even if you lost if you feel like you were represented well and the judge was fair then your going to live with the outcome Effect on the Relationship If you don t buy the boots your going to have a mad employee for a long time he will not want to work not going to be productive Reoccurrence Its going to keep happening you have to stop it from happening reoccurrence by establishing what s right and establishing who has power you have to set a precedent you have to stop it from happening Ex Wal Mart gets tons of lawsuits Wal Mart settles all of those claims because cost of court is very expensive Then Wal Mart started litigating cases because in many of those cases those people don t have a lot of money Ex Brown vs Board of Education blacks were not allowed in white public schools if they satisfied interest in that case in one town it would have been solved but it wouldn t have solved America s problems So what did they do to stop reoccurrence Take it to the Supreme Court to determine who was right and that solved the case The main reason is to STOP REOCCURENCE By determining who has power When your thoughts work against you Ex Kid 17 turned down 4 million over 2 years to play baseball 7th overall rank The agent said he s worth 4 9 million Ball club says 4 million is the final offer The kid should take it The kid turns down the 4 million dollars He had a bad year in independent ball He had a bad year and got offered 1 2 million Went back to independent ball and played bad and got a 100 000 contract and he turned that down He turned down a 4 million dollar offer to getting basically nothing 5 Mistakes You Want to Avoid Mistake 1 Viewing the Negotiation as a Fixed Pie The opportunity may exist to create value for both parties think about incentives put some incentives in The kid should have expanded the pie a win win for both people could have been incentives commission bonus Give the kid a bonus if he played well Solution share information try to provide info that could lead to wise trade offs for example the promotion Mistake 2 Anchoring on the First Offer Ex The agent told all the ball clubs that 4 9 was going to be his price so he was not willing to budge Or willing to negotiate another price Solution reject anchors come to the table with realistic expectations with what you expect to achieve Mistake 3 Escalating Commitment Strong psychological needs to justify your previous actions and behaviors The ball player was insulted when they offered him the 1 9 million Have a realistic view of reality Solution don t dwell on the past you have to move forward Once they come with the 4 25 million accept it Mistake 4 Feeling Too Confident he was over confident about his ability so he was unwilling to budge and unwilling to give in for another offer Solution consider the opposite why are they only offering me 1 25 million One thing that can be helpful get an opinion from an outsider Mistake 5 Focus Too Narrowly on the Issues they were so focused on short term they didn t look at the big picture they weren t focused Solution Ask questions and make multiple offers asking questions might give you an idea of what the long term or what the future is going to be like Ex How many years do you expect me to be here what s the salary after the 2 years 5 Ways We Can Approach This 1 Avoiding lose lose strategy when factors are there that its not important that you negotiate at all A danger in avoiding strategy can be that somebody can get mad Ex Housing market you do not have to just negotiate with that one person there is other alternatives 2 Accommodating lose to win strategy high importance relationship low importance of outcome I m going to lose in the short term but I m going to set that relationship so I can win in the future Lose first negotiation so I can win in the future People are happy when they get what they want Ex Coke has a good relationship with firehouse subs its important to them because firehouse is growing Coke made that million dollar machine that firehouse has that …