Overview
Win-Lose
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Books like “Winning through Intimidation”
May get a better deal some of the time.
Damage Relationships
Miss creative agreements
Make a deadlock
Win-Win
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Books like “Getting to Yes”
Focus on creativity
Have better relationships
May give up achievable gains especially
against tough negotiators
Win-Lose Playbook
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Find opponents weak spots
Who makes first offer
Make demands
Overcome objections
Threaten
Using tactics
Win-Win Playbook
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Build trust
Communicate clearly
Probe for real interests
Find common ground
Brainstorm new options
Cross-cultural communication
Counter tactics
Question
• Are you more of a win-win or win-lose
negotiator?
3-D negotiation
• 1. Tactics
• 2. Deal Design
• 3. Set-up
Deal Design
• Drawing Board metaphor – Creativity,
invention and fresh thinking
• Find hidden sources of economic and
non-economic value. e.g. include risk
sharing provisions
• Focus on substance and outcomes.
Deal Design
• Finding common ground and also
analyzing differences.
• Egypt and Israel, Mount Sinai boundary
negotiation
• Egypt – Sovereignty
• Israel – Security
• Solution – DMZ with Egyptian flag.
Deal Design
• Understanding differences can help to
separate different parts and give each party
what it wants at least cost to the other.
• An entrepreneur and a buyer have different
forecasts for the future of a company.
• Buyer can pay based on future performance.
• Risk, Patience, costs, deal image.
Set-up
• Negotiation moves away from the table
that set-up the most promising situation
once you’re at the table.
• If the set-up is not right they take action
away from the table to make it better.
Set-up
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Right parties
Right Sequence
Right Issues
Right set of interests
Right table
Right time
Right expectations
Right Consequences for walking away
Set-up
• Staples founder Thomas Stemberg
wanted a second round of financing from
venture capitalists.
• The VCs refused to value the company as
highly as he hoped.
• How could he “break the VC cartel?”
• Ask who are the potential “high value
players” and approach them directly to
set-up the right players and interests.
Creating and claiming value
• Your negotiating objective should be to
create and claim value for the long term
by crafting and implementing a deal that is
satisfactory for both or all parties
• One-shot negotiations - reputation
• Long-term relationships – parties live up
to their side of the bargain
Question
• What kind of things can create value?
Creating value
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Discounted cash flow
Precedent
Relationships
Reputation
Political Appearance,
Fairness
Self-Image
Claiming value
• Competitive side of negotiations where
one side gets a bigger slice of the value
pie.
Creating and claiming value
• What are the barriers to creating value?
• What are the barriers to claiming value?
Preparing for a negotiation
Should we negotiate?
Question
• Have you ever tried to negotiate about a
price where you normally don’t e.g. A
restaurant or a department store?
Assignment
• Try to negotiate a lower price when
purchasing something. It cannot be a
place like a market where negotiating is
normal. Tell us how you got on.
Question
• How do you feel when negotiating?
Question
• A negotiation professor buys a big screen
TV, he does lots of research on different
models and on dealer costs. He visits
several dealers, and he packages, he
bundles the price of the TV with
installation, satellite dish and other
features. And he obtains a last price
concession, by mentioning a competitors
offer and as a result he saved $120. Now,
what do you think about this?
• Some people love to negotiate, some peo
ple have no problem with this. Other peopl
e might ask, is this the way we want to sp
end our brief time on Earth
Case
• A college offering a job to a professor, and she replies
by e-mail, granting some of the following provisions
would make my decision whether to accept your job
offer easier. Let me know what you think for example,
she wondered if they would consider a higher salary,
and she wondered if they would consider no more than
three new class preparations per year for the first three
years. Well, the college search committee received her
e-mail and replied immediately, we have decided to
withdraw the offer of employment to you
Summary
• You have to consider the risks, and
balance those against the benefits.
• You have to consider your feelings about
negotiating in general
• Do a cost benefit analysis of the rewards