Negotiation and Conflict
Management
MNO3702
Class 1
Agenda
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Welcome to the class!
Course Overview
Negotiation Exercise – Creamery@Holland
Exercise Debrief
Who we are?
Who we are?
Instructor
Teaching Assistant
Ameek Kaur
Vivian Yee Theng
Getting to know you
Course Overview
Background
Negotiation is an interpersonal decision-making process necessary whenever we cannot
achieve our objectives without support from others.
When two or more parties need to reach a joint decision but have different preferences,
they negotiate.
We negotiate all the time whether we know it or not.
Negotiation is a core leadership competency.
Negotiation Myths/Facts
Negotiation Myths/Facts
▪ Negotiators are Born
Mindsets about intelligence beliefs
1. Incremental Theorists: I am work-in-progress
2. Entity Theorists: I am a finished product
Negotiators who hold an incremental belief, outperformed those who hold an entity belief (Kray & Haselhuhn,
Journal of Personality and Social Psychology, 2007)
▪ Negotiators are aggressive
• Should adapt the appropriate strategy
▪ Negotiation skills are intuitive
• Need to watch out for biases, planning is important
▪ Negotiators become better with experience
• Experience is an expensive way to learn
• Simulation-based negotiation classes provide risk-free setting
Course Objectives
Course Objectives
▪ Improve negotiation skills
• Overcome habitual pattern of responding (e.g. reciprocity, fixed pie belief)
• Increase communication, listening, and conflict management skills
▪ Increase your capacity to understand and predict the behavior of individuals
and groups in competitive situations
• Experiment with various negotiating strategies
• Take risks and assess your negotiating behavior in a “safe” environment
▪ Examine behaviors of others and see how they react to you
• Compare the success of your strategy to those used by others
Course Objectives
▪ Get feedback on your interactions with others
• What did you do right
• What did you do wrong
▪ Develop a toolkit of useful negotiation skills, strategies, and
approaches
• Claim value
• Create value
• Build trust
Understand that there is no “cookbook” solution
Syllabus
▪ Readings – after class
▪ Attendance policy
• If you must miss a class, please inform your TA in advance
▪ Honor code
• You may never show your role materials to your counterpart
• You can tell your counterpart anything you want, but no violence please! Also,
• You cannot make up facts that may change the power distribution of the exercise
• There may be consequences to your words and actions
• Class discussion stays in class
• Class material is copyrighted
Course Roadmap
Class 1
Class 2
Class 3
Class 4
Distributive
Negotiation
Integrative
Negotiation
Influence
Advanced
Integrative
ABC/Local 190 Ongoing Negotiations
Class 7
Class 5
Class 9
Class 6
Class 8
Agents
Dispute
Resolution
Class 10
Group
Negotiation
Debrief
Class 11
Class 12
Multi-party,
Cross-culture
Negotiation
Module
Closure
Course Assessment
Course Assessment
(Extrinsic Motivation for learning)
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Attendance & Class Participation (20%)
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Planning Documents
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You should prepare planning documents for all your negotiations
Submit the document for Cookbook (work with a partner) by Class 4
Bullard Houses (5%) due Class 6
Viking (5%) due class 8
Post-negotiation Analysis (20%)
• On any of the exercises or overall experience, due 19 Feb 10PM
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On-going Group Negotiation – ABC/Local 190 (25%)
• Planning Document for ABC/Local 190 Round 1 (5%) due Class 5
• Outcome for ABC/Local 190 Round 2 (5%) due Class 7
• Group Negotiation Journal (15%) due 19 Mar 10PM
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Reflection Journal (25%) – due 16 Apr 10PM
Learning Tips
(Intrinsically driven)
Learning Tips
(Intrinsically driven)
▪ BEFORE:
• Prepare well for your respective roles (play the part)
• Think critically about the previous lesson
▪ AFTER:
• Reflect on the experience
• What worked well, what didn’t go so well, what changes to make for the next time
• Read about the topic covered in class
Negotiation Exercise: Creamery@Holland
▪ Preparation – 15 min
▪ Negotiation – 20 min
Negotiation Exercise: Creamery@Holland
▪ Restaurant takeover deal
▪ Seller: Travis from Tanaka’s Tavern
▪ Buyer: Carol from Creamery ice cream chain
Debrief
▪ Fill your results in the google sheet (link posted in Canvas
Announcement)
Discovery: Analysis & Planning
▪ How did you prepare?
▪ What did Carol find out about Tanaka Tavern?
▪ What did Travis find out about the Creamery?
▪ What were your goals?
Key Negotiation Principles
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Best alternative to negotiated agreement (BATNA)
Reservation price
Zone of possible agreement or bargaining zone (ZOPA)
Target Price
BATNA (Best Alternative To a Negotiated Agreement)
BATNA (Best Alternative To a Negotiated Agreement)
What are you going to do if you do not make a deal with this person?
▪ BATNA is your greatest source of power
• Improve your BATNA before and when you negotiate
• Do not fall in love with one alternative
• Counterpart’s perceptions of your BATNA are also very important
Reservation Price
Reservation Price
▪ Your “bottom line”, the point at which you are indifferent to whether you
achieve a negotiated agreement or walk away
▪ Anything worse than the reservation price, you prefer no agreement
▪ Reservation price = BATNA +/- things that make you want to do the deal.
• E.g. opportunity costs, switching costs, ego, idiosyncratic preferences
▪ Reservation price should never change unless
• Your BATNA changes
• Terms of the deal change
Should you Reveal your BATNA and Reservation Price?
Should you Reveal your BATNA and Reservation Price?
▪ Never reveal your reservation price!
• The other party can push for a resolution that is only marginally acceptable to you
• Always go into a negotiation with reservation price
▪ Reveal your BATNA when it is strong
• You can highlight the strength of your BATNA without providing specifics
• But beware of issues of trust and credibility
Bargaining Zone
▪ Space between the buyer’s reservation price (BR) and the seller’s reservation
price (SR) – that is, the zone of possible agreement.
▪ If BR < SR, then there is no zone of possible agreement.
BR
Negative
Bargaining
Zone
SR
Bargaining Zone
▪ Space between the buyer’s reservation price (BR) and the seller’s reservation
price (SR) – that is, the zone of possible agreement.
▪ If BR > SR, then a zone of possible agreement exists. The zone of agreement is
from SR to BR.
SR
Positive
Bargaining
Zone
BR
What is the size of the pie?
▪ Dividing the pie (surplus)
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The fixed sum to be divided = BR – SR
X = final outcome
Buyer’s Surplus = BR – X
Seller’s Surplus = X - SR
Throughout the negotiation, each party should reassess estimates
regarding the other party’s reservation price.
Tools and Strategies
▪ Reference Points
• Anchors
• First Offers
• Counteroffers
▪ Concessions
▪ Planning Documents
Multiple Reference Points
▪ BATNA
• $180K Queenstown location for buyer, $60K profit for seller
▪ Target price
• Fashion store handover = $110K ($80K/800 sqft X 1100 sqft)
• Real estate agent appraisal = $70K
What can you do to strengthen your BATNA?
Should you make First Offer?
Concessions
Concessions
▪ Develop a rationale around each of your concessions
• Make bi-lateral (trade-offs), not uni-lateral concessions: Don’t reward
obstinate behavior with concessions!!
Concessions
▪ Develop a rationale around each of your concessions
• Signal information in the size of your concessions, make concessions smaller
as you approach your goal.
Planning is Key!
Planning is Key!
▪ Research about the following for SELF and OTHER
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Interests
BATNA
Reservation Price
Target Price
Sources of Power
Weaknesses
Opening Move
Potential Concessions
Self Reflection
Self Reflection
(You are encouraged to do this!)
▪ Create your own Reflection Diary
▪ Reflect on today’s negotiation (Creamery)
• What went well, what didn’t go so well
• Relate it to your strengths and weaknesses
(develop awareness about your own style)
Takeaways
▪ Prepare and gather information (Planning documents)
• Know your BATNA and define your reservation price
• Define your Aspiration Level (i.e., target price)
• Research the other party’s BATNA/reservation price
▪ Tools and strategies during the negotiation
• Reference points
• Concessions
• Planning document
Recommended Readings
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Thompson, Leigh L (2022) The mind and heart of the negotiator. Chapter 2 “Preparation: What to do
before negotiation” - LIB EBOOK
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Lewicki, R.J (2021) Essentials of negotiation. Chapter 2 “Strategy and tactics of distributive bargaining” LIB EBOOK
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Malhotra, D., & Bazerman, M. (2007). Negotiation genius: How to overcome obstacles and achieve
brilliant results at the bargaining table and beyond. Bantam. Chapter 1 (Claiming Value in Negotiation) –
LIB EBOOK
Next
▪ Class 2 - Lion City