...Alternative to a Negotiated Agreement A party’s BATNA is a measure of the balance of power among the negotiating parties based on the resources they control or can influence to respond to their interests that will be addressed in a given negotiation. “walking-in” BATNA, that group of resources in your pocket before negotiation begins, and the dynamic BATNA that changes as you gain information during the negotiation process gives you a sense of whether to undertake a negotiation and whether to quit once the process has begun. Elements of BATNA 1.0 Deadlines: if you are under pressure to deliver a particular result within a tight time frame, your BATNA may be weaker than the BATNA of a party who at least claims to have all the time in the world. 2.0 Alternatives: you need to measure how each choice you make influence the likelihood that the negotiation will yield favorable results. 3.0 Your own sources: it is crucial to take look at the resources you can influence or control to achieve the objective. And it requires understanding whether there is more than one way to meet your interests. 4.0 Other parties’ resources: if the resources they offer to solve the problem are more comprehensive or more useful than yours, clearly that means their BATNA is stronger- at least in one area. 5.0 Information: The more information we have about the subject matter of the negotiation, the greater our capacity to assess our BATNA and parties with whom we’re negotiating. 6.0 Experience:...
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...MANAGEMENT REPORT BATNA Basics: Boost Your Power at the Bargaining Table www.pon.harvard.edu Negotiation Management Report #10 $50 (US) Negotiation Editorial Board Board members are leading negotiation faculty, researchers, and consultants affiliated with the Program on Negotiation at Harvard Law School. Max H. Bazerman Harvard Business School Iris Bohnet K ennedy School of Government, Harvard University Robert C. Bordone Harvard Law School John S. Hammond John S. Hammond & Associates Deborah M. Kolb Simmons School of Management David Lax Lax Sebenius, LLC Robert Mnookin Harvard Law School Bruce Patton Vantage Partners, LLC Jeswald Salacuse T he Fletcher School of Law and Diplomacy, Tufts University James Sebenius Harvard Business School Guhan Subramanian Harvard Law School and Harvard Business School Lawrence Susskind Massachusetts Institute of Technology About Negotiation The articles in this Special Report were previously published in Negotiation, a monthly newsletter for leaders and business professionals in every field. Negotiation is published by the Program on Negotiation at Harvard Law School, an interdisciplinary consortium that works to connect rigorous research and scholarship on negotiation and dispute resolution with a deep understanding of practice. For more information about the Program on Negotiation, our Executive Training programs, and the Negotiation newsletter, please visit www.pon.harvard...
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...Case study: The Muse/TransStar and Southwest Airlines BATNA Case Overview Muse Air was struggling amid the 1982 traffic controllers’ strike, a massive debt to service and shrinking cash reserves. By the end of 1984, they were looking for a merger to keep it afloat. In 1985 culminated the purchase of Muse Air by its long time nemesis and rival, Southwest Airlines. Southwest Airlines paid USD 60.5 millions in stock and cash for Muse Air when Muse Air was on the verge of collapse in 1985. After completing the acquisition, Southwest Airlines renamed Muse Air as Transtar Airlines in 1986. Transtar Airlines became a wholly owned subsidiary of Southwest Airlines and operated as an independent airline. Southwest acquired the company and a series of complex negotiations between Southwest Airlines and Transtar instigated. An agreement on combined master seniority list is reached in the last negotiation between pilot groups. Nonetheless, Transtar Pilots Association (TPA) Board of Directors (BOD) rejected the proposed Integrated Seniority List (ISL) believing that such act would create more leverage for their Merger Committee to obtain a more favourable ISL. The rejection however, resulted in escalation of anger and distrust between union presidents and causing entire breakdown to the negotiation. Analysis In the first round of discussion, in 1985, Transtar pilots were unrepresented so the negotiations ensured only between Southwest Airlines and the Southwest Airlines Pilot Association...
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...BATNA - Best Alternative Having available options during a negotiation is a good alternative which empowers you with the confidence to either reach a mutually satisfactory agreement, or walk away to a better alternative. "Don't put all your eggs in one basket." It's an old saying which has stood the test of time. Some of you urbanites, sitting in your cubicles, may be scratching your heads and wondering, 'What in the name of Hades does this mean?' Meanwhile, back out there in the countryside, a ruddy faced farmer, is likely rolling his eyes and patiently explaining, that should you trip on the way back to the kitchen, eggs are no longer on the breakfast menu. To a negotiator, this wise old proverb illustrates that if you bring only a single proposal to the table, you may likely end up with a rotten deal, or no deal at all. You need to have an alternative plan waiting in the wings. It should be fairly obvious that not every negotiation is going to get tucked away in a nice, neat settlement package. This is where BATNA comes to the rescue for those of you sensible enough, to have heeded the sage advice of that old farmer who coined the above proverb many ages ago. BATNA means 'Best Alternative to a Negotiated Agreement'. This is your alternate plan when the talks start to wobble out of control. It can also be your trump card to make the deal happen to your advantage, or walk away from it altogether. Let's illustrate BATNA by using a simple example. In the first scenario...
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...BATNA - Best Alternative Having accessible choices amid an arrangement is a decent option which engages you with the certainty to either achieve a commonly palatable understanding, or leave to a superior option. "Don't put all your eggs in one basket." It's an old saying which has stood the test of time. Some of you urbanites, sitting in your work spaces, may be scratching your heads and pondering, 'What for the sake of Hades does this mean?' Meanwhile, pull out there in the field, a bronzed confronted agriculturist, is likely feigning exacerbation and persistently clarifying, that if you stumble in transit back to the kitchen, eggs are no more on the breakfast menu. To a negotiator, this insightful old saying delineates that in the event that you convey just a solitary proposition to the table, you might likely wind up with a spoiled arrangement, or no arrangement by any means. You need an option arrangement holding up in the wings. It ought to be genuinely evident that not each arrangement is going to escape in a decent, perfect settlement bundle. This is the place BATNA acts the hero for those of you sufficiently sensible, to have paid attention to the wise guidance of that old rancher who authored the above precept numerous a long time prior. BATNA means 'Best Alternative to a Negotiated Agreement'. This is your substitute arrangement when the discussions begin to wobble crazy. It can likewise be your trump card to make the arrangement happen further bolstering...
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...trap. 2. BATNA: I must analyze what my BATNA is. This is my reference for the negotiation. 3. Focus on Interest: I will approach the negotiation with a focus on interest of the other party. Identifying the possible interest of other party involved in negotiation will help me analyze the possible ways of expanding the pie (creating more value). 4. Integrative Bargaining: Focus more on Integrative bargaining. Analyze multiple issues and interest, creating and claiming value and cooperative problem solving. Consider possible trade-offs to avoid conflicts and have a win-win situation. 5. Bargaining Zone: I must analyze my bargaining Zone. The zone where the buyer’s and supplier’s negotiation ranges overlaps. 6. Reservation Price: I have to write down my reservation price. This determines when to expand the pie create more value and when to walk away from negotiation. 7. Identify the power in negotiation: Identify exactly the type power in negotiation and analyze the persuasive skills required to move from perceived power to realized power. 8. After striking with the initial deal, I will have to keep my options open for re-anchoring. Negotiation Trap: * Identifying the type of bargainer helps to identify the potential traps. * Soft bargainers agree on deals worse than the BATNA and they fail to achieve best deals for themselves. * Hard bargainers tend to walk away from the deals that are better than the BATNA and they oversee...
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...unable to reach a mutual agreement (Murtoaro & Kujala, 2007). There are also several concepts of negotiations including win-win, interest-based, positions v. interests, and BATNA negotiations. Below the reader, will find a brief description of all of these concepts. Win-Win Negotiations The win-win negotiation approach is a relatively new concept and is successful when one or all parties meet their requirements of the settlement without the use of power (Falcão, 2014). A win-win negotiation strategy has seven requirements to form a solid foundation. “Promote interdependence, proactive learning, be translucent, be positive, be reasonable, be loyal in the negotiation process, and commit to a win-win process” are the seven steps to a successful resolution (Falcão, 2014, para.3). In win-win negotiations, it is necessary for the parties to conduct some background investigations especially for business-business negotiations because criminals wear different suits. Best Alternative to No Agreement (BATNA) Rodger Fisher, William Ury, and Bruce Patton introduced the term best alternative to no agreement in their book, “Getting to Yes” (Negotiation At Work, 2008). Anyone going into a negotiating setting should develop a BATNA before meeting with the other party. A person needs to follow seven steps when developing a BATNA. No one can guarantee each party will accept the agreement; therefore, a person must have a backup plan. Decide what the most...
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...thevarious parties influence the negotiation process and its outcome?Answer:The parties in the Frasier negotiation are the National Broadcasting Company (NBC) andParamount, the owner of the show. While the National Broadcasting Company (NBC) wants topay under $5 million in order to make a profit on the show, Paramount seemed to bedemanding $ 6 million per episode. Paramount came down to $5.5 million later.Q.2. What is NBC's BATNA? What is Paramount's BATNA? What is your best estimate of theirrespective reservation prices? Is there a ZOPA?Answer:NBCs BATNA: The fact that Paramount didnt have a BATNA. If they switch networks the showwould lose viewership, which will affect the studio as well as the network to which they move.So whatever NBC was offering them was the best deal they can get. And Graboff knew the CBSnetwork pretty well and was pretty sure they wouldnt buy Frasier at such a high cost.Moreover this might kick off a price war that will ruin the networks industry and people mightreconsider getting shows from paramount for their bad dealing.Paramounts BATNA: It didnt have one. But they were relying heavily on the fact that Frasierwas the flagpole show of NBC. But if they quit NBC, both the parties will suffer, whileParamount will suffer the most.ZOPA: The ZOPA would be something that NBC had offered, the creative bonus offer based onratings. If Paramount things their show is good enough, they must go for the bonus offer, buttry and fix the slot. Slot is important because...
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... and motivated people walk into substantive negotiations ill-prepared. Thus, it is critical that you adopt a thorough methodology to help you prepare to negotiate. Our five-step pre-negotiation framework offers a simple yet effective approach. (In the chapters that follow, we will add to this list as we confront more complex negotiations.) Step 1: Assess your BATNA. The first step in any negotiation is to ask yourself, “What will I do if the current negotiation ends in no deal?” In other words, you need to assess your BATNA, or best alternative to negotiated agreement—the course of action you will pursue if and when the current negotiation ends in an impasse.3 Without a clear understanding of your BATNA, it is impossible to know when to accept a final offer and when to walk away in order to pursue other options. Your BATNA assessment requires the following three steps: 1.Identify all of the plausible alternative options you might pursue if you are unable to reach an agreement with the other party. 2.Estimate the value associated with each alternative. 3.Select the best alternative; this is your BATNA. In the Hamilton case, you have a number of alternatives if the negotiation with Connie Vega ends in impasse: you might wait for other offers, you might approach Quincy Developments...
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...to focus on in order to improve negotiation skills and techniques. What strategies or techniques are used to solve the problem or address the issue? The article lists Ten Best practices for Negotiators in a table and continues to explain the importance of each. The table from the text is as follows: |Ten Best Practices for Negotiators | |1. Be prepared | |2. Diagnose the fundamental structure of the negotiation | |3. Identify and work the BATNA | |4. Be willing to walk away | |5. Master paradoxes | |6. Remember the intangibles...
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...answer the questions. There is not a need to respond directly to this background information in your analysis.) • What is your BATNA (Best Alternative to a Negotiated Agreement)? o Explain why it is the “best” alternative. What are some other possible alternatives? o How acceptable your BATNA is to you? What are the implications of this acceptability for the way you approach this negotiation? o Remember that the ideal BATNA: ▪ Does not require the negotiation counterpart’s participation or permission. ▪ Is a “sure thing” or very close to it. o Specifically in a case (but not in real life), a BATNA cannot include asking a third party to do something they have not yet done. (The third party is not going to appear in class; therefore, you won’t be able to ask them.) • Does it seem (initially) that one party is more dependent on getting a deal than the other party is? If so, what are the implications of this potential imbalance? • Decide what the relevant issues are that you want to negotiate. o List the issues. (Attempt to avoid one-issue negotiations.) o Set your priorities. (Rank them or group them.) • Choose resistance point(s) and target point(s) for quantitative issues. The resistance points should be based on the BATNA. o Note: Sometimes you have resistance points for specific issues. (For example, you may have a time deadline regardless...
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...…go on about how expectancy theory might apply…where was the break-down…get specific – Missing obvious chance to apply concepts: “We had ten people all going in different directions” – Goal alignment – Vague or general terms: “We had a problem with communications” how and why was this a problem…did it effect motivation by breaking a link from expectancy theory or unbalance inputs and outputs. © James Berry 2013 3 Negotiations The Basics Dr. James Berry Lecturer University College London james.berry@ucl.ac.uk © James Berry 2013 4 Negotiation Skills © James Berry 2013 5 Objectives • • • • Briefly review what negotiation is Highlight why it might be important Review your BioPharm/Seltek negotiations Key things to know (BATNA, Reservation Price, ZOPA, Target Price) • Negotiate Case: Recruit © James Berry 2013 6 Negotiation is… • The process where two or more parties decide what each will give and take in the context of their relationship . . . © James Berry 2013 7 Negotiation is… • A bargaining and influence process designed to reach agreement about a decision or outcome • A core leadership and management competency • Most people are not effective negotiators – Over 80% of corporate execs and CEOs leave money on the table – Even effective negotiators have skills that can be sharpened and bad habits that can be broken © James Berry 2013 8 Matters...
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...possible for both sides to achieve their objectives” (Nelson and Quick 2009). For example, a dispute over land would necessitate distributive bargaining, whereas a partnership between two firms to buy and sell a product could be made through integrative negotiation. The process of two or more parties reaching a joint decision is influenced by a variety of factors. In analyzing business negotiation, we will first give an overview of past scholarly research on the topic, and then explore more current mental models of negotiation. We will also examine the possible hurdles to reaching agreements posed by cross cultural differences, particularly between American and Chinese business people. Finally, we discuss the relative importance of BATNAs (Best Alternative to Negotiated Agreement) and contributions in the bargaining process. History of Negotiation Research In the 1960’s and 1970’s, the main issues identified by scholars studying negotiation were the personality characteristics of the individuals involved and the situational context of the negotiation. Although many studies investigated the impact of personality differences on the success of a negotiation, the results generally showed that this variable accounts for only a small amount of the difference in...
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...INTERNATIONAL NEGOTIATION Oceania_POP Tuesday, May 29, 2012 3:28 AM Homework for INTERNATIONAL NEGOTIATION Group Member: Hong Nhung BUI Dian Amanda Pereira Kimberly Hiew Yi Mei 1. Negotiating Variables & Elements impact negotiation Negotiation items Opening Ticket revenues Targeting Walk away/ Limit $1,100,000 $550,000 Strategy & Explanation Attention Elements impact negotiations $275,000 Split of ticket revenues 60% 50% 25% Performance Schedule 9 performances 5 evenings 2 weekend matinees 2 weekday matinees 9 performances 6 evenings 3 weekend matinees 0 weekday matinees 13 performance s 6 evenings 3 weekend matinees 4 weekday matinees Matinees all week except Monday Calculation of Cost= explanation of the concession. The cost deduces the revenues. Exchange Limits set by the reduction of the profit Matinees - withhold info? $40,000 =3.6 % ticket revenues Deep ticket discounts for patrons & group don't make considerably profit Weekday matinee profits is excluded in the financial projections Cast & crew salaries are based upon a week run regardless of the number of performances Cast & crew salaries don't include additional performances Cost for additional performance =$10,000. Revenue for additional performances & its profitability Weekly Salaries for $300,000 $200,000 Paid by the host theater INTERNATIONAL NEGOTIATION ...
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...allure of liquidity I listed our home for sale and waited for the offers. Indeed the offers did come in, in fact over the next few months we were in and out of escrow three times. Undeterred we listed our home for a fourth and mutually agreed final time. We agreed our Best Alternative to a Negotiated Settlement (BATNA) was staying in the home and not planning to buy a bigger house. Our reservation point was set as a sales price of $440,000 which we calculated as the amount of money we needed to pay off our mortgage, all other debts, and provide enough seed money for our new investment fund. Two days after relisting our home we received an offer for $445,000 which we accepted. Prior to accepting the offer I received a call from the buyer’s agent, named Rong, inquiring as to why the property had been in and out of escrow three times. I explained our past experiences with buyers getting cold feet and backing out of escrow. I also expressed my reluctance to accept any additional offers without assurances the prospective buyers were serious. Rong assured me her buyers were serious. In an effort to provide these assurances Rong also elaborated on her buyers BATNA. According to Rong, her buyers had decided our complex was the only place they wanted to buy and our particular floor plan was the only floor plan in which they wanted to live. Our house was the only three bedroom four bathroom unit for sale. Rong insisted her buyers were willing to either buy our property...
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