Term Paper on "Negotiations as Business Professionals, We Negotiate"

Term Paper 6 pages (1841 words) Sources: 1

[EXCERPT] . . . .

Negotiations

As business professionals, we negotiate every day on topics ranging from work assignments, project delivery dates and even business travel. Our viewers have routinely reported that women and men approach negotiations differently and have asked for advice from others to develop and refine this critical skill set," said JillXan Donnelly. 'Negotiation Tips' are the culmination of advice and clearly represents a strong desire by the people to become better negotiators and ultimately strong business leaders."

Auctions are just one form of business negotiations. Other examples are competitive bids for procurement, brokerages/exchanges/cartels, and two party negotiations. While these negotiation techniques appear to be fundamentally different from each other, from the business process modeling or work flow point-of-view, they can be strikingly similar. Auctions can be of many different kinds: Dutch auctions, regular open cry auctions, sealed bid auctions,

Etc. Each type of auction can further have many variations such as reserve prices, BATNA & ZOPA, Due diligence, Win-Win Situation, Cross-border negotiations. We present taxonomy for auctions.

Reservation Price:

In microeconomics, the reservation (or reserve) price is the maximum price a buyer is willing to pay for a good or service; or, conversely, the minimum price at which a seller is willing to sell a good or service. Reservation prices are commonly used in auctions.

Reservation prices vary for the buyer according to their disposable income, their desire for the good, and the prices of, and their information about substitute goods. Reservation demand is a name for the schedule of reservation prices at which a seller would be willing to sell different quantities of the good in question.

The reservation price is used to help calculate the consumer surplus or the producer surplus with reference to the equilibrium price.

Just as a consumer has an incentive to search for a low price when purchasing a good, a worker has an incentive to search for a high wage when looking for a job. The lowest wage the worker is willing to accept is that worker's reservation wage.

Due-diligence:

1. Offers to purchase an asset are usually dependent on the results of due diligence analysis. This includes reviewing all financial records plus anything else deemed material to the sale. Sellers could also perform a due diligence analysis on the buyer. Items that may be considered are the buyer's ability to purchase, as well as other items that would affect the purchased entity or the seller after the sale has been completed.

2. Due diligence is essentially a way of preventing unnecessary harm to either party involved in a transaction.

BATNA & ZOPA:

If I have a BATNA, so do you. If I have a reservation point, so do you. The $64 million dollar question (inflation), then, is whether there's a positive overlap between my reservation point and yours.

The bargaining zone represents the overlap (or lack thereof) between your reservation point and mine. The zone of possible agreement, or ZOPA, represents the overlap between the most the buyer is willing to pay and the least the seller is willing to accept.

A always assume of ZOPAs as a "dance floor." I envision two negotiators dancing, each trying to lead the other to his reservation point. it's possible that there's no space on the dance floor, meaning that the maximum a buyer is willing to pay is less than the minimum a seller will accept. it's also possible that the dance floor is the size of a football field.

The most common mistake people make is to assume that the bargaining zone is much smaller than it actually is. I call this ZOPA myopia. ZOPA myopia often occurs because people are anchored by their own reservation prices.

Cross-border negotiation - culture:

In looking at the effect of culture on negotiations it is easy to understand its importance in influencing the way in which people view the world. We may see the Italians as more relaxed, the Germans more precise, the Americans as more driven. If we are French we mistrust the English, if English we mistrust the French (the effects of the 100 Years War live on) and so on.

If you really want to see the stupidities that can arise from cultural differences go and look at Israel and Palestine, two groups of highly intelligent people, both with a long and distinguished history, with a strong religious and family life - and they are in the process of trying to destroy each other. The same thing is happening in other "trouble-spots" around the world. However it is also necessary to understand that cultural differences, especially where language and history differ, may include different views of desirable objectives. In Japan it's OK to sleep during meetings, but don't blow your nose in public, and be very careful to look at business cards which are handed to you.

Firstly we should acknowledge that most human beings share the same concerns; their children, their spouse, their boss/employees, and the economic situation. Frenchmen will decry the effects of crime, along with Brits, and Americans. All parents are not sure that their children will do what they wish and so on. By focusing on our common humanity you can connect with the people with whom you are negotiating; we are all brothers and sisters under the skin. The paradox is that, although we have a lot in common with people in other countries, other countries are different. A Frenchman was recently found guilty by a Scottish court of hitting his son, and English plane spotters were also found guilty in Greece of spying (plane spotting is unknown in that country); in both France and England there has been disbelief that these cases ever came to trial, let alone succeeded.

Cultural differences can have a dramatic effect on negotiation. The distribution of influence (power) may involve different networks and players from those the negotiator is used to. The culture may have a centralizing and Statist tendency (as in China), or it may be decentralized and business-orientated, as in the U.S. The networks involved in the negotiations may include groups which you never meet face-to-face; civil servants, the members of the Saudi Royal family, party members, members of Congress or of Parliament, State Senators, diplomats, shareholders, crime-syndicates and the wife of the company President.

There are cultural taboos; Muslims and Jews don't eat pork, Hindus don't eat beef, in Eastern Asia you don't show the sole of your shoe to someone, pointing can be a problem, as can eye contact, standing too close or too far away, there are a thousand and one things to remember. Some cultures value punctuality and deal-focused meetings; others have little sense of the urgency of time and need to first develop relationships. Anglo-Saxon societies value lawyers and certainties in details, in other societies there are few lawyers (Japan) and the long-term relationship is the important thing. It is also important to understand to what extent the other side is negotiating as a group, rather than via one man (the normal Anglo-Saxon model).

Win-Win Negotiations:

Do you feel that someone is continually taking advantage of you? Do you seem to have to fight your corner aggressively, or ally with others, to win the resources you need? Or do you struggle to get what you want from people whose help you need, but over whom you have little direct authority? If so, you may need to brush up your win-win negotiation skills.

Effective negotiation helps you to resolve situations where what you want conflicts with what someone else wants. The aim of win-win negotiation is to find a solution that is acceptable to both parties, and leaves both parties feeling that they've won, in some way, after the event.

Where you do not expect to deal with people ever again and you do not need their goodwill, then it may be appropriate to "play hardball," seeking to win a negotiation while the other person loses out. Many people go through this when they buy or sell a house - this is why house-buying can be such a confrontational and unpleasant experience.

Similarly, where there is a great deal at stake in a negotiation, then it may be appropriate to prepare in detail and legitimate "gamesmanship" to gain advantage. Anyone who has been involved with large sales negotiations will be familiar with this.

Neither of these approaches is usually much good for resolving disputes with people with whom you have an ongoing relationship: If one person plays hardball, then this disadvantages the other person - this may, quite fairly, lead to reprisal later. Similarly, using tricks and manipulation during a negotiation can undermine trust and damage teamwork. While a manipulative person may not get caught out if negotiation is infrequent, this is not the case when people work together routinely. Here, honesty and openness are almost always the best policies.

Preparing for a successful negotiation

Depending on the scale of the disagreement, some preparation may be appropriate for conducting a successful negotiation.

For small disagreements, excessive preparation… READ MORE

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