1.

0 Prepare: Plan Your Negotiation Strategy

1.1 Preliminary Question: Should I negotiate?

1.2 Is this a position-based or interest-based negotiation?

1.3 Am I trying to resolve a dispute or make a deal?

1.4 How should I analyze a negotiation?

1.5 Is this a cross-cultural negotiation?

1.6 How should I handle ethical issues?

1.7 Should I use an agent to negotiate for me?

1.4 How Should I Analyze a Negotiation?
A. What questions should I ask to complete an
analysis?

B. What is my BATNA in a dispute resolution
negotiation?

C. How can I use decision trees to complete my
BATNA analysis?
•  You are preparing to negotiate the sale of your car to a possible
buyer, Pooja. She is the only person who responded to an ad
that you posted one week ago.

•  You need at least 4000 from the sale to finance the purchase of a
truck that you have ordered. You want to keep your car for three
more weeks, which is when the truck will arrive.

•  The reasonable value of the car is 5000 (based on several online
calculators).

•  If you can’t find a buyer willing to pay at least 4500, you will sell
the car to a friend, Tommaso, for 4000. You know that
Tommaso will let you keep the car for the next three weeks.
 Key Questions in Your Analysis
•  What is your overall goal in reaching a negotiated agreement with Pooja?

•  What issues are most important to you in reaching this goal? Why are these
issues important?

•  What is your Best Alternative to a Negotiated Agreement (BATNA) with Pooja?

•  What is your reservation price (in this negotiation with Pooja, the lowest
price that you will accept)?

•  What is your most likely price?

•  What is your stretch goal?

Mike Tyson House – Farmington, Connecticut
•  56,000 square feet, 18 bedrooms, 38 bathrooms, 1,500 square-foot health
club, indoor pool

•  1997 - Purchased for $2.7 million

- Adds 3,000 square-foot nightclub with 2-tier dance floor, a wall of 200 TV screens, a DJ
station and smoke machine

•  1998 - House on market for $22 million

•  1999 - Lowers price to $12.9 million

•  2000 - Lowers price to $5 million

•  2002 - Takes house off the market

"No Bites on Tyson House," Wall Street Journal

 A Civil Action
•  Woburn, MA water contamination
•  High number of leukemia cases
•  Attorney (Travolta) sues two large companies

•  Companies probably willing to settle for $25 million; attorney

demands $320 million

•  Case against one company dismissed; other company settles for $8

million
•  Attorney files for bankruptcy
•  You are preparing to negotiate the sale of your car to a possible
buyer, Pooja. She is the only person who responded to an ad
that you posted one week ago.

•  You need at least 4000 from the sale to finance the purchase of a
truck that you have ordered. You want to keep your car for three
more weeks, which is when the truck will arrive.

•  The reasonable value of the car is 5000 (based on several online
calculators).

•  If you can’t find a buyer willing to pay at least 4500, you will sell
the to a friend, Tommaso, for 4000. You know that Tommaso
will let you keep the car for the next three weeks.
 Key Questions in Your Analysis
•  What is your overall goal in reaching a negotiated agreement with Pooja?

•  What issues are most important to you in reaching this goal? Why are these
issues important?

•  What is your Best Alternative to a Negotiated Agreement (BATNA) with Pooja?

•  What is your reservation price (in this negotiation with Pooja, the lowest
price that you will accept)?

•  What is your most likely price?

•  What is your stretch goal?

 Key Questions in Your Analysis
•  What is your overall goal in reaching a negotiated agreement with Pooja? Sell
your car

•  What issues are most important to you in reaching this goal? Why are these issues
important? Price (because you need money to buy truck) and transfer date
(because you need the car for the next 3 weeks)

•  What is your Best Alternative to a Negotiated Agreement (BATNA) with Pooja? Sell
the car to your friend, Tommaso

•  What is your reservation price (in this negotiation with Pooja, the lowest price
that you will accept)? 4500

•  What is your most likely price? 5000

•  What is your stretch goal? 6000?

 Reservation Most Likely Stretch
Price
BATNA 4500 5000 6000
 What is the Other Side’s Analysis?

I find it helpful to try to figure out in advance where the

other person would like to end up-at what point he will
do the deal and still feel like he’s coming away with
something.

- What They Don’t Teach You at Harvard Business School, Mark McCormack
 Reservation Most
Price Likely Stretch
BATNA
4500 5000 6000

4500 5500
3500 BATNA
Stretch Most Likely Reservation
Price
 Reservation Most
Price Likely Stretch
BATNA
4500 5000 6000
Zone of Potential
Agreement (ZOPA)

3500 4500 5500

BATNA
Stretch Most Likely Reservation
Price
Conclusion: Key Questions in a Negotiation Analysis
•  What is your overall goal in reaching a negotiated agreement with Pooja?

•  What issues are most important to you in reaching this goal? Why are these
issues important?

•  What is your Best Alternative to a Negotiated Agreement (BATNA) with Pooja?

•  What is your reservation price (in this negotiation with Pooja, the lowest
price that you will accept)?

•  What is your most likely price?

•  What is your stretch goal?