MIMT 5210:

Managing Global Complexity

Session 2:
Cross-cultural negotiation strategies
Melody M. Chao
Spring 2023
Session 2’s focus
Negotiation basics
Brief recap & wrap-up
Yerba Mate

Simulation exercise
Sweet Shop

Discussion
Yerba Mate vs. Sweets Shop
From last session…

Introduction to the course

“Save my brain power. I
don’t want to think too
much if I don’t have to.”
Cognitive miser

Negotiation basics
Six main dispute resolution
processes
Dispute resolution vs. deal making
Simulation exercise: Yerba Mate
Discussion questions
 What are your roles?
 Buyer: Peace Café
 Seller: Guayaki Company
 Anchoring effect:
 Who gave the first offer? What is it?
 What are your Reservation vs. Aspiration
points?
 What is your BATNA?
 What are your outcomes?
 What is the nature of this negotiation?
Distributive? Integrative?
Discussion Questions
 What are your roles?
 Buyer: Peace Café
What are you known for?
What is important for you?
What are your goals in this negotiation?
 Seller: Guayaki Company
What are you known for?
What is important for you?
What are your goals in this negotiation?
 [See Outcome Summary]

Discussion Questions
 Who gave the first offer?
 Why or why did you not give the first offer?
 Any Anchoring effect?
 Anchor: Buy(er) low, sell(er) high?
Depends?
 Be mindful of the (group/class) cultural
dynamics!
Good or bad: With an “agreeable”
counterpart? The role of compromises?
 How to wipe off the first offer on the table if
it is unreasonable?
Discussion Questions
 What are your Reservation vs. Aspiration
points?
 Aspiration point
Specific goals a negotiator wishes to achieve as
part of an agreement
 Reservation point
The lowest acceptable value to a negotiator for a
negotiated agreement
Bottom line; walkaway point
 [vary from person to person]

Discussion Questions
 What are your Reservation vs. Aspiration points?
 Buyer:

 Seller
Discussion Questions
 What is your BATNA?
 The best alternative to a negotiated
agreement
Reservation point = BATNA?
Most negotiation textbooks:
Define Reservation point in terms of
the value of your BATNA
Assume they are equal

What do you think?

How and what do you “see”?
The importance of negotiation
planning (Brett, 2014, p. 18)
Buyer (Peace Café)

> $8400, go for Vitale Mate

price

Reservation point = BATNA

Cognitive miser
Reservation point = BATNA?
Others also argue:
Need to consider non-financial
elements of BATNA
Looking beyond the price
BATNA now include subjective
element when valuing the options!
More non-financial aspects to
alternative, harder to make a
quantitative comparison!
 [See Sample Planning Document]

How and what do you “see”?

Cognitive miser
The importance of negotiation
planning (Brett, 2014, p. 18)
Buyer (Peace Café) Seller (Guayaki Co.)
How and what do you “see”?
The importance of negotiation
planning (Brett, 2014, p. 18)
Articulate assumptions
Position & Interest?
Self & Others (any parties outside of the
immediate context)?
Prioritize
Trade-off
Expand the pie

Reservation point = BATNA

 [See Outcome Summary]

Discussion Questions
 What are your outcomes?

 What are typical outcomes?

 Range from _________to ________(for 500 cases)
 Some with additional value, such as:
Product promotion and/or joint marketing
Purchase of additional products (tea leaves, energy
shots, etc.)
Buy-back of unsold product
Product exchange of less popular flavors for more
popular flavors
Discount on future orders or larger orders
Free samples
Retail pricing
 [See Sample Planning Document]

How and what do you “see”?

The importance of negotiation
planning (Brett, 2014, p. 18)
Buyer (Peace Café) Seller (Guayaki Co.)
Negotiation mindset

1. Planning! Planning! Planning! (List out your

assumptions. Consider the unknown)
2. Information exchange as a “hypothesis
testing” process (Verify your assumptions. Open
to adjusting initial assumptions)
3. Beware of the assumptions of the counterparts
4. Shift away from “positions” to “interests”
5. Recognize “priorities”

Cognitive miser
 [See Outcome Summary]

Discussion Questions
 What are the other outcomes?

 Satisfaction
 Trust
 Future relationship
 Fairness

 Does you and your partner feel the same way?

 How accurate we are in ‘reading’ our partners?
 Discussion Questions
 What is your goal during the negotiation?
 When you were negotiating, what was the nature of
this negotiation to you? Distributive? Integrative?

Distributive bargaining Integrative bargaining

 Negotiation that seeks to  Negotiation that seeks to

“divide up a fixed pie” “expand the pie”
 Available resources:  Available resources:
Fixed Variable
 Primary motivations: I win,  Primary motivations: I win,
you lose you win
 Primary interests:  Primary interests:
Opposed to each other Complementary
 Focus of relationship:  Focus of relationship:
Short-term Long-term
Integrative thinking?
Have you seen this?
Negotiation mindset
1. Planning! Planning! Planning! (List out your
assumptions. Consider the unknown)
2. Information exchange as a “hypothesis testing”
process (Verify your assumptions. Open to
adjusting initial assumptions)
3. Beware of the assumptions of the counterparts
4. Shift away from “positions” to “interests”
5. Recognize “priorities”
6. Recognize “win-win” potential
Our focus thus far… Cognitive miser

 Introduction to the course

 Negotiation basics
Six main dispute resolution processes
Dispute resolution vs. deal making
 Simulation exercise: Yerba Mate
Anchoring
Reservation & Aspiration points
BATNA
Importance of planning (see textbook p. 18)
Expanding the pie
Integrative & distributive negotiation
Reflection time

What do any of these have to do with culture … or leadership?

Session 2’s focus
Negotiation basics
Brief recap & wrap-up
Yerba Mate

Simulation exercise
Sweet Shop

Discussion
Yerba Mate vs. Sweets Shop
25 Sweet Shops Simulation
 Overview
One-on-one negotiation simulation
The session is divided into 3 parts:
1. Preparation
2. Negotiation
3. Post-negotiation survey
https://ust.az1.qualtrics.com/jfe/form/SV_09F7WG3lF70CkpE
Total: 60 min
 Remember to
Submit the final materials (contract & planning document) before
the end of this class
 Finish early?
Plan A:
 Take a break
 Take a look at Simulation 1 summary
 Take note of your negotiation experiences
Plan B:
 See you next week!
Session 2’s focus
 Brief recap & wrap-up
Anchoring
Reservation & Aspiration points
BATNA
Expanding the pie
Integrative & distributive negotiation

 Simulation exercise
Sweet Shop

 Discussion
Yerba Mate vs. Sweets Shop