Previous Paper and Answer

HERIOT-WATT UNIVERSITY
NEGOTIATION – MARCH 2021
Section I
Case Studies
Case Study 1
Doctored IT
GP practice The Braids is looking for a new IT services operator, as its current provider is
not able to keep up with the demands of the growing practice and when the contract comes
to an end in two months’ time the practice has no intention of renewing it. The current
intranet system needs upgrading and the practice is looking for a better on-call service
engineer to deal with any issues with the fourteen PCs on site. The doctors need to make
sure the data is secure and always available to any member of the team – even the mobile
doctors through their laptops, smartphones or tablets. Ideally, they want cover guaranteed
24/7 with a maximum wait time for a callout of two hours.
The Braids practice manager, Bea Sharp, is looking forward to meeting the IT company
representative on Monday, so she is keen to get some preparation work done before the
weekend. It is important to get this contract in place as soon as possible, to avoid having no
other option but to renew the old one, which management agree would be a backward step
for the practice.
Bea had been comparing local and national prices for this sort of service provision – they
ranged from a rather cheap-looking £30 per month to a very expensive £3000 per month.
This hadn’t really helped her to set a realistic opening position. Her budget was a maximum
of £1000 per month, but she would like to pay considerably less, as long as it didn’t
compromise the quality of service. It was imperative that the IT systems stayed working and
that any downtime was completely minimised, because patients would be at risk if the
doctors couldn’t access their full records.
Having a service engineer available 24/7 is hugely important, and having a guarantee that
someone will be on the premises to fix any issue within an hour would be ideal, though Bea
would be willing to push that to two hours if the penalty for non-compliance was strong
enough – perhaps as much as 50% of the fee that month?
Security was also a big concern, so some kind of guarantee and high-level security protocols
would be important. Bea wasn’t quite sure of the right thing to ask for here, so she would
have to rely on the information from the IT company on what it could provide and what that
would mean for the medical practice.
Bea did not have a strict requirement on the length of contract, as long as there was an easy
termination clause in case any of the promises were not kept. Another solution could be to
have a six-month trial period when both parties could leave without any financial cost.
Ultimately, though, she would like it to run for at least two years, but if the company
performed well, she would be happy to extend that indefinitely.
1
Questions Maximum Word Count 1200 words
1. What are Bea’s Interests in this negotiation?
2. What are the negotiable Issues for this negotiation?
3. How should Bea set her Entry and Exit points?
4. Suggest a Proposal Bea could make.
5. What is Bea’s BATNA, and how could it influence her negotiation?
(Total 40 marks)
2
Case Study 2
Tool Trouble
Ben was a plumber with his own business. He was meeting up with his old friend Alex for a
meal before Christmas. Alex was a tradesman too and had his own carpentry business. After
catching up, they began to discuss some work troubles and found that they both had issues
with equipment that they needed. It was expensive and neither could afford all the things
they needed, but as they talked about it, they discovered that they each had some of the
equipment the other needed. Perhaps they could swap?
Being men of a mathematical nature, they decided to look at the problem rationally as per
John Nash’s Utility Theory. They devised the following table to represent their items and
associated Utility before trading:
Ben’s tools Utility for Ben Utility for Alex if acquired

Drill & bits 3 3
Spare battery charger 4 6
Laptop 7 7
Electric saw 2 4
Alex’s tools Utility for Alex Utility for Ben if acquired
Socket set 4 8
Mini hoover 6 6
Printer 1 3
They spent a lot of time discussing options for the exchange and in the end, they were not
sure what to do (it was late when they finished their meal and they were getting quite tired).
They wanted to make sure they were both making a gain and that the exchange was fair.
Eventually, they agreed that they would swap:
Ben would give Alex the spare battery charger and the laptop, and Alex would give Ben the
socket set and printer.
1. Explain why you think using the Nash Utility Theory was a good way to make this
exchange. What exchange do you suggest they make?
2. Explain the concept of the Optimum Solution.
3. Discuss the benefits of moving away from Rational Bargaining. What would you
suggest is used instead?
(Total 35 marks)
TOTAL OF 75 MARKS
3
Section II
Essay Question
Essay Maximum Word Count 1450 words
Ploys & Counters
Jenni received the following e-mail at 3.15pm on Friday:
Dear Jenni
Thank you for your telephone call. We are delighted by your interest in hiring our
function room for your conference next year. We have the date free at the moment in
our main facility. It’s a little more expensive than your budget of £5000, at £6500, but
I have spoken to my manager and managed to get you the following deal which
includes a 20% rate discount:
Function room and tea & coffee facilities: £5500.

Equipment hire: Included
Lunch buffet for 100 delegates: £10 per head
(including soft drinks)
Total £6500
This is a huge saving on our usual rates and if you book by the end of business
today, I can guarantee these rates for you.
Kind regards
Sophia
Crown Park Estates Function Manager
Jenni was left in a quandary. She was very keen on the function suite at Crown Parks, it was
perfect for the event, but the cost was a lot more than she had budgeted. However, with the
discount it was much more acceptable. She did not have long to make her decision.
What advice can you give to Jenni about Ploys and their Counters? What would you suggest
she does in this situation?
(Total 25 marks)
TOTAL OF 100 MARKS
END OF PAPER
4
Section I
Case Studies
Case Study 1
1. Interests are the motivations for preferring specific solutions to problems. They are
the ‘fears, hopes and concerns’ of Bea. They are reasons ‘why’ Bea wants certain
things to happen.
Some possible Interests for Bea in the negotiation are as follows:
1. Security of data
2. Confidence in the IT system
3. Seamless IT over the whole practice
4. Quality engineer team
Definition of Interests 2 marks

Any three Interests 6 marks
8 marks
2. A negotiable issue is the agenda item. It is quantifiable and it delivers the party’s
interests.
Issues can be prioritised as High (must get or no deal), Medium (would like to get
within ranges or it puts pressure on the viability of the deal) and Low (would like to
get, but will not affect the deal).
In this case, the Issues for Bea can be shown as follows:
1. Monthly cost
2. Security protocols
3. Performance guarantees
4. Number of items covered
5. Definition of what is covered
6. Call out availability
7. Time limit guarantee for call outs
8. Penalty
9. Contract length
Definition of Issues 2 marks

Any four Issues listed for both parties 6 marks
8 marks
1
3. Entry and Exit points are part of the preparation process. They are the ranges within
which a negotiator is prepared to deal. The Entry point is where they are willing to
start the negotiation and the Exit point is the point beyond which they are unwilling
(or even unable) to deal.
Entry and Exit points should be defensible and credible.
From Bea’s point of view, she might set the Entry and Exit points for the Issues as
follows:
Issues Entry Exit

Monthly cost £500 £1000
Security protocols High level Medium level
Performance guarantees 50% monthly fee 20% monthly fee capped
Call out availability Within 1 hour Within 2 hours
Contract length 1 year 5 years
Define Entry & Exit points 2 marks

Credible and defensible 2 marks
Entry and Exit points of any 4 issues 4 marks
8 marks
4. A Proposal is a tentative suggestion, specific or vague in the condition, but always

vague in the offer and should be presented in the ‘IF–THEN’ format. It should always
be delivered with the condition first, then the offer.
‘If you agree to 24/7 cover, including our mobile units, within an hour with a
performance guarantee for any time over that, then I would consider a longer
contract and a higher monthly fee.’
There is a fair exchange of issues: Bea values the engineer cover and guarantee
over the contract term and monthly fee, while the IT company will probably value the
fee more.
Define proposals: If–Then; vague/specific; conditional;

condition then offer 4 marks
Example proposal 2 marks
Justification 2 marks
8 marks
2
5. BATNA means the Best Alternative To a Negotiated Agreement (or Best Alternative
To No Agreement) and is from Fisher and Ury in ‘Getting to Yes’.
Briefly, it defines the negotiator’s alternative option if he or she does not agree to the
present terms offered by the other party and the negotiations cease. BATNAs provide
data on the ‘walk away’ or ‘take it or leave it’ alterative. They strengthen the
negotiator to the extent that the BATNA is credible to the other party; they
underscore their weakness if there is no BATNA at least as good as the current deal
on offer. Note that BATNA is the alternative to NO agreement, not a consideration of
an alternative offer from the negotiating party.
In this negotiation, Bea has two alternatives neither of which is particularly attractive.
Firstly, Bea can try to find another supplier and begin the negotiation again with
them, though presumably she has already looked around to find the best option.
Secondly if this deal falls through, she can always go back to the current supplier –
though the company is not keen on this option at all. Really the pressure is on Bea to
get a (good) deal with this negotiation. With such a weak BATNA she will be reluctant
to push too much and may be likely to accept a less than perfect deal just so that
they don’t have to renew the current contract.
Knowing your BATNA makes you more aware of your options. A strong BATNA can
galvanise your stance, while a weak BATNA can encourage you to come to an
agreement.
Define BATNA 2 marks

Bea’s BATNA 2 marks
Important to understand relative to negotiation 4 marks
8 marks
3
Case Study 2
1. John Nash was a mathematician who turned his attention to the mathematics of
bargaining in 1950 with his work on Utility Theory and the Bargaining Problem. His
work centers not on how to negotiate but how appropriate the solution is the problem
– outcome over process.
His utility theory is based around knowledge of each bargainers utility to an object,
and then what is the optimal exchange mathematically. It is based on four
assumptions:
Highly rational bargainers can accurately compare each other’s desire for various
things;
Bargainers who have equal skills;
Bargainers who have full knowledge of the tastes and preferences of the other;
and
Bargainers who desire to maximise their gains in bargaining.
This case clearly has some value in using Nash’s theory as the assumptions work
well within the case outline. Both Ben and Alex know each other and have been open
and honest with each other about the tastes and preferences (utility) of each piece of
equipment. They appear to be equally skilled and both are seeking to maximise their
gains in the exchange.
In this case I would suggest the optimal exchange is:
Ben should swap the spare battery charger and electric saw for the socket set and
printer. This would give Ben a net Utility gain of 5 (11-6) and Alex a net Utility gain of
5 (10-5).
Students should discuss:

What is Utility Theory 2 marks
What are the assumptions 4 marks
How do they apply in this case? 2 marks
Exchange suggestion and discussion 4 marks
12 marks
4
2. The optimum is defined as where the ‘product of the gains in utility are maximised’.
Each individual’s utility is independent of everybody else’s. Suppose, by rearranging

the trade from the optimum, it is possible for Alex’s gains to go up but only if, say,
Ben’s gains go down from. Both would gain (Alex gains 6 and Ben gains 4 say).
Unambiguously, it would be a better deal for Alex but a worse one for Ben. He has
reduced his gain by 1 and Alex has increased it by 1. Still, both have gained
something from the adjustment, but note that the product of the gains in utility when it
was 5 for Ben and 5 for Alex was 25 (5 × 5 = 25), yet by the re-arrangement the
product of the gains in utility is now 24 (4 × 6). The shift from the Pareto Optimum to
the new share out has reduced the product of their joint gains.
Now why would Ben agree to that exchange? It makes him worse off than he could
be (4 instead of 5) though better off than no deal. Because in a negotiation process
we have a choice; we can veto a proposed deal and go elsewhere. No doubt such
relatively worse deals as hypothesised at a net gain of 24 instead of 25 could be
struck in the real world but in the Nash equilibrium no better deals for both partners
can be struck other than the optimal one.
Figure 8.1 ‘The benefits of bargaining’ from the text.
In Figure 8.1, it is not possible for both parties to be better off than at ‘C’. All attempts
to do so – to move from C towards R, or towards S – makes the other negotiator
worse off. As each negotiator in a process model has to agree to any move or
solution, they are more likely to veto any movement from C in either direction. Moving
to your solution other than C, you could end up along the line RS or even ‘inside’ line
RS, either of which produces a clear loss of potential gains in utility between A and
C.
The assumption of knowledge of each other’s preferences is essential in the Nash

model to obviate ploy manipulation by either or both of the parties to mislead each
other on their preferences. However, in a process model, it is not really essential if
we assume that negotiators set out to do the best they can for themselves, but doing
what is best for self may lead to deadlock or to worse deals than they could get if
they were to do what is best for both of them.
Alex need not be concerned about the valuation placed on a particular solution by
Ben because he only has to assume that Ben prefers certain outcomes (trades) more
than Alex does and that Ben will reveal these preferences in his offers and counter-
offers. What is crucial for Alex to know is by how much he (Alex) values certain
trades (his preferences or priorities). If Alex trades things that are of lower value to
him for trades that are of higher value, then the outcome will benefit Alex (and vice
5
versa).

Optimal Solution & math for this case 4 marks
Benefits of Bargaining Diagram 4 marks
Outcome preferences 3 marks
11 marks
3. Nash’s solution does not describe a negotiation and does not describe the process
by which negotiators come to an agreement. It is about the optimum outcome when
the deal is concluded.
In fact, most of the interesting features of negotiation (bargaining skills, language

used, etc.) are removed by the Nash assumptions and unrealistic assumptions are
introduced, which do not correspond to real life (negotiators knowing exactly the
value placed on each possible trade by the other).
These assumptions are very often not likely in real negotiation situations – how often
do you really know the tastes and preferences of the other bargainer?
Instead we can use Kennedy’s preparation planner to identify our own priorities and
then use the debate phase to understand the other parties.
There are similarities in that both use preferences and exchange to get a deal that
suits both parties, however Kennedy’s method requires more guesswork, which is
normal in real life negotiations. Nothing is certain.
In real world negotiation, we do not know the valuations that people place on different
trades; we know our own (if we prepare appropriately). Sequences of offers and
counter-offers reveal each party’s rough preferences – you value early payment more
than the amount; I value a returns policy more than minimum order value; we trade
between them. That you may be desperate for early payment, as I am for a flexible
returns policy, may inform the ratio of the trade. If I get what I want and you get what
you want, worrying about by how much you are ‘gaining’ compared to me is of little
operational significance, or ought to be!
Essentially, negotiators are advised to trade that which is of lower value to them for
that which is of higher value, as illustrated in Figures 3.1, 3.2 and 3.3.
Figure 3.1 Comparative valuations 1
6
Suggested Priorities for Ben in this case could be as follows:
Item Priority
Socket set H
Printer M
Laptop H
Electric saw L
Mini hoover M
Drill & bits L
Spare battery charger M
In the real world negotiations that might use the priorities (and Preparation planner
associated with them), it is not a case of optimum distribution to create the maximum
product of their gains, instead the rule of play is “trade that which is cheap for you for
that which you value more”. Whether that outcome would closely match the Nash
solution is up for debate, but it is the only viable way to work in the real world where
complete knowledge and understanding is simply not possible.

Unrealistic assumptions 4 marks
Theory v reality 2 marks
Priorities in the Preparation planner 3 marks
Show case in priorities instead 3 marks
12 marks
7
Section II
Essay Question
Students should include and discuss the following in the essay:
What is a ploy?
Chester Karass
3 types of ploys and one example of each
Red behaviour and its outcomes – deadlock/bad feelings going forward/mistrust
Weakness of using ploys in relationships
Why people use ploys: exploitation or protection?
Communication and understanding of motives
What ploy is being used in the case (Russian Front, Deadline), and its effect on Jenni
Advice on how Jenni should proceed

Explain ploys 9 marks
Red behaviour 4 marks
Why use ploys 4 marks
Weaknesses 4 marks
Case ploy and counter 4 marks
25 marks
© Heriot-Watt University, March 2021
8
Negotiation Examination Report
March 2021
Course Leader’s Report
Case 1
Overall, Case 1 was answered very well by most.
Q1 In particular I’d ask students to think more clearly about Interests, as quite a high percentage
had a few rogue Issues in the answer. If it is negotiable, it is not an Interest.
Q2 on Issues was almost perfect score for every student. Well done. For those that didn’t get 8/8 it
was because they had less than 6 Issues in their list. If it is not obvious from the text, use your
imagination to find something that would fit.
Q3 Probably the worst answered question, as many students ignore the request for Entry and Exit
positions and went on to talk about Distributive Bargaining. Those who did well put together a
planner with lots of Entry and Exit positions.
Q4 Mostly well answered, remember though it is a Proposal, not a Bargain and many fell into the
trap of writing both condition and offer as specific….
Q5 Again answered well, most students know what a BATNA is and what it is for. Remember to
discuss why it's important with reference to the case.
Case 2
A bit of a rollercoaster this one. Some answered it very well, others had good bits and bad bits and
others just did not know what to make of it. Students need to remember that these answers are
worth 11-12 marks each, a small paragraph is not anywhere near enough. Think much wider and
always apply to the case.
Q1 Mostly the best answered question in this case. Nash was well described for his Utility Theory,
and the exchange was well worked through by most students. The last 3 marks tended to be missed
by the majority of students though, be careful to answer the full question by explaining why the two
friends fit well into Nash’s assumptions.
Q2 This question seemed to stump most students. The few who got it, did it very well indeed, but
almost 90% failed to understand what was being asked for. The Optimal Solution is part of the Nash
chapter on the Benefits of Bargaining, with the diagram and discussion on how it fits the case being
required for this question. Oddly many students used the same diagram in Q1 or Q3, without
realising that was what was required for Q2.
Q3 80% of the students got this half right, giving good reasons why Rational Bargaining has its faults
in real life. But infuriatingly failed to notice the illogical use of Principled Negotiation as the
alternative they gave. PN is in fact part of Rational Bargaining chapter, so if it is part of Rational
Bargaining, how can it be an alternative to Rational Bargaining? I was looking for the 4 phases, and
in particular the priorities used in Kennedy’s prep planner, which is seen as a viable alternative to
Nash.
Essay
This was, for the most part, a disappointing essay. Those that did well gave a good overview of the
topic and some good advice to Jenni on the specific ploys she faced. However, at least half the
students gave not much more than a long list of every ploy you can think of. An essay is about the
analysis and discussion of the topic as a whole, not a long list. You can’t possibly get more than 6
marks for listing ploys, apart from anything else it doesn’t show anything other than your ability to
copy them from the text. You need to show you have understood the topic as a whole, but
explaining, in your own words, how ploys work, why they are used, what are the weaknesses, how
they can be countered and in this essay to give Jenni specific advice on how to deal with the ploys
she faces.
NEGOTIATION – JUNE 2021
Section I
Case Studies
Case Study 1
Tooled Up
Mohammed was the Sales Director for a tool manufacturer that specialised in high-grade
professional building tools, and had a secondary set of less sturdy (and less expensive)
ones for the DIY market. They had a good relationship with the local trades and some
medium-sized stores in a couple of nearby cities. Their reliability and quality products had
finally opened the door to the biggest DIY superstore in the country, something they had
been wanting for eighteen months. Mohammed has a meeting this afternoon with the
Purchasing Manager, Virgil, from HomeHouse Inc.
Mohammed has prepared the following:
Contract term of three to five years, with a minimum of 10,000 units per annum, with a price
of £1 million per annum (flexible by 10%), and no buy-back guarantee. Delivery from seven
days.
He is confident that he can secure a deal, but the meeting takes a very different turn:
Mohammed: Thank you for your time, it is really important to us to secure the contract with
HomeHouse, we are sure we can make a successful partnership, for us both.
Virgil: Tell me your terms, I really don’t have time for long drawn out meetings.
Mohammed: Of course. We would be looking for a five-year contract, for a minimum of

10,000 units per annum, at a cost of £1m per annum. We can deliver to your main depot
within two weeks of any order.
Virgil: You must be joking? You are a new supplier and need to prove yourself before
making such ridiculous demands. We are the only retailer in the country that can provide you
with such a large customer base, but only if the deal is right.
Mohammed: Oh, of course. I understand. Perhaps we could reduce the price to £900,000
per annum?
Virgil: You are wasting my time. The deal will be £700,000 per annum, 10,000 units with a
buy-back guarantee from you if they don’t sell. The contract will be for one year only,
renegotiable at that time, and if you have proved yourself perhaps we can look at the price at
that time only. We will require a five-day delivery turnaround.
Mohammed: I don’t think I can agree to that, how about …
Virgil: Take it or leave it! You won’t get a better chance to sell your goods to a bigger
market, and I won’t pay any more for an untested product. You have until the end of today to
agree or I will take my business elsewhere. Goodbye.
1
Mohammed was left shocked. Maybe just getting his foot in the door of HomeHouse was
enough, and when it came to renegotiating next year he could make it up?
Questions Maximum Word Limit 1200 words
1. What are the Interests for Mohammed and Virgil in this case?
(8 marks)
2. How could a Preparation Planner help Mohammed prepare better for the negotiation?
(8 marks)
3. Virgil is not keen on having a Debate. Why is that not helpful?

(8 marks)
4. Virgil is using Ploys to get what he wants. How can Mohammed deal with this?
(8 marks)
5. Write a Bargain that Mohammed could suggest to Virgil.

(8 marks)
(Total 40 marks)
2
Case Study 2
Wedding Plans
Susan is the Senior Events Planner at a luxury private castle in Scotland. It’s been a very
difficult six months with Covid-19 restrictions curtailing all the events that had been planned.
The business is still able to operate but in a much reduced capacity. Live entertainment is
not allowed and group numbers are restricted to 30, which impacts almost every event.
There have been many difficult conversations with clients over the last few months.
This afternoon though, is going to be the toughest yet. Lisa is a very emotional bride-to-be.
Her wedding was booked for the end of the year – just before Christmas. They had booked it
2 years ago and had been making payments regularly to pay for the big event. There was to
be 150 guests, over 2 days, with lavish entertainment, food and drink. It was to be nothing
short of spectacular – and with a spectacular price to match.
The whole event was to cost £25,000. When the contract had been signed (in August 2018 –
just over 2 years ago) there had been no indication of a global pandemic. There was a
£5,000 non-returnable deposit paid at the start, and a further two payments of £5,000 each
had been paid since. So, there was £10,000 still outstanding for the booking.
Over several e-mails and phone calls in the last few weeks there had been much discussion
on what to do going forward. So far the following had been discussed:
1. Cancel and get all the money back through the bride’s insurance – however as the
venue is still operating, the insurance has said that it will not pay out.
2. Move the date of the wedding forward by 12 – 24 months, with no extra charges to
pay. The Bride is adamant she doesn’t want to wait.
3. Reduce the scale of the wedding to fit current regulations. The Bride is adamant she
doesn’t want this.
4. Lisa has suggested she wants to completely cancel and hold something closer to her
home in South England, so it’s easier for all the participants to travel.
Susan has noticed that Lisa is becoming more and more agitated, stressed and upset as the
weeks have progressed and Susan is thinks that Lisa is unable to make a decision as she is
being very unrealistic about what is doable and doesn’t want to admit her big day will be very
different to how she imagined. It’s an incredibly difficult situation, and Susan has a great deal
of sympathy for her in this situation, however her business is at extreme risk. Bookings are
non-existent: there are a handful of clients who have been able to keep their bookings, most
have deferred leaving the Castle company struggling to survive. It is impossible to simply
give in to Lisa’s demands for a full refund.
The only thing stopping Susan from holding firm and saying no to any form of a refund is the
threat of a social media backlash. Lisa has said more than once she was distraught at the
treatment she was receiving and wondered how Susan’s other clients might feel if they knew
how such a luxurious establishment dealt with their customers. The way Lisa is behaving
suggests to Susan the story she tells on social media might be a lot worse than the reality,
and any damage to their reputation could be devastating to future bookings once things are
back to ‘normal’. Something that Susan simply cannot risk.
Susan’s boss has suggested she simply ‘send it to the lawyers as its breach of contract’, but
Susan doesn’t think that is the best way to handle it.
A Zoom call with Lisa is set for 2pm, and Susan has to try and find a way forward. She
doesn’t want to lose the booking, but if she does, she certainly doesn’t want to pay back any
more than £10,000. What other options does she have?
3
1. Show how the four prescriptions of Principled Negotiation could be put to use in this
negotiation.
(11 marks)
2. How could an understanding of BATNA help Susan prepare for this negotiation?
(12 marks)
3. Explain the difference between Positional Posturing and Positional Bargaining, with
reference to the above case.
(12 marks)
(Total 35 marks)
TOTAL OF 75 MARKS
4
Section II
Essay Question
Essay Maximum Word Limit 1450 words
Charlie has a negotiation next week with a large Greek transport company. It is his first time
being given the responsibility of a new supplier, added to the fact that he has never
negotiated with anyone in another country. He was nervous about the whole thing, and
having never visited Greece before was busy reading up on everything from language to
cultural information. He was in danger of spending so much time preparing for the visit that
he wasn’t going to have any time to prepare for the negotiation itself.
The cultural relativist believes that if you want to do business with people the world over,
knowing about the differences between them and us is an essential advantage. The cultural
universalist believes that, while awareness of the cultural norms of the people we visit may
be beneficial, our competence in negotiation skills is more important.
Discuss Charlies situation given your knowledge of Negotiation and give advice on how he
should best prepare before the meeting in Greece.
(Total 25 marks)
TOTAL OF 100 MARKS
END OF PAPER
5
Section I
Case Studies
Case Study 1
1. Interests are the hope fears and concerns of the negotiators. Interests are not
negotiable or quantifiable – they are WHY they are negotiating. Interests are what
motivate the negotiator to choose one solution over another.
Interests for the case could include:
Mohammed’s Interests could include:
1. Grow business into national outlet

2. Increase turnover
3. Have a good relationship with new customer
4. Increase sales
Virgil’s Interests could include:
1. Reduce costs
2. Remain profitable
3. Increase product selection
4. Quality products for customers
What are Interests? 2 marks

Virgil’s Interests (minimum 3) 3 marks
Mohammed’s Interests (minimum 3) 3 marks
8 marks
1
2. The Negotiation Preparation Planner is a tool used to prepare a negotiation by
outlining the Interests, Issues, Priorities and Positions.
Negotiable issues are prioritised because negotiators have varying degrees of

preference for what they want, and it is these differences in value of each issue that
give the negotiators trading possibilities when it comes to proposing and bargaining.
Issues can be prioritised as High (must get or no deal), Medium (would like to get
within ranges or it puts pressure on the viability of the deal) and Low (would like to
get, but will not affect the deal).
Entry and Exit points are assigned to each issue. They are the ranges within which a
negotiator is prepared to deal. The entry point is where the negotiators are willing to
start the negotiation and the exit point is the point beyond which they are unwilling (or
even unable) to deal.
Entry points should be defensible and credible.
Mohammed’s Prep Planner:
Issues Priority Entry Exit

PRice M £1m £800,000
Units H 10,000 8,000
Delivery L 14 days 7 days
Contract term M 5 years 3 years
Better preparation by Mohammed could give him greater confidence to stand up to

Virgil’s demands.
Define Preparation planner and its component parts 3 marks

Completed preparation planner with minimum of 3 issues 5 marks
8 marks
2
3. Debate is the second phase of the negotiation and takes on average 80% of the time
in a negotiation. During the debate phase it is necessary for the negotiators to
exchange information, understand each other’s positions and issues without giving
out information about how far they are willing to move.
There can be problems during debate when one or both sides use Destructive
Debate behaviours.
Destructive debate behaviours include:

Arguing, Interrupting, Threats, Attack/Blame, Irritate, Point Score, Blocking, Insults.
The problem with any of these behaviours is that they cause a negative reaction from
both sides, often leading to a breakdown in communication. And if it’s not stopped
before it’s too late, it can result in a deadlock.
Constructive debate behaviours include:

Summaries, Active Listening, Questions, Assurances, Signals.
You can only have a productive negotiation if you can discuss and understand each
other’s issues and positions. Putting down a unilateral demand is unhelpful and
frankly risky. Spending time debating the issues gives each party a better idea of how
to move the negotiation forward. Using the constructive debate skills will help to
confirm understanding and check that any proposal you might make will be
potentially acceptable. Rushing to proposals or bargains can lead to
misunderstandings, errors or even deadlock.
Constructive v Destructive debate styles 4 marks

What is debate? 1 mark
Discuss case and why Virgil is making a mistake 3 marks
8 marks
3
4. Ploys are a Red play that manipulate the course of the negotiation in favour of the
user. They can be subtle or obvious, but can pull you in and change the way the deal
progresses in an unexpected way.
Virgil is using three ploys in this case to try and manipulate the decision of
Mohammed. Firstly, he is putting down a Shock Initial Demand (or Anchoring), trying
to wrong foot him by being so far out of his terms that he has to do a rethink.
He is also applying pressure with Sell Cheap, Get Famous to get Mohammed to
agree to a very low price, by offering him access to a big market that will be good for
his products.
Lastly, Virgil has given Mohammed a Deadline of only a few hours to make the
decision. Time pressure can cause people to make mistakes, as they wrongly think
they don’t have the time to consider other options, as this deal will no longer be
available.
It is a weak long term move, as all ploys once recognised are disarmed.
Mohammed needs to recognise this and stand firm in his negotiation. He must apply
a Purple counter to the ploy(s), and get the negotiation back on an even keel – and if
this fails he should seriously consider walking away instead of agreeing to such a
bad deal.
Define Ploys 2 marks

Name the ploys 2 marks
Discuss the problem/weakness 2 marks
Purple counter 2 marks
8 marks
5. Bargaining is the 4th phase of the negotiation. It comes after general proposals have
been exchanged and accepted. Bargains use the IF…THEN conditional format, with
the condition first and the offer second, just like in Proposing, however unlike in
Proposing both the condition and offer must be Specific.
For example: If you agree to pay £2,000, then I will agree to delivery in 6 weeks.
In this case, perhaps Mohammed could suggest this Bargain to Virgil:
If you agree to a 3 year deal for 8,000 units at a price of £850,000, I will agree to
delivery within 5 days.
This bargain may need some further negotiating on the specific details, but once it
has been agreed it is important that the two parties confirm what they have agreed,
preferably in writing.
Define Bargain 4 marks

Example of Bargain 2 marks
Agree what has been agreed 2 marks
8 marks
4
Case Study 2
1. Principled Negotiation (PN) is an adaptation of mediation practice to negotiation by

exchange. It sets out a framework for the resolution of differences by what is claimed
is a method based on ‘merit’, not ‘coercion’ or ‘deception’. It was created by rational
deduction and not by observation of dispute resolution or negotiation; it is a designed
rather than a derived technique.
It reflects disillusionment from experience of adversarial legal practices by its

authors, Roger Fisher and William Ury. They believed that they had found that similar
legal practices which had the ‘best arguments’, often backed by coercion or unequal
bargaining powers, ‘won’ the case, irrespective of its actual merits either in law or
according to fairness as understood by traditional bargaining practice. They named
this traditional bargaining method ‘positional bargaining’, though their version had
little to do with voluntary negotiation outcomes, as traditionally understood.
The four PN prescriptions:
1. Separate the People from the Problem

2. Focus on Interests, not on Positions
3. Generate Options for Settlement
4. Base Agreement on Objective Criteria
In the context of this case, PN has its merits.
Clearly Lisa is emotionally involved and this could easily lead to problems with the
negotiation. As it’s such a deeply personal issue, the cancellation/changes of her
wedding day, it is possible her emotions will colour her judgment on the possible
solutions. Prescription 1 would therefore be helpful, if it was possible to do it. Is there
someone else who could be less emotionally involved, that Susan could talk to? Her
husband-to-be, may be just as hard to reason with, as would other family members –
though maybe slightly more open to suggestions.
Prescription 2 would be much easier to implement, and perhaps more helpful in this
instance. The big stumbling block is the difficulty of the positions – cancel/no refund.
Neither of these options are really what either of them want. Is there a wider picture
to be found by taking a step back? Obviously, she will still need to discuss the
positions to get a deal, but by focussing instead on the interests perhaps another
solution could be found.
Prescription 3 is also something that could be helpful, solutions should be considered

and generated that perhaps haven’t yet been considered. Brainstorming some ideas
could help them move forward.
However, Prescription 4 is less likely to be of use in this case. How would they
decide what objective criteria to use when they cannot agree what to do at the
moment.
Mediation by third parties features in the examples of PN at work throughout Fisher

and Ury’s book, which is not a common resource, and mostly completely impractical,
in everyday negotiations, like this one.
Explain Principled Negotiation 3 marks

Describe the four Prescriptions of Principled Negotiation 4 marks
Show how they could be used in this case 4 marks
TOTAL 11 marks
5
2. BATNA means the Best Alternative To a Negotiated Agreement (or Best Alternative
To No Agreement) and is from Fisher and Ury in ‘Getting to Yes’. Briefly it defines the
negotiator’s alternative option if he or she does agree to the present terms offered by
the other party and the negotiations cease. BATNAs provide data on the ‘walk away’
or ‘take it or leave it’ alterative. They strengthen the negotiator to the extent that the
BATNA is credible to the other party; they underscore their weakness if there is no
BATNA at least as good as the current deal on offer. Note that BATNA is the
alternative to NO agreement, not a consideration of an alternative offer from the
negotiating party.
Knowing your BATNA makes you more aware of your options. A strong BATNA can
galvanise your stance, while a weak BATNA can encourage you to come to an
agreement.
If there is no deal with Lisa, Susan’s BATNA will be to go to court to protect her
contract and make sure she doesn’t have to pay back the initial deposit. This has two
knock-on effects – she could spend more money on lawyers than she would on
giving the money back to Lisa, and she could end up on a social media blacklist for
suppliers. Neither of these are good for future business. It is a very poor BATNA.
In this case, Susan is in a tricky position. The BATNA is poor – the alternative to ‘no
deal’ is not good. She is in a weak position and yet has to protect her business as
much as possible. Paying out the extra £5,000 is not a desirable outcome either. My
advice to Susan is to try to find a way to work with Lisa, perhaps being creative to
find a way to fix the wedding problem, or use the venue for something else instead.
Keeping the business, and the client happy would surely be the better option.
Prepare some alternative issues to discuss: e.g. use the venue for an anniversary
party next year instead; offer a free ‘honeymoon’ weekend of luxury for the happy
couple if they defer their booking to next year; or give free transport to the venue for
the much limited number of guests if they keep their booking, etc.
What is BATNA? 2 marks

How can it help/hinder Susan’s negotiation stance? 4 marks
What could be her BATNA in this case? 3 marks
What advice would you give Susan based on her BATNA? 3 marks
12 marks
6
3. Positional Posturing is where an extreme position is used to force a deal or
movement, by using it in a public way. It is a threat based on a position that is hard to
accept – the hope being that those on the receiving end perceive the threat to be
such a deterrent to accept the position! This case provides an excellent example of
this with the threat of social media backlash if Susan doesn’t pay back the ‘non-
returnable’ deposit.
Positional Bargaining is where the negotiation is based on the extreme positions of

the negotiators. It is a dangerous thing to do, as often negotiators can get ‘stuck’
defending a position, which can lead to deadlock. A good example from the case is
that Susan can’t give back any of the deposit, her position is no, and Lisa wants the
full deposit returned. Both extreme positions and unlikely to lead to an agreement.
Fisher and Ury set up two extremes – ‘hard’ and ‘soft’ - to show that neither extreme
can be efficient, wise or good for relationships. They also exclude the possibility for a
strategy falling somewhere in between the extremes. This is contrary to much of the
experience that most negotiators have had. It is a common experience that
negotiators don’t think JUST in single positions, but along a range of positions.
What is Positional Posturing? 3 marks

What is Positional Bargaining? 3 marks
How do Fisher and Ury see them? 2 marks
Give examples from the case to show each 4 marks
12 marks
7
Section II
Essay Question
Students are expected to discuss and include the following in their essay:
Contrast between cultural relativists and universalists 2 marks

General topics from Hofstede or Trompenaars discussed including:
how they did their research, where, when and general outcomes 6 marks
Weakness of the research in relation to negotiation: dated, research itself,
globalisation, stereotyping 5 marks
Behaviours in negotiation v culture (pros and cons) 4 marks
Benefits of basic behaviour courtesies in negotiation 2 marks
Case advice for Charlie 3 marks
How to prepare advice 3 marks
25 marks
© Heriot-Watt University, June 2021
8
NEGOTIATION – APRIL 2022
Section I
Case Studies
Case Study 1
Royal Southern Hospital, with an annual budget of £140 million from the Government,
provides hospital services to a small city. It has “total autonomy in the management of its
own affairs”, but it must keep within the Government’s guidelines for the National Health
Service.
A problem has emerged within the general surgery function where three posts out of an
establishment of four consultants are filled, and the Hospital is experiencing difficulty
recruiting a fourth general surgeon. This places a work burden on the three surgeons which,
they have intimated, cannot continue indefinitely. Something has to be done, in their view, to
recruit a fourth surgeon as their weekly hours of work, for which they are not recompensed in
full, are rising to 60 or more on occasion. They believe that their good will is being exploited
by the hospital management.
The resignation six months before of one of the surgeons to take up a post in Australia, and
the failure to recruit a replacement (is the hospital management deliberately using the
vacancy to save money – about £100,000 per annum?), have added to what was already a
large and growing workload for an establishment of four general surgeons. With only three
on hand it is becoming impossible.
There is also a local shortage of junior doctors (in training), plus a registrar (a trained
surgeon not yet promoted to consultant), who is on sabbatical leave for another four months.
The situation is due to be made even worse in three months’ time when one of the three
surgeons takes up the prestigious and statutory part-time administrative post as the Medical
Director for the hospital, reducing still further the days she will be available to share in the
surgery workload of the other two surgeons. A part-time replacement will cost about £25,000
to replace her days off. The surgeons have demanded adequate remuneration for their
excessive hours and/or an extension of the Hospital’s waiting lists.
The hospital faces considerable budgetary pressure from the Government’s requirement that
they make 5 per cent savings in the hospital’s £8 million annual administrative costs and the
new Health Minister has just announced a national campaign to reduce waiting lists in all
NHS hospitals.
Anything the hospital agrees with the general surgeons must, if at all possible, avoid creating
a precedent for the remuneration of other consultants in other departments.
1
1. To what extent do the interests of the general surgeons and the hospital
management conflict?
(8 marks)
2. To what extent are the interests of the general surgeons and the hospital
management compatible?
(8 marks)
3. How might a Negotek PREP Planner be completed to show the negotiable issues,
the priorities and the positions of the surgeons?
(8 marks)
4. Why is it important that the negotiators look out for signals?

(8 marks)
5. What proposal could the hospital make to resolve the pay problem?
(8 marks)
(Total 40 marks)
2
Case Study 2
“I’ve seen Jill negotiate before”, said Sara. “She hates conflict, so she’s obviously an avoider
and we should deal with her as such.”
“I’m not so sure, Sara. I’ve also seen Jill negotiate, and she can be very forceful. I think she
is more of a competitor,” replied Steven.
“Well how will we decide how to deal with her?” asked Sara.
“Never mind Jill, what about her manager Jon?” asked Steven. “He will be at the next
meeting and I don’t think I’ve ever met him. What is he like to deal with?”
Sara thought for a moment. She hadn’t much experience of Jon, but understood he often
liked to collaborate and work together with others to find a solution. On the other hand, he
was under pressure to get his deal done within a tight budget. Would that make him more
competitive, especially in front of his junior?
“Do you know Steven, I just don’t know!” replied Sara.
1. Referring to the work of Rubin & Brown, discuss the personality traits of Jon and Jill,
and how helpful it might be for Sara in her preparation.
(12 marks)
2. Discuss the disadvantages of Personality Testing in relation to negotiation

preparation.
(11 marks)
3. How would behaviours be easier for Sara to focus on?

(12 marks)
(Total 35 marks)
TOTAL OF 75 MARKS
3
Section II
Essay Question
“We need to project a strong image in this negotiation. I don’t want the other side to think we
are weak.” said Chen.
“That’s all very well”, countered Lee, “but what if that comes across as aggressive. It’s a new
supplier, and if we play this correctly, we could have a long relationship with them.”
“Exactly, if we are weak to start, we might never recover!” warned Chen.
How might a Tit-for-Tat strategy assist a practical negotiator at the start of a negotiation, and
then how to manage as the negotiation develops?
(Total 25 marks)
TOTAL OF 100 MARKS
END OF PAPER
4
April 2022
Case Study 1
This case is based on Integrative Bargaining, specifically the 4-phases. Overall it was answered well
by most students.
Q1 Based on the concept of Interests, this question had the added focus on conflicting interests, and
I think this threw a lot of students as many didn’t address it and instead simply gave a list of
Interests. A lot of students straying into Issues, which is a common problem.
Q2 Was a follow on the Q1, and again many didn’t know how to answer. This time it asked about
common Interests. Many just wrote about ones they had in common, some even suggested there
would be no problem negotiating these. Was also looking for a short input on what a common
interest meant.
Q3 Was the best answered question in the case. Most student got full marks for a short concise
definition of the constituent parts of a planner, then creating one for the case.
Q4 A question on signals was well answered, though most didn’t go as far as giving examples from
the case which was a requirement for the answer.
Q5 Proposals are clearly well understood by most, but often the students described it well and then
didn’t write one – make sure you show the examiner you know how to do it.
Case Study 2
This case focussed on Personality & Negotiation, specifically the work of Rubin & Brown. A missed
set of answers by students, some did very well, others clearly not as comfortable with the topic did
not. Students should remember that along with Case I, Case II requires you to show BOTH
knowledge and application, so try to relate each answer back to the case.
Q1 There were 2 parts to this question, and it is important they are both addressed. Most did this
well, but others only wrote about the theory, not the application. Good show of theory knowledge
by most, most also recognised which personality traits they all had, most missed that Jill had a Mixed
set and this should have been discussed as a problem for Sara’s preparation.
Q2 Some great lists and discussions on the disadvantages of using Personality, however some
students clearly didn’t understand them all. Also, many did not relate them back to the effect it
would have on Sara’s preparation (as asked in the question) and advice on what she should do.
Q3 This question was not well answered at all. Only about half of students got it right. What
confused me most about this was of the half that didn’t get it, more than half of those had already
mentioned the answer in previous questions: behaviour is easier to react to than personality and
that she should look out for Red/Blue behaviours. Maybe already putting this in Q1 or Q2 put
students off writing about it this one, but that is why I always advise students to read all the
questions before starting. Case questions are follow-ons from each other to form a sequence of
related questions, be careful you are not ‘over answering’ in the previous questions and leaving
yourself nothing for the next one.
Essay
Knowledge, understanding and analysis is required for the essay section. Tit-For-Tat, by Axelrod, was
the main focus of the question, and most students did a very good job explaining TFT and its context
within Dilemma, however the question asks you to show how it could be used during a practical real
life negotiation at the start and during. A large percentage of students ignored this part of the
question, or simply wrote a very short paragraph on it, when actually it is over half the question.
Some tips on how to write a better essay:
1) Read the question – it asks you to show how it can be used, you need to do that with detail,
analysis and examples.
2) Include research context – explain the use of TFT in Dilemma in detail.
3) Give specific uses and show outcomes of TFT in real life
4) Give an example of TFT in use, either personal or in current affaires
5) The application needs to show clear thinking, not just general advice such as use Purple.
6) Only a small percentage of students mention the problem of communication in a dilemma
situation, show how good communication can help when using TFT.
Section I
Case Studies
Case Study 1
1. Interests are the motivation(s) for a person preferring one solution to another. Issues
are what a person wants. Interests are their concerns, hopes, fears. They are WHY a
person wants something. Issues are ways of delivering a person’s interests.
Recognition that the Interests of the two parties can be in conflict.
Identify the conflicting Interests of the surgeons: to prevent the deterioration in their
living standards caused by excessive hours of unremunerated work.
Identify the conflicting Interests of the hospital management: to maintain their

positions and incomes from managing the hospital to the satisfaction of the National
Health Service.
These Interests are in conflict to the extent that satisfying the surgeons means
breaching budgetary guidelines or increasing waiting lists, both of which will fail to
satisfy the NHS.
Define Interests 2 marks

Recognise that Interests can be in conflict 1 mark
Identify Interests for both parties (min 4 in total) 4 marks
Why are they in conflict? 1 mark
8 marks
2. Recognition that Interests can be compatible.
Identify compatible Interests of the surgeons: to have the appropriate establishment

of general surgeons to achieve normal workloads in order to eliminate
unremunerated work.
Identify the compatible Interests of the hospital management: to have the appropriate
establishment of general surgeons to achieve normal workloads to meet the waiting
lists targets of the NHS.
These Interests are compatible to the extent that failing to satisfy the surgeons
means breaching budgetary guidelines or increasing waiting lists, both of which will
fail to satisfy the NHS and the Minister of Health.
Discuss how Interests can be compatible with case example 4 marks

Discuss the compatible interest for both parties 4 marks
8 marks
1
3. Define:
• Negotiable Issues: any joint decision over which one or both parties has discretion;
• Priorities: ordering of the negotiable issues to reveal the intensity of preference of
each party for satisfaction on the issues, running from High (must get or no deal),
Medium (would like to get within ranges or it puts pressure on the viability of the
deal) and Low (would like to get, but will not affect the deal);
• Position: the points in the negotiable range between the Entry (opening position)
and the Exit (closing position) of the party.
Candidates will be expected to set out their answer in a Negotek Prep Planner format
(from the text). Their own rank ordering of the priorities or the ranges they identify is
not important. Issues chosen to illustrate their answer are not absolutely crucial but
should be credible and be drawn from the case study. Likewise, the positions they
identify are not crucial but should be at least illustrative.
Negotek PREP Planner format: General Surgeons
Issues Priority Entry Exit

Recruitment of 4th surgeon H Now By 3 months
Transfer 4th surgeon’s pay M In full some %
Increase waiting lists L Immediate In 3 months
Define all parts of Prep planner 3 marks

Prep planner with at least 3 entries 5 marks
8 marks
4. Signals are a willingness to consider movement. They are a way to let the other
negotiator know there is room for movement, without giving anything away.
Signals can help to resolve deadlock. It is common to everyday dialogue and is used
by negotiators either to initiate movement through signalling or to respond to signals
to follow with movement.
How can signals initiate movement without giving in? The key to initiating movement
lies in the use of language. Initial positions are often stated in the absolutes of ‘no’,
‘never’, ‘impossible’, ‘cannot be considered’, ‘absolutely essential’, ‘no surrender’, ‘no
comprise is possible’, ‘no way’, ‘over my dead body’, ‘cannot be less than’, ‘not an
inch’, ‘till hell freezes over’, and so on. This language conveys our determination and
asserts the strength of our case. Conducting negotiations in the media makes it even
more difficult because public stances are made to intimidate the other side and to re-
assure our constituency, and they are difficult to modify without serious loss of face.
Signals should not be ignored, because signals lead to proposals. When we hear or
see a signal, it is important to ask the other negotiator about it, and to reciprocate any
movement where possible.
Define signals 2 marks

Examples in general and from case 4 marks
Signals lead to proposals 2 marks
8 marks
2
5. A proposal is a tentative solution. It has two parts: it has a condition, which can be
vague or specific in nature, and an offer, which is always vague. An effective
proposal is always in the assertive conditional format “if you give me something that I
want, then I could give you something that you want.”
In the proposal, the negotiator is suggesting what wants they COULD trade. It is an
assertive statement and never asked as a question.
The hospital needs to consider what they can offer to trade with the surgeons in
return for them agreeing to a higher pay. By linking tradables with different priorities
they are more likely to succeed.
A proposal could be:
“If you agree to the deferred recruitment of a 4th surgeon, then we could agree to an
increase in the waiting lists to reduce your workload.”
Define proposals 4 marks

Linking tradables with different values 2 marks
8 marks
3
Case Study 2
1. Rubin and Brown (1975) identified two variables to determine the personality of
negotiators: interpersonal (sociability towards other people) and motivational
(competitive or cooperative) orientations. These give four basic personality types:
collaborators; competitors; accommodators; and avoiders. Negotiators are alleged to
be one of the four types:
Figure 10.1 Rubin and Brown’s personality styles
Avoiders prefer to avoid conflict, strictly follow rules and regulations, avoid decisions,
stick to the status quo, don’t like change and have poor social skills.
Accommodators are relationship-oriented, want to be liked, smooth over tensions,

prefer ingratiation to confrontation and look for compromises, being generous with
concessions.
Collaborators are results-oriented and seek good relationships. They do not

dominate but are pragmatic and seek consensus. They can be good ‘fixers’ (even
slightly Machiavellian) and willingly take time to solve a problem with others.
Competitors prefer power to relationships to get decisions. They are very results
driven, are given to ploys, tricks and threat postures, and not given to pointless social
graces.
Given the case information, it is not clear what personality to attribute to either Jill or
Jon. Jill is described as either an Avoider or Competitor, and Jon has been observed
as Collaborator, but it’s unclear if he is also competitive in some circumstances. They
could certainly have a mixture of both, or perhaps different parts of their personality
becomes dominant depending on the situation. For example, although I am
collaborative in general, in some circumstances I can be more competitive.
The problem with identifying their personalities is that it can often be complicated,
and sometimes mixed. Most people display a mixture of types at different times, with
a one-type predominance. All personality types negotiate.
Negotiations in pairs = 16 combinations 4 types. Teams compound combinations

problem. It is difficult to identify personality influences on negotiation. This is will
make preparation for any one type rather difficult, if not impossible.
Describe the 4 types of personality by R&B 4 marks

Discuss Jon & Jill’s personality types 4 marks
Problems of missed personality on preparation 4 marks
12 marks
4
2. When preparing for a negotiation we are setting out our plan for what we want. It is a
time to decide our wants (Issues), our priorities and positions for the negotiation. If
we have time, it can also be helpful to plan how we wish to behave in the negotiation,
especially in relation to how to deal with the other side. But does Personality Testing
help with that or hinder our work?
As described in question one there can be difficulties in deciding which personality to

attribute to negotiators as they can often be a mixture, and when negotiating in teams
this only adds to the dilemma of how to treat the team. If there are examples of each
personality trait, how can you prepare to deal with each one without being
contradictory?
Most people display a mixture of types at different times, with a one-type

predominance. All personality types negotiate.
Problems:
Personality testing can take hours and can take an expert to correctly identify them.
Does the team have sufficient time for this activity? Does the other side agree to take
part in such an activity?
Identifying personality types is very difficult to achieve accurately. Even if achieved,

how to match personalities? If you do have the information, accurately, how do you
respond to effectively work with each type of personality – and how do you do that
when the personality is mixed or there are multiple different types on the team? Jill
and Jon are both displaying different personalities, which do you work with?
If personalities can be over-ridden, why concern oneself with personality? If it is

possible for your personality to be changed with circumstance, or indeed hidden by
taught practices when in a negotiation situation, then surely it a waste of time trying
to understand them on the off chance they can be useful in preparation.
If personality has an influence, it is only in the opening sessions and is quickly

displaced by reactions to each other’s behaviours. Are we simply wasting too much
time trying to guess how to react to the other sides personality instead of preparing
our negotiation stances, arguments and ranges that are actually helpful when we
negotiate?
What is preparation 3 marks

Four problems with personality testing:
Time, accuracy, overriding and length of influence 8 marks
11 marks
5
3. Behaviour traits – such as Red/ Blue and Purple Style – are observed in any
negotiation setting.
• Red behaviours are aggressive, domineering and demanding.

• Blue behaviours are submissive, soft and giving
• Purple behaviours are co-operative, assertive and work on the principle of
trading.
How people behave cannot be hidden from view; what is driving them can. There is
more than enough mileage in observing behaviour – believe what people do, not
what they say they will do – to make personality profiling redundant, with very few
instances where it would be advantageous to invest the time and energy required to
assess personality profiles of the other negotiators for it to work.
Negotiators using the Purple behavioural trait can cope with any negotiator’s
personality because the behavioural approach centres on the constructive debate
behaviours and the conditional proposition Whether you are ‘tough’, warm’,
‘numbers’ or ‘dealer’, or a ‘competitor’, ‘avoider’, ‘accommodator’ or ‘collaborator’,
makes little difference because you will not get anything from me, unless and until I
get something from you.
Focusing on the deal at hand, not the person you are dealing with is a much better
way to prepare for any negotiation. Using the IF–THEN purple conditionality principle
will be much more useful than confronting how they are acting.
Conclusion: It is better to study their negotiating behaviours, whatever their

personality traits, and apply the appropriate (purple?) behaviours that generally work.
Describe the three behaviour styles 3 marks

Why study behaviour 5 marks
How to use behaviour in negotiation 2 marks
Purple conditionality 2 marks
12 marks
6
Section II
Essay Question
Students are expected to discuss the following in their essay:
Robert Axelrod's computer experiments

The rules for Tit-For-Tat (TFT)
Show how TFT can affect the choice of ‘co-operative v competitive’ at the start of a negotiation
Example of how it works
Discuss Dilemma game and how TFT helps players
How communication changes the dilemma
Explain how TFT can affect choices in any stage of the negotiation
A real negotiation example of TFT (text or personal)
Practical problems – being stuck in deadlock
Conclusion
Robert Axelrods Tit-For-Tat (TFT) 6 marks

Explain effect of TFT in real negotiations 4 marks
Discuss Dilemma game 4 marks
Effect of communication 4 marks
A real negotiation example of TFT (text or personal) 3 marks
Practical problems – being stuck in deadlock 4 marks
25 marks
© Heriot-Watt University, April 2022
7
NEGOTIATION – AUGUST 2022
Section I
Case Studies
Case Study 1
Stuck in the middle
Otis Henderson is the owner of Perfect Products Ltd (PPL), a manufacturing firm that
specialises in sports goods. He recently landed a large contract to produce branded goods
for a well-known sports firm. It is a huge contract worth HK$10 million per annum for a
minimum of five years. It is highly specialised work for which Otis’s firm is a market leader.
The problem has been that some of the equipment that Otis installed specially to deal with
the order has not been working properly. As a result some 20% of the goods sent to his
client have been returned as ‘significantly failing their quality standards’. The client’s
Purchasing Director, Jose, has requested a meeting with Otis next week at their Head Office
to ask him to explain what he is doing to improve the situation. He has also sent a notice to
Otis, reminding him that the contract states that the quality of the products must not dip
below 95%, and that if it does there are penalties to pay. Jose and his team are keen to
make sure their brand is protected as lesser quality goods would reflect badly on their
company brand. They are well known for strict enforcement of the quality assurance clause
in their contracts.
Otis has had his accountancy team on the case and they have confirmed that currently the
damages to pay for an 80% delivery rate are HK$1 million. It is a huge amount of money that
would render the project financially impossible. He would almost be better off cancelling the
contract – with a cancellation charge of $HK1.2 million.
For his own part, he is aware that the machinery in question is also in breach of performance
contract, and he is trying to negotiate with the supplier to give him compensation for all the
problems he has had with it. A new one is being installed in its place next week, completely
free of charge, and Otis is confident that he can get back on track to near-perfect product
lines once it is in place. He is hoping to get a compensation deal of HK$500,000, and has an
in-principle agreement from his supplier for that amount to be confirmed once the new
machine is installed and working, but that wouldn’t touch the million being asked by his
client.
The huge investment made to get the new contract has left Otis with little or no capital of his
own that he could use, so his only option is to hope that he can negotiate the compensation
down to under HK$500,000. Jose is known to be a tough negotiator, and is not averse to
using tactics such as shouting abusively in the meeting until the other side gives in and
concedes to his demands. He is not known to show any sympathy for his suppliers and
demands nothing but the highest performance from them at all times. No excuses.
1
1. What are the Interests for Jose and Otis in this case?
(8 marks)
2. Show the compensation issue for Otis and Jose as a Distributive Bargain.
(8 marks)
3. Why could Tradables help Otis to negotiate the compensation with Jose?
(8 marks)
4. Give an example of a Proposal Otis could offer to Jose, to resolve this problem.
(8 marks)
5. If we imagine Jose’s exit price is HK$300,000 and the compensation is agreed as

HK$450,000, what would be the buyer’s and seller’s surplus in this case?
(8 marks)
(Total 40 marks)
2
Case Study 2
Shown the Door
There follows an extract from a negotiation between Jessica, the customer, and Martin, the
salesman at a local DIY superstore.
Martin: So to clarify, you want to order eight Paloma white internal doors? That’s a total of
£480.
Jessica: Yes, is there a discount for ordering that many?
Martin: No, but if you order two more we can give you 10 per cent off.
Jessica: I don’t need two more, I only have eight doors to replace! When can you deliver
them? I need them by Friday.
Martin: We can arrange delivery within the next five days. That will be an extra £30.
Jessica: An extra £30? Can’t you give me free delivery for spending so much?
Martin: I’m sorry, madam. It’s not up to me. You can always take them home yourself.
Jessica: That’s not possible, they are too big. OK, I’ll pay for the delivery.
Martin: OK, that’s great. Now, have you decided what handles and hinges you want with the
doors? We have a lovely range in aisle 4, if you want to pick them now. I can have them
delivered at the same time, no extra charge.
Jessica: Oh, I hadn’t realised I had to buy those separately. On your display they have them
fitted.
Martin: Those are for display purposes only, to let you see how they look when fitted.
… [10 minutes later] …
Jessica: I have decided on the Tunis range, in chrome.
Martin: A great choice, they will go very well with the doors. That will be an additional £115.
However, I know you were looking for an offer, so if you were interested in taking the Tunis II
range, which is slightly better quality in a polished chrome, instead of £135 I could do those
for £120. That offer is only available today, though – if you come back tomorrow I can’t give
you the same offer. What do you think?
Jessica: Oh, that does sound like a good deal. OK, I will take them. So that’s £630?
Martin: Yes, that’s right. So far, £630. Now, can I show you our range of paint finishes for
the doors? They can make all the difference. After all, if you are spending £600 on them, you
want them to look at their best for as long as possible, don’t you?
Jessica: Of course, but don’t they come ‘finished’?
Martin: For £60 a door? Oh no, but it won’t take you long to paint them. We can sell you all
you need for the job – brushes, tape, paint, covers, etc.
3
Jessica: I just don’t have time for that, never mind the extra cost!
Martin: Oh, I totally understand. Perhaps I can show you a different range of doors that
come pre-painted and ready to hang?
Jessica: Oh, that would be marvellous, thank you.
Martin: Of course, they are a little more expensive than the Paloma range, but you will be
making a huge saving in terms of time, and so on, and of course, they are all quality finished.
Jessica: Well, when you put it like that, it makes sense that they would be more expensive,
but how much more expensive?
Martin: They are £78, so only an extra £18 per door.
Jessica: Hmmm, OK. I suppose I don’t really have much choice and it’s only £18.
Martin: Great, shall I put this through the till then?
Jessica: Yes, please. Any discount for cash?
Martin: No, but if you use your credit card there will be a 2 per cent surcharge.
Jessica: I’ll stick to cash.
Martin: That will be £774, then.
Jessica: £774? I only have £650 in cash. Here is my credit card …
1. Identify and discuss the 3 ploys being used by Martin in this case.
(12 marks)
2. Why do people use manipulative ploys in a negotiation?

(11 marks)
3. Explain why Martin’s use of Ploys is weak.

(12 marks)
(Total 35 marks)
TOTAL OF 75 MARKS
4
Section II
Essay Question
Rhona is a Senior Manager for a biscuit production company. Their current factory site has
become outdated and with the new contracts just signed by the European Sales Team, they
would need to up production dramatically in the next few months, something that is just not
possible in the current site. She has found a new warehouse building across town for lease,
with really great transport links that would suit the company perfectly. Rhona is due to meet
with the agents next week and is quite nervous about it. They are used to this sort of deal
but it is Rhona’s first time doing such a complex negotiation – she is more used to food
suppliers and the occasional HR dispute.
She is under pressure to get this right, and get it right quickly – they must have access to the
new site within 6 weeks so that they can fit it with their new state-of-the-art production line
machinery (purchased by the Engineering Department Manager already). Delays of longer
than 2 months could have cost implications on the delivery/storage of the new equipment,
but also delays in getting the new site up and running will impact sales. The longest she can
accept would be 3 months.
The price is also a big pressure point as she cannot afford to be paying over market rental
rates. Rental increases over the time of contract must also be less than or close to inflation
rates only, with rent reviews only every 5 years. There also needs to be decent length of
time on the rental to make it worth their while (minimum of 8 years, though she would like
15) – could there even be a purchase option down the line?
Using your knowledge of the course, explain to Rhona the benefits of using the 4 phases of
negotiation, and show her how to prepare for the negotiation next week.
(Total 25 marks)
TOTAL OF 100 MARKS
END OF PAPER
5
August 2022
English exam comments:
Case Study 1
This case is about distributive bargaining and required the student to apply their learning from the
course with the case material. Overall this case was answered well, with most students
remembering to define the topic briefly, and use the case material to apply the topic.
Q1. Interests. Always question 1, this tests the students’ knowledge on the topic of Interests,
specifically can they show me they know what an interests is, and not confuse it with a negotiable
issue. On the whole students did well here, but still quite a few confusing interest and issues. If it
has a number in it, it is NOT an Interest, because numbers are negotiable.
Q2. Distributive Bargaining. The question asks the students to outline the case as a DB problem.
Most students can draw the diagrams and explain them, a few missed defining the constituent parts
(settlement range, entry point, etc.) But overall, this was also answered well.
Q3. Tradables. Some confusion over why to use the tradables, but most students gave a good list of
a few possible and remembered to explain the why the differing values placed on the tradable by
the negotiators was so important.
Q4. Proposing. A good show of knowledge from most students on what a proposal is, and how to
write one. More care should be taken when writing the proposal though as still a few students
writing a bargain, not a proposal. It is easily done – especially under exam pressure, but try to check
that the offer is ALWAYS vague in proposing.
Q5. Surplus. A mixed bag of answers here. While about half of students got the full 8 marks, quite a
few missed 2 or 4 marks by simply not giving enough detail. Required for this question are the 4
parts: definition of surplus, diagram, condition and calculations.
Case Study 2
Overall, this was a very mixed case. Some students clearly studied and understood how ploys work
and how to deal with them, others seemed to know ploys by name but not much else.
Q1. Identify the ploys in the case. This was the best answered part of this case. Nearly all did well,
but those that didn’t missed defining and explaining the TYPES of ploy, as well as the ploys used.
Most students failed to accurately name all 3 ploys (I think only 4 students got them all), but most
were very close so still got good marks.
Q2. Motives. This was a mixed response. Those students that described Red play and the motives
of Protect and Exploit did very well here. Remember to link back to the case – what was Martins
motive?
Q3. Weaknesses. A lot of missed opportunities here. Most, though not all, students gave sone good
account of why ploys are inherently weak. Most also mentioned that they are easily countered. The
students that did best here went on to give some convincing counters to the ploys in the case.
Oddly, a few students decided to explain why ploys were not weak at all, but without evidence to
back up this assertion, I have to disagree.
Essay – The 4 phases
Overall, I was very disappointed with the answers to this essay. The 4 phases is a core concept, it is
1/3 of the course, and yet many students didn’t even know what they were. Some made up their
own version, some used 4-phases from external reading. The exam is there to test your knowledge
and learning from this course – not a different course – so you must use the course text to form your
answers. By all means read and add to that, but fundamentally the answers you need are in the
text.
Those who did in fact describe the correct 4-phases (prepare, debate, propose and bargain) did a
good job giving an overview of what they are all about. However, most stopped there. There was
very little attempt to answer the question of ‘why’ to use them. Even more frustratingly, the second
part of the question (give advice on how Rhona should prepare for this negotiation) was only
answered by about ¼ of the students. This second part was worth almost half the marks, so you can
imagine that most students failed or only just passed this essay.
You must read the whole question and make sure that you are answering the question set. Writing
blindly about the topic is not enough.
Chinese exam comments:
Case Study 1:
1. Many students did not provide a clear definition.

2. Some students did not provide the distributive bargaining diagram for Q2.
3. Most students did well on this case study and gained high marks
Case Study 2:
1. Students generally did OK with this case study and got good marks.
2. Most students could discuss exploitation well, but many students forgot to discuss
protection.
3. Most students could discuss the future relationships, but some students did not link to the
ploys used by Martin to discuss counters.
Essay:
1. Most students did not provide sufficient explanations for why use 4 phases
2. Most students did not do the second part of the essay, i.e. provide a definition of planners,
content of planner, and benefits of preparation model.
3. Some students mixed the answer of several components into one.
4. In general, the students did not do very well with this essay.
Overall, a substantial proportion of the students have quite high marks (low 70 and high 60s)
because they scored high for Case Study 1 and quite high for Case Study 2.
Section I
Case Studies
Case Study 1
1. Interests are the hopes, fears and concerns for each negotiator. They are WHY they
are there to negotiate, but Interests are NOT negotiable. Your interests drive your
issues in the negotiation.
Interests for Otis in this case could include:
1. Keeping his client happy

2. Avoiding losing the contract
3. Keeping the contract profitable
Interests for Jose could include:
1. Protecting his brand integrity

2. Ensuring highest quality standards from suppliers
Define Interests 2 marks

List of at least three Interests 6 marks
8 marks
1
2. Distributive bargaining is where there is a single issue to be negotiated, in this case
the cost of compensating Jose. The negotiation is complicated by the fact that there
is nothing to trade movement for, so each party feels ‘psychic pain’ when unilateral
movement is required to reach agreement. It is a zero-sum dynamic.
Each party has their own entry and exit point for the single issue. Entry point is where
the negotiators want to start the negotiation and exit point is as far as they can go
before they must exit the negotiation. They will know each other’s entry point but
never know the other negotiator’s exit point.
Figure 1
Figure 2
If there is a gap between the exit prices, no negotiation is possible (see Figure 1). If
there is an overlap, then a negotiation is possible (see Figure 2). This is called the
settlement range.
If we see Otis as the buyer here and Jose as the seller, for the above case the
diagram would look as follows:
Jose’s exit price is unknown.
Define Distributive Bargaining (zero-sum, single issue, etc.) 2 marks

Define Entry, Exit and ranges 2 marks
Distributive Bargaining diagrams 4 marks
8 marks
2
3. Tradables are items over which the negotiator has discretion, which can be used to
widen the focus of the deal. They can be traded for movement on other issues. In
distributive bargaining, using tradables can make the negotiation easier by removing
the single-issue problem.
Negotiators value things differently, so what might be of little value to one negotiator
could mean a lot to the other negotiator. Making a trade from that difference in value
is the key to successful negotiation.
Tradables that could be used in this case could include:
1. Discounts
2. Guarantees
3. Extra goods
4. Returns manager
Define tradables 2 marks

List of at least four tradables 4 marks
Value of tradables will differ between negotiators 2 marks
8 marks
4. A proposal is a tentative solution. It has two parts: a condition, which can be vague or
specific in nature, and an offer, which is always vague. An effective proposal is
always in the assertive conditional format: ‘If you give me something that I want, then
I could give you something that you want.’
In the proposal, the negotiator is suggesting what wants they COULD trade. It is an
assertive statement and never asked as a question.
Otis needs to consider what he can offer to trade with Jose in return for agreeing to a
lower compensation amount. By linking tradables with different priorities he is more
likely to succeed.
A proposal could be:
‘If you can agree to a lower compensation amount, then I could look at providing
some free goods as part of the ongoing contract.’
Define proposals 4 marks

Linking tradables with different values 2 marks
8 marks
3
5.
The settlement range is the Negotiators’ Surplus, or the surplus amount available to
the negotiators. Where P* is the agreed price (HK$450,000 in this case), the Buyer’s
Surplus will be equal to the Buyer’s Exit Point (BEP) - P*, or the amount the buyer
has saved by agreeing to the price P*. The Seller’s Surplus is equal to P* - Seller’s
Exit Point (SEP) or the amount gained by the seller by agreeing to price P*.
For there to be a surplus there must be an overlap, so BEP > SEP.
In this case example the Negotiators’ Surplus = BEP - SEP

= 500,000 - 300,000
= 200,000
Buyer’s Surplus (Otis) = BEP - P*

= 500,000 - 450,000
= 50,000
And the Seller’s Surplus (Jose) = P* - SEP

= 450,000 - 300,000
= 150,000
Define Surpluses 2 marks

Diagram 2 marks
BEP > SEP 2 marks
Calculation of Surpluses 2 marks
Total 8 marks
4
Case Study 2
1. Ploys are where one negotiator manipulates the outcome of the deal by using a trick
or devious play in the negotiation. All ploys aim to influence your expectations of the
negotiated outcome.
All ploys belong to one of three main types: dominance, shaping and closing.
Achieving dominance from an early stage enables one party to set the tone and the
tempo (not to say the temper) of the following sessions. It coincides with the most
conflict-ridden phase of negotiation because the struggle for dominance involves
conflict-enhancing behaviours.
Characteristically, dominance behaviour is about defending extreme positions,

appearing to be intransigent by design, revealing narrow grounds for manoeuvre – if
any – and generally bullying ‘opponents’ (which accurately describes how
manipulators see and portray the other negotiators) into early concessions, or into
revising how far they will have to move to get a settlement.
In the middle phases of negotiation, with the concentration of the parties on debating
the parameters of a possible settlement (signalling, proposing, packaging and
bargaining), numerous opportunities appear that can shape the deal.
This is where ploys flourish and the literature abounds with ploys to shape the
perceptions of what is possible and to shape expectations of what is likely. Some are
outrightly dishonest and do not have any ethical justification whatsoever. They are
about cheating in its crudest form and negotiators who use them are using
disreputable methods – true ‘dirty’ tricks.
Certain ploys flourish in the end game, or the close, of the negotiation and are about
pressurising the opponent to settle on the last offer. Some of them are well known
and obvious but still work in the right circumstance when used against those who do
not notice what is being done to them.
Ploys range in sophistication from the subtle to the obvious.
In this short case Martin has used The Add-On, Off Limits and the Deadline ploys.
The add-on ploy is where a salesman continually adds small extra costs on to the
purchase. The added costs are usually small increments so they are harder to say no
to than if the whole amount was added at once. Martin adds on delivery, hinges and
handles, painted surface and credit card charges.
Off limits suggest that something is not negotiable as it has been decided by a
‘higher authority’, for example a company policy. Martin uses this to back his delivery
charge policy.
Deadline ploys are used to rush the decision, with the idea that if the other person
has less time to think about it, they are more likely to agree to the extra cost. The
special offer on the hinges and handles is an example of this.
What is a ploy? 3 Types of ploy explained 6 marks

Name and explain the 3 ploys from the case:
Deadline, Off limits and Add on 6 marks
12 marks
5
2. Identification of Red manipulative behaviour (briefly contrasted with Blue behaviour
but not an in-depth exposition) is essential: aggression, open coercion, threatening,
bullying, ‘taking’, etc. Identification of ‘devious’ Red behaviour – the act of gaining
Red outcomes from hiding your Red intentions.
Defining the purpose of manipulation: to influence the perceptions of the outcome

and lower these expectations so that the Red manipulator gains more than the other
player (‘More for me means less for you’). As these ‘gains’ (even if only short-term)
can be significant, the Red manipulator has an economic incentive to behave in this
manner.
The salesman is behaving in a Red manor by using ploys. He is putting pressure on

Jessica to manipulate the outcome of the negotiation. Where he senses a weakness,
he is taking advantage. Obviously, Jessica has not prepared well, is uncomfortable in
the DIY store, and has little experience in this situation. The salesman is very
experienced and knows exactly how to pressure Jessica into buying far more than
she came in for.
Experience is a great teacher, and people subjected to tactical ploys soon learn that
they were disadvantaged in the exchange and seek to protect themselves from
similar exploitation on later occasions. There are two motives for playing Red: to
exploit the other player (to take advantage of their Blue gullibility) or to protect
oneself from the other player (‘Do unto others before they do it unto you’). These two
motives explain why negotiators resort to tactical ploys.
The exploiter motive corresponds to the image of the ‘streetwise’ dealer and attracts
a large audience of would-be ‘tough guys’, ready to mix it with other tough guys.
They seek to win at the other negotiator’s expense. They get a buzz from defeating
the other negotiator, from winning the largest slice of whatever is going, and from
getting something for nothing (or giving very little in exchange). They thrive in short-
term businesses (used-car sales, estate and housing agents and brokers, and one-
off contracts). Above a certain level they can increase the costs of a business sector
far beyond their personal gains (e.g. the construction industry with its myriad of
claims and counter-claims for variations and defects). Chester Karrass made a
successful career teaching people how to survive in the negotiation (i.e. tactical
ploys) jungle.
The protector motive is a more acceptable cause of resorting to tactical ploys. This is
summed up in the text as: ‘I defect (i.e. use ploys) not because I want to but because
I must.’ This is like the footballer who justifies his fouling of other players because it is
necessary to ‘get his retaliation in first’. It is fear of what the other negotiator might
intend to do to you that drives you to ploys. ‘I expect him to try to cheat me by
padding his prices; hence it is legitimate to hit him with the Krunch’ (‘You have to do
better than that’). Of course, exposure to the Krunch teaches negotiators to pad their
prices because they expect to be Krunched, which perpetuates the ploy cycle.
In this case, it is clear the salesman is looking to exploit Jessica and get the better of
her in the deal.
Discuss issue of manipulation 2 marks

Motives: Exploitation 4 marks
Motives: Protection 4 marks
This case – Exploitation 1 mark
11 marks
6
3. The weakness of using ploys lies in their being discovered. A ploy recognised is a
ploy disarmed. If you know a ploy is going to be used against you, you prepare.
Expecting the Nibble to be employed by your customer, you Nibble back, slicing
something off here and something off there. You pad your prices to allow for late
payments and demands for freebies. She ‘Bogeys’ you – ‘I love your product but my
budget won’t allow me to place an order’ – so your padded price serves to protect
your true price. You come down in price in response to her Bogey, so the next time
round she hits you with the Krunch! To make money you Nibble. And so it goes on,
until you are so accomplished at ploys that you forget that your original motivation
was to protect yourself. Meanwhile your behaviour is indistinguishable from that of
the exploiter. Indeed, you can justify exploitation on the grounds that this enables you
to get back what you lost to other exploiters!
In this case there are counters for the ploys used by Martin. Some examples could
be
Deadline – What would be the implications of ignoring the deadline?

Off-limits – An assertion that something is Off-Limits should be seen as an entry point
for negotiation and not necessarily a final position. If we merely have to state that a
topic is non-negotiable in order to get our own way, then negotiation is replaced by
inflexible demands that become impossible to resolve. Equally, where the ultimatum
is reinforced by reference to company policy it should be remembered that all
companies have policies. Why should one take precedence over another?
Add-on – Prevention is better than cure. Learn to say no or question what is included
before you start. A negotiator’s strongest position is always before the contract is
signed; the weakest is arguing after the event. Look at the small print in the contract
before you commit.
It is not only when it is expected, a ploy can be recognised or discovered through the
course of the negotiation. Perhaps you feel pressured or somehow stop and think
that the negotiation is not going the way you expected at all, then it is time to
consider if a ploy is being used by the other side. It is too late to prepare for it, but it
is still possible to stop it without ruining the prospect of a deal (if you still want to do
one with someone who uses ploys!). A successful counter could be as simple as
saying no and reframing it your way, but sometimes it is more about getting back to
trading using Purple behaviours and making sure that the deal is not one way.
Another weakness of using ploys is that people will potentially stop doing business
with you. If you gain a reputation for using ploys, this could put people off wanting to
be in partnership with your firm – manipulative techniques do not look good for long
term relationships. Would you like to be in business with someone you discovered
cheated you? One off purchases are rarer than you think, so behaviour matters over
time.
Recognised ploys and counters 6 marks

Expected ploys 3 marks
Future relationships 3 marks
12 marks
7
Section II
Essay Question
Students must discuss the following in their essay:
What are the 4-phases and define negotiation

Discuss each aspect of the 4-phases in detail, with examples: Prepare, Debate, Propose,
Bargain
Why is the 4-phases the best way to deal with this negotiation? Compare/contrast to at least
one other method.
Using the case material, derive a Preparation Planner for Rhona and include the following:
Interests, Issues, Priorities and Positions.
Discuss the benefits of good preparation for Rhona including giving confidence for this
negotiation
4-phases explained 8 marks

Why use 4-phases 2 marks
Definitions for Preparation Planner 5 marks
Contents of Planner 8 marks
Benefits of Preparation Model 2 marks
25 marks
© Heriot-Watt University, August 2022
8
NEGOTIATION – DECEMBER 2020
Section I
Case Studies
Case Study 1
Tangled
Stefan and Dennis owned a successful hair salon in the city centre. They had won awards
for their styling and had appeared in many magazines and local newspapers, which only
served to make them very busy. While this has been a great boost to business, some loyal
clients have been having difficulty getting appointments, with some waiting times up to
three months.
When the building next door was put up for lease, they decided it would be a great
opportunity to expand the business, giving them more room for more clients. If they had
the space they could also start to offer beauty treatments, which could add 10% to their
profits next year.
They had budgeted around £80,000 for the refurbishment, though they had up to
£100,000 for the whole project including all the decor, which on top of the extra rent for
the building would push Stefan and Dennis to the limit. Anything they could save on
building costs would make the enterprise much less risky. The business partners had
three quotes from local builders. One was extremely expensive at £150,000; the other
two were around the budgeted £80,000. The sooner they could get the salon up and
running, the sooner they would have the extra space and would be able to recruit new
stylists and get clients booked in. The owners were expecting another influx of business
around the six-month mark, as they were up for several more awards during that time
and the publicity was guaranteed to attract more bookings. This alone made it a priority
to have the building work complete before that time.
The quote they preferred was from Access Builders Co. It included the following:
Building renovation labour costs £35,000

Materials £28,000
Completion date 4 months
Fixtures and fittings for new salon area £25,000
Total £88,000
It was slightly over budget but Stefan and Dennis were sure they could negotiate some of
the costs down, especially since they had a completion date of just four months. The
other affordable quote they had received involved a much longer building process of
seven months, which although possible would be cutting it fine. Access Builders had
promised a dedicated building project manager who would be on site at all times. He
1
would take all the responsibility and allow Stefan and Dennis to get on with their own
business next door. There would be only minor disruption to the main business, as they
would only open up a doorway between the two buildings once all the main work had
been completed. Access had also suggested a weekly update meeting to be held on
Fridays, when changes and updates could be discussed in a timely and most efficient
manner.
The builder had also offered to give the old salon a makeover to keep it looking as sharp
as the new part of the building, priced at an extra £2000. Stefan and Dennis liked the idea
of this optional extra, but would have to make some savings elsewhere before agreeing to
it.
The parties were due to meet tomorrow for a final time to negotiate the contract.
1. What are the Interests in this case for Stefan and Dennis?
2. What are the negotiable Issues in this case?
3. Why are Ranges important for the negotiators?
4. Suggest a Bargain that Stefan and Dennis could put to Access Builders about the
refurbishment deal.
5. How does having a BATNA benefit Stefan and Dennis in this negotiation?
(Total 40 marks)
2
Case Study 2
Best Behaviour?
Beth and Lin run their own business with a workforce of 120 making high end
accessories for women, such as hats, scarves, gloves, umbrellas. They have a good
reputation in the market for quality products, with bright cheerful designs, and have
picked up a celebrity following with one high profile client wearing a matching ensemble
to a premier last week and being snapped by all the fashion magazines. There have also
been a few Instagram posts by soap stars wearing their products. This rash of recent
publicity has opened the door to some new retail opportunities and this week Beth and
Lin have been invited to pitch at a huge West End store. If they got this deal, it could
mean big things for the company including expansion of their production facilities and it
could even lead to some global sales, as many travelling wealthy people visit this store.
This is no easy pitch though, as Beth and Lin have little experience in this new market
and are nervous about the buyer (Casey Reed) they will face. There are many stories of
how difficult and devious he can be, and how utterly ruthless he is to get the best deal
possible for his store. He plays on the nerves of those he faces, as he is all too aware that
most of them need his business to catapult their own sales and prowess.
As they prepare for the meeting, Beth and Lin discuss how they will deal with Casey:
Beth: Everyone we have spoken to talks about how aggressive Casey is, I think we need
to go in there just as aggressive and demand he pays full rates for our goods – after all he
knows our business has been attracting headlines and he wants our products in his store.
Lin: That is totally the wrong way to play this. He won’t entertain us if we come across
too strong. We need to play it down, we need his business, after all this deal could make
or break us. Let’s take whatever is on offer and be grateful we are in his store!
Beth: If we give away too much though, the deal won’t be worth the paper it’s written
on. I know you are more comfortable having a softer approach – and so am I – but we
can’t appear weak in this instance. It’s such a huge opportunity we have got to change
our usual tactics and go for it.
Lin: I am just not sure I can pull it off Beth. You are right about one thing though, we
need to get this right as it means too much to us to blow it.
Beth: I don’t trust him, Lin, and if we are too soft, he will take advantage and walk all
over us. It’s time to be strong. Just follow my lead and don’t give an inch!
3
1. Explain the behavioural styles of Beth, Lin and Casey.
2. What is the Dilemma Game, and how could you relate it to the case?
3. How could Beth and Lin resolve the problem of trust and solve the negotiators
dilemma?
(Total 35 marks)
TOTAL OF 75 MARKS
4
Section II
Essay Question
Essay Maximum Word Count 1450 words
Linking Issues
“That meeting was terrible Isobel. We had a list of over 10 issues to discuss and
negotiate. I’m sure we both wanted to deal, but we couldn’t come to an agreement”,
complained Archie. “We went through each issue, one by one, and it soon became clear
that we could only agree on some of the less important ones, so when it came to the
important issues for us, like price, there was just no movement from them.”
Explain the benefits of linking issues as opposed to separating them in proposals and
bargains, and how this could help with Isobel and Archie’s negotiation.
(Total 25 marks)
TOTAL OF 100 MARKS
END OF PAPER
5
Section I
Case Studies
Case Study 1
1. Interests are the hopes, fears and concerns of the negotiators. Interests are not
negotiable or quantifiable – they are WHY they are negotiating. Interests are what
motivate the negotiator to choose one solution over another.
Interests for the case could include:
1. Use a builder they can trust

2. Get a quality job done
3. Minimise financial risk
4. Prevent further loss of custom
5. Prevent too much disruption to current business
6. Have a good working relationship with the builder
7. Increase profits from the business
Definition of Interests 2 marks

Any 6 Interests 6 marks
8 marks
2. Issues are the agenda items of the negotiation. They are WHAT they are there to
negotiate about.
Some of the issues in this case are:
1. Labour costs
2. Materials costs
3. Completion date
4. Warranties/guarantees
5. Fixtures and fittings
6. Redecoration of the old building
Define Issues 2 marks

List of Issues (minimum of 6) 6 marks
8 marks
1
3. Ranges are the areas of movement between the negotiators’ Entry and Exit
positions. The Entry positions are where the negotiators want to start or open the
negotiation and the Exit positions are as far as they are willing to move to before
walking away from the negotiation.
The settlement range will be the area between the buyer’s and seller’s Exit prices.
In this case the negotiation ranges for the salon owners could be as follows:
Issues Entry Exit

Labour costs £28,000 £32,000
Materials costs £20,000 £28,000
Completion date 4 months 5 months
Warranties/guarantees 5 years 1 year
Fixtures and fittings £20,000 £25,000
Redecoration of the old £1000 £2000
building
Define Ranges, Entry and Exit 4 marks

Entry and Exit points for issues (minimum of 5) 4 marks
8 marks
4. Bargaining is the fourth phase of the negotiation. It comes after general proposals
have been exchanged and accepted. Bargains use the IF … THEN conditional
format, with the condition first and the offer second, just as in Proposing.
However, unlike in Proposing, both condition and offer must be specific.
For example: If you agree to pay £2000, then I will agree to delivery in six weeks.
In this case, perhaps Stefan and Dennis could suggest this bargain to Access
Builders:
If you agree to reducing the labour costs by £5000, then we could agree to
extending the completion date to four and a half months.
This bargain may need some further negotiating on the specific details, but once it
has been agreed it is important that the two parties confirm what they have
agreed, preferably in writing.
Define Bargain 4 marks

Example of Bargain 2 marks
Confirm what has been agreed 2 marks
8 marks
2
5. BATNA means the Best Alternative To a Negotiated Agreement (or Best
Alternative To No Agreement) and is from Fisher and Ury in Getting to Yes.
Briefly, it defines the negotiator’s alternative option if he or she does not agree to
the present terms offered by the other party and the negotiations cease. BATNAs
provide data on the ‘walk away’ or ‘take it or leave it’ alterative. They strengthen
the negotiator to the extent that the BATNA is credible to the other party; they
underscore their weakness if there is no BATNA at least as good as the current
deal on offer. Note that BATNA is the alternative to NO agreement, not a
consideration of an alternative offer from the negotiating party.
The BATNA for Stefan and Dennis in this case is the other supplier that they got
a quote from. It is currently slightly lower than the quote from Access, but the
completion date is a lot longer, which could be risky for the new business.
Having a back-up, or alternative, can be good, if the alternative is a realistically

good alternative. It can strengthen the negotiator’s position and give confidence in
asking for more during the negotiation. If the alternative is poor (or, worse still,
non-existent), it can weaken the negotiator’s determination to negotiate a good
deal – through desperation. Here the salon owners have a genuine alternative,
though at the moment it is still looking less profitable. If there is no deal accepted
between them and Access, they can at least attempt to get a deal with the other
supplier.
Define BATNA 3 marks

What is Stefan and Dennis’s BATNA 2 marks
How does it help in the negotiation? 3 marks
8 marks
3
Case Study 2
1. Students should discuss:

3 styles of negotiation: Red, Blue and Purple
Examine what style fits each person in the case: Lin and Beth are Blue and
Casey is Red
Discuss how the outcome of the case might be if they play as suggested in the
case
Talk about style switching and why it is not advised
Styles defined and case examples 4 marks

Style switching pros and cons 4 marks
Outcomes of Red v Red, Blue v Red, etc 4 marks
12 marks

Explain the dilemma game – 10 rounds, little communication, outcomes
win/lose
Relate it to how the case negotiation could start and end if they follow the
Red/Blue styles discussed in the case
Dilemma Game explained 8 marks

Case application and possible outcomes win/win lose/lose 4 marks
12 marks

Trust vs risk in the game and in practical negotiations
Axelrod and Tit-for-Tat – how it works and outcomes
Real solutions and how to behave for Beth and Lin, based on Tit-for-Tat
Purple style benefits
Trust v risks 4 marks

Tit-for-Tat explained 3 marks
Solution to case example using Tit-for-Tat (deadlock/deal) 4 marks
11 marks
4
Section II
Essay Question
Linking Issues
Students should include and discuss the following in the essay:
Traded decision-making process

Conditional proposal and bargain
Single issue vs multi issues
Distributive bargaining/zero sum problems
Integrative Bargaining and joint gains
Valuing issues in the Negotek preparation planner
Benefits to knowing values from both sides
Deadlock and introducing tradables
Linking issues and flexibility in decision-making process
Examples from the case/advice to parties
Define linked Issues, proposing & bargaining 4 marks

Zero sum and the distributive bargaining problems 4 marks
Priorities in the Prep Planner 6 marks
Tradables dealing with deadlock 4 marks
Examples from contracts and/or students experience 3 marks
Advice for Isobel and Archie 4 marks
25 marks
© Heriot-Watt University, December 2020

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HERIOT-WATT UNIVERSITY

NEGOTIATION – MARCH 2021

1. What are Bea’s Interests in this negotiation?

2. What are the negotiable Issues for this negotiation?

3. How should Bea set her Entry and Exit points?

4. Suggest a Proposal Bea could make.

5. What is Bea’s BATNA, and how could it influence her negotiation?

Ben’s tools Utility for Ben Utility for Alex if acquired

Questions Maximum Word Count 1700 words

2. Explain the concept of the Optimum Solution.

NEGOTIATION – MARCH 2021

Essay Maximum Word Count 1450 words

Ploys & Counters

Jenni received the following e-mail at 3.15pm on Friday:

Function room and tea & coffee facilities: £5500.

TOTAL OF 100 MARKS

NEGOTIATION – MARCH 2021

Some possible Interests for Bea in the negotiation are as follows:

Definition of Interests 2 marks

In this case, the Issues for Bea can be shown as follows:

Definition of Issues 2 marks

Entry and Exit points should be defensible and credible.

Issues Entry Exit

Define Entry & Exit points 2 marks

4. A Proposal is a tentative suggestion, specific or vague in the condition, but always

Define proposals: If–Then; vague/specific; conditional;

Define BATNA 2 marks

In this case I would suggest the optimal exchange is:

Students should discuss:

Each individual’s utility is independent of everybody else’s. Suppose, by rearranging

Figure 8.1 ‘The benefits of bargaining’ from the text.

The assumption of knowledge of each other’s preferences is essential in the Nash

Students should discuss:

In fact, most of the interesting features of negotiation (bargaining skills, language

Figure 3.1 Comparative valuations 1

Figure 3.3 Comparative valuations 3

Suggested Priorities for Ben in this case could be as follows:

Students should discuss:

NEGOTIATION – MARCH 2021

Students should include and discuss the following in the essay:

Students should discuss:

© Heriot-Watt University, March 2021

Course Leader’s Report

Overall, Case 1 was answered very well by most.

NEGOTIATION – JUNE 2021

Mohammed has prepared the following:

Mohammed: Of course. We would be looking for a five-year contract, for a minimum of

Mohammed: I don’t think I can agree to that, how about …

Questions Maximum Word Limit 1200 words

3. Virgil is not keen on having a Debate. Why is that not helpful?

5. Write a Bargain that Mohammed could suggest to Virgil.

NEGOTIATION – JUNE 2021

Essay Maximum Word Limit 1450 words

TOTAL OF 100 MARKS

NEGOTIATION – JUNE 2021

Interests for the case could include:

Mohammed’s Interests could include:

1. Grow business into national outlet

Virgil’s Interests could include:

What are Interests? 2 marks

Negotiable issues are prioritised because negotiators have varying degrees of

Entry points should be defensible and credible.

Mohammed’s Prep Planner: