On Negotiating a good Agreement
Do you want to get the best offer? Do you want to build a long relationship with your partner? Adam Castor, a professor of SKK GSB raised these questions while delivering his lecture on Negotiations to the students of SKK GSB, Kelley, Tuck, and EDHEC this semester. Professor Castor’s class teaches students the essential tools of negotiation, to help them to improve their negotiation skills as well as to let them understand their strengths and weaknesses and improve their negotiation style in their lifetime.
A good negotiator is usually well prepared before the negotiation starts.
• BATNA: Best backup plan to a negotiated agreement
A successful Negotiation usually has a good planning strategy. Prepare 2 -3 options during the planning
• Reservation price: Worst offer you’re willing to accept
Analyze how important each issue is to you and your opponents.
• Bargaining zone: Range between buyer and seller’s reservation prices
• Target price: Ideal agreement
A good negotiator usually has the following motivation.
The smarter negotiator appears to be able to understand his or her opponents' real interests and thus to provide them with better deals at lower cost, which is the cornerstone of integrative negotiations. Top negotiators always have a win-win motivation. Cognitive ability tends to reach the best agreement for both parties. With that attitude, ask more questions during the negotiations and try to understand the other party’s situation. Understand their style. Different negotiators have different personal or cultural preferences. Many Western cultures have a quick-paced approach to negotiations, while it can be a little different for Asian cultures. To find the tradeoffs and creative solutions that ensure that everyone gets a fair deal, you have to share information about your needs and priorities. The extent to which you trust the other party should determine your approach to sharing and collecting information. Usually, the best chance for a good agreement comes from both parties trusting each other and disclosing information on each side and trying to find the best solution for both sides. This also can build a long-term relationship.
A good negotiator usually follows these steps during the negotiation.
It gives fewer reasons to support arguments. Tries to make the first offer, usually the recipients use the first offer as an anchor and they do not adjust a lot within their Bargaining zone. The people who make the first offer generally win the negotiation. Asks counterparts to explain their reasoning, and sometimes waits for a response or threatens to walk away.
Adam Castor holds a Ph.D. in Managerial Science & Applied Economics from the Wharton School of Business. He was an Instructor at the Wharton School, University of Pennsylvania, Philadelphia, and is now a professor of SKK GSB.
Yin Lin, SKK GSB PR Committee, Class of 2021