Page 83 - DMGT519_Conflict Management and Negotiation Skills

Unit 4: Negotiation

1. To push for a settlement close to the seller’s (unknown) resistance point, thereby yielding Notes
the largest part of the settlement range for the buyer. The buyer may attempt to influence
the seller’s view of what settlements are possible by making extreme offers and small
concessions.
2. To convince the seller to change her resistance point by influencing the seller’s beliefs
about the value of the condo (e.g., by telling that the condo is overpriced), and thereby
increase the bargaining range.

3. If a negative settlement range exists, to convince the seller to reduce her resistance point
to create a positive settlement range or to change his own resistance point to create an
overlap. Thus, Megan could be persuaded to accept a lower price, or Larry could decide he
has to pay more than he wanted to.
4. To convince the seller to believe that this settlement is the best that is possible – not that
it is all she can get, or that she is incapable of getting more, or that the buyer is winning by
getting more. The distinction between a party believing that an agreement is the best
possible deal leads to ego satisfaction. Ego satisfaction is often as important as achieving
tangible objective.

In all these strategies, the buyer is attempting to influence the seller’s perceptions of what is
possible through the exchange of information and persuasion. Regardless of the general strategy
taken, two tasks are important in all distributive bargaining situation—(1) discovering the
other party, and (2) influencing the other party’s resistance point.

4.13 The Bargaining Zone and the Negotiation Dance

Typically, negotiators’ target points do not overlap. The seller wants more for the product or
service than the buyer is willing to pay. However, it is often (but not always) the case that
negotiators’ reservation points do overlap meaning that the most the buyer is willing to pay is
more than the least the seller is willing to accept. Under such circumstances, a mutual settlement
is profitable for both parties. However, the challenge of negotiating is to reach a settlement that
is most favourable to oneself and does not give up too much of the bargaining zone. The
bargaining zone, or Zone of Possible Agreements (ZOPA) (Lax & Sebenius, 1986) is the region
between each party’s reservation point. The final settlement of a negotiation will fall somewhere
above the seller’s reservation point and below the buyer’s reservation point (Raiffa, 1982).
Every negotiator should know certain important principles when it comes to slicing the pie.
First it is important to realise that the bargaining zone can be either positive or negative.
Strategy 1: Assess your Best Alternative To Negotiated Agreement (BATNA) and improve it.
Nothing can help a negotiator get a bigger slice of the pie than having a great BATNA.

Strategy 2: Determine Your Reservation Point, But Do Not Reveal It
Unless you are willing to settle for your reservation point, do not reveal your BATNA or your
reservation price during the course of negotiation, even in the friendliest of situations. If you do,
the other party will simply offer you your reservation price and you will not have any surplus
for yourself. Further, your threats to “hold out” won’t work because the other negotiator will
know that rationally, you are better off accepting the offer.
Strategy 3: Research the Other Party’s BATNA and Estimate Their Reservation Point

Even though determining the other party’s BATNA may be easier said than done, negotiators
often fail to do sufficient research, which reduces their power more than anything. Negotiators

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