BATNA and Reservation Point in Negotiation
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Questions and Answers

What is the fixed pie bias in negotiation?

  • Focusing on a single issue in negotiation
  • Assuming that one's gain must be at the expense of the other party (correct)
  • Negotiating on multiple issues simultaneously
  • Dividing a fixed amount of resources

    • What is the primary goal of Principled Negotiation?

  • To win the negotiation at all costs
  • To use power and coercion to get what you want
  • To create value for all parties involved (correct)
  • To find a middle ground

    • What is the BATNA in negotiation?

  • Basic Alternative To a Negotiated Agreement
  • Best Approach To a Negotiated Agreement
  • Basic Approach To a Negotiated Agreement
  • Best Alternative To a Negotiated Agreement (correct)

    • What is the purpose of asking 'Why?' in negotiation?

    <p>To explore the other party's interests and needs</p> Signup and view all the answers

    What is the advantage of building trust in negotiation?

    <p>It increases the chances of reaching a mutually beneficial agreement</p> Signup and view all the answers

    What is the concept of 'reservation price' in negotiation?

    <p>The maximum price a seller is willing to accept</p> Signup and view all the answers

    What is the purpose of identifying transaction costs in negotiation?

    <p>To minimize the transaction costs</p> Signup and view all the answers

    What is the benefit of shifting from single- to multi-issues in negotiation?

    <p>It increases the chances of reaching a mutually beneficial agreement</p> Signup and view all the answers

    What is the purpose of asking 'What if?' in negotiation?

    <p>To explore creative solutions and possibilities</p> Signup and view all the answers

    What is the role of the station manager in the context of sailing?

    <p>To sponsor the sailing trip</p> Signup and view all the answers

    Study Notes

    Reservation Point (RP)

    • RP quantifies BATNA (Best Alternative to the Negotiated Agreement) within a deal
    • RP = BATNA + Transaction Costs
    • RP is the objective walk-away point, bottom line, or final price
    • At RP, a negotiator is ambivalent between accepting the deal and going to BATNA
    • If 1¢ above RP, it is rational to accept the deal

    BATNA

    • BATNA is the best alternative course of action if the negotiation fails
    • BATNA is the "Plan B" or the fallback position

    Distributive Strategies

    • Aspiration Target: the best outcome you can imagine (even if unlikely)
    • RP (Reservation Price): the bottom line or final price
    • Transaction Costs: costs associated with walking away from the deal
    • BATNA: the best alternative course of action if the negotiation fails

    Structure of a Negotiation

    • Distributive Bargaining: win/lose, single issue
    • Integrative Bargaining: win/win, multiple issues
    • Congruent Bargaining: identical preferences

    Claiming Value (Distributive Bargaining)

    • Claiming value is necessary in any negotiation
    • Cues of a purely distributive negotiation: single issue, no future relationship, no side deals, and money is lump sum

    Profits

    • Profits = Net Above BATNA
    • Net Above BATNA is the profit made above the best alternative course of action

    Key Takeaways for Negotiation

    • Beware of the fixed pie bias
    • Shift from single- to multi-issues
    • Build Trust
    • Ask "Why?" and "What if?" to create value
    • Principled Negotiation: responsible for creating value

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    Description

    Test your understanding of BATNA, Reservation Point, and their roles in negotiation strategies. Learn how to quantify and use them to make informed decisions. Practice your negotiation skills with this quiz!

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