MGT 365 Lecture Notes - Lecture 14: Reservation Price

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Target point: point at which a negotiator would like to conclude negotiations: preferred price. Resistance point: price beyond which negotiator will not go: optimal goal, sometimes referred to as negotiator"s aspiration, negotiator"s bottom line, also sometimes referred to as a reservation price. As buyer most they will pay. As seller smallest amount they will settle for. Asking price: initial price set by seller. Initial offer: first number buyer will quote to seller. Both parties in negotiation should establish starting, target, & resistance points before beginning negotiation: starting point, often in opening statements each party makes. Buyer"s first offer: target point, usually learned/inferred as negotiations get under way. Ppl typically give up the margin between starting points & target points as they make concessions: resistance point, beyond which a person will not go & would rather break off negotiations. a successful negotiation. Isn"t known to the other party & should be kept secret.

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