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MGMT 3513 Assigned Readings_Ch 3 & 7 (got 94% in the course)

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Department
Management
Course
MGT 3513
Professor
All Professors
Semester
Spring

Description
Readings Thompson Chapters 3 and 7Chapter 3 Distributive Negotiation Slicing the PieWhen people get emotional in negotiation it is nearly inevitably about how the pie should be dividedHow Negotiators can best achieve their outcomeseconomic eg money and resources as well as social eg preserving relationships and building trustHow best to claim resourcesWho should make the first offerHow to respond to an offer made by the other partyThe amount of concessions to makeHow to handle an aggressive negotiatorNegotiation dance Process of making an opening offer and then reaching a mutually agreeable settlement Most negotiations involve a winwin aspect expanding the pieEven in winwin negotiations the pie of resources created by negotiators eventually has to be slicedThe Bargaining ZoneTypically negotiators target points DO NOT OverlapThe seller wants more than the buyer is willing to pay It is often that negotiators reservation points DO OVERLAP The most the buyer is willing to pay is more than the least the seller is willing to accept The challenge of negotiation is to reach a settlement that is most favorable to ONESELF and DOES NOT give up too much of the bargaining zone The bargaining zone or zone of possible agreementsZOPA is the range between negotiators reservation points The final settlement of a negotiation will fall somewhere ABOVE the sellers reservation point AND BELOW the buyers reservation pointThe Bargaining Zone can be either positive or negativeThe overlap means that mutual agreement is better than resorting to BATNAsEX The sellers reservation point is 11 the buyers reservation point is 14 The most the buyer is willing to pay is 3 greater than the very least the seller is willing to accept The bargaining zone is between 11 and 14 or 3 If the negotiators reach agreement the settlement will be somewhere between 11 and 14Suboptimal If the parties fail to reach an agreement in this situation and the outcome is an impasse because negotiators leave money on the table and are worse off by not reaching agreement than reaching agreement Negative Bargaining Zone indicates that there is no positive overlap between the parties reservation points In this case negotiators should exercise their best alternatives to agreementBargaining Surplus The amount of overlap between parties reservation points It is a measure of the size of the bargaining zone the pie The bargaining surplus is a measure of the value that a negotiated agreement offers to both parties over the value of not reaching settlement Example Im a buyer and my reservation point the most Im willing to pay is 1500 but I get the item for 900 Anything below 1500 is my surplusExample Im the seller and my reservation point the least Im willing to accept is 700 but I sell it for 900 Anything over 700 is my surplus Both sides wants to get as close to the other sides reservation point as possible thereby maximizing his or her slice of the pie The best possible economic outcome for the negotiator is one that just meets the counterpartys reservation point thereby inducing the other party to agree but allows the focal negotiator to reap as much gain as possible In other words one person gets all or most of the pie Negotiators Surplus The total surplus of the two negotiators adds up to the size of the ZOPA or bargaining surplus MixedMotive the fact that negotiated settlements fall somewhere in the ZOPA and that each negotiator tries to maximize his or her share of the bargaining surplus They are motivated to cooperate with the other party to ensure that settlement is reached in the case of a positive bargaining zone but they are motivated to compete with one another to claim as much of the bargaining surplus as they can
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