Negociation: Negotiation and Reservation Price

Negotiations are a part of daily life whether we are aware of them occurring or not. In everything that we do there are preferred end results and the end results are likely to affect more than one person. The goal in this however, is to ensure that all parties are equally benefited from the actions and reactions that occur to create that end result. While some dealings are done in a more subtle manner without a great deal of negotiation per say there are other situations that would warrant more vocalized mutually acceptable compromises. The purpose of this paper will be to effectively explain a situation of which required negotiation on the part of both parties that almost all of us have endured and that would be the process of buying a

Pricing is a pertinent issue in procurement and acquisition in organizations. Consumers buying the commodities of an entity should get clarity on pricing related issues. There is uncertainty in Pro

Bernie and Vivian meet and negotiate a selling price of $12,500. Vivian has requested an additional three weeks to obtain the funds to purchase the vehicle. Bernie agrees to the extension of time but requires a deposit of $1,000. Vivian agrees to the terms.

Having analyzed the scoring scheme and weights given to each outcome, I realized that the most important outcome was obtaining a large federal loan from the government. In fact, obtaining a $2 billion loan outcome alone would satisfy the governor’s scoring scheme to support the project. Therefore, before going into the negotiation I realized that this issue would be a pivotal outcome in the negotiation for me. If I succeed in negotiating the right federal loan amount I could be flexible with the other issues in the negotiation but keeping in mind that the higher the score the better the result for the governor. My BATNA was to walk away from the deal where I would still maintain the 30 points in that situation which meant that if the result of the outcome was less than 30 points, I would vote against the deal.

The TexasAgs oil company case study gave us insights on different aspects of a negotiation that can happen in real world scenarios. It elegantly portrayed the importance of having a BATNA, setting target and restriction points, impact of the fluctuating markets on the ongoing negotiations, downside of the emotional behavior, importance of having a third party member or mediator in the negotiation. The case illustrates that the negotiations should be based assumptions as they may or may not be right. Having facts and understanding the other parties true objectives and goals are truly essential in negotiation. It is a typical example of how the current power on one side can dominate and take complete advantage of their position.

Calculating reservation price is an important part of the home buying process and can help me negotiate the best possible deal for my situation and get the home that I want. Consider using the above calculations for each home that I are considering so I have the confidence to overbid or negotiate for a lower price with my budget in mind.

What is your best estimate of their respective reservation prices (“walk away price”)?  Be sure and explain your answer. Don’t just give a number.

If you accept your BATNA, you know when you can simply turn your back on the negotiations. But it is important not to ignore the other party's BATNA. The relative strength of each party's BATNA will determine the balance of power each can exercise.

Suppose the hotel chain is willing to negotiate the price. When you enter the negotiations, what is the lowest price you are willing to accept (i.e., your reservation price)? (Of course, you will not announce this price to the other party.)

Like influencing, negotiation is based on the idea of exchange, in which both parties are willing to trade-off in order to find an acceptable solution. Roger Fisher and William Uri (1922) introduced the term BATNA – best alternatives to a negotiated agreement – which are the default alternatives that both sides to a negotiation would take if they did not reach agreement. This is useful as the standard against which any proposed agreement should be measured, the bottom-line.

Through a series of increasingly complex examples and a sound explanation of what is ultimately relatively straightforward probability theory, Sebenius makes the importance of sequencing in negotiations and deal-making quite clear. There are many reasons that one party to negotiations might have their willingness to agree with certain deals or take certain actions

“Negotiation is the process whereby people attempt to settle what each shall give and take or perform and receive in a transaction between them” as defined by Rubin and Brown (as quoted in Stoshikj, 2014, p. 32). This action is usually held between two parties or more in order to discover a common ground or reach a mutual agreement. It has come under the company’s attention that there are some unresolved issues regarding several different concerns such as air pollution, water contamination and council land rates on company land in Mortlake, Queensland.

RESERVATION PRICE = the maximum or minimum--depending on whether you're the buyer or seller--at which you would be indifferent between doing the deal, and not doing the deal

When negotiating in the business world, it can range in situation from employee to employer or to employee to customer. In the employee to customer stand point, in the paid service industry, such as subscription services to internet, a customer will complain about poor service and request credit from the provider. The employees job is to make the customer happy but at the same time save the company money, that is where the point of negotiation comes into play. At many times the customer will have a set number that is well beyond a reasonable amount, in those situations the employee must negotiate with the customer to a reasonable amount that will benefit both parties.

“Negotiation is a form of decision making in which two or more parties talk with one another in an effort to resolve their opposing interests (Essentials of Negotiation fifth edition.” Negotiation occurs on a daily basis. It occurs between businesses, partnerships, marriages, friends, family and even law enforcement. “Negotiations occur for several reasons: (1) to agree on how to share or divide a limited resource, such as land, or property, or time; (2) to create something new that neither party could do on his or her own, or (3) to resolve