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Achieving Negotiation Success. Negotiations and Conflict Resolution, MBA 257. Professor Laura Kray kray@haas.berkeley.edu Office: F591 Meeting times: Tuesday & Thursday, 2-4/4-6 Office hours: Wednesday, 2-3 or by appt. Welcome!. You are about to embark on a journey of self-discovery
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Achieving Negotiation Success Professor Laura Kray 2010
Negotiations and Conflict Resolution, MBA 257 Professor Laura Kray kray@haas.berkeley.edu Office: F591 Meeting times: Tuesday & Thursday, 2-4/4-6 Office hours: Wednesday, 2-3 or by appt Professor Laura Kray 2010
Welcome! • You are about to embark on a journey of self-discovery • Challenge assumptions • Navigate tricky situations • Develop skills • Gain experience • Give and receive feedback • Increase confidence Professor Laura Kray 2010
About the course • Fast paced • Limited time for discussion relative to other classes • Take offline some pressing questions/comments (index cards, office hours, email) • Experiential and interactive • Other students highly dependent on your attendance and preparation • Need reflection to reap the benefits of experiences • Feedback intensive • You are strongly encouraged to think through how you approach a wide variety of conflicts in life • Ultimately what you get out of it is up to you! Professor Laura Kray 2010
Negotiating is like… Professor Laura Kray 2010
Goals for the course • Learn to depersonalize and enjoy conflict • Overcome common negotiator traps • Cognitive biases • Ethical traps • Develop a framework for approaching any negotiation • Transactional • Dispute resolution • Multi-party • Take risks to facilitate learning • Improve communication skills • Have fun! Professor Laura Kray 2010
About your professor • Beginning my 9th year at Haas • Psychologist (social, non-clinical) • How do thoughts, goals, and emotions influence behavior? • Primary research and consulting areas: • Negotiations • Gender stereotypes • Growth versus fixed mindsets • Reflection on past experiences • Analytical problem solving • Meaning construction • Learning Professor Laura Kray 2010
Course assignments • Preparation and participation (30%) • Participation in debriefing discussions • Remember you must be present to participate! (2 absence max) • Negotiation journal entries (20%) • Two entries submitted for grading • Reflect on in class negotiation, readings and course themes • Peer feedback and self-analysis (20%) • Online surveys after each negotiation to provide feedback • Self-analysis of feedback received • Real world negotiation (20%) • Apply course concepts to negotiate something of real value to you • Red paper clip option • Negotiation cheat sheet (10%) • Development of your own personal toolkit Professor Laura Kray 2010
Negotiation exercises • Provide safe environment to experiment • Compare and contrast your behavior with the behavior of your classmates • Understand that there is no “cookbook” solution • Expect reputational consequences for your actions • Get feedback on your interactions with others Professor Laura Kray 2010
Miscellaneous course details • Volunteers for course representative? • Green class: no printouts of slides • Slides will be posted on bspace AFTER lecture • Use of phones and internet in class is prohibited • Laptop use discouraged generally; prohibited with guest lecturers • Individual assignments should be done independently Professor Laura Kray 2010
Negotiations • A decision making process by which 2 or more parties agree how to allocate scarce resources • Information exchange, not debate • Satisfy other party’s interests to improve your own outcome • Both an art and a science • Art: a soft skill influenced by relationship building • Science: develop an analytical framework to devise a strategy and apply tactics Professor Laura Kray 2010
The defining characteristics of a negotiation situation • Belief that conflicting interests exist • Communication between parties is possible • Intermediate solutions/compromises are possible • Offers and proposals don’t determine outcomes until accepted by both parties • Parties have incomplete knowledge about each other’s interests • Parties seek to maximize their utility Professor Laura Kray 2010
Competitive Market • The market has roughly an even number of buyers and sellers. • You can complete as many transactions as possible in 30 minutes. • You can only complete one transaction with any given party. • You must complete an agreement form for each completed transaction before proceeding to the next transaction. • Your goal is to earn as much profit as possible. • Make contact with a negotiating partner in the market area (front of room near chalkboard) and then proceed to negotiating area (student seat area). • You are free to share information verbally about your profit schedule, though under no circumstances should you physically show your counterpart your profit schedule. Professor Laura Kray 2010
Good luck! • 5 minutes preparation • 30 minutes to negotiate • Submit all agreements after market closes • Reflection • How to gauge negotiation success? • What factors contribute to success? • What types of issues exist in negotiations? Professor Laura Kray 2010
Competitive Market • Maximum individual gain: $8,600 • Model: $800 • Delivery/Financing: $5,600 • Volume Discount: $2,400 • Maximum joint gain: $11,200 • Model: $800 X 2 = $1,600 • Delivery/Financing: $4,000 X 2 = $8,000 • Volume Discount: $2,400 Professor Laura Kray 2010
Types of negotiation issues • Compatible issue: • Both parties want the same thing • Distributive issue: • Zero sum, win/lose • Parties have opposing preferences and care equally about issues • Integrative issues • Parties have opposing preferences but different strength of preferences (priorities) Professor Laura Kray 2010
Model Professor Laura Kray 2010
Volume Discount Professor Laura Kray 2010
Delivery Time & Financing Professor Laura Kray 2010
How to measure negotiation success? • Performance • Individual gain • Joint gain • Effect on relationship • Transaction costs • Will the deal stand the test of time? Professor Laura Kray 2010
What makes a good negotiator? • Preparation and planning skill • Knowledge of subject matter being negotiated • Ability to think clearly and rapidly under pressure and uncertainty • Ability to express thoughts verbally • Listening skill • Judgment and general intelligence • Integrity • Ability to persuade others • Patience • Decisiveness Laura Kray, Haas School of Business (c)