Coalition Negotiations
The fourth case study is dedicated to the Coalition negotiations and whether the creation of an alliance should be encouraged or discouraged during the negotiations. This merger exercise included different parties, A, B, or C, to obtain the maximum possible gain. In order to obtain this gain, the requirement was to join one of the unions that were attributed with a particular number of payoffs.
If all three parties are involved in the association, their total payoff will be 480. In case there only two parties join the coalition, A and C, A and B, or B and C, their payoffs will be 380, 440, and 300, respectively. If two parties decide to join the merger, they will divide the agreed amount of payoff between each other, and the third, not involved party will get 0. Therefore, the result of these negotiations was to join one of the unions and end up with the greatest gain at the end of those negotiations.
In preparation for this negotiation, it was necessary to answer several questions to identify which position would bring the best outcome for us. First, there was a need to assess each party’s alternatives and BATNAs. By predicting other players’ possible options and payoffs, there was a chance to cultivate a value and encourage or discourage the creation of a coalition.
Secondly, it was established which mix of parties would be the most favorable and what kind of payoff they could get from each (Staff, 2022). After choosing the most advantageous merger, it was critical to consider the communication between parties, how long the coalition would last, the strengths and weaknesses of the parties involved in the alliance, and what tactics should suit these negotiations.
The bargaining process required thinking critically and participating in an equal and fair game. The principles of fairness, justice, and equality during the negotiations were the key components. Taking into account each party’s strengths, weaknesses, and possible options made it possible to accept, reject and modify the framing of the negotiations and propose our alternatives. Changes in the framing were necessary in order to avoid crises or impasses.
During the bargaining process, there was a need to encourage and discourage some parties from joining the favorable coalitions. Other parties got the motivation to join the union by minimizing their BATNAs, highlighting values they could gain from this merger, and building interpersonal relationships based on equality and fairness (Staff, 2022). On the other hand, some parties were discouraged from joining certain coalitions to prevent other parties from taking control of the outcome after the alliance.
The main takeaway from these negotiations was that joining a coalition could be the best option to gain win-win outcomes for parties in a weak position. By joining the right union, it is possible to create values for both sides and the best payoff for oneself (Staff, 2022). In addition, the framing of the negotiation is of great importance as the right framing allows the parties to build trust and effective communication. The fact that the framing can be altered during the negotiation makes it possible to prevent parties from undesirable outcomes. Finally, the main realization was that building trust and good interpersonal relationships with counterparts was important.
The Bullard House Negotiations
The fifth case study describes the negotiations on the Bullard Houses that are under sale on real estate. The Bullard Houses is an ancient historical place located in the center of the city of Gotham. Nowadays, this place is owned by Downtown Realty Incorporation, whose main shareholders are seven direct descendants of Bullard’s family. They intend to sell this place to one of the companies that will comply with their wishes and propose the best offer. They do not want to sell it to the company that will transform this ancient place into a source of commercial revenue and an example of distastefulness.
As a Downtown Reality representative, we aimed to find buyers whose offers would satisfy the shareholders and cover all the financial expenses associated with this real estate. There are four possible buyers, but one of them does not reveal their plans for the future of this site. Moreover, the sellers as well insist on keeping their requirements confidential.
The main difficulties in the preparation process were not revealing confidential information and not losing the client’s trust. Since there was a high chance of getting involved in misinformation, it was important to consider all the available information before the negotiations. Before the bargaining process, the team worked through simplified financial structures like mortgages, debts, loans, and development costs and identified the resulting net profit from each buyer. In addition, it was critical to preparing to answer the questions about difficult issues that could be asked by other negotiators and be ready to deal with unethical tactics.
During the bargaining, the priority was ethical principles of negotiations, such as obeying the laws, avoiding fraud, and telling lies. In order to detect laws, the focus was on inconsistencies and vagueness, and asked different questions in multiple ways to get as much information as possible. In some cases, there was a need for evidence and suggestion of contingencies when the opponent’s intentions were unclear.
Overall, one of the main conclusions is that it is crucial not to lie and rely on ethical principles in this negotiation. The costs of lying could be unbearable and lead to the loss of reputation. Moreover, lying and fraud lead to expending of mental energy, social damage like an increase in transactional costs, destruction of trust, and a desire for vengeance in the deceived.
Reference
Staff, P. (2022). Win-win negotiations: Can’t beat them? Join a coalition.PON – Program on Negotiation at Harvard Law School. Web.