Case Specific Learning

Group 7
Name Hemant MoghePadhye Kaushik Moitra Neeta Mulchandani Indraneel Murudkar Archana Nuggu Roll # A34 A35 A36 A37 A38

Common Learnings

1. Use Time Outs to Coordinate or To Cool Down

Taking a break gives an opportunity to verify what was heard. It should not be looked at as a weakness. A time out ensures that we do not make unplanned concessions on the fly. We can take a break to take a stock of where we are and where we are going in the negotiation.

Case Specific Learning

2. When in doubt Ask!!!

If you don't understand, treat the other side's anchor as nothing more than a point for open discussion. Ask, "Where did this number come from?" Insist on detailed evidence in support of the anchor.

A)Chappalwala Case

Case: A buyer comes to a roadside chappalwala and purchases a pair of chappals for Rs.70/-. For this transaction, the buyer hands Rs.100 note to the chappalwala. Due to lack of change the seller approaches a bidiwala and after receiving the change hands over Rs.30/- to the buyer. After the buyer leaves, the bidiwala returns to the chappalwala and notifies that 100 rupee note is fake. The chappalwala hands over another 100 rupee note to the bidiwala. 1. Maintain your cool There has been a loss equivalent to the cost of the chappal and the additional Rs.30 that was returned. In this case, the chappalwala needs to maintain his cool and should not let this one incident affect the future negotiations. 2. Practice at every opportunity Most people hesitate to negotiate because they lack the confidence. Develop this confidence by negotiating more frequently. The chappalwala in the forthcoming deals needs to believe that he can make a better deal and be more pleasant and persistent and at the same time not sound demanding. He needs to understand the opportunity cost. In this way, within a few deals he will be able to recover his loss.

B)

50 year old Antique pen selling/buying negotiation

Case: A scrap dealer who had found an antique pen came to know that he can fetch between 18,000 and 25,000 for the antique pen if he sells the same. The buyer on 2

Case Specific Learning

the other hand is an antique collector and came to know that this particular seller is selling an antique pen so he approaches the seller to buy the pen. 1. Do not make unreasonable Demands In this case several scrap dealers started with prices such as 3 Lacs. As long as the bargaining range for one party in some way overlaps with that of the other party, there is room for bargaining. If the ranges do not overlap and this may not be known at the beginning of the negotiations, there may be no successful negotiation. Due to the unreasonable beginning offer by several scrap dealers, the negotiation did not move ahead as expected. 2. Formulate alternatives In any competitive negotiation, try to formulate at least one alternative: what you will do if the deal with the other party cannot be completed. Alternatives will give you power to say no to the current deal if necessary and to walk away from unsatisfactory agreements.

3. Signal for movement and create a win-win situation

You signal that you are prepared to move and respond to signals from the other side. In some cases, the sellers were very hard bound on their offers and were not ready to negotiate. As the seller had not incurred any cost in procuring the pen he had the flexibility to offer the pen at minimum cost, with no loss. To create a winwin situation the deal should have been considered for amount ranging between 10,000 and 20,000 because at this range no particular party was at loss.

C)Electra Car selling/buying negotiation

Case: The Buyer in this case was promoted to managerial position with a bonus of Rs.1, 50,000/-. Also the organization was offering him a soft loan which would get sanctioned in 3 days. The seller is a senior executive of MNC and now as his transfer is on the cards plans to sell the car. 1. Probe with proposals Similar brand were available between 2.80L to 3.5 Lacks, but the seller here was trying to sell it at a higher price, and was selling with other features such as audio system along with it and many other accessories. In this case the buyer could have proposed that the seller can remove all those features and ask for a better deal. Also, one needs to trade concessions by giving the other party some of their demands in exchange for receiving part of what you want.

2. Dont disclose too much

Case Specific Learning

The buyer should not disclose too much. For example, He does not need to tell the seller that he has promised his kids and they want to be seen with this car. Disclosing such information will not help the buyer to get a fair deal. The seller could take advantage and charge a high price. 3. Closing the deal The seller would require 15 days to get the car damage repaired. Instead, the buyer could create urgency, asking for a better deal and in turn agreeing to pay the seller within 3 days. An ideal way of closing the deal Most people prefer a bird in the hand rather than two in the bush. In other words, they prefer the certainty of a smaller offer to the uncertainty of a larger future gain. I know that you want Rs.3, 50,000/- for that car and you may get it someday. However, Im willing to pay Rs. 3, 00,000/- for it within 3 days. Can we make a deal?

D)

Selling of oranges

Case: This case is about a negotiation between multiple seller and multiple buyers. The seller is a producer of oranges. His daily production is 1000kg of oranges. The harvesting period lasts only for 4 months. The CoP is INR 12000 per 1000 kg. Additionally, there is a transport charge of INR 3000 from the farm to the whole-sale market. The current rate of oranges in the whole-sale market ranges from INR 18,000 - 35,000 depending upon the size and quality of the product. The constraint here is the buyer can approach only 2 sellers in the market. Explore each other's needs You clarify your and the other side's needs and communicate your opening position. Non - Agreement Consequences One of the first things a negotiator needs is to understand what costs and consequences may occur, should one fail to reach a negotiated agreement. In other words, what are the alternatives? Be careful that we don't over inflate what we perceive as the strength of our alternative options, and over embellish the options of our counterparts. Managing Multiparty negotiations When you're getting ready to meet with more than one party, the usual steps of two-party negotiation apply. First, you must determine your BATNA "best alternative to a negotiated agreement." Assessing your BATNA means forecasting what you are likely to end up with if an upcoming negotiation falls apart. It's important to analyze other parties' BATNAs as well. Assessing

Case Specific Learning

someone's BATNA means putting yourself in his shoes i.e. gathering necessary information and making the same estimates you made for yourself. When you've figured out someone's BATNA, you've identified the bare minimum you need to offer to convince him to say yes. If he has no reasonable chance of getting more than what you offer, he should logically accept what you are prepared to commit. Careful thought, planning and preparation are vital elements that must be fully considered, before beginning the multiparty negotiation process. In this case, one of buyer parties needed only the peels whereas the other needed the orange without the peels. If these interests are understood, it will be easy to convince each party to say yes.

E) ACE FMC Case

Case: ACE is a small size manufacturing setup catering to many car producers. FMC is a major passenger car producer and ACE is their major supplier meeting 80% of their requirements. Both the companies have their teams meeting to discuss on per rod cost and additional requirements.

1. Ready yourself - Spend most of the time planning and exploring needs Both the groups spent 60 to 70 percent of their time doing homework and questioning for needs. The ACE group calculated the overall process cost, identified the benefits of the new material handling system, the reduction in labor cost, the ability to add one more shift to service more orders and accordingly formulated the strategy. They were able to inoculate themselves against the anchor effect due to thorough homework. The FMC group also did their research and tried to determine what a reasonable price (plus or minus) would be. They had set and prioritized their objectives as to what was the acceptable rejection rate and planned their strategy and techniques that would help them reduce the transportation cost and benefit them as they were planning to increase the overall capacity. Both the groups were ready with the bargaining mix (offers, counteroffers) and protocol to be followed. 2. Trust Factor -There is almost always a Trust dynamic at work in negotiations

Case Specific Learning

In this case, ACE has been the major supplier for FMC meeting 80% of the requirements. In such relationships, if both the parties come across as trustworthy and straightforward, as opposed to devious and untrustworthy, it is mutually beneficial. They will be less likely to doubt each others word or suspect the facts. It is important to avoid unexpected and apparently unreasonable changes in the position. We observed that in the groups where the trust was built, it was easier to come to a credible and acceptable close.

3. Managing Group Negotiations This case involved negotiation between groups - Each group consisted of the factory manager, QC Engineer and Business Development executive. In group negotiations it is important to offer encouragement to members of the group and to support others by agreeing with their statements and contributions. There should be no intergroup conflict. It leaves a bad impression on the other party if they see that the members of the group are not on the same page. 4. Tie-up the loose ends

Having agreed you have a deal you must confirm exactly what has been agreed.

A key learning from this case was even though both the parties (ACE and FMC) of one group had closed the deal, they were not on the same page about what was finally agreed upon. There were certain discussions on the 4 Lac investment for the material handling cost during the negotiation, however this was left as a loose end and only the per rod cost, quantity to be supplied and the transportation cost details were finalized. Such loose ends cause unnecessary delays in getting the negotiation to a logical end point.

F) Negotiating for Leaves

Case: A manager was responsible for a process which is a front office job where walk in customers in a branch with queries were handled or resolved.

Case Specific Learning

The process was handled by six employees under supervision of this manager. However three employees had requested for a leave at the same time. All three employees walked into managers cabin on Thursday afternoon with their issues. Reason for leave: One employee suddenly got unwell and wants to go on leave immediately. Second employee got information about his father getting admitted in hospital in his native due to massive heart attack, and the third one had an advanced approved leave for his vacation. 1. Listen and be Patient In such a situation, when all three employees approached the manager at one go, the Manager should have listened to them one by one instead of dealing with them in a group and should have reserved his decision for some time for planning and prioritizing. After giving a thought over the situation he should have called each employee individually empathized about the issue that each employee was facing and also communicate upfront about the concerns which the manager will face if all three employees goes on leave at one go. As two employee issues were critical, the manager could have asked the third employee who had an approved vacation earlier to postpone his vacation for time being looking at the exigency. 2. Give Relationships adequate attention The manager needed to focus on persuasion rather than domination. He needs to understand what is fair to all the three employees as well as for him. The manager needs to pay adequate attention to relationship building and management. Manager could have also compensated the third employee by reimbursing his travel tickets.