BazermanMoore

154 Chapter 9: Making Rational Decisions in Negotiations
Recently, the chief purchasing officer for one of our consulting clients (a Fortune
100 organization) participated in negotiating contract terms for the firm’s purchase of a
new health-care product ingredient from a European company. Both sides agreed to a
price of $18 per pound for a million pounds of product per year. However, conflict
arose over exclusivity; the European firm would not agree to sell the ingredient exclusively
to our client. Our client could not afford to invest in producing a new product
based on this ingredient if competitors had access to the same ingredient.
When the chief purchasing officer arrived in Europe, the argument over exclusivity
continued. Finally, he asked the producer why they would not provide exclusivity to a
major corporation that was offering to buy as much of the ingredient as they could
produce. The producer explained that exclusivity would require him to violate an
agreement with his cousin, who currently purchased 250 pounds per year to make a
locally sold product. Once this piece of information emerged, the purchasing officer
was able to quickly wrap up an agreement that provided exclusivity, with the exception
of a couple hundred pounds annually for the producer’s cousin—and the celebration
began.
The key to this agreement was the chief purchasing officer’s decision to ask about
the producer’s interests (selling a small amount of the ingredient to his cousin), rather
than staying focused on the producer’s stated goal (not providing exclusivity). Interestingly,
the chief purchasing officer is viewed within his corporation as a negotiation genius,
and part of his reputation is based on his ability to resolve this dispute. Yet, as he
puts it, ‘‘All I did was ask them why they didn’t want to provide exclusivity.’’
Even negotiators who are aware of each side’s interests have not always thought
through the relative importance of each issue. To be fully prepared to negotiate, you
should know how important each issue is to you, as well have as a sense of how important
each issue is to your counterpart. The best agreements are reached by trading off
relatively unimportant issues for more important ones. For example, when negotiating
a new job offer, you may realize that health benefits are more important to you than an
extra three days of personal time, or you may be more interested in postponing your
start date in exchange for fewer vacation days during your first year. You make these
sorts of smart, efficient trades possible when you show up to negotiate prepared with
the knowledge of how issues trade off against each other.
Summary
Together, these groups of information (each party’s alternative to a negotiated agreement,
each party’s set of interests, and the relative importance of each party’s interests)
provide the building blocks for thinking analytically about a negotiation. You should
assess all components of this information before entering any important bargaining situation.
With this information in hand, you will be prepared for the two primary tasks of
negotiation: creating and claiming value (Lax & Sebenius, 1986). As we develop each of
these two themes, it is important for you to remember that creating and claiming value
are processes that occur simultaneously in a negotiation. Many of us are good at one
but not the other. Our goal is to make you comfortable with both aspects of the negotiation
challenge.