Question

Your Task

You will engage in a negotiation for the sale and purchase of a commercial asset such as a business or a piece of real estate.

Assessment Description

You may be nominated to represent the vendor and will receive email instructions from the vendor company CEO including:

1. Appointment to represent the company as their agent for the sale of the commercial asset;

2. Specific details about the commercial asset;

3. Information about the status of current negotiations with an alternative potential purchaser;

4. Information about a new potential purchaser;

5. Contact details of the agent appointed to represent the purchaser.

Alternatively, you may be nominated to represent the purchaser and will receive email instructions from the purchaser company CEO including:

1. Appointment to represent the company as their agent for the purchase of the commercial asset;

2. Specific details about the commercial asset;

3. Information about alternative assets the company is considering purchasing instead;

4. Information about the vendor;

5. Contact details of the agent appointed to represent the vendor.

Stage 1: Pre-negotiation (1,000 words)

You must answer the following questions:

1. What is your thinking style preference form – monarchic, hierarchic, oligarchic, anarchic – and what is your thinking style scope – internal, external? Attach copies of completed Sternberg-Wagner Thinking Style Inventories.

2. Are your thinking style preferences – form and scope – optimal for conducting this negotiation? Explain your answer.

3. What adjustments (if any) could you make to adapt to a more optimal thinking style for this negotiation?

Stage 2: Negotiation (300 words) You must:

1. Enter negotiations with your counterpart for the sale and purchase of the commercial asset;

2. Maintain a communications log that captures the date, method, items discussed, and outcomes of each communication. Attach copies of any communications that confirm agreed price

Stage 3: Post negotiation (400 words)

You must prepare a 1 page letter to your client advising the outcome of the negotiation.

4. What is your client’s BATNA? What is your client’s reservation value?

5. What is the other party’s BATNA? What is the other party’s reservation value?

6. What is the ZOPA range? What is your strategy for claiming the greater proportion of the ZOPA? Include at least fifteen academic references in your answers to the above questions with a minimum of five references coming from academic journals.

Answer 1

Stage 1: Pre-negotiation:

1. What is your thinking style preference form – monarchic, hierarchic, oligarchic, anarchic – and what is your thinking style scope – internal, external? Attach copies of completed Sternberg-Wagner Thinking Style Inventories.

Sternberg (1997) hypothesized particular relationships among the thinking styles to examine this we used exploratory factor analyses to describe the relationships among the thinking styles for this sample of ethnic minority college students. To reduce the number of variables to a smaller subset, second order factor analyses were conducted, using the subscales as variables in the analyses, based on the larger sample of college students. Bartlett’s test for sphericity was significant, indicating that the data were amenable to factor analysis. The first analysis involved a direct oblimen rotation. Four significant factors using the Kaiser criterion emerged, explaining 68.6% of the variance in the 13 subscales. A number of the subscales double-loaded, triple-loaded, or significantly negatively loaded on the four factors. Additionally, the component correlation matrix showed a low correlation between the factors. Thus, the next factor analysis was conducted using varimax rotation in an attempt to “force” the subscales onto factors. This analysis yielded a four-factor.

The content validity of the Thinking Styles Inventory—Short form (TSI-SF) was evaluated using theoretical perspectives on cognition, styles, and abilities. Because traditional assessments of thinking style tend to be derived from existing theories within cognition and ability, it was difficult to assess the content of the Thinking Styles Inventory, which is based on governmental operations, based on prior assessments of style.

The TSI-SF was evaluated using exploratory factory analysis (EFA), an extracting procedure that allows for the extraction of a particular number of factors. The initial exploratory factor analyses with an orthogonal rotation accounted for 69% of the variance and extracted four components, on which two of the thinking styles double loaded. Although the follow-up EFA explained 60% of the variance, each thinking style satisfactorily loaded onto a factor, with the exception of the anarchic thinking style, which double loaded on factors one and two in all factor analyses. Thus, the three-factor solution was deemed the best empirical solution. The three factor solution and the uni-dimensionality of each factor was also supported by follow-up exploratory analyses of each factor, each of which extracted only one factor and accounted for approximately 60% of the variance. The three-factor solution suggests that the 13 thinking styles can be reduced to three overall factors: openness, closed-mindedness, and self-reliance.

By said so, I can state that the hierarchic is the style of thinking that I prefer than any other type of thinking. About this type of thinking, my scope of thinking is the external level.

2. Are your thinking style preferences – form and scope – optimal for conducting this negotiation? Explain your answer.

Hierarchic style of thinking is the best style of negotiation since it allows for the setting of the priorities. It enables a person or a firm to share the necessary information which in turn gives positive effects on the outcome of the negotiation. Sharing information including the unrelated information to the negotiation is so important to the success of the negotiation. Setting the priorities will allow for the privacy of the negotiation. Hierarchic style of thinking allows for the creation of order at which the negotiation will be conducted, the development of solid data and undertaking of the research ahead of the negotiation time will give confidence and more so power to the firm negotiating.

Undertaking research ahead will help the business to identify the order at which negotiation will be held. In this case, the firm will be able to set the target price of the commodity being negotiated on. The identification of the market price or the target price will help in improving the terms used to favor a successful negotiation. Another important reason that makes this type of thinking to be the best for negotiation is that it allows for the two parties to get more satisfied when they conclude. This means that a firm or an individual between the two parties can go back and ask for the concession which in turn increases the satisfaction of the other party.

Hierarchic style of thinking gives a person enough time to get prepared for the negotiation process. This person or firm, therefore, will be able to avoid the additional deals that might later lead to the failure of the two parties to agree.

3. What adjustments (if any) could you make to adapt to a more optimal thinking style for this negotiation?

The following are the adjustments that are made in the process of negotiation:

The word "between”, as it tends to be tantamount to a concession, and any shrewd negotiator with whom you deal will swiftly zero-in on the lower price or the later deadline. In other words, you will find that by saying the word between you will automatically have conceded ground without extracting anything in return.

The expression “I think we're close” - the problem with arriving at this crossroads, and announcing you're there, is that you have just indicated that you value simply reaching an agreement over getting what you want. And a skilled negotiator on the other side may well use this moment as an opportunity to stall, and thus to negotiate further concessions

"Why don't you throw out a number?" But some research has indicated that the result of a negotiation is often closer to what the first mover proposed than to the number the other party had in mind; the first number uttered in a negotiation (so long as it is not ridiculous) has the effect of "anchoring the conversation."

These are the few adjustment which is necessary to help reach a successful negotiation between the two parties.

Stage 2: Negotiation:

Attach copies of any communications that confirm agreed price.

Communication Log Template

Date	Communication            Method	Items Discussed	Outcome
23, April 2020	Integrative negotiations This method of negotiation involves finding a solution by both parties. They both struggle to win the negotiation prize	Pashendale Holding Pvt Ltd	We reach to an agreeable price where both the involved parties were satisfied. The agreed price which both of us agrees was that $25 millions

Stage 3: Post negotiation:

                                                                                          Email: [email protected]

22, April 2020

By email: [email protected]

xxxxxx

Chief Executive Officer

Farnsworth Property Trust

RE: NEGOTIATION FOR [PURCHASE/SALE] OF [Pashendale Holding Pvt Ltd]

Dear xxxxx,

In behalf of Pashendale Holding I would like to take this opportunity to thank you for the attention and instructions you’ve stated in the previous letter. For make it up to you, it is my pleasure to write a report on the negotiation that I had undertaken on the property of this firm. As you know, it is the goal of this firm to economically use the available resources which it owns. The exploitation of this property can only be done through sales.

  I wish to confirm that during the arrangement of this negotiation, the selling firm had required that the property is sold at a higher prize which can be acceptable. This firm had chosen me to negotiate selling the property Pashendale Holding Pvt Ltd due to the good negotiation skills that I have or hold.

         During the process, I got to learn that I should negotiate for the best deals in selling this kind of property.   It was an opportunity for me to exercise my skills, knowledge, and experience. I was much encouraged to do the best deal of negotiation to this firm; this is because am one of the employees who will become the beneficiary of the success of the deal.

         I got to learn about being prepared to offer a counter offer whenever buying recommendation is made. This will help me in my future sales negotiations as I will be in a position not to blindly accept the first proposition but still present them with my well researched and prioritized summary of my kind of deal close to what the purchaser would have suggested.

In my opinion, I will be very uncomfortable if I am told to first offer a figure for the cost of the property. Instead, I would prefer if the client described to me the nature of the property and its possible cost price.

       This was a win-win scenario. For this reason, as the scenario is favourable, the purchaser and I end up reaching at a minimum cost that was within our target ranges. We negotiate on the quoted price until we reach on a fair middle ground which I and the purchaser were quite satisfied. Our deal had goals which in my opinion was mutually compatible. In this case, the purchaser declared that he will have no reason to back out at any other time.

Yours sincerely,

xxxxxxx.

4. What is your client’s BATNA? What is your client’s reservation value?

His self BATNA is evaluated at $27,000.000.00, while my self reservation value is $23,000.000.00

The self-reservation value is the least favorable price that a seller will analyze due to the actual value of the property being sold. This is the lowest price that a seller is willing to sell his or her property to another client. It is the favorable price that a seller will think she can afford to let the property go. It is significantly calculated from the actual value of the property being auctioned.

5. What is the other party’s BATNA? What is the other party’s reservation value?

This is the median price arrived by the two negotiating parties. It is described as a favorable priced to both the parties. In this case, it refers to the highest price the buyer is willing to pay for the lowest price at which the seller is willing to let his or her property go. Another reservation value arrives upon the agreement of the two negotiating parties. This means that the value will depend on the strength of the negotiating skills. A seller or a buyer between the two negotiating partner should have a good negotiating skill so that he or she will be able to arrive at a price she is willing to pay or simply complete the deal.

6. What is the ZOPA range? What is your strategy for claiming the greater proportion of the ZOPA? Include at least fifteen academic references in your answers to the above questions with a minimum of five references coming from academic journals.

Include at least fifteen academic references in your answers to the above questions with a minimum of five references coming from academic journals.

ZOPA stands for Zone of Possible Agreement; it is the range at which the deals are made. This Zone is where the parties find an acceptable price. In simple, this is where an agreement is possibly likely to occur. The process of finding a higher Zone will require a more detective work whereby it involves a suggestion or a proposal by a person between the parties negotiating. A person who proposes the value of the offer into the table is called a proponent. On the other Hand, the person who receives an offer is called a prospect. A higher Zone of possible agreement is reached with the used of the best negotiation skills.