Question

Andy wants Ben to build Andy a pool, a tennis court, and a basketball court for Andy's employer which is a small hotel. Ben tells Andy that he can do the pool for $ 10,000, a tennis court for $ 7,000, and a basketball court for $ 3,000 if this is done individually. Andy must have the pool for no more than $ 12,000. He would like the basketball court this year or next. He would like the tennis court for no more than $ 8,000. His entire budget for this year for any of these things is no more than $ 17,000 but he would really prefer $ 15,000. Andy must decide this within 10 days or lose his job. Andy knows that Ben has no time pressure at all. Andy also knows that Ben, however, does not like to waste time and likes to do multiple jobs at once if he can in order to be more efficient. Andy also knows that Ben has many other jobs he can do right now but that he prefers to do jobs closest to his office more than farther jobs because they are easier to get to etc. Andy's hotel is only a mile from Ben's office. Andy would like someone to improve the entrance to his hotel, the back area of his hotel, and the parking lot of his hotel, but he really does not care about that right now as he can do that in 3 or 4 years and has no rush for that. Andy also knows that Ben's construction business is always looking for more cement trucks and flatbed trucks and Andy happens to have a cement truck and two flatbed trucks he does not need anymore.

a. What 2 or 3 negotiation strategies would you advise Andy to use in negotiating with Ben and why?

b. In general, what 2 strategies below would you say most often ruins negotiations between people and why?

Answer 1

Answer to the question:

Let us first understand the situation at hand, In this case, what Andy has to put on the negotiation table which Ben might find attractive and agrees to the terms laid by Andy. Andy can offer a relaxed time for completion of the project, a convenient site or job location for Ben, more work in the future apart from work being negotiated at present and the trucks which Ben wants to support his work. In return for these offerings from Andy, he can ask ben to accommodate his budgetary constraints and accepts the work.

Let us now answer the two questions:

a. Under the given scenario what should be the strategy to be adopted by andy and the rationale behind adopting the negotiation strategy.

Strategies that can be adopted:

i. Accommodative Strategy: This strategy is called lose: win, in this case, negotiated need to lose something to win the lager over the objective, hence he can offer the time, convenience, future work prospect and truck one by one as he brings the negotiated cost closer to his budgetary comfort. This will help him in bringing down the cost to the lowest possible extent.  

ii. Collaborative Strategy: This strategy is based on the approach to create a win: win situation for both the parties, hence by offering the time and convenience of location, future prospect of work and selling the unwanted trucks to the Ben at a reasonable price, ben will agree to the budgetary constraints of Andy and in return, Ben will get the offerings from Andy which he is looking for. This will create a situation of the win: win for both the parties.

b. The two strategies which generally ruins the negotiations under such situations are Avoiding strategy or competitive strategy because in this case Andy is well aware of the Ben and his conditions on which he will probably agree and as of now only Ben can meet the cost, therefore doing the negotiation with competitive or avoiding strategy will not give the desired outcome.

In avoiding strategy importance to the relationship as well as outcomes are very low. However, in competitive strategy importance to outcome is given more and less importance is given to relationship with vendors and the one who can give the outcome with least cost and time is given the priority.

In competitive strategy, Andy does not have many options to create the competitive aspect to bring down the cost and similarly he can not opt for avoiding strategy as his job is on stake if he does not get the job done in the given time.