01.10.2018 - Brims VS Easterly

During this class, we played a negotiation game. Brims, a chain of coffee, wanted to build a coffee shop on a land it recently bought, but Easterly, a successful bed-and-breakfast inn, was opposed to this project that could have disturbed its own business. We worked in pairs, and each negotiator represented a party. Thanks to some information and in order to find a common ground, each party had to fix a reservation price, a specific price that would have been a good outcome, and the very best price realistically hoped. 

The negotiation with Sarah was very long but very efficient and instructive. Indeed, I needed $185,000 to buy another land and launch my business somewhere else. I fixed my first offer at $200,000, my good outcome at $165,000, and my walk-away price at $145,000. That was the first mistake I made, to consider that I had to fix my walk-away price and my good outcome under the amount I really needed. I thought that ask for $200,000 was substantial enough because I only needed $185,000, and also because the initial value of the land was $100,000. I thought that my opponent, Sarah, as a negotiator for Easterly, would not offer me that much, and I was desperate to accept an offer lower than my needs. This mistake is mostly due to the lack of information about Easterly. Because of that lack, I was not able to prepare my BATNA and so to evaluate the other side, consider every option and find a solution for every possible issue. 

My second mistake was to make the first offer. I did it because I wanted to fix the first price above my needs, and not let Sarah propose a price too low to negotiate well and reach an acceptable deal. At the end of the negotiation, I was satisfied with the $180,000 I obtained. Actually, I should have let her do the first offer because when we showed our figures to each other, I was surprised and disappointed. Indeed, her maximal offer was $350,000, which is considerably higher than my expectations. Discovering that, I realized that I could have asked for a lot more, and my good deal turned into a bad deal. That was finally a bad deal for her too, because we didn’t sign anything, and under the law, I had 30 days to retract myself and cancel the bad deal in order to renegotiate, and the renegotiation would have been harder. Once again, this mistake was due to the lack of information and preparation, I didn’t know that my opponent had so many financial resources and that I had the strongest bargaining position. 

To conclude, I can say that thanks to this practical exercise, I realized how important is the BATNA in negotiation, and I also realized that without it, you can’t negotiate as well as possible.