Chapter 6

Strategy
Strategy versus Tactics
What is the difference between strategy and
tactics?
Some use the terms interchangeably
Strategy defined = overall approach to a bargaining
situation
Tactics defined = techniques used during the
process
Charlene Barshefsky, U.S. trade representative:
Strategy comes first objectives determine a
broad negotiation strategy which is set away
from the table, tactics are techniques used at the
table
6-2
Negotiation Skills
Skill 6.1: Identify three keys time
(deadlines), information, power
Skill 6.2: Develop an increments of
concessions strategy
Skill 6.3: Consider using a principled
negotiation strategy (focus on interests, not
positions)
Skill 6.4: With multiple issues consider a MESO
or Economic Matrix strategy
Skill 6.5: Consider applying a 3-D Negotiation
approach
6-3
Chapter Case:
West Coast Music Inc.
Kevin Carter, president of West Coast Music,
a chain of 12 family-owned music stores,
negotiates leased space in malls
Five lease issues are critical:
1. rent
2. monthly maintenance charge
3. store allowance for carpeting, fixtures
4. length of contract
5. mall location (a. high traffic, b. main floor,
c. second floor)
6-4
Key Strategy Elements
Overall a negotiation strategy should consider three
critical situational elements:
Time
80/20 rule
Deadline strategies:
Conceal your deadline
Declare an earlier deadline
Find the other sides deadline
Information
The heart of negotiations shapes strategy, reality
Preparation is key - side with more info. has edge
BATNA is the most important
Power
Whole process is about power, ego, leverage
Balance between parties is a key factor
6-5
Five Strategies for Various Situations
Tactics for Success:
Use Time to Your Advantage
1. Have patience: Remember 80/20 rule
2. Be persistent: Reframe seek new information or
real interests; wait for better timing
3. Move quickly when possible: Opportunity for a quick
resolution on an issue may pass
4. Deadlines: Dont panic often can be moved,
eliminated
5. Know counterparts timelines: Easier to gain
concessions as it nears
6. Make time work for you: Move slowly with
perseverance

6-7
Traps to Avoid:
Protect Your BATNA
1. Before negotiating set a specific BATNA
and stick to it
2. Write it down on paper and refer to it
when receiving an offer
3. Never reveal your BATNA but you can
increase the perception of your power to
gain leverage
6-8
Strategy 1: Increments of
Concession
Focus on The Number distributive process of
finding a settlement point
Increments of concessions defined = pattern of
concessions that leads the other party to guess
your BATNA, and thus a settlement point
Possible concession patterns:
Split the difference = even division between the last two
offers
Equal increments = equivalent concessions
Decreasing increments = smaller concessions, appear to
be closing in on a value = the number
6-9
Increments of Concessions:
Split the Difference
Sellers listed price = $390,000 (and does not
make any counteroffers)
Pattern A: Split the difference (50/50)
Buyers 1
st
offer = $310,000 (range = $310,000 -
390,000)
2
nd
offer = $350,000 (range = $350,000 390,000)
3
rd
offer = $370,000 (range = $370,000 390,000)
4
th
offer = $380,000
What is the buyers BATNA?
6-10
Increments of Concessions:
Equal Increments
Pattern B: Equal increments of $20,000
Buyers 1
st
offer = $310,000 (range =
$310,000 390,000)
2
nd
offer = $330,000 (range = $330,000
390,000)
3
rd
offer = $350,000 (range = $350,000
390,000)
4
th
offer = $370,000
What is the buyers BATNA?

6-11
Increments of Concessions:
Decreasing Increments
Pattern C: Decreasing increments
($20,000; $10,000; $5,000)
Buyers 1
st
offer = $310,000 (range =
$310,000 - $390,000)
2
nd
offer = $330,000 (range = $330,000 -
$390,000)
3
rd
offer = $340,000 (range = $340,000 -
$390,000)
4
th
offer = $345,000
What is the buyers BATNA?
6-12

Strategy 2: Principled
Negotiations
From Getting to Yes, key elements:
Focus on interests, not positions:
Interests = needs, desires, concerns, fears that lead to
why
Positions = specific demand
Separate people from positions
People negotiate are affected by egos, feelings, anger
Step into their shoes to discover their reasoning
Focus on objective criteria
Facts, principles, standards can be used to frame an offer
Develop mutual-gains options
A settlement must be superior to no agreement for both
parties
Propose options with gains for both parties
6-13
The Positions versus Interests of Smith and
Jones
Strategy 3: Multiple Equivalent
Simultaneous Offers (MESOs)
MESO steps:
Identify and prioritize issues, estimate their
weights (relative value) to both parties
Identify different likely outcomes for each
issue, set one as the standard = 100 points,
then set relative value of others
Create at least three equivalent offers
(approximately equal point values)
6-15
Why Is the MESO
Strategy Appealing to Others ?
People prefer to be given choices many options,
rather than a single offer
One MESO option is likely to be a greater value to
them can lead to further discussion, settlement
It gives them input they can discuss the values,
weights, etc.
Butconsider
MESO strategy requires multiple issues with realistic
alternative outcomes
MESO can be a complex process
MESO requires a party to reveal some of its own
interests
6-16

Calculating MESO Options
Strategy 4: The Economic
Matrix
Similar to MESO strategy (avoids weights)
May be more useful than MESO if all issues
can be given estimated dollar values
Core elements:
Brings several economic issues into one
proposal
Limits the total value of all issues (increase in
one must be offset by a decrease in another)
Provides options of equal value to the other
party to consider
6-18
Strategy 4: The Economic
Matrix Advantages
Focus is on the total value of all issues,
not distribution of each issue
Positive response by other party which is
given choices and may prefer one option
Matrix presents valuable data, allows
discussion and input on values
6-19
Strategy 5:
3-D Negotiation
Useful if negotiations stall, reach impasse, or
power is imbalanced
Lax and Sebenius view negotiation in 3-D:
1
st
dimension tactics used at the table
2
nd
dimension deal design (including specifics)
3
rd
dimension the setup of the whole negotiation
Setup includes: parties, issues, BATNAs, timing,
information
Thus, 3-D strategy = review all the elements of the
setup, change one to influence the outcome
Examples: Bring a new third party into the negotiation;
improve your BATNA; shift the priorities of the issues;
seek offers from other parties
6-20
The Three Dimensions of
Negotiations
Summary of Strategies
and Likely Use Situations
Strategy Negotiation Situation
Strategy 1: Increments of
Concessions
Distributive bargaining (one
issue/usually price)
Strategy 2: Principled
Negotiations
Integrative bargaining
Strategy 3: Multiple Equivalent
Simultaneous Offers (MESOs)
Multiple issues each with
multiple outcomes
Strategy 4: The Economic
Matrix
Multiple issues each with
multiple outcomes all can be
given estimated dollar value
Strategy 5: 3-D Negotiations Negotiations stall, reach an
impasse, or power is
imbalanced
6-22