Francis Hemingway on Business Innovation

Nov 18
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Negotiating Skills: Building a Business Lecture 3

Tonight I attended the third lecture of the Building a Business Series, this time on negotiating skills given by Owen Darbishire, the Rhodes Trust University Lecturer in Management Studies at the Saïd Business School, University of Oxford. I’ve typed up my notes and posted them here, which you can use in addition to the lecturer’s slides:

Bidding

  • Escalation of commitment: people are committed to decision in the past, even if objectively it was a bad one

  • Auctions: winner’s curse

    • e.g. 3G auctions.

    • 70-75% of acquiring companies loose money in M & A activity.

Definition of Negotiation

  • “Process of potentially opportunistic interaction by which two or more parties, with some apparent conflict, seek to do better through jointly decided action than they could otherwise.”

Negotiating Well

  • first think about the “best alternative to negotiated agreement”.

  • recognise that sometimes an agreement is not possible.

  • the more information you acquire, the more options you will have and so you will get better results.

  • think about what your interests are versus a particular position.

  • use creative solutions: contingent contracts can increase expected value for both parties.

  • a mythical fixed pie often exists where it need not.

Anchoring

  • People negotiate around a number – set it to your advantage.

Framing

Further Reading