Salt Harbor: Confidential Information for Brims

          

This negotiation situation is about the sell of a parcel next to a bed and breakfast inn. The parcel belongs to Brims, a highly regarded and fast growing chain of coffee shops. The objective for both parties was to sell/buy the parcel for the best price possible so each party won’t resort to its BATNA.

            If Brims and Easterly (Bed and breakfast) do not manage to come to an agreement, the dispute would end up in court which would be very costly and there is not guarantee whether which party would end up winning the case.

            In this situation I was Brim’s manager and by lack of time, I guess, I didn’t properly understand the stake of the situation (out of the confidential information). I understood that the opening of my shop would be delayed as long as no agreement between the two companies was found and that the best for my company was to sell the parcel (without losing any money) knowing that another parcel for my business had already been found. Also, I didn’t get the importance of the harm that the establishment of one of my shops in this precise parcel represented for Easterly and that explains why the very best price I had in mind ($ 125.000) was much lower than what I could have gotten out of this negotiation.

            Indeed, when we made a debriefing at the end of the negotiation, I understood that Brims (my company) was in a stronger position. My company’s last price for the sell of the parcel was $110.000 whereas Easterly was willing to pay $350.000 for the parcel.

            The ZOPA was in-between those two figures and the price that would be fair for both parties was about $220 000.

            Also, I made a big mistake. My opponent wasn’t willing to do the best offer which meant I had to, to unblock the situation. Which meant that I made a weak first offer ($125.000) because I wasn’t fully aware of my strong position and the situation’s stakes.

            Obviously, my opponent immediately accepted the deal, and to be honest, at the end of the negotiation I was quite satisfied knowing that I could have asked for a bit more but I tried to remember that it is also important that the other part feels happy ad gets something out of the deal in case that we are led to do business again sometimes. Of course, at the time, I didn’t imagine that the ZOPA between us was way higher than I expected.

            This failure doesn’t matter much, not only because it was a simulation and but also, and most importantly because I learnt many lessons from my mistakes, such as:

-       I sort of “failed” this negotiation because I thought as an individual person and not as the representative of a company. Indeed, the purpose of every company is to make profit and not just to “have enough money out of the deal to buy another parcel”. A company never settles for less if it can have more.

-       I also learnt that the idea of a fair price that is not necessary the fair price of a company, in a negotiation you need to find out the reservation price of each other party, and you shall never reveal yours.

-       During the debriefing, I also learnt that I ever I get asked about my reservation price, I shouldn’t answer and just ask another question in return.

-       Also during the debriefing, the teacher gave us a good tip that I could have used in my situation which was: “If you see that she/he reacts quickly to you offer, you should back peddle (as long as nothing is written). You’re going to appear a little less strong and therefore you’re not getting as much as you could have but you’re still getting a bit more than your first offer.  

Conclusions: When I noticed that my adversary didn’t want to make the first offer, before doing so, I should have asked more questions because those answers would have helped me in understanding the stakes of the negotiations and the position of my opponent.