Case Description 10-31-2008
Since the negotiations between the management and the union party for a new 3-year contract have broken down last week, both parties have agreed on selecting new negotiators. My task, as the representative for the management, is to increase the profit gains for my company. I have been given with clear orders about the range of concessions I am allowed to make and therefore about my resistant point when to better accept a strike.
As a negotiation-case, which was hold as a classroom exercise with a random partner, I assumed that this was a one-time negotiation between me and my negotiation partner with less importance of our relationship. For this reason, I tried to get the best outcome by choosing the strategy of competition and ignored the fact that in a real life situation, this negotiation of course might have consequences and linkages to further negotiations between these 2 parties.
Since my primary goal in this negotiation was to maximize the firm’s profit, I was assuming that the goal of the Union’s Party was the same, that means maximize their own profit. Even though I was authorized to accept any deal which would increase the profit by at least $10 Million, I soon realized that the maximum profit gains would sum up to $51 Million, a range of $41 Million. For this reason, I thought that it would be easier to maximize the outcome by concealing my information and trying to claim the lion’s share of the pie than by cooperation with the opponent.
My expectation about the union’s resistant point was quite simple and as follows: Since I got strict orders to achieve at least $10 Million profit increase or to go for my BATNA (accepting strike), I simply expected the union party’s resistant point to be $10 Million in profit or to go for their BATNA (go on strike). By further assuming that each increase/decrease in profit gains on my side would lead to the same decrease/increase on the union’s side, I assumed not only the resources to be fixed, but also the bargaining zone to be pretty large.
I identified 3 issues (bargaining mix) to discuss with 3 different level of priority, which were crucial to increase the profit gains for my company (vacation plan, health plan and the wage per hour). With the “wage per hour” being the issue with the highest potential and the vacation plan having the lowest potential for a profit increase, I decided to focus my negotiation tactics on the wage issue.
Even though the negotiation was a class-room practice, the negotiation-process itself was pretty stubborn, even leading to the partially ignorance of the time constraint given by our professor. Both teams acted really tough in order to get their best outcome and there was at no time any attempt by either team to move away from their though negotiator behaviour to a more cooperative one. Both teams signals at a very early stage, that they are willing to use their BATNA (going on strike & accepting strike), if there was no satisfactory outcome.
After identified the 4 issues to discuss, any first proposal-package made by any team was immediately refused by the other one, even though some of them might have been quite acceptable. Instead on agreeing on the whole bargaining-mix, we then decided to negotiate each issue individually. I implied that the issue of “wage per hour” is not discussable for me, because I had strict rules to follow and therefore did not have any room to make any concessions. I further proposed to defer the discussion about the wage-issue to the end of the negotiation.
Negotiating issue by issue sequently did not work out that well either, because there was always one party which used the “if-language” and tried to trade-off concessions on one issue with concessions from the other party related to another issue. Owing to the fact that the health...