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