Simulation #3: Board of Education (BE) vs. Teachers Association (TA) Preparation and Strategy We began our preparation by reading the simulation material several times to extract relevant and essential information for the negotiation, including the main priorities of the Board as well as the goals we were trying to achieve. From the material, our group determined our subjective utilities that included, preventing an impasse, or even worse a teachers’ strike, and ultimately, retaining our positions on the Board. The given material also gave us a basic understanding of the situational factors affecting this negotiation. For instance, it was evident that the Board was under time pressure to finalize an agreement with the Teachers Association, as we are only one week away from the beginning of the school year. If we are unsuccessful in finalizing a contract at minimal cost or preventing the teachers from going on strike, the community could withdraw its support of the board and ask for our resignations. Between the Teachers Association and Board of Education, the six issues remained unsettled including: reduction in staff, benefits, workload, salary, binding arbitration of employee grievance, and evaluation of teachers. Taking the interest of both sides into consideration, the team planned to use a collaborative strategy overall, since there is already an existing relationship and both parties can benefit if a deal is made. Additionally, this negotiation deals with the Principal-Agent theory, where the Teachers Association can be seen as the principal, as the teachers are the individuals that will be directly affected by the decisions that are made throughout our negotiation. Due to the significance of controlling the budget in this negotiation, our team planned to bring a calculator to the negotiations to help calculate figures effectively, especially for the issues of health insurance and salary. Additionally, we created a comprehensive spreadsheet prior to the negotiation, and calculated the specific dollar amounts contributed by the Board and the teachers towards the total annual cost of healthcare coverage. Further, we used the percentages that were given to calculate how much more teachers were going to pay towards their health insurance, if we increased their percentages to 15-20%. Lastly, we did research on the cost-of-living in Ridgecrest, when compared against nearby neighborhoods and against the national average, in order to give us some credibility when discussing potential salary increases. We found that the cost of living in Ridgecrest was 3% lower than the national average. Therefore, we planned to use this point to negotiate with the teacher association to control our budget. While preparing for the negotiation, it was also critical for us to determine target points. As mentioned earlier, this negotiation consisted of six components and the target points were determined accordingly. First, regarding reduction in staff, the Board planned to increase the pupil to teacher ratio from 13.5 to at least 15.5. While doing research, we also found that the average pupil to teacher ratio in the U.S. was currently 15.8. The second issue focused on benefits, including health insurance, bereavement leave, and sick days. At present, there was a total of 10 days of sick leave for each teacher and the board expected to reduce it to a range of 5 – 8 days. Additionally, within health insurance benefits, the traditional insurance plan was expected to be switched to a health maintenance organization (HMO), and we would take advantage of the spreadsheet, which was made and calculated in advance, to help us to control the budget. Third, the teachers’ workload was also a major negotiation point for us because the board expected to make the workday longer for teachers. The work day of teachers at present was 7 hours and 5 minutes, including 5 hours and 25 minutes for teaching and extra assignments, another 50 minutes for preparation, and 50 minutes for duty-free time. Target points for the issue of workdays of teachers was a slight increase of 45 minutes, reaching the current contract workdays of 8 hours. In order to make the negotiation of workload smoother, we have also discussed more details about workload. On the one hand, we proposed to eliminate the preparation time of 50 minutes and reduced the duty-free time to 25 minutes. By that means, we could have more space to accomplish an increase of extra time because there was no preparation and duty time. As for the other duties that needed to be finished, the Board would hire an outsider or assign any qualified teacher to accomplish that. Fourth, in order to control the budget as much as possible, our team’s resistance point in terms of a salary increase was $5,000. However, we also felt that it was difficult to provide such an increase, and unless the teacher association makes a huge concession, the possibility of failure at this point is high. However, the Board of Education would also propose that if the cost of living in Ridgecrest increases, we would be willing to bargain or make a concession for a salary increase. Therefore, the board would primarily take advantage of the fact that the living standard on Ridgecrest was lower than the national average to bargain if they required a higher salary. The fifth point concerned the binding arbitration of employee grievances, which was not as critical as the other issues. Therefore, we would take advantage of this in order to make concessions in exchange for the other negotiation concessions. Lastly, concerning the evaluation of teachers, the aim of the board was to hire a consultant to evaluate the teachers and both parties would discuss in respect of the teacher review of evaluation, evaluation conference procedures, and timing of evaluation use. With complete preparation before the negotiation, the chance to realize satisfactory outcomes will be higher for both parties. Description & Analysis of the Negotiation March 25: Initial Negotiation On March 25th, we had our first meeting with the Teachers Association. Both teams agreed to negotiate three out of the six general categories, and the remaining three during our final in-class negotiation. Sofia began our negotiation with a focus on salary, stating that it was one of their main priorities. Karnika mentioned that since teachers in the same district have recently been getting raises, they don’t want their teachers getting the short end of the stick. Our group quickly responded that the Board wasn’t going to be able to provide such salary increases unless sacrifices are made elsewhere and only if there was an increase in cost of living. We mentioned to the Association that after doing some research, we found that the cost of living in Ridgecrest, California was 3% lower than the national average. However, after considering the consequences of the teachers potentially declaring an impasse or even worse, going on strike, we asked the Association if they had any number in mind. The TAs responded with a $10,000 salary increase per teacher, per year and even offered an option that more junior teachers could take a lower salary, whereas senior teachers could have a higher salary, if it would make it easier to accommodate. As the association believes this is what will make the teachers happy, they also told us that if a raise doesn’t happen, the teachers would be willing to go on strike. We realized that their number was far beyond our resistance point, however, we told them that we would return to the topic further in the negotiation. Our group then asked if any teachers were retiring soon, to which they responded that no more than 20 were willing to retire. Eventually, both teams decided to move on and negotiate on other topics first, and come back to the salary discussion at a later time. Next, we discussed benefits, particularly health insurance, and first asked the Association what the teachers were looking for? They explained that since the switch from traditional insurance to an HMO plan limits teachers’ options to doctors, they are not in favor of this switch and want to keep the health insurance as it is. After discussing that the HMO plan would be ultimately cheaper for teachers, the Association refused to budge. The Board eventually proposed not switching to an HMO and sticking with the traditional system, but instead increasing the percentage contributed to the total annual cost by the teachers to 15-20%. Before officially agreeing, both sides said we would also come back to figuring out the specific percentages when we discussed salary. Further, we then negotiated on bereavement leave. The Association told us they would like six days paid leave, with two additional days for in-laws. We first asked what the reasoning was behind the additional two days for in-laws, to which they responded: “because it’s the right thing to do.” We offered to provide a total of two days, which they thought was absolutely ridiculous. The Association then brought up potentially striking a compromise, maybe if they reduced it down to three days, they could get a salary increase in exchange. However, for everyday they gave up, they were asking for an additional $1,000 in salary. Essentially, less days for a higher salary. Both teams also agreed to table this for now, and come back to figuring out the specific numbers later. Within benefits, we also discussed the issue of accumulated sick leave. The TA very quickly expressed that they did not want any changes to the current policy of ten days of sick leave per year. We proposed three days per year and in exchange, we would provide monetary compensation. However, the Association responded that realistically, three days is not sufficient even if we provided monetary compensation. At this point, it seemed like we were hitting a standstill on most of our issues. As a result, we took a short five-minute break to convene with our teams, and came back with another proposal. The board proposed that the teachers could have their ten days of sick leave, but in exchange, we would reduce the maximum amount of $7,500 for accumulated sick days upon retirement down to $4,000. Additionally, the TA brought up that as of now, retired teachers can cash out 25% of their sick days upon retirement, to which they offered they could possibly decrease to 13%, if they could have a salary increase in return. To conclude our day, we negotiated on the subject of binding arbitration regarding employee grievances. The TA first mentioned that when a teacher files a grievance to the Board, they want the negotiation between the Board and Union to be witnessed and decided by an impartial third party that the Association approves of. However, we were hesitant to this idea, as it could tie the board’s hands in deciding how to deal with both legitimate and illegitimate grievances. In response, the Teachers Association also expressed their hesitation that if the third party were to recommend something the board disagrees with, the board will begin to treat teachers unfairly. However, the TA did say that if this wouldn’t be possible, we can compromise on this issue, as long as they can get something in return. We understood the TAs concern, and responded that we would be willing to agree to some form of advisory arbitration, just not to a scenario where a third party makes all the decisions. By this point of the negotiation, it was evident to our team that the salary increase was the number one priority of the Teachers Association, and that they would favor a compromise on most issues in order to get a salary increase. March 31: Final Negotiation On March 31th, we conducted our final negotiation in-class. Following our first negotiation, we had three remaining topics that needed to be addressed with the Teachers Association including, reduction in staff, workload, and evaluation of teachers. Additionally, we needed to determine specific figures regarding a potential salary increase and benefits, as we discussed in our previous meeting. Sofia began the negotiation by bringing up health insurance, as the TA was originally opposed to the new HMO plan but also wasn’t in favor of raising the portion of healthcare coverage paid for by the teachers. As a result, they proposed the idea of switching to the new HMO plan, but not increasing the percentage contributed by teachers. Our team declined and proposed a 15% contribution from teachers, 75% from the board, which they declined. We eventually settled on a 14% contribution from the teachers, 86% from the board, and decided to put it to the side, while we found a good compromise for workload that could also be applied to the issue of health insurance. Moving forward, we discussed the issue of workload, proposing that the board was looking to increase the total length of the present workday by 55 minutes, from 7 hours and 5 minutes to a full 8 hours. First, the TA asked what would be going into that extra hour, to which we broke down the total 8 hours for them: 7 hours and 35 minutes for teaching and extra assignments, no prep time, and a 25-minutes for duty-free time. In order to come to a compromise, we even proposed taking the 55 minutes and allowing the teachers to divide it within the three categories of teaching, prep time, and duty-free time, in a way that would be most beneficial to them. However, the TA continued to argue that if we increase the school day, it’ll actually be more harmful to the students, as it takes them away from extracurricular activities and they are unsure of how the parents would react. The TA first offered that they would like to put all 55 minutes towards the teachers’ prep time, even though we suggested putting the full amount of time into actual teaching. We proposed putting only 10-minutes into prep time, and the following 45 minutes into teaching. The TA came back with another counteroffer, stating that they weren’t willing to give up the teachers’ original prep time of 50 minutes or duty-free time. As a last resort, we proposed that instead of 7 hours and 35 minutes of teaching, we would reduce it to 6 hours and 45 minutes, with 35 minutes for prep time, and 25 minutes for duty-free time, totaling to a 7 hour and 45 minute workday. This proposal also didn’t seem to satisfy the Association, as they came back with an offer to decrease teaching time by 30 minutes, and increase prep time to 40 minutes, totaling a workday of 7 hours and 35 minutes, to which we finally agreed. Simultaneously, we also agreed to the teachers’ and Board’s contribution towards health insurance. We would stick with the traditional insurance plan, however, the teachers would now be increasing their contribution to 14% of the total annual cost for health care coverage, while the board contributes 86%. Within workload, we then discussed emergency assignments and general obligations. The TA first mentioned that since this was a topic where their demands are very simple, rational, and don’t have a monetary component associated, they hoped that we could be on the same page. The TA proposed, if a teacher has to get assigned to an obligation such as cafeteria duty, the board makes it a rotation-based system, with a one semester maximum time limit before someone else gets picked. They wanted to reassure us that someone will always be there to do the duty, however, they also want to prioritize the teachers’ interests and have good morale. We thought this was very reasonable and quickly agreed. Additionally, the TA then proposed prior to assigning any duties, a six-week notice is given so that teachers that are interested can apply to participate in that obligation or duty, which we also agreed to. Since both teams didn’t settle on this during the first negotiation, we then discussed bereavement leave. The TA mentioned that they were willing to come to a fair compromise, however, they believed we were low-balling them so much that it seemed completely unreasonable. During our first meeting, the TA proposed a total of eight days, six days paid leave for the teacher, and two additional days for inlaws. We counter offered a total of five days, with two of those days being fully paid, and the remaining three would only be half-paid. The TAs response was expected, they said that if they were going to make that concession, they needed an appropriate increase in salary. Since we weren’t making much progress at this time, we decided to move forward with another topic and asked the TA if they would be comfortable agreeing to two topics simultaneously, similar to what we did for the bereavement days and health insurance. Moving forward, we discussed binding arbitration, which also wasn’t resolved from our first meeting. To remind us, the TA mentioned that our proposed agreement was that an impartial third party is present during grievance hearings, however, the Board still makes all final decisions. However, in exchange for giving the board that power, they were again asking for a salary increase. We then proposed another idea, where if the teachers aren’t happy with the Board’s decision, they could appeal the decision with a statement from the third party, and the case could be reopened. However, the TA was still concerned that even if it was appealed, the board would still be the one making the final decision. We took a five-minute break to convene with our teams, and discuss another idea to bring to the table. We suggested that a group of three advisors could make the decision to appeal, if needed, and eventually, if the case is reopened, the board won’t have any say and it can be given to the State, who would ultimately make the decision. The TA was appreciative that we were addressing their concerns, however, they were concerned with the feasibility of this idea, considering the massive backlog in litigation cases within the State. Eventually, the TA suggested that they would agree to our initial proposal, if they can get a salary increase. At first, they were asking for a $2,000 increase, as a part of the total $10,000 salary increase they were looking for. After a few back-and-forths, we agreed that the Board will make all decisions regarding employee grievances and arbitration procedures, with an impartial third party present, in exchange for a $1,500 salary increase. Additionally, in order to get them to agree to both at once, our group quickly brought up bereavement leave and asked how much they were looking for in terms of monetary compensation, to which they responded $700. We negotiated the amount down to $600, for five total days of bereavement leave, two of which are fully paid, and remaining three are half paid, to which we both agreed. We then began to negotiate the specifics on accumulated sick leave. During our first meeting, the board had proposed decreasing the maximum amount of $7,500 for accumulated sick leave upon retirement to $4,000. However, the TA mentioned that if we’re reducing the amount to $4,000, they were expecting a $2,000 increase in salary. We proposed a $600 salary increase, equal to the amount they were already receiving for the bereavement leave. After a few back-and-forths, we settled on a $1,000 increase in salary. Before moving on, we also emphasized that for the 20 teachers who are planning on retiring, they will now only receive up to the new maximum amount of $4,000. In the first negotiation, the TA also brought up potentially decreasing the 25% of leftover sick days that teachers can cash out upon retirement, to 13%, in exchange for another salary increase. They mentioned they now only wanted a decrease from 25% to 16%, however, we remembered their original proposal of 13% and expressed that they should honor it. They eventually agreed to allow teachers to cash out only 13% of their leftover sick days upon retirement, in exchange for a $400 salary increase. Next, we discussed evaluation, where we first mentioned that the Board would like the flexibility to take up to three months to provide teachers’ with their evaluation written reports and annual performance reviews. The TA quickly responded saying that their hope was one week, and they’re concerned that if there’s a large gap between when teachers are receiving their evaluation reports, it will impact their professional development and the ability to do their job. They eventually proposed meeting us in the middle, in exchange, for a modest salary increase. In every issue that we’ve negotiated, we were realizing that the TA has used these salary increases as leverage, to ultimately get the highest possible salary at the end. At this point of the negotiation, our group desperately wanted to tackle the salary issue as soon as possible and be able to make an agreement, that way the TA would not be able to use it for leverage in remaining issues. The TA finally agreed to settle on a salary, and come back to evaluation after. At this point, the Board had already given the teachers a total of $3,500 in salary increases ($1,500 from binding arbitration, $600 bereavement leave, $1,000 sick days, $400 accumulated sick leave upon retirement). From the very beginning, our group was aware that the TA’s proposed increase in salary was $10,000 and that it was far beyond our resistance point, however, we explained that we were only going to be willing to offer them $4,000, based on the state’s budget. The TA remained quiet as we explained that if we went above $4,000, we would then be maximizing the state’s funding and that the salary issue was simply out of our hands. The TA was at a loss of words for a while, stating that they didn’t believe us that $4,000 is our maximum amount. However, we explained that the Board/State was even considering cutting teachers’ salary, and that an increase wasn’t even a possibility. The TA finally told us, “if it was $5,000, I would say yes”, even though her partner did not seem to agree. As a result, we took advantage of this weakness, and quickly agreed to the $5,000 salary increase for all teachers, except for the 20 that would be retiring. We then returned to the evaluation issue, where we agreed to compromise and give the Board up to one month to get the teachers’ observations and written reports. Our last issue was concerning staff reduction, involving pupil to teacher ratio, systemwide reductions in staff, layoffs, and severance pay. The TA first expressed that it would be best for the teachers and students if the pupil to teacher ratio decreases, whereas the Board wants an increase. We proposed a pupil to teacher ratio of 15.5, backed by the reasoning that the average in the country is 15.8. The TA countered with a ratio of 15, to which we both agreed. Next, when discussing system-wide staff reductions, we expressed that the board wishes to retain as much control as possible over layoffs, but may provide opportunities for the TA to make informal recommendations. The TA responded that they would like these decisions to be jointly determined by the Association and the Board, with an equal number of representatives from both sides, with the reasoning that the teachers’ also have someone representing them. We thought this was a fair proposal, and ultimately agreed to the terms. Additionally, we then expressed that by law, we are not required to offer any severance pay to laid-off teachers. We brought up aspects including the fact that while private institutions offer severance pay, the Board does not operate as a private institution. Second, we argued that if two parties are jointly deciding that a teacher should be laid-off for an appropriate reason, there’s no reason that they should be receiving severance pay. The TA responded with the point that since we’re also increasing the pupil to teacher ratio, some teachers might get laid-off regardless, not because they did something wrong. As a result, we proposed a case-by-case basis, maximum of one-week of severance pay, to which they agreed. Statement of Lessons Learned After negotiating all issues stated in the case, we settled on the best options presented from both parties. Although not all were happy with some outcomes, we understood that one has to make sacrifices to reach an agreement. During our first negotiation, the way we were negotiating shifted after our first meeting with the teacher association. There was a mutual unspoken agreement on who does what during the negotiation among our group members. This unspoken rule helped the next meeting go swiftly regarding each role in our group. Another benefit of ● We asked of their wants first – for us to find a suitable compromise (for us) ● Group meetings (important) to have one goal in mind for each issue ● Always low ball to reach a compromise you like. ● Use previous statements against them ( they asked for 2000 for salary and we misunderstood, one member agreed on 5000 salary increase the other denied) ● During first meeting we saw the team dynamic and worked the person rather than the case ● Don’t give out important information from your end, ex. (we don’t want the states involvement, don’t show previous compromise points first let them talk) ● LET THEM TALK the more they talk there will be a point we can use to get what we want ( ● Ask a lot of questions even though they aren’t important at the moment (we asked about # of retiring people this year 20) ● Resolve the biggest issue first rather than keeping it for last because everything will be based on the mast important (salary) ● Always find a compromise that helps you first, keep negative outcomes to a minimum. ● Compromise on one issue to get what you want in another (we compromised on workload so we get less days bereavement leave) ● Sometimes both parties want the same thing. It is important to find that “thing” by listening (evaluation?) ● “Conflict is an opportunity not a threat” ● Setting an unrealistic compromise sometimes hurt your real goal ( we made them compromise on bereavement leave too early latter they used it against us on Health insurance) Simulation #1 – Exemplar #1 Preparation Upon reviewing the simulation facts, I began my process as an agent for Peach Computers of figuring out the best strategy for getting them out of their financial difficulties by selling off as many computers as possible for as great of profit as I could manage. To approach the conflict and create a solid strategy, I needed to identify what my largest problem was. Based on the information provided, the greatest need is that Peach Computers was in a poor financial condition. The problem with Peach Computers was situational with an immense amount of time pressure. They were unable to make the previous payroll and they have bank loans due within 14 days. Time is a very important factor, therefore getting enough capital to sustain Peach Computers as quickly as possible is the paramount goal. This was how I used the preparation, process, and product model to begin my strategic approach to the finding a solution. After reviewing the textbook, one thing that jumped out as a helpful tool would be the Negotiation Checklist (Section 1, Reading 4). This was going to be a good starting point and allowed me to think through my side of the problem while also trying to anticipate the needs and wants of Campus Computer Stores. The checklist was also very similar to the selling points Professor Bailey covered during the debrief of The Used Car exercise discussion during class. One of my first questions regarding the problem was will it be better to sell more computers for a lower price or fewer computers for a high price? Additionally, rush delivery will create an increase in charges. At this point, it was essential to create my target point. I decided to set my target for 300 computers at $1,000 each with payment in seven days, with the option to sell the additional 200 units within 30 days at $800. This would equate to earning $920 per unit. While I did not sit down and visualize my outcome or what the paper contract would look like, this did give me a good idea and was also well above the minimum of $695 for which Peach Computers was willing to sell their inventory. Moreover, following the information in Make a List, Check It Twice (Section 3, Reading 9), I physically wrote down what I would like for Peach Computers to walk away with. Upon reviewing my information, I felt my goal was specific and moderately difficult to attain. If I told the representative of Campus Computer Stores that Peach wanted to sell as many as possible for $700, is that really a challenge? That pricing is rock bottom for what Peach Computers is willing to sell off their remaining inventory. I felt heading into the negotiation that we could have a collaborative meeting rather than a competitive outcome. Peach Computers has stock available to ship and would be able to help Campus Computers with any supply or inventory needs they may have. I was trying to figure out what the needs of Campus Computers would be prior to our meeting. Two different scenarios occurred to me about Campus Computer Stores while working through the information provided. The first was that Campus Computers is also in financial distress and needs the sale of the Peach I to stay in business. The second could be that Campus Computers is experiencing supply challenges and does not have inventory available to sell. The first problem would be an even bigger problem for Peach Computers since they need an immediate infusion of cash to continue their operations. The second would be an easy negotiation, especially since Peach can accelerate their shipping timeframes and hopefully in doing so have cash in hand sooner. Another section of the text I reviewed was Solve Joint Problems to Create and Claim Value (Section 1, Reading 9). Clearly each party in this situation needs something other party can provide; otherwise, there would be minimal reasoning for the meeting to occur. To solve each organization’s problem, it would be in the best interest of both individuals to work together and negotiate a favorable agreement, especially since Peach Computers would like to continue having a working relationship with Campus Computer Stores. This is where Interest-Based Persuasion (Section 2, Reading 9) also factors in. If Campus Computers needs a supply of computers and Peach has plenty to offer, it would be in everyone’s best interest to cooperate and create favorable terms for the transfer of goods. Negotiation The negotiation started off very cordially. Both sides were amenable to working together to create a favorable outcome in the best interests of each party. Initially, basic information was being discussed, very similar to the Ask, Listen, and Learn strategy (Section 1, Reading 9) especially since I was representing Peach Computers and selling units to the other side. How many computers did Campus Computer Stores need? How much where they looking to spend? When would Campus Computer Stores like the Peach I computers to be delivered? Basic information to help both parties come to the table in a cooperative method. The representative from Peach Computers also provided some answers to the questions from Campus Computers by Divulging Information Strategically (Section 1, Reading 9). Peach Computers indicated that they had plenty of inventory available to meet the needs of Campus Computer Stores, provided the standard wholesale price, and gave the customary delivery timeframe. The representative for Peach Computers also mentioned that because inventory was available, shipping could be expedited, but it would incur an additional fee. Some of the initial figures being thrown around by Campus Computers were 300 computers for $1,350 with delivery in 30 days. These numbers were a decent starting point. From there, Peach Computers mentioned that wholesale is typically around $1,600; $1,595 to be exact, and Peach would entertain that offer. The representative from Peach Computers also mentioned that delivery time could be accelerated, however, there would be an additional fee for expediting the shipping. The baseline price per unit increased to $1,450 with delivery occurring within seven days. After a discussion back and forth regarding pricing, both Campus Computers and Peach Computers agreed upon $1,400 per computer for 300 computers to be delivered within seven days. In The Fine Art of Making Concessions (Section 3, Reading 4), making concessions in installments would allow for Campus Computer Stores to see that Peach Computers is flexible in creating a deal that works for both parties involved. With that deal in hand, Peach Computers still had an additional stock of 200 computers in inventory. An offer from Peach to Campus Computers for the additional 200 computers for $1,200 each was rejected. Another rejected offer was for 100 more computers for $1,100. At this point, Campus Computer Stores stated that they only needed 300 machines. Peach Computers attempted to continue working on the relationship and offered to send additional computers in 180 days to replenish the inventory sold by Campus Computers. The representative of Campus Computers seemed to take notice and offered to take an additional 100 units if the price is discounted to $1,300 each. This would bring the total 400 to computers. However, Campus Computers could only pay $450,000 for the time being but they were willing to pay the additional $70,000 in 180 days. The representative for Peach Computers was a little hesitant to accept the offer given the lengthy repayment period. Campus Computers then provided another option with a repayment plan of 90 days if it included a discount of 25% off of the $70,000. This would reduce $70,000 by $17,500 for a total of $52,500. The discount would allow Campus Computer Stores to purchase the Peach I for a final price of $1,256.25 per computer. Both Peach Computers and Campus Computer Stores were satisfied with this final offer. Results Peach Computers would supply 400 Peach I computers to Campus Computer Stores for $1,300 per unit. Campus Computers would pay $450,000 same day. The additional $70,000 will be provided in 180 days. However, Peach Computers was able to negotiate the remaining amount to be paid at a 25% discount within 90 days, which equals $52,500. This resulted in Peach Computers selling 400 Peach I machines for $1,256.25 per item. A few things came into play during the discussion. The first being the Dilemma of Honesty. Should I have told Campus Computers how desperate Peach was for cash? Should I divulge how dire the situation really is, that Peach Computers was unable to make payroll? Could I trust everything my counterpart was saying? Were they just trying to get my bottom dollar price? Was it possible Campus Computers did not have the funds for 180 days or was this a ploy to take the computers, keep their money, and run? Were they in financial trouble and would be going bankrupt before they could pay Peach Computers? In additional to the Dilemma of Honesty also comes the Dilemma of Trust. Would I be able to trust the representative of Campus Computers that they would pay the additional $70,000 in 180 days? Would it be better to take a discount of 25% and receive payment in half the time? Was Campus Computers also experiencing financial difficulties? Would they be bankrupt in 180 days before they could pay off the remaining balance to Peach Computers? Another item that came up was the Dilemma of Winner’s Curse. Once I had secured 300 computers at $1,400, which more than exceeded my target point of 300 computers at $1,000, I had to stop and wonder if that was the best I could do. I had an internal dialogue in my head asking myself if I could do better; if I would be able to get more. I was experiencing an intra-personal conflict. Could I sell more computers and offload more of the Peach inventory? I then decided to see if I would be able clear out more inventory for Peach Computers while also gaining more capital with providing an offer of an additional 100 computers at an even more discounted price. When the representative of Campus Computers started pushing back that they only needed 300 computers, I started to wonder if I had over played my hand. I was able to maintain my composure and offer it under the guise of needing to replenish inventory that would be sold while also offering a discount to create repeat business. Analysis and Lessons Learned First and foremost, the negotiation is just a discussion. Simply put, it is one side bringing their perspective to the table to meet with another who may have joint interests at the very heart of the discussion. I need to calm my mind and focus on the task and issues at hand and not be so nervous. I need to find my confidence and ask for what I want. Professor Bailey stated that, “Conflict is an opportunity, not a threat.” At the end of the day, it is just a conversation; lives are not on the line for this negotiation. The person sitting across from me is just that, a person. They want the best for their organization just as I want the best for Peach Computers. I had my target point set before the meeting, and I left the information tucked away in my notebook so I could refer to it if needed. However, once I found out the information of what Campus Computers needed, I realized my target point by way of price per item was very low. My target point for the number of computers to sell was spot on. It would have been nice to sell all the inventory available, but I think we were able to settle on a decent price for Peach Computers and clear out 80% of their available stock while also receiving a much-needed infusion of cash. In the future, it may perhaps benefit me to set a couple different points for my target; to have a moderately difficult but achievable goal and then a stretch goal. While I thought my target point was going to be a moderately difficult goal to achieve, it almost seemed too easy based on how the discussion went. Another thought after the fact, was did I have too much of a hard line, especially after I hit my target point of selling 300 computers? Was I too pushy in trying to continue to offload the additional inventory Peach Computers had on hand? Did I show my hand a little too much when I kept trying to sell the additional 200 computers? Did I reveal how much financial trouble Peach Computers was in? I feel that part of my negotiation came off as a little desperate. I may have covered for it well by saying things such as, “As you sell computers, you will need to restock your inventory. The Peach I is a great computer, and your customers will appreciate the quality of the machine.” Moreover, in looking at the Three Schools of Bargaining Ethics (Section 2, Reading 12), I feel I most identify with the school of thought that negotiating is a game. I feel that not revealing your precise position can be helpful in getting a fair deal. If I revealed the financial hardships of Peach Computers, it would be entirely likely that the representative of Campus Computers would take full advantage of our situation. By not showing my full hand while also providing what appeared to be a discount off the wholesale price, it looks like Peach Computers is pleased to make a deal as opposed to desperate to make a deal. When thinking about the Dilemma of Winner’s Curse, could I have done more? Could I have sold more computers? Could I have gotten a higher price for the computers I did negotiate to sell? Did the representative from Campus Computers agree to quickly? Did I play right into his hand? Simulation #1 – Exemplar #2 I had the pleasure of working with Andrea Viza on the first-course simulation, Peach Computers v. Campus Computers Stores. In this simulation, Andrea played the role of Peach Computers while I played the role of Campus Computers. The opportunity to have had the first practice negotiation in class during the previous week definitely set Andrea and me up for a successful attempt at Simulation 1. Ironically, in my Andrea and I were the two who did the worst during that practice simulation so it was refreshing to see how far the two of us had come since then. From preparation to execution, it was apparent and easy to compare how a lack of practice, as discussed in class, can impact a negotiation. Fear of failing (again) and my performance in the practice negotiation definitely impacted and informed how I prepared and executed my strategy in Peach Computers v. Campus Computers Stores. Preparation SELF: In preparation for Peach Computers v. Campus Computers, I spent A LOT of time reviewing my class notes. It was very important to me that I not only utilize the material and strategies discussed in class but that I also implement the reactions and thoughts I had during the exercises we completed both in and outside of class. For example, after reading the case once over, I spent time making sure I was self-aware and conscientious. For example, I thought about my personal conflict style and how that may impact the simulation. Naturally, I know that I typically approach negotiations with a collaboration negotiation mindset; I wanted to see if there were opportunities in the case for both sides to partner and solve the conflict by creating value. However, although this was my initial thought, I couldn’t be sure that this was the approach that Peach Computers was going to take so my first note and strategy was to be adaptive and respond to the negotiations in ways that would still allow me to get what I wanted, my target point. Lastly, I thought about my communication and personality, which would both be essential in being able to receive the
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