A STUDY ON HARVARD METHOD OF NEGOTIATION

PROJECT REPORT

Submitted by,

AMALA MARY RAJU

MZC18MBA04

Under the guidance of

Mr. BLENS THOMAS MATHEW

(Assistant Professor, Mount Zion School of Business Management)

In partial fulfilment of the requirement

for the award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

of

APJ Abdul Kalam Technological University

MOUNT ZION COLLEGE OF ENGINEERING

KADAMMANITTA

JANUARY,2020
 TABLE OF CONTENT

SL.NO TOPICS PAGE NO

INTRODUCTION

Negotiation is a dialogue between two or more people or parties intended to reach a beneficial
outcome over one or more issues where a conflict exists with respect to at least one of these issues.
Negotiation is an interaction and process between entities who compromise to agree on matters of
mutual interest, while optimizing their individual utilities. This beneficial outcome can be for all of
the parties involved, or just for one or some of them. Negotiators need to understand negotiation
process and other negotiators to increase their chances to close deals, avoid conflicts, establishing
relationship with other parties and gain profit. It is aimed to resolve points of difference, to gain
advantage for an individual or collective, or to craft outcomes to satisfy various interests. It is often
conducted by putting forward a position and making concessions to achieve an agreement. The
degree to which the negotiating parties trust each other to implement the negotiated solution is a
major factor in determining whether negotiations are successful. People negotiate daily, often
without considering it a negotiation. Negotiation occurs in organizations, including businesses, non-
profits, and within and between governments as well as in sales and legal proceedings, and in
personal situations such as marriage, divorce, parenting, etc. Professional negotiators are often
specialized, such as union negotiators, leverage buyout negotiators, peace negotiator, or hostage
negotiators. They may also work under other titles, such as diplomats, legislators, or brokers. There
is also negotiation conducted by algorithms or machines known as autonomous negotiation. For
automation, the negotiation participants and process have to be modeled correctly. The Harvard
principle is considered one of the most effective negotiation techniques worldwide and was
developed more than 20 years ago at Harvard University by Professors Roger Fisher and William
Ury. The concept aims at a "win-win situation" in which the negotiating partners see their
counterparts as partners instead of opponents. This creates a constructive and partnership-like
relationship between the negotiating partners. On the basis of this relationship, problems with
differing opinions can be overcome and the partners can reach a peaceful agreement. A solution
reached with the Harvard principle usually has the best possible outcome for both parties and doesn’t
impair their personal relationship.

THEORETICAL FRAMEWORK

Harvard Principles of Negotiation

Discuss the subject matter

Treat your negotiating partner with respect and detach your relationship from the actual topic of
discussion. This will enable you to consider the factual problem independently of all personal
aspects. Ideally, both parties concentrate on the interests of all involved.

Focus on the interests

Negotiations often turn into fights over who is right or wrong. The problem with this kind of
negotiation is that no win-win situation can arise, but a winner and a loser emerge from the
negotiation. The Harvard principle aims at the contrary. In order to achieve fair results, both parties
should therefore try to forget their own positions and focus solely on interests. Encourage your
negotiating partner to reveal their own interests. While the respective positions are often completely
different, the interests often point in the same direction. Think about your own interests in advance
and write them down in a list in preparation to the negotiation.

Develop alternatives

Don't look for the "perfect" solution, because it usually doesn't exist but don’t look for an “either-or"
solution either. This allows you to discover new options and develop alternative solutions. To
develop further options, a mind map can be very helpful, oryou can use the catchall method to
further develop alternative solutions together.

Objective decision criteria

Once you have developed potential solutions with your negotiation partner, the actual decision-
making process begins. Define objective decision criteria together and evaluate all possible results
accordingly. Based on this evaluation you should be able to make a decision which unites all
interests. Negotiation features in many aspects of our lives – whether negotiating to buy a car or with
an employer to increase salary. Sometimes, we’re unsuccessful. However, you may be able to
strengthen your position by identifying what’s important to the other person.

Negotiation features in many aspects of our lives – whether negotiating to buy a car or with an
employer to increase salary. Sometimes, we’re unsuccessful. However, you may be able to
strengthen your position by identifying what’s important to the other person.
Roger Fisher founded the Program on Negotiation (PON) at Harvard Law School. The PON stated
that every negotiation has seven key elements which are distinguishable but interconnected. Their
presence means you can better understand the dynamics and flow of a negotiation. We provide a
breakdown of each element so as to help you formulate a game plan for your next negotiation.

How Will You Approach the Negotiation?

How you approach the negotiation will determine how each element applies. For example, do you
plan to ‘win’ the negotiation or do you want the best outcome for all parties? The first approach is
called distributive or zero-sum negotiation, where one side ‘wins’ and the other ‘loses’. Parties put
their personal positions and differences before their counter-party. For example, negotiating with a
car sales associate. The second approach is called integrative or interest-based negotiation. This style
focuses on win-win situations for both parties. Unlike distributive bargaining, the driving question is,
‘how can we create the most value together?’. Parties use this approach when the issues at hand are
complex, negotiations are ongoing or are looking to maintain their relationship. For example, when
your boss agreed that you could take time in lieu in exchange for completing a project outside work
hours, you participated in an interest-based negotiation.

1. Interests

Each negotiation approach shares similar components. The first is interests. Critically, interests
differ to positions – a position is what a party wants whereas an interest is why. For example,
let’s revisit our earlier example where you completed a project outside work hours so you could
take time in lieu. Your position is straightforward – take time in lieu. But your interest might be
for a number of reasons. Maybe you wish to take leave to go on a holiday you booked earlier in
the year. Understanding a party’s interests are key to integrative negotiation. When fixated on
positions, it’s easy for parties to attack and defend positions. Asking ‘why’ opens up a
collaborative environment and increases the chance of a mutually beneficial outcome. Interests
can also play a role in distributive negotiations. They enable you to generate arguments or
counter offers depending on the other party’s response. Understanding the other party’s interests
can then be a powerful negotiation tool.

2. Alternatives

Interests allow you to measure your alternatives to the agreement and paint a picture of your best
alternative to a negotiated agreement (BATNA) and worst alternative to a negotiated agreement
(WATNA). Ideally, you should not negotiate for anything south of your BATNA. This isn’t
always possible and understanding your alternatives – as well as the other party’s – will be
determinative in a successful negotiation.

3. Relationships

In a negotiation, relationships can help determine the following:

1. How fixed your stance on certain positions

2. How aggressive you can be on certain issues, and

3. What negotiation approach you can take.

4. Before engaging in a negotiation, you should always ask

5. How important is the relationship with the other party to me?

6. Will I ever see the other party again?

7. Is my reputation important?

You may choose to negotiate harder if you don’t care what the other party thinks. Further, even
if you don’t interact with this party again, you may consider your reputation if they are part of a
particular industry or market in which you work or operate.

4. Options

Options are the different combination of outcomes possible. They differ from alternatives, which
explore what happens if you cannot reach an agreement. For example, when you were
negotiating to buy your first car, an alternative might be to buy from another dealer or buy a
second-hand car online. An option might be that you pay a little extra for aluminum tyres and
roadside warranty.

When you have reached this element of a negotiation, it means you are progressing towards
reaching an outcome. However, be mindful that discussing options is intended as a brainstorming
exercise. It’s not a signal for taking offers or making concessions. The idea is that you create
options first, and evaluate them second. Discussing options can empower both parties as they
have a say in resolving the issues. So take care to avoid expressing judgment or drawing
conclusions.

5. Legitimacy
How do you substantiate the fairness of your offer? How do prove that your counter-party’s
offer is unfair? You need some objective standard of fairness for the claims made and not just
something that you have discussed at the negotiating table. For example, if the car dealer offered
to let you finance the vehicle, how do you know the interest they are charging is reasonable? A
legitimate offer would be comparable to a market rate. Legitimacy not only solidifies your offers,
but it can weaken the other party.

6. Communication

Communication is an obvious element that is part of all negotiations. It goes beyond voicing
your position and your offer. It also involves listening, the tone of your voice and even body
gestures and movements.

Some easy communication tips to remember are:

Ask open-ended questions to gather as much information

Listen actively (this means putting your phone away from sight), and

Be relaxed – stiff body postures can send the wrong message to the other party.

Remember, you want to know more than just what the other party is offering or their positions.
An effective negotiator will be able to communicate and speak about interests.

7. Commitment

The final element of negotiations is ensuring that there is a commitment by both parties.
Commitment is two-pronged. Firstly, you want to ensure that the outcome that you have agreed
to is realistic. Secondly, both parties must be able to uphold their end of the bargain. Where these
outcomes are non-existent, it is likely that the parties will have to negotiate their deals again To
ensure that there is the requisite commitment, some key questions to consider at the beginning of
the negotiation might be:What kind of commitment can I expect at any future negotiations? What
is the other party’s level of authority? How authorized is the other party?

For example, if the car dealer was only an associate and had to get the paperwork signed off by
the principal salesman, then it is likely that they cannot fulfil all their promises. Asking these
questions before you negotiate can save you the time and hassle of having to renegotiate with the
person with actual authority and commitment responsibilities.
ABOUT THE TOPIC
On October 30, 2013 the Walt Disney Company made a surprise announcement that it was acquiring
Lucasfilm, home of the immensely successful Star Wars brand, from its founder, George Lucas, for
$4.05 billion, split evenly between stock and cash. Lucas was the sole shareholder in his company.
The acquisition bolstered Disney’s status as a leader in animation and superhero films and gave it the
opportunity to reap huge earnings from the already lucrative Star Wars media and merchandising
empire. Disney promised to begin producing and releasing new films in the Star Wars franchise
every two or three years. The acquisition even included a detailed script treatment for the next
three Star Wars films.
The 68-year old Lucas decided to sell his company after beginning to plan his retirement several
years ago. According to Walt Disney Chairman Robert Iger, a famous negotiator in Hollywood, he
and Lucas conducted the negotiations personally, beginning in early 2011. Speaking of Lucas’
decision to hand over his creative legacy to Disney, Iger told the New York Times, “There was a lot
of trust there.”
The acquisition bolsters Disney’s status as a leader in animation and superhero films, the New York
Times reports. Disney purchased Marvel Entertainment for $4 billion in 2009 and Pixar Animation
Studios for $7.4 billion in 2006. It also gave Disney the opportunity to reap huge earnings from the
already highly lucrative Star Wars  media and merchandising empire.
Since becoming Disney’s CEO in 2005, Robert A. Iger has aggressively expanded the company
beyond its traditional niche in animated films for young children and theme parks. Iger has arranged
to transition from CEO to a lesser role with Disney in March 2015.
Fans of the Star Wars  franchise – known for their loyalty and zealotry – were thrilled by Iger’s
announcement that Disney would begin producing and releasing new films in the Star
Wars franchise every two or three years. The acquisition even included a detailed script treatment for
the next three Star Wars films.
In addition to the Star Wars brand, Lucasfilm gave Disney the rights to the Indiana Jones franchise
and Industrial Light and Magic, Lucas’s special-effects company. But Disney’s chief financial
officer told the Times that Disney’s financial calculations behind the purchase were almost based
entirely on the future earnings of the Star Wars series, which is already represented in Disney’s
theme parks.
This deal offers further confirmation of Disney’s willingness to make bold bids to expands its big-
ticket content. Its $4 billion deal with Marvel paid off almost immediately with film hits such
as Marvel’s The Avengers, which grossed $1.5 billion worldwide.
Lucasfilm’s merchandise licensing revenue currently comes primarily from toys sold in North
America. Disney is planning to expand the licensing business to international markets.
The 68-year-old Lucas stepped down as head of his company and serves as a consultant as it joins
Disney. Lucas decided to sell his company after beginning to plan his retirement several years ago.
In a past interview with the Times, Lucas revealed that he was tired of the pressure of living up to the
expectations of Star Wars  fans.
“Why would I make any more [films] when everybody yells at you all the time and says what a
terrible person you are?” he said.
According to Iger, he and Lucas conducted the negotiations personally, beginning early in 2011.
Speaking of Lucas’ decision to hand over his creative legacy to Disney, Iger acknowledged to
the Times, “There was a lot of trust there.”
CONCLUSION
In conclusion, negotiation stands as the best alternative to problem-solving. However, the
preparation and approach to negotiation will determine its success. Coming up with alternatives
is the best negotiation strategy that shows concern and interest instead of ignorance and
negligence. The alternatives are tabled out to bring a solution without undermining the interest of
the involved parties. The Harvard method is based on communication and fair treatment. Its
greatest advantage is a high acceptance of the negotiation results. It also has a positive effect on
the speed of implementation of those results. An additional advantage is the strengthened
personal relationship between the negotiating parties, which ideally forms the basis for future
cooperation. A negotiation is an outstanding approach to problem-solving. Negotiators need to
understand negotiation process and other negotiators to increase their chances to close details,
avoid conflicts, establishing relationship with other parties and gain profit.