Introduction to Negotiation Strategy
At Oak Spring University, we provide corporate level professional Negotiation Strategy and other business case study solution. Sabana REIT: Activist Retail Investors Rebel case study is a Harvard Business School (HBR) case study written by Yoon Kee Kong. The Sabana REIT: Activist Retail Investors Rebel (referred as “Rafi Sabana's” from here on) case study provides evaluation & decision scenario in field of Finance & Accounting. It also touches upon business topics such as - negotiation strategy , negotiation framework, Corporate governance, Financial markets.
Negotiation strategy solution for case study Sabana REIT: Activist Retail Investors Rebel ” provides a comprehensive framework to analyse all issues at hand and reach a unambiguous negotiated agreement. At Oak Spring University, we provide comprehensive negotiation strategies that have proven their worth both in the academic sphere and corporate world.
What’s my BATNA (Best Alternative To a Negotiated Agreement) – my walkaway option if the deal fails?
What are my most important interests, in ranked order?
What is the other side’s BATNA, and what are his interests?
Rafi, a retiring oncologist, wanted to invest in safe, high dividend paying stocks. Upon his stockbroker's recommendation, he bought three tranches of S$500,000 worth of Sabana REIT ("Sabana") even as price fell during the period in between. His stockbroker had advised him to adopt dollar cost averaging, as even if price fell, Rafi could lower his breakeven price and gain in the longer term as stock prices tend to mean-revert. Further, Sabana's high dividend yield would help offset the price fall. Six months later, Sabana's price fell further. Rafi sought the advice of Michael, an investment-savvy friend, who advised him to look at capital gain yield besides dividend yield, and to check out Sabana's website and various investment forums for important company's actions and other crucial information. Rafi found that disgruntled investors, unhappy with Sabana's falling dividend and price, had formed two groups, one of whom had proposed various drastic actions at an Extraordinary General Meeting which may involve booting the REIT manager, and/or delisting the REIT and liquidating its portfolio. The manager formed a Strategic Review Committee and requested for more time. Rafi had to decide: vote for or against the manager or just cut loss immediately.
By interests, we do not mean the preconceived demands or positions that you or the other party may have, but rather the underlying needs, aims, fears, and concerns that shape what you want. Negotiation is more than getting what you want. It is not winning at all cost. Number of times Win-Win is better option that outright winning or getting what you want.
Options are the solutions you generate that could meet your and your counterpart’s interests . Often people come to negotiations with very fixed ideas and things they want to achieve. This strategy leaves unexplored options which might be even better than the one that one party wanted to achieve. So always try to provide as many options as possible during the negotiation process . The best outcome should be out of many options rather than few options.
When soft bargainers meet hard bargainers there is always the danger of soft bargainers ceding more than what is necessary. To avoid this scenario you should always focus on legitimate standards or expectations, clearly understanding the arbitrage . Standards are often external and objective measures to assess the fairness such as rules and regulations, financial values & resources , market prices etc. If the negotiated agreement is going beyond the industry norms or established standards of fairness then it is prudent to get out of the negotiation.
Every negotiators going into the negotiations should always work out the “what if” scenario. The negotiating parties in the “Sabana REIT: Activist Retail Investors Rebel” has three to four plausible scenarios. The negotiating protagonist needs to have clear idea of – what will happen if the negotiations fail. To put it in the negotiating literature – BATNA - Best Alternative to a Negotiated Agreement. If the negotiated agreement is not better than BATNA (Negotiations options), then there is no point in accepting the negotiated solution.
One of the biggest problems in implementing the negotiated agreements in corporate world is – the ambiguity in the negotiated agreement. Sometimes the negotiated agreements are not realistic or various parties interpret the outcomes based on their understanding of the situation. It is critical to do negotiations as water tight as possible so that there is less scope for ambiguity.
Many negotiators make the mistake of focusing only on the substance of the negotiation (interests, options, standards, and so on). How you communicate about that substance, however, can make all the difference. The language you use and the way that you build understanding, jointly solve problems, and together determine the process of the negotiation with your counterpart make your negotiation more efficient, yield clear agreements that each party understands, and help you build better relationships.
Another critical factor in the success of your negotiation is how you manage your relationship with your counterpart and other people doing the mediation. According to “Yoon Kee Kong”, the protagonist may want to establish a new connection or repair a damaged one; in any case, you want to build a strong working relationship built on mutual respect, well-established trust, and a side-by-side problem- solving approach.
According to
Harvard Business Review
, there are three types of negotiators – Hard Bargainers, Soft Bargainers, and Principled Bargainers.
Hard Bargainers – These people see negotiations as an activity that they need to win. They are less focused less on the real objectives of the negotiations but more on winning. In the “Sabana REIT: Activist Retail Investors Rebel ”, do you think a hard bargaining strategy will deliver desired results? Hard bargainers are easy to negotiate with as they often have a very
predictable strategy
Soft Bargainers – These people are focused on relationship rather than hard outcomes of the negotiations. It doesn’t mean they are pushovers. These negotiators often scribe to long term relationship rather than immediate bargain.
Principled Bargainers – As explained in the seven elemental tools of negotiations above, these negotiators are more concern about the standards and norms of fairness. They often have inclusive approach to negotiations and like to work on numerous solutions that can improve the BATNA of both parties.
Open lines of communication between parties in the case study “Sabana REIT: Activist Retail Investors Rebel” can make for an effective negotiation strategy and will make it easier to negotiate with this party the next time as well.
Yoon Kee Kong (2018), "Sabana REIT: Activist Retail Investors Rebel Harvard Business Review Case Study. Published by HBR Publications.
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