Introduction to Negotiation Strategy
At Oak Spring University, we provide corporate level professional Negotiation Strategy and other business case study solution. Lutherwood-CODA (Community Opportunities Development Association) case study is a Harvard Business School (HBR) case study written by James Phills, Dan Kalafatas. The Lutherwood-CODA (Community Opportunities Development Association) (referred as “Lutherwood Coda” from here on) case study provides evaluation & decision scenario in field of Leadership & Managing People. It also touches upon business topics such as - negotiation strategy, negotiation framework, Corporate governance, Social enterprise.
Negotiation strategy solution for case study Lutherwood-CODA (Community Opportunities Development Association) ” 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?
In early 2003, Reverend Doctor Dieter Kays, the CEO of Lutherwood-CODA, was reflecting on Luther Village, the Canadian nonprofit's bold, three-phase, 12-year, $75 million real estate project to develop a sprawling, high-end, 20-acre, 750-member retirement community in downtown Waterloo. With the first two phases of the project complete, Luther Village had accumulated $4.5 million of profit from construction. Phases I and II of Luther Village had sold out. At the time, Lutherwood-CODA had brought to market a new concept in elderly residential services. But Phase III, a $20 million assisted living center serving individuals with daily service and care needs, would be completed in a much more competitive market. Demand for the new facility was lower than it had been for Phases I and II. Moreover, Lutherwood had assumed substantial debt to finance Phase III. All of the equity generated during Phases I and II had been reinvested into Phase III. Kays knew that the organization's ability to service its obligations depended on being able to market and fill the new assisted living facility as quickly as possible. Could Lutherwood-CODA tolerate this new level of financial risk? Would market and economic conditions allow Phase III to execute its aggressive marketing program? Could the project really generate sufficient funds for Lutherwood-CODA's social programs? Was the development and operation of Luther Village consistent with Lutherwood's social mission?
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. 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 “Lutherwood-CODA (Community Opportunities Development Association)” 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 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. According to “James Phills, Dan Kalafatas”, 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 “Lutherwood-CODA (Community Opportunities Development Association) ”, 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 “Lutherwood-CODA (Community Opportunities Development Association)” can make for an effective negotiation strategy and will make it easier to negotiate with this party the next time as well.
James Phills, Dan Kalafatas (2018), "Lutherwood-CODA (Community Opportunities Development Association) Harvard Business Review Case Study. Published by HBR Publications.
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