At the beginning of the day, the students were given and taught
this handout on
The Art of Negotiation.pdf
3 teams. This week we have a very complex 3 way
negotiation with A Financial Institution, A software Company, and A
Financial Institution: Joyce Hu
The Financial Company needs to hire the Software Company to create
a database for them in order to keep track of their clients
(without the database, they cannot take on the Landlord as a new
Software Company:Xiao Mei
The Software Company needs to lease an office at the Modern
International so it can take on clients in Shenzhen (this includes
the Financial Institution)
Landlord: Sophie Cao
The Landlord needs a loan from the Financial Institution in order
to buy the office they plan to lease to the Software Company.
After the lesson, the students were given some time to analyze
their goals. There are some tricks here that they first need to
figure out. For example, the Landlord was not able to get a very
large loan without a signed deal from the Software Company as proof
they would be able to return the loan.
In the end three contracts need to be signed – The loan, the lease,
and the database contract. If one fails, they all fail.
Each contract has 5 different areas to negotiate. Each area has up
to 20 points that can be earned. In the end, the team with the
least amount of points loses, and one person from that team will be
kicked out of the contest.
Each team also has 1000 Jiahua Dollars to play with. Each $100 is
worth one point. If a team gets stuck on an issue, they can try to
give a hongbao to the other team to try to sweeten the deal!
I was not happy at all with the results, but I was happy to see
that our contestants learned a lot from the results.
This negotiation failed because of two main points:
1 - Time
All the negotiations started very late as everyone was too cautious
to make the first move. There was too much time taken in the
negotiation between the Landlords and the Software Company, which
left not enough time for the Financial Institution to make it's
deals. Everyone knew there were deadlines, and no one worked at the
speed the business required.
2 - Stubbornness and Caution
The deal between the Landlords and the Software Company took so
long as Rachel would not give the concessions needed to get the
deal done. Sophie knew that Rachel needed full permission to
renovate the entire office. She used that to her advantage and was
very stubborn about it. In the end, the two did sign a deal,
however Rachel gave up too much and both teams lost too much time.
Sophie did a good job here as a negotiator - got more than she
should have, but the cost of losing all the time was too much.
The Financial Institution was also very stubborn and would not give
terms acceptable to the Software Company, and the Landlords would
not give the Financial Institution the terms they needed.
As you can see above, there were 15 things to negotiate in this
exercise. The whole thing fell apart because only 2 or 3 terms
could not be competed. However, even if one team was not to get
exactly what they wanted in one of those areas, giving in and
signing the deals anyways would have been better for everyone. The
big picture was not seen and the little details caused big
problems. Not uncommon in the real business world
The lessons learned:
1 - Don't let little things stop you from reaching important
2 - In business, you will have to deal with people that you feel
are unreasonable. That is a part of life. Don't think of this as a
needless obstacle. Think of this as an opportunity to improve our
own character by handling them with professionalism and the
determination needed to get the job done.
Xiao Mei vs. Eric
The original plan was this: If all contracts were signed, the
weaker contestant on the team with the lowest score was out. If the
deals failed - as they did - one contestant from EVERY team was to
be kicked out. So I had decided to kick out Chloe, Linda, and
Joyce. This is when Joyce finally got some good negotiating done.
She argued a few points about fairness that I disagreed with, but
then fought to say that as the lessons were learned, there is no
need to punish half the contestants. They all wanted to push on and
keep trying. So I agreed on one condition. I told Chloe that if
there is only one person to be kicked out, it would be her as I
felt she did the least actual negotiating. Sophie pretty much got
the lease done on her own. I told her if she wanted to take Linda
and Joyce down with her she could. But she stood up for them and
wanted them to stay - so I agreed. However, Marco is now officially
out as well for missing his second time with no substitute.
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