Thinking Styles, Negotiation & Conflict Management Essay

Question:

Discuss about the Thinking Styles, Negotiation & Conflict Management.

Answer:

Introduction

This presentation is a negotiation process on behalf of a client-vendor against the purchaser. The commercial asset on sale is the real estate owned by my client. The presentation covers three main areas, namely: pre-negotiation, negotiation, and post-negotiation.

Pre-negotiation

Thinking style according to Lauren?iu and Ramona (2014, pg. 21) is a concept that determines the link between one’s intellectual capabilities and his/her personality. My thinking style is Monarchic. With this thinking style, one prefers solving one problem after the other. My level of thinking style is internal. In this case, I prefer dealing with tasks that require some engagement with particular, solid chores that require substantial accuracy in execution. The Internal level of thinking style is particularly important in ensuring best results in a given task.

The Monarch form of thinking style and the internal level of thinking are sufficient in for ensuring an optimal for administering this negotiation. A Monarchic form of thinking styles allows one to be focused and objective in solving a given problem. All the energy and concentration is put into a given engagement (Lauren?iu and Ramona, 2014). On the other hand, the internal level of thinking style in this negotiation will ensure the negotiator is specific to the issues of the subject, and that, clear and accurate decisions are made in the negotiation process.

To ensure a more optimal thinking styles for this particular task, the specific adjustment that needs to be considered is borrowing some ideas from other forms and levels of thinking styles. To cite as an example, as a negotiator should adopt the idea of an anarchic form of thinking styles that allows executions of multiple tasks that allow some level of flexibility and have no formal structure (Lauren?iu and Ramona, 2014). By so doing, the negotiator will be able to engage in many tasks in the negotiation without many problems. Also, the negotiator can also borrow the ideas of solving problems that are more open and general and that expect one to think in a more abstract way. The reason for making such as an adjustment is to ensure that one is prepared in case the purchaser decides to employ an internal level of thinking style in this engagement.

BATNA simply refers to a Best Alternative to a Negotiated Agreement. The client's BATNA for the real estate investment is $175 million, and the reservation value is $150 million. The $175 million is the amount the other purchaser had offered to give as payment for the investment, and $150 million is the predetermined minimum value of offer the client can accept for the investment.

The BATNA of the purchaser is $135 million, and the reservation value is $163 million. The $135 million is the budgeted amount the other party had prepared to pay for the property and $163 is the highest they can stretch the budget for the commercial asset. This means that the purchaser can afford to any amount between $135 and $163 million for the asset.

ZOPA is the Zone of Possible Agreement. In the sale of property, product or services, ZOPA is the intellectual region where two parties in the negotiation can agree. In this case, the ZOPA lies between $150 million and $163 million. This is the comfort area where the negotiation should be focused by both parties. However, this is not final as my client may opt out of the negotiation if a better offer is placed on the table by another vendor. The best strategy to obtaining a greater proportion of the ZOPA is by raising the reservation value. This will force the purchase to increase his/her BATNA.

Negotiation

Entering into negotiation requires that the seller makes an offer to the buyer, in this case, the selling of a real estate. The intention is to attract the potential offers for purchase from different vendors. This process involves the use of a contract that is prepared by the real estate local association with the support of their legal counsel. The sole purpose of preparing the contract is to allow vendors the opportunity to understand the property is of what nature and its market price (Bruce and Ray 2006). The contract document also provides room for specifying the clauses the parties wish to be factored in the agreement including the purchase terms, the closing of negotiations, the official handover, the amount required for deposits and any other conditions that will bind the contract.

Once the buyers complete making their offers, they will be expected to make an official delivery to the seller. The most potential buyer is appraised, and the negotiation is moved to the next stage. The negotiator will expect that the potential buyer to give a detailed offer. The offer of a suitable buyer will be the basis for further negotiations. The negotiator is entitled with the right to accept, reject or even give a counter offer after a detailed review of its details. With a counter offer, the negotiation process is initiated (Bruce and Ray 2006). The Complete counter offer should entail the following information: the deadlines for giving feedback, dealing with various contingencies and other special conditions such as asset inspection and the financing arrangements. This will lead to several exchanges between the negotiator and the buying part until the agreement is reached or the negotiations fold, and the log below is documentation of all the communications between the two parties.

Table 1: Communication Log

Date

Method

Items Discussed

Outcomes

01/05/2017

Video conferencing

Purchase Price and Terms of Payment

This was the first item that was discussed and agreed. The selling price that was agreed by both parties is $160 million. The two parties also agreed that the payment should be done by the specific land contract that will be attached to the contract as part of the reference. According to the agreement, the parties also committed that during the closing of the sale, a 40% down payment and the remaining balance of 60% be paid with at the interest rate of 12% per year.

08/06/207

Video conferencing

Earnest money payment

During the negotiation, the parties agreed that the deposit of 40% ($64 million) be made through the broker during the time of closing the sale. The parties also went further to clarify that in case the offer is not accepted, the money will be promptly deposited back to the broker’s account. On the other hand, in a situation where the offer is accepted by the owner and the buyers fails to perform other obligations of the contract, the money deposited as earnest will be forfeited to pay for any damages afflicted to the seller (Lax and Sebenius,1986).

06/07/2017

Video conferencing

Taxes and other adjustments

The parties also concurred that any levies, taxes, and charges that will accrue against the property should be paid by the seller up to the date of closing the sale after accepting the purchase offer, and will be paid by the seller in a prorated manner (Lax and Sebenius, 2003). Further, all insurances attached to the property shall be canceled at a prorated rate and the responsibility transferred to the buyer during the closing time.

20/07/2017

Email exchange

Title of the real estate

In this discussion, the two parties also came to a conclusion that during the closing, shall promptly give an abstract of the property title to the buyer at the seller’s expense. Further, the policy must show all the marketable title at the seller’s reasonable time and must provide room to correct any defects (Lax and Sebenius, 1986). At the closing of the sale, the seller must give the title to the purchaser and must have a good and sufficient warranty, and that is free from all liens and obstructions saving as otherwise given in the offer.

01/08/2017

Email exchange

Property Ownership/Possession

Once the closing of the sale is done, the seller must transfer the possession of the asset to the purchaser, and in case he/she fails to do so, the seller will not be a tenant to the buyer, but the seller will be forced to pay 0.005% for damages every day. All other remedies will remain with the purchaser as provided for by the law.

16/08/2017

Telephone conversation

Risk of Loss

Any damage or loss done to asset preceding closing of the sale, the seller will take responsibility.

05/09/2017

Telephone conversation

Developments and fixtures considered

The offer and purchase price include all the properties and other assets therein.

20/08/2017

Email exchange

General conditions

The sale of the property expressly confirms agreement of all clauses of the contract by both the seller and the supplier.

10/10/2017

Roundtable meeting

Time to accept and close the sale

The parties agreed to close the sale in a period of six months.

Post Negotiation (Report)

The following are the issues that were covered in the negotiation, the outcome, and the possible next move: The negotiator did apply the monarchic form of thinking style and internal level of thinking style. Our BATNA to the negotiation is $175 million, and the reserved value is $150 million. On the other hand, the BATNA for the purchaser is $135 million, and their reserved value is $163 million. After extensive negotiations, the agreed price was $160 million.

Further, the other important items that were covered in the report include the following: earnest money payment, taxes and other adjustments and title of the real estate. The others are property ownership/possession, the risk of losses, developments, and fixtures, general conditions and time to accept and close the sale. After extensive negotiations, the parties agreed that the process of closing the sale of the real estate would take approximately six months.

The following are the outstanding issues of the negotiation process: the agreed price for the property is $160 million. According to the agreement, the parties also committed that during the closing of the sale, a 40% down payment and the remaining balance of 60% be paid at the interest rate of 12% per year. The title deed of the real estate transfer. At the closing of the sale, the seller must give the title to the purchaser, and it must have a good and sufficient warranty that is free from all liens and obstructions saving as otherwise given in the offer. Property Ownership/Possession- the seller must transfer the possession of the asset to the purchaser at the closing of the sale and failure to do so, a certain fee will accrue.

In general, the negotiation should be implemented since the sale value of $160 million is above the reserved value of $150 million and there is no any other purchaser who is giving us a better offer.

References

Bruce, B, and Ray, F 2006, Bargainer Characteristics in Distributive and Integrative Negotiation, Journal of Personality and Social Psychology, Vol.74 (2), pp. 345-359

Lauren?iu, PM, and Ramona, P 2014, Adaptation of the Thinking Styles Inventory (TSI) within a Romanian student sample Romanian Journal of Applied Psychology 2014, Vol. 16, No. 1, 20-24

Lax, D. A., and Sebenius, JK (1986). The Manager as Negotiator: Bargaining for Cooperation and Competitive Gain. New York, The Free Press.

Lax, DA and Sebenius JK 2003, "3-D Negotiation: Are You Playing the Whole Game?" Harvard Business Review 81(11): 64-74.

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