Reference no: EM132905942

Twenty months ago Peter decided to move closer to where he works. Following this decision to move, he put his condo on the market and started to look for a new one but with no results. Sixteen months later, Peter finally received an offer to buy his condo, and after a brief negotiation, settled on the selling price. Because he had not yet found a condo to buy, he postponed closing the sale for five months to give himself additional time to look. The buyer, Alice, was not happy about having to wait that long because of the inconvenience and the difficulty of getting a bank to guarantee an interest rate for a loan so far in advance. Peter adjusted the price so Alice would accept the postponement, but it was clear that she would be much happier if he could have the date closer.

There were relatively few condos on the market in the area where Peter wanted to live, and none of them were satisfactory. He jokingly said that unless something new come on the market, he would be sleeping in a tent on the town common when the leaves turned in the fall. Two months later a condo came on the market that met his requirements. The seller, Susan, set the closing price at $145,000 which was $10,000 above what Peter hoped to pay but $5,000 below the most he would be willing to pay. Peter knew that the more he paid for the condo the less he would have and he would have to make some very desirable alterations, buy draperies and some new furniture, and hire a moving company.

Questions

1. Is this an integration or a distributive bargaining situation? Give reasons for your answer.
2. Should Peter be familiar with the tactics of distributive bargaining? Explain (giving three reasons).
3. What is Peter's target and resistance points? What are the characteristics of each of these points?
4. How does Peter decide on his initial offer?
5. What is the objective of each party to this negotiation?
6. What is the bargaining range? Is it positive or negative? Explain
7. What is Peter's BATNA and why is it important to him?
8. Explain four possible strategies that Peter could use to maximize the value of the current deal.
9. In this scenario what would be the likely package of issues for negotiation in a "bargaining range"?
10. What are the two fundamental tasks that are important in all distributive bargaining situations?