Business Report: Negotiation and Bargaining in Car Dealership

This report examines the principles of negotiation and bargaining through the lens of a car dealership scenario. It outlines the roles of buyers and sellers, highlighting potential conflicts and the need for strategic approaches. The report explores the importance of third-party intervention, different negotiation models, and the significance of BATNA (Best Alternative to a Negotiated Agreement). It identifies key issues that arise in such negotiations, such as price, features, and payment terms. The report then delves into theoretical models like position-based and interest-based bargaining, emphasizing the mechanics of effective communication, including conversation and the use of relevant questions and proposals. It also discusses strategies for successful negotiations, such as single-issue negotiation, and anticipates the outcomes of the negotiation process. The report concludes by emphasizing the value of communication and compromise in achieving win-win outcomes, referencing relevant academic sources.

Introduction
Bargaining and negotiations are reasonable tools for reaching an understanding to make a
successful deal. As different parties have different needs and goals, so the bargaining strategies
are used in order to attain an effective amicable agreement. These procedures are used in the
situations such as conflicts of interests, ideological differences or any form of altercation for that
matter (Odell, 2012). The negotiation procedure involves a negotiator who plays important role
in conflict resolutions. The following report depicts a real life scenario regarding negotiation and
bargaining deal that, in most of the situations, happen between car dealers and their buyers.
Situation
A person needs to purchase a car and therefore visits sellers to sellers in order to fulfill his aim of
finding perfect car as per the price, model and features. Before the negotiation process begins,
the main parties involved in this case are – buyer and car dealer. However, during this process a
lot of issues are bound to arise and needed to be addressed. The buyer has certain models of car
in his mind along with the price that he wants to pay for the car. While, the car dealer has
different modes with different prices and his aim is to sell any of them probably by luring the
potential customers. The negotiation position, here, is that both of them has a certain minimum
price for selling and purchasing. The parties, therefore, will have to come to a compromising
stage so that they could reach to an agreement where both of them will benefit (Shell, 1999).
Third Party Intervention
In the above scenario, there is a possibility of an impasse between the two parties, where they
can’t reach an agreement. So, in such a situation, for averting legal hurdles, a third party is
required, which is neutral in that he has to take an objective viewpoint regarding the case (Brett,
Kressel, & Pruitt, 1991). Both the parties then choose a trusted facilitator, who will have to listen
to the arguments from both sides in a non-partisan manner. Generally, there are three forms of
interventions – settlement facilitation in which the negotiator helps in reaching the agreement by
choosing an alternative for them to end up in a win-win situation. The second form is mediation
process in which the lines of communications are open for the parties to express their
requirements. While, the third one entails a process in which the facilitator has the power to
make judgment or decision regarding the conflict. So, in the present scenario, the negotiation
between the car buyer and car seller can best be performed with the help of settlement
facilitation.
BATNA
The Best Alternative to a Negotiated Agreement will be the final option that both of the parties
would expect to get to. The importance of using this approach is that the negotiator or the
negotiating parties always have available options regarding good alternative negotiation. This
approach empowers all the parties to either reach the mutually acceptable agreement or walk
away with a better agreement (Brett, Pinkley, & Jackofsky, 1996). To begin with, both the
parties are needed to determine their BATNA well before the process of discussions and

negotiations start. So, the BATNA for the purchasing party is to buy a better quality car at the
lowest possible prices. Other than that the buyer has to consider the factors like feasibility,
impact and consequences. The buyer can go to every car to check out the prices. On the other
hand, the car seller will be eying on such a deal that includes fulfilling the buyer’s requirements
along with maintaining the margin of profit for the company. So, at the end of the deal, a final
decision will be made by the parties that will be based on the fairest prices by both car buyer and
car seller.
Identification of Issues
The different issues that are going to emerge in such a situation are that the buyer forgets as to
what exact purpose he needs to purchase the car for, that is, whether for business or personal use.
On the other hand, the seller, due to the fact that he has to make long term profits, may try to
exert pressure on the buyer by exaggerating its features. Also, if the seller comes to know that
the buyer desperately needs a particular car and has no other options but to turn to his company,
then he will use this leverage in his favor to seal this deal (Rubin, & Brown, 2013). The other
possible issues are difficulty in the mode of payment or uncomfortable installments and
unavailability of a particular color in a particular model or the difficulties associated with the
delivery.
Theoretical Models and Sources of Power
One of the effective theories that can be used in this negotiation process is negotiation based on
position according to its need for a particular party. It is a subjective negotiation because both the
parties take a stubborn approach rather than making amendments and adjustments to their stand.
It is also known as competitive bargaining because they are to reluctant to make compromise.
The other applicable theory is interest based bargaining in which each of the parties are ready to
consider the interests of each other’s interests by cooperation for reaching to a compromise
(Putnam, & Jones, 1982 ). Its main advantage is that both the parties can become creative and
innovative to adopt a win-win situation for themselves. Further, the balance of power is an
important element in determining effective negotiation to ensure compromise. However, if one
of the parties possess more power than the expected compromise will difficult to attain.
Mechanics of procedure
Conversation is very effective factor in this as it ensures that the parties are in a position to have
a dialogue and share their predicament. It must include a respect towards each other’s views and
opinions. The healthy conversation allows the use of proper mechanisms such as relevant
questions. For example, the seller, in the present scenario, may ask what offers does the buyer
expects, while the buyer may ask about mileage, performance, extra features and security
features of the car. Providing suggestions and proposals will also be done interchangeably.
Strategies to successful negotiations

There are different strategies used for carrying out successful negotiations such as single issue
negotiation in which the discussions occur over only one issue (Matos, Sierra, & Jennings,
1998). So, in the present scenario, the price of the car seems to be the single issue on which the
discussion could be done. In terms of the price limit, both the parties make their initial offer and
the bargaining begins with each party convincing each other to come towards their side of offer.
So, the dealer will lower his offer, while the buyer will increase his offer to reach to a successful
negotiation.
Anticipated results
The negotiation process is always done with an intention of getting an amicable agreement, so it
is expected that the car dealer, at the end of the negotiation, will be able to sell his car without
making any loss and the buyer is expected to purchase the car as per his choice in reasonable
costs. So, the success of the negotiation is generally based on effective conversation, dialogue
and ability to make logical proposals. In terms of the financial capabilities, the buyer can avail
extra services or accessories by making a counter offer.
Conclusion
The process of engaging in negotiations in different scenarios are always helpful because the fact
that the parties involved, more often than not, have conflicting ideas regarding the achievement
of their goals. So, the communication is a better way used by the parties to present their
proposals and suggestions for an appropriate compromise. So, a successful settlement is one that
takes a win-win stand for both the parties.

References
Brett, J. F., Pinkley, R. L., & Jackofsky, E. F. (1996). Alternatives to having a BATNA in dyadic
negotiation: The influence of goals, self-efficacy, and alternatives on negotiated
outcomes. International Journal of Conflict Management, 7(2), 121-138.
Brett, J., Kressel, K., & Pruitt, D. (1991). Mediation Research: The Process and Effectiveness of
Third-Party Intervention. Administrative Science Quarterly, 36(1), 137.
http://dx.doi.org/10.2307/2393437
Matos, N., Sierra, C., & Jennings, N. R. (1998, July). Determining successful negotiation
strategies: An evolutionary approach. In Multi Agent Systems, 1998. Proceedings.
International Conference on (pp. 182-189). IEEE.
Odell, J. (2012). Negotiation and bargaining. Handbook of International Relations, 2nd edn,
Beverly Hills: Sage Publications, 379-400.
Putnam, L. L., & Jones, T. S. (1982). Reciprocity in negotiations: An analysis of bargaining
interaction. Communication monographs, 49(3), 171-191.
Rubin, J. Z., & Brown, B. R. (2013). The social psychology of bargaining and
negotiation. Elsevier.
Shell, G. R. (1999). Bargaining for advantage. Viking, New York, NY.