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COALITIONS: HARBORCO
Prof. Stephen W. Nason

Professor of Business Practice
© Prof Stephen W. Nason – All Rights Reserved
Negotiation Outline: Where are We Going?
Negotiation
Fundamentals Processes Contexts Remedies
Nature of Perception Salary Negotiation

Negotiation & Biases Negotiations Envelope
Distributive Negotiating Style Disputes Video Analysis
Negotiations
International
Integrative Hard Ball Tactics Persuasion
Negotiations
Negotiations
Coalitions &
Strategy Best Practices
Groups Multiple Parties
& Tactics Difficult
Conclusion
Auctions Negotiations
© Prof Stephen W. Nason – All Rights Reserved 2
Harborco Outcomes
 55 Possible agreements:
– 9: 6‐WAY
– 46: 5‐WAY
Coalitions: Harborco
Harborco Outcomes II
 55 Possible agreements:
– 9: 6‐WAY
– 46: 5‐WAY
Agreement US HK & PRC MBA FT Exec Ed
6 way 10% 39% 14% 12.5%
5 way 70% 30% 29% 37.5%
X 20% 31% 57% 50%
What can explain this?
Coalitions
 Multi‐issue, multi‐party negotiations tend to involve the formation of
coalitions
– especially blocking coalitions
 Coalitions are usually unstable
 Therefore, the analysis of coalitions becomes crucial in developing
strategies both before and during the negotiation itself
Who is the Strongest
 Who is the Strongest?
– FDCR?
– Harborco?
 Who is the Weakest?
– Other Ports?
– Environment?
 Who did the best?
 Who did the worst?
Harborco Results Summary
Exec Ed
Harborco Environ Union Other Ports DCR Governor
Role Average : 56.8 63.5 64.3 84.5 70.5 44.8

+1.8 +13.5 +14.3 +53.5 +5.5 +14.8
Harborco Results Summary
MBA FT
Harborco Environ Union Other Ports DCR Governor
Role Average : 60.1 65.3 80.1 93.3 70.1 64.9

+5.1 +15.3 +30.1 +62.3 +5.1 +34.9
Why Did Harborco Do So Poorly?
The Leadership trap
 Often there is such pressure to get a coalition that the leader makes too
many concessions to too many people.
 Leader deals one on one with each of the other 5 parties.
Solutions?
 When you lead the coalition, do not make too many concessions.
 Do NOT deal one on one with each party.
 Coordinate a network of concessions and trades.
 Negotiate one on group: leader with whole group.
To Build a Strong Coalition You Must Understand
the Answers to Key Questions
 Who are the most likely parties to share your interests?
 If such a coalition were to form, is it strong enough to block agreements
which aren’t in accord with its interests?
 How stable is such a coalition likely to be?
 Are there other potential coalitions whose interests are in opposition?
 Who is not in favor of your coalition?
 Are you in a strong or weak position?
 Are each of the other positions strong or weak?
Is the Environmental League a Strong
or Weak Role?
 Do they want an agreement
– Yes, but some reservations
 What do they care about?
– Only Industry Mix and Ecology
– Employment, Loan, Compensation are irrelevant
 What are the implications of this?
– Huge Value Potential & POWER
Why Was This Exercise So Frustrating?
Complicated:
 Negotiation with 5 other people simultaneously is more complicated than
just 1
More people seem unreasonable, blocking everything?
 Did anyone seem to want to block an agreement?
 Why?
Blocking Coalition
Other Ports does not want an agreement!
 Gets 150 if no agreement
How should Other Ports Block?
 Aggressively?
 Subtly, wily?
Build blocking coalitions by being subtle,
wily, sneaky
What would be successful blocking strategies?
 Find someone else who does not want a coalition, if possible.
 Encourage someone to get excluded or to not want to be in the coalition
1. Do a side deal?
2. Build an alliance with someone who shares many of your issues?
3. Support and encourage weaker members “extreme” position that rest can not
accept?
4. Support powerful members extreme positions?
5. Support the leader?
If you try to aggressively block a coalition, the others will turn on you
When to Block, When to Join the Coalition
 Being excluded has costs
 Do not vote no unless you know someone else will vote no too
Did Voting Help Build the Coalition?
Which was more useful in helping the Harborco person understand others?
 Discussion
 Voting
– First vote always fail, but voting exposes the problems
– Voting forces people to work harder linking issues and build multi‐issue
proposals
Coalition Dilemma
Key to effective coalition‐building is
 to find a way to bind the parties together by
– understanding the interests of each party and
– being creative about identifying the common elements in those interests
 but you also need to find differences to trade in order to create value
– Even though discussing differences often makes it harder get people to work
together
Coalition Dilemma
Should you
 search for similarities to bind parties together or
 search for differences to trade in order to create value?
Answer:
 Do both!
 E.g. Similarity can be a higher goal (quality of life of Seaborn)
 the differences are the more specific interests.
Building Coalitions:
Consensus or “Majority Rule”
What are the pros and cons of consensus versus “majority rule?”
 Consensus
– More stable outcomes
– Achieving consensus is more difficult , more frustrating, and need to
compromise more
 Majority
– Need to compromise less and easier to achieve
– Much less stable:
• The closer the “majority” necessarily for an outcome is to the threshold
(e.g. 50%), the more unstable the coalition is
Keys to Building Coalitions
 Find a way to bind the parties together, so that shifting is less likely to
occur
 Understand the interests of each party
– Be creative about identifying the common elements in those interests
 Search for differences to trade
 Push for reliance on consensus rather than “majority rule”
Strategies and Tactics for Negotiating in Groups
Step 1: Opening
Mutual Strategy Coalitional Strategy Individual Strategy

1. Share own and 1. Seek others with similar 1. Open with a high, but
elicit others’ interests interests not outrageously
 Construct an alternative high demand
that meets your  Do not reveal your
collective interests. interests
Step 2: Persuade others by

2. Consider Many 2. Recruit Just Enough 2. Argue The Merits Of Your
Alternatives Members To Control The Alternative
 Be creative Group’s Decision  Base discussion on
 Look for ways to use all  Make sure that members’ interpretations of reason

available resources interests aligned more and fairness that support
 Look for ways to create
with those inside the your position
additional resources coalition than those
outside the coalition
Step 3: Bind Coalition Together

3. Don’t just compromise 3. Encourage interpersonal 3. Appear unable (or
 Make trades! obligations among coalition unwilling) to concede
members
Step 4 & 5: Reinforce the coalition

4. Encourage positive 4. Encourage positive 4. Not focused on positive
relations relations within own relations
coalition
5. Create value 5. Build cohesion and trust. 5. Use power if necessary
 Expand everyone’s  Reinforce and help  Use threats, time
wealth others deadlines, hardball

tactics
 Use promises
Core Characteristic of Each Strategy

Create value Shared interests Power
 Integrative strategy  Defensive strategy  Aggressive strategy
When would you use each strategy?
When Would You Use Each Strategy?
Create value Shared interests Power

 Integrative strategy  Defensive strategy  Aggressive strategy
Use when there are Use when there are Use when you are the

enough resources NOT enough resources  Most powerful
available so that  But enough common  Most skillful
 everyone (or most) interests to get a  Big dog!
can share the big pie minority coalition
 Situation is very
complicated
 When there will be
winners and losers
Three Questions
1. When are most issues in the negotiation solved?
– at the deadline
2. How do people behave at the deadline?
– Quite stupidly
3. What then is the technical name for the deadline?
– Stupid Time
The Deadline or “Stupid Time”
Most issues in the negotiation solved at the deadline
 At deadline we have “Stupid Time”: People act stupid
Two typical behaviours during stupid time
 Panic
 Happy, giddy generosity
Panic Stupid Time
1. Panic: too much info, too little time, too much left undone, many new
proposals, yelling, crying
People accept bad deals that they do not understand
Options
 Offer a deal that is great for you that they do not understand.
 Offer a minor point that they do not have time to fully consider.
 Split the difference.
NEVER accept a rushed deal that you do not understand (make sure you are
prepared!).
Happy Stupid Time
2. Happy, giddy generosity: So pleased the negotiation almost over, relief
that the stress is almost over, already invested so much time and effort in
the negotiation that people will not let it fail now
People give away a lot for free
Options:
 Since they are giving away things, ask for them, nibble
 Say “don’t worry about that, we’ll take care of it”
DON’T ever give away too much for free
How Do you prevent yourself from being stupid
during “Stupid Time”
 Understand Stupid Time.
 Complete understanding of your bottom line and BATNA.
– Not just a bottom line as a number but how it was derived
– Know when to walk away and when to stay.
 Preparation, preparation, preparation!
 Never accept a rushed deal that you do not understand!
 Extend the deadline.
 Use it yourself.
Harborco Coalition Conclusions
 Power is dangerous! (The Leadership TRAP)
– When you lead the coalition, do not make too many concessions
 Perceived weakness can be a strength (trade)
 Be a member of the winning coalition first,
– then worry about maximizing your results
 If use power too bluntly people will exclude you
 Coalitions are fragile
– work for consensus over majority
 Blocking works better with subtlety, not aggression
– Blockers need to join the coalition when you can no longer maintain a blocking coalition
 Focus on underlying interests and trade
 Link issues together don’t deal with them separately
 Don’t act stupid during “stupid time.”
Apply all the negotiation concepts from the course

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COALITIONS: HARBORCO

Prof. Stephen W. Nason

Fundamentals Processes Contexts Remedies

Nature of Perception Salary Negotiation

Agreement US HK & PRC MBA FT Exec Ed

6 way 10% 39% 14% 12.5%

5 way 70% 30% 29% 37.5%

X 20% 31% 57% 50%

Harborco Environ Union Other Ports DCR Governor

Role Average : 56.8 63.5 64.3 84.5 70.5 44.8

Harborco Environ Union Other Ports DCR Governor

Role Average : 60.1 65.3 80.1 93.3 70.1 64.9

Mutual Strategy Coalitional Strategy Individual Strategy

Mutual Strategy Coalitional Strategy Individual Strategy

 Look for ways to use all  Make sure that members’ interpretations of reason

Mutual Strategy Coalitional Strategy Individual Strategy

Mutual Strategy Coalitional Strategy Individual Strategy

wealth others deadlines, hardball

Mutual Strategy Coalitional Strategy Individual Strategy

Mutual Strategy Coalitional Strategy Individual Strategy

Create value Shared interests Power

Use when there are Use when there are Use when you are the

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