Describe integrative negotiation, and provide examples of this approach to negotiating
What will be an ideal response?
Answer:
Integrative negotiation involves a more open bargaining process where the parties share their interests and needs and explore how a resolution may be achieved that will satisfy both. In integrative negotiation, the parties inquire about the underlying interests that justify the positions they hold. Open communication, trust, and sharing of information are key components of an integrative negotiation process. The main principle of integrative negotiation is that by sharing underlying interests and seeking to understand each other's interests, each party may realize greater gains than they might through distributive negotiation processes.
Examples of integrative negotiation include situations where the parties have interests beyond single issues like price, such as furthering important relationship interests. Family members, neighbors, co-workers, and long-standing business partners are just a few examples of relationships where the parties will likely achieve greater benefits through integrative rather than distributive negotiation processes. Students may offer other examples.
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At the beginning of that year 2013, Lancer Inc. had 50 units in its inventory, each costing $4. In January, Lancer Inc. purchased 30 units for $5 each. On January 31, Lancer, Inc. sold 20 units. Assuming a LIFO cost flow assumption, what would be Lancer, Inc.'s cost of goods sold?
a. $100 b. $80 c. $200 d. $150 e. $120
Derek owns a perpetuity contract that promises to pay him $1,000 per year in end-of the-year cash flows with the first cash flow beginning one year from today. Derek perceives some risk with the promised cash flows and has discounted them at an annual rate of 10.00% to determine the present value of the contract. Derek has offered to sell a portion of the contract to his brother Cam. The agreement is that Derek will keep the first 25 cash flows and that Cam will keep the remaining cash flows beginning with the first cash flow 26 years from today. What is the present value of the original contract?
What is the present value of the first 25 cash flows? What is the present value of the cash flows received in year 26 and beyond? If Derek makes the deal as described and charges Cam $1,000 for the year 26 and beyond cash flows, which brother is getting a better deal? Please provide dollar values for each of these questions.