Negotiation Process For Sale Of Commercial Property At 116 Davies Street, Liverpool, Sydney
Mental Self-Government Theory and Its Types of Thinking Styles
On behalf of Pashendale Holdings Ltd, I approached the Farnsworth Property Trust regarding the sale of commercial property at the commercial property of 116 Davies Street, Liverpool, Sydney. The price that I had quoted to them was $ 16.83 million for the plot of land.
The theory of mental self-government implies that thinking styles understood in accordance with the opinions of government constructs. According to the theory coined by Robert J. Sternberg, there are different types of governments present in the world but they are merely external reflections or mirrors in which people can be governed and organized and not coincidental (Adomako, Danso, Uddin and Damoah, 2016). Sternberg suggests that the understanding of people can be done in terms of the forms, functions, scope, and learnings of government. It is inherent of people do not consider or exhibit a single style but people prefer to behave differently and undertake tasks in different situations (Zhang, 2011). The theory comprises three different types of functions namely legislative, executive and judicial. Whereas the theory comprises of four different forms of mental self-government namely monarchic, hierarchy oligarchic and anarchic. An individual possessing monarchic form, preference for certain projects, tasks, and situations which allows them to completely focus on only one task at a time rather than undertaking to multitask. The underlying quality of a monarchic individual is their approach towards accomplishing a task and the single-minded focus on a particular situation before moving to the next task (Buzan, 2014). A hierarchical oriented person is a multi-tasker who has a predilection for particular projects, tasks, and situations within a given time frame. This kind of people can be adaptive in any setting where it requires to fulfill the goals my setting different priorities for accomplishing them. Only the situation that demands more attention than others are considered (Chen and Liu, 2012). A person who is anarchically oriented tends to be much more flexible than any other forms as the person takes random approaches for every situation which might be difficult to understand by other people (Delina, 2014). Finally, a person who possesses oligarchic characteristics has a predilection for specific situations, projects, and tasks which is somewhat similar to a hierarchically oriented person. This kind of individuals to undertake multiple things within a given time frame but the issue lies with prioritizing the tasks to be accomplished. To be fair, an oligarchical oriented person can easily manage situations when they are of equal importance (Richmond and Conrad, 2012).
Negotiation Process and Thinking Style
As a negotiator, in this case, I have chosen the monarchial thinking style because my focus would be every aspect of this deal. The entire negotiation process required to focus on a particular before moving onto the next.
The theory of mental self-government comprises two different scopes namely internal scope and external scope. A person having an internal scope is considered to be introvert and often disapprove working within a group. People with such characteristics work independently of others. On the other hand, a person possessing external scope are generally extroverts and are open to working in groups. I have applied the external scope of thinking style to negotiate with the purchasing agent of the company. The external scope helps in working with others or a group of people which would enable an individual to generate new ideas and concepts (Yashkova et, al, 2016). There were some small areas of conflicts which were also resolved through the process of effective communication and external thinking.
Refer to Appendix.
In order to continue with the negotiation process, I have chosen the monarchical style of thinking as it emphasizes every aspect of the deal. The negotiation approach and thinking styles were appropriate to address and take the deal to the final stage. I focused on every task with a single-minded and accomplished each task before moving to another. The deal with the client seemed difficult initially but necessary clarifications were addressed in details. For instance, on the first day, the geographical location of the property was discussed while on the upcoming days the communication was related to the positive returns on investment and the solution of petty conflicts. Throughout the entire negotiation process, I maintained a positive outlook towards my work and so this helped me to proceed ahead. I kept my patience until the purchaser was convinced to finalize the deal.
Though the monarchic thinking style form and the external scope of thinking were suitable for the negotiation, it was quite a lengthy process since I had to give complete priority and focus to one task at a time. The aim of the entire negotiation was not to sell the property at the initially quoted price of $ 16.83 million but to obtain a better price than $ 15.3 million that the Hewitt Constrictions was offering. As per the statistics, the price of the same 116 Davies Street land was between $ 15.5 million and $ 16.5 million. I aimed at raising the bid above the alternative bid of $ 15.3. Thus I started negotiating for more so that it settles at something good. The buyer as expected was not ready to offer more than $ 15.3 million. Through my consistent tone and repetitive and patient communication through emails, the buyer developed their faith in our company. The bid rose from $ 15.25 to $ 16.25 million.
Alternative Deals and ZOPA Range
The BATNA which Pashendale Holdings Ltd had while making this negotiation was to sell the property to Hewitt Constructions, at a price of $ 15.5 million. Thus if the Farnsworth Property Trust did not negotiate and purchased the land, we still had an alternative deal. I was firm with my stand and would not accept anything below our reservation value of $ 16 million.
On the other hand, the Farnsworth also had an alternative of purchasing from Uruz Holdings, a plot which is close in location to the one which we are offering for sale. Their reserve value was at $ 16.25 million above which they would not pay at all and reject the deal. It is an added advantage to know about the other part’s reservation value so that accordingly the price can be quoted and the negotiations can be made (Kozhevnikov, Evans and Kosslyn, 2014).
The ZOPA range was known to me and so I did not quote any price much outside the range or else my offer could be at the risk of rejection right from the beginning. I gave a quotation which touches the maximum limit of the ZOPA range (Schön, 2017). Further negotiations were made to get the price within the agreeable range. The negotiation was based on a cognitive style where emotions were made a part of the negotiation. When two people negotiate using cognitive styles it becomes their own interest-based process of negotiation. I had my own interest of getting a higher price for the land while the other side party, i.e., purchasing agent of Farnsworth had an aim of getting this plot of land at the least price they could negotiate for. Thus while communicating we both came to a common price which was fixed as the deal (Young, 2016). The price of $ 16.25 million was finally decided on the land. There was also the involvement of emotions in the process of negotiation (Delina, 2014). We as humans value our emotions and as a negotiator, I have learned this over the years that using the emotional aspect into a deal one can get his way out. Thus I tried to value the sentiments and emotions of my potential purchaser, the company as well as the purchasing agent (SCHATZKI, 1981). I positively motivated the agent to fix the deal as well as conveyed how we as a company value the interests of our purchasers. Their business goal is our priority and we will always be a support to the company post the deal is made. The negotiations involving emotions are often better than the cold negotiations (Boehm and Lyubomirsky, 2008). The negotiator plays an important role in understanding the needs and interests of the purchaser. I tried to even make the ZOPA much flexible so that there could be proper negotiations made and a good bargain set.
Role of Communication and Emotions in Negotiation
Communication is very important in the case of all the negotiations and business transactions. I had a long and continuous communication process over emails with the purchasing agent, Mr. Matheus Rodrigo Berger Ramos. After highlighting our strengths of the deal and eliminating the weaknesses or hindrances pertaining to the deal I finally managed to make a positive negotiation and sold the land at $ 16.25 million on 05.01.2019.
Communication phases are clearly discussed in the file appendix given below (Assessment 2: Communications log template).
[Your Name]
Email: [Your email address]
January 7, 2019.
By email:
VirnaPashendale
Chief Executive Officer
Pashendale Holdings Ltd
DearVirna,
RE: NEGOTIATION FOR SALE OF 116, DAVIES STREET, LIVERPOOL, SYDNEY
The final outcome of the negotiation was a positive one. They realized that the bargain was fair as the present price of the same commercial property is between $ 15.5 million and $ 16.5 million. They found the location of the land strategic and needed the property. We had an alternative offer which was too low to fix a deal for. Therefore I negotiated to fix the final price at a higher level. This was a profitable negotiation for us as we received a better purchase at a higher rate. For the buyer, it was a good bargain as they got a good and highly demanded land plot at a reasonable price. The negotiation was not easy as after the first time when the price was quoted the buyer agent was not happy and disinterested to continue the communication regarding the purchase of the particular plot of land. However, I kept my patience and tried to emotionally connect the purchaser to the deal. The bringing in of emotions and the application of the cognitive style was useful for negotiating further. I have a hierarchy thinking and so step by step I kept on negotiating with the purchasing agent while I also kept catering to their interests and priorities. The buyer could be connected to the deal when they saw that all their expectations were being met through this particular purchase. They also saw that we as a company valued their business strategies of increasing their capital growth as well as enhancing their investment holdings. There were few small conflicts that arose but were eventually resolved before the final deal was fixed through the cooperation from both sides. As an external thinker, I was always trying to address the issues that were hindrances to the sale of the property. Moreover right from the beginning, I had to be conscious and aware of all the various aspects that were a problem or an area of disapproval by the purchaser. Thus I gradually eliminated those aspects from the property’s deal so that the deal becomes even more attractive to the buyer. But while doing all this I was also very much aware of the fact that I need to maintain the BANTA so that we are not worse off. The ZOPA was made flexible while the reservation value was not compromised with. The first offer made by the buyer was $15.3 million. However, we got to know about the true value of the land, and there was a potential possibility of negotiating it with 10% more than the price offered by the. Since the value of the property was somewhere between $15.5 million to $16.5 million, I decided to bid a little higher and asked for $16.83 million. As expected, the deal was rejected. I then offered $16.5 million, which was the real maximum price of the land. Again it was rejected. Finally the potential purchaser Farnsworth Property Trust through their purchasing agent, Mr. Matheus Rodrigo Berger Ramos agreed to pay us an amount of $ 16.25 million (which was their reservation value) for the purchase of the plot of 116 Davies Street, Liverpool, Sydney.
Yours sincerely,
[Your name]
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