Posted: March 2nd, 2022

Creating options is a useful skill in negotiations.

Creating options is a useful skill in negotiations. Options can be like arrows in the quiver of a skilled negotiator.

An option is a creative deal term that one side can offer another in a negotiation; it’s anything that you can trade or any agreement you might include in a deal that might satisfy at least one party’s interest.
For example, imagine that you are negotiating compensation for a new job. You want a higher salary, but you’re already at the
top of a prospective employer’s salary range. Creative options to suggest might include a performance bonus at the end of the year, a guaranteed raise in six months, better benefits, future tuition reimbursements, a company car, and so on.

One way to create options is by engaging in design thinking. One form of design thinking that some business people use is Human Centered Design. (Human Centered Design is used for product development but aspects of it can apply to negotiations). Human Centered Design is a structured approach that seeks to identify interests and use factual research in order to create options. A team of individuals examines what the needs of the other party or customer by putting itself in their shoes. Then, the team uses a group brainstorming technique called a “deep dive” to develop dozens of needs. Once the needs of the other side have been identified, the team begins to think of ways to satisfy those needs. Those ways become your options.

Mini- Case Study

Rio Tinto, a leading mining company, is set to start face-to-face negotiations with the government of Mongolia as its seeks to complete the $6.75bn expansion of a huge copper project in the Gobi desert. The Anglo-Australian group is sending a team of senior executives to the capital Ulaanbaatar to try and hammer out a new financing agreement so that the development timeline can be maintained and underground caving operations can start later this year. The discussions will focus on a number of issues including tax, a new power agreement and benefit sharing, according to people with knowledge of the situation.

The government of Mongolia would like to place a withholding tax of $300 million on the income of the copper mine, but Rio Tinto does not wish to pay more than $200 million. If possible, it also wishes to avoid withholding taxes for fear that it might be accused of aiding and abetting corruption since it will have no control over the funds. Rio Tinto would ultimately like to use its contributions to build a positive relationship and good will with the people of Mongolia.

Please spend a some time researching information and data about Mongolia and its government and identify six key interests that they have. Then, create a set of six options that Rio Tinto could propose the Mongolian Government to help reach an agreement. (Each option should be tied to a specific interest). Your recommendations, including the interests that you identify, should be based on economic facts, and specific development and policy challenges faced by Mongolia and its government.

The aim of this exercise is to encourage you to use your research skills to prepare for a negotiation by understanding the other side and developing options.