Negotiations galore

As days go by, I'm starting to love the second term more and more. It's difficult as hell (with 3 finance courses!) but this is what I came to do the MBA for. Even the most pessimistic of my classmates feel that we're actually learning something of value. Of course it helps that all the professors we have had so far are fantastic. This might sound like a sales pitch, but a) you've got to see it to believe it, and b) No, IESE isn't paying me to say this stuff.

Anyways, this friday, like all fridays, we had 2 continuous classes of negotiations, where we did the exact same exercise that I remembered reading on Noelle's blog exactly a year ago. The class was divided into 2 sections, and our team had to bid for product prices in a competitive market against the other team. We did beautifully - our team decided to take a fall by upping the price, so as to signal to our competitor (which was in another room, and consisted of people from our class itself, but we had no inkling who they were) that we wanted to collaborate and not start a price war.

Our competitors got the idea, and despite tremendous temptations (in the form of multiplying your profits 8 times - and I almost fell for it too, only pausing to listen to the rationale of my team members and maintaining my sanity) both teams, in a non-communicative way (even when we had to send a team rep to speak to the rep from the other team, our respective reps wisely chose not to speak about the prices at all), stuck to the unsaid agreement, as both our respective teams ended up with the most profits in the entire class.

Two things that struck me. One, the success of any venture depends largely on the intelligence that you and the entity that you are dealing with display. Had our competitor not gotten the hint, we would have spiralled into a price war, cutting profits for both of us. Second, I saw teams in my class react the exact same way Noelle had mentioned - that even though some team reps shook hands on a particular price, they failed to get the backing of their teams, thus changing the agreed prices, and resulting in some very un-diplomatic language in the class. It's funny how similar some things remain even when they are so different.