3-D Negotiation by Lax David A. & Sebenius James K

Author:Lax, David A. & Sebenius, James K. [Lax, David A. & Sebenius, James K.]
Language: eng
Format: epub
Published: 0101-01-01T00:00:00+00:00

Dovetailing Differences in Other Arenas

There are a host of other types of differences that lend themselves to dovetailing. Once you get in the habit of looking for them, they may show up often and unexpectedly.

Take, for example, a difference in tax status. An individual in the United States can’t deduct interest on a loan used to purchase a car. But if a corporation borrows money to purchase the same car, it can deduct that interest. The corporation can then lease the car to the individual, resulting in a joint gain. How? Compare the after-tax cost of the corporation borrowing to buy the car with the cost to the individual who borrows to buy the same car. Since the corporate buying cost is much lower than the individual cost—by the amount of the tax savings from the interest deduction—lease terms can be worked out that leave both parties better off. In effect, this arrangement “shares” the tax savings resulting from tax-status differences between the two parties.

Dovetailable differences may also be found in liquidity. If one firm has cash on hand and another firm is in desperate need of capital to exploit a new technology, the liquid firm can provide capital in return for an attractive percentage of the profits generated by that new technology.

You may also come across valuable differences in attitudes toward relationships and precedents. One player may place great value on the deal at hand, while another may focus primarily on the relationship. In some organizations, decision makers are very much concerned with the precedents (or appearance of precedents) that may be established by a particular agreement, while other decision makers care much less about precedents (and the relationships they may affect) and care more strongly about the substance of the deal at hand.

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