Negotiation Case Analysis

The capability to negotiate is believed to be an art, which is greatly appreciated by numerous employers. Negotiation stands for the fact of utilizing the power of cogency, diplomacy, and capacity to provide original resolutions and arbitrations in order to obtain, as far as possible, a win–win result or solve a contradiction. Negotiations are considered as dynamical and a number of them are afflicted by particular tensions. Tensions are stress factors, which are sensed by parties during their attempts to get their requirements met. A tension appears when both parties’ interests are more different than similar concerning the negotiated issue. It can be an improbable problem to exclude all tensions, but there are methods, which help to manage efficiently. In fact, negotiation stands for the process of aggregated decision-making. It concerns intercourse that can be direct or indirect and official or unofficial, which appears between people who are stimulated to congregate on an arrangement for mutual advantage.

The current research paper will demonstrate a peculiar negotiation situation, demonstrating the background of this negotiation, weak and strong sides of both parties, their BARNA and ZOPA, outcomes of the negotiation, and possible lessons, which can be learned on the basis of this case.

Background

The negotiation appeared between a software vendor (ISV) and the company requiring this software (Partner, Inc.). ISV is known to be a company, which specializes in creating and marketing software intended for wide spread and niche markets. ISV decided to price their top end software program at $21,000. Due to the fact that the following disjunctive stands for $16,000, ISV has been ready to decrease the price to $16,000 as the least suitable setting. Therefore, any setting between $21,000 and $16,000 appears as congruous to the software vendor (ISV). In turn, a company that requires this software for the project execution (Partner, Inc.) has a budget of only $18,000. Therefore, everything beyond $18,000 will make the production not worth of the project price. ISV and Partner, Inc. reached their agreement at a point of $17,500, while initiating a contract for further long-lasting cooperation.

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The figures demonstrate that $16,000 to $18,000 is the general overlapping ground among the parties, which are involved in the current negotiation. In a case of a win-win negotiation, the parties are supposed to reach an agreement anywhere within these limits. However, there might appear a win-lose negotiation. It would result in one party attempting to utilize a weakness or vulnerability of the other side. It practically means that if the software vendor found out that Partner, Inc. wretchedly required ISV software in order to be able to execute the major project and was not aware of the alternative equipment offered by the competitor, ISV could not shift below $20,000. Moreover, the negotiation could become win-lose when the project manager attempted to provide the vendor with an impression of evolving the software in-house and attempt to sale the software, for example, for $15,000. The course of the win-win strategy shows that win-win strategy involves feelings of both parties. In the current situation, in case Partner, Inc.’s project manager willingly bargains to an offer of $18,000, it might make the ISV software vendor feel that the company has quoted too low. However, if the ISV vendor gladly agrees for $16,000, it might make the Partner, Inc.’s project manager regret not having bargained $15,000. Negotiators constantly concentrate on their feelings in case they do not reach a win-win situation. Despite the fact that the deal has been very beneficial for Partner, Inc., the company has decided to take a particular time-period before submitting their answer. This is especially important when the deal presents a number of competitors. ISV has numerous competitors who demand quite different prices for the necessary software. Thus, Partner, Inc. has asked for time in order to dedicate it to the analysis, study, and deliberation. This has allowed creating the impression of a fair deal. Finally, a win-win situation requires valuing the relationship based on trust and credibility (Benoliel & Wei, 2009, p. 54). It presupposes respecting commitments and demonstrating an open approach (Benoliel & Wei, 2009, p. 54). In fact, ISV competitor Zoom Software has quoted the identical price of $17,000 as their absolute last price for Partner, Inc., while suggesting to sell the product at the price of $15,000 to a major competitor of Partner, Inc. The principle of trust and credibility has been ruined by Zoom Software, which has persuaded Partner, Inc. to select ISV in favor of future trust and credibility. Both companies understand that efficient win-win negotiations are their cornerstone of future felicitous deals, which will help establish long-lasting mutually beneficial relationships (Thompson, 2014, p. 99).

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The current example of the win-win situation can be featured as a principled negotiation. This type of negotiation is also known as integrative negotiation (Benoliel & Wei, 2009, p. 67). The companies have decided to choose a specific negotiation format that has helped both parties perform together in order to counterfeit a value-originating bargain, which leaves both sides with the result and the status of their relationships (Thompson, 2014, p. 109). Principled negotiation has allowed creating a common setting in which sides have established collaborative interests and have decided to work together in order to build reciprocally beneficial resolutions (Benoliel & Wei, 2009, p. 68). Both sides have demonstrated that they have been capable of understanding each other and trusting each other. Principled negotiation presupposes that both sides should think in terms of problems and interests rather than thinking in terms of positions (Fells, 2009, p. 90). Thinking in terms of positions results in a zero-sum game when principled negotiation leaves both sides in a better or at least not worse situation than the one when they initiated the negotiation. Principled negotiation utilized in the current case can be featured by a pie analogy (Thompson, 2014, p. 71). In fact, each side has collaborated with the other in an attempt to originate a greater, mutually advantageous pie, which they can share (Thompson, 2014, p. 71). Both companies understand that this negotiation and agreement is not a matter of a single collaboration. Commonly beneficial agreement could lead to a long-lasting cooperation, which could bring even more benefits for both sides (Thompson, 2014, p. 71). Thus, the companies have decided to apply the compromising style. This style incorporates meeting halfway (Benoliel & Wei, 2009, p. 76). As it has been demonstrated, one side has made some cession, while the other party has made some cessions as well. There have been no clear winners as both parties have reached win-win result, which has led to fair result. The analyzed example demonstrates that the parties have depicted a tendency to start out at extreme positions and afterwards they worked their way to the middle. ISV’s extreme position was $21,000, which was unacceptable for Partner, Inc. as their limit was set at $18,000. The collaborating style, utilized in the current situation involved assuring that both sides’ requirements and limits were met. Parties have spent a lot of time brainstorming on how to originate common value and collaborate on a solution. Both of them have been interested in this cooperation as ISV’s competitors attempt to set lower prices for their products, which at the same time are known to be of worse quality. In turn, Partner, Inc. has not been interested in bad quality as the software required for the viable project had to be of the best quality offered by ISV. Both collaborators have decided to expand the pie and made great efforts to meet an optimum agreement, which could maximize both parties’ returns. This style is believed to be great for creating strong bonds and preserving good relationships. Nonetheless, the collaborating style is regarded as the most time-consuming style, as well as the most mentally fatiguing style (Thompson, 2014, p. 129). The current example has also demonstrated that this style required the most preparation as Partner, Inc.’s manager has dedicated a lot of time to analysis, study, and deliberation.

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BATNA

The example of ISV and Partner, Inc. has shown that each party is presumed to have outlined the best alternative to a negotiated agreement (BATNA). BATNA is regarded to be the best trend of action that the party could adhere to one-sidedly outside provided negotiations (Benoliel & Wei, 2009, p. 97). Therefore, a major tryout of the suggested agreement concerns the question whether it proposes a better disbursement than the party’s best alternative course of action beyond the negotiations. This position is also known as individual rationality. Therefore, disbursement from both sides’ BATNA puts a restriction, a lower line on the disbursement, which the party should actualize from a negotiated setting (Thompson, 2014, p. 204). In addition, these limits of disbursement outline the disagreement point and a negotiation settlement, which is equivalent to the non-collaborative Nash equilibrium concept (Thompson, 2014, p. 204). Moreover, the potential setting, which stands for the dimension of the contract set that satisfies the BATNA cessions, is called the zone of possible agreement (ZOPA) (Benoliel & Wei, 2009, p. 97). The lowest line, which ISV’s BATNA restriction sets, stands at $16,000 that is actually set by the company’s competitors. The highest line, which the company sets, stands at $21,000. The highest line that Partner, Inc. can allow is $18,000. The company demonstrates that their BATNA does not set the lower restriction as all options lower than the highest line will easily suit the company. Therefore, the range between $16,000 and $18,000 stands for the zone of possible agreement between the companies. This dimension demonstrates that both companies have possibilities for mutual gains. They concern this zone of possible agreement. Both companies’ payouts are driven by their BATNA levels. ISV has been ready to propose the lowest BATNA level in order to preserve the potential client and the possibility of long-lasting cooperation. In turn, Partner, Inc. has decided to suggest a price between $17,000 and $18,000 in exchange of the best possible quality and lost-lasting cooperation. Therefore, Partner, Inc. aimed to utilize win-win strategy in order to get their offer suggested. Partner, Inc. negotiators aimed to work together with ISV towards getting a resolution to their discrepancies in BATNA, which would result in both sides being satisfied. Partner, Inc. has utilized a number of key points when aiming for the win-win strategy outcome. Firstly, the company has decided to concentrate on preserving the relationship, thus separating the ISV company from the problem. Secondly, the company has concentrated on interests rather than positions. These positions were incorporated in the ZOPA dimension (Thompson, 2014, p. 206). Thirdly, the company has generated a wide variety of options, which offer gains to both parties before they decide what to do. The first principle of Partner, Inc.’s win-win strategy concerns maintaining the relationship. This stands for not allowing the divergence to ruin the interpersonal relationship of negotiators, not charging others for the problem existing, and objecting to oppose the issue, not people. In this case, Partner, Inc. has decided not to confront negotiators who suggested the highest extreme level of their BATNA first, but to oppose the issue, providing supported evidence of capacity to reach a common ground. Both parties demonstrate different higher extreme levels of BATNA, which could create a serious problem for their further cooperation. Partner, Inc. has understood that their minor concessions in the process of negotiation could pave the ground for further collaboration, which can bring serious advantages for the company in front of their competitors. Both companies have decided to make concessions in the form of executing the possible ZOPA for cooperation. This has allowed finding an appropriate resolution to an existing problem. Therefore, negotiation has not been broken down into argument. ISV honored the possibility of Partner, Inc. continuing to express positive regard for negotiators even when disagreeing with the highest BATNA level. 

Shadow Negotiation

Shadow negotiation is believed to be a specific kind of interpersonal intercourse and power acting, which are performed in the “shadows” or behind-the-scenes (Benoliel, 2011, p. 87). In fact, shadow negotiations define the amount of give-and-take, which will appear in the negotiation process (Benoliel, 2011, p. 87). It is highly important to adhere to regulations and perspectives utilized in the shadows, including expectancy that a compromise between two negotiators will be reached (Fells, 2009, p. 107). It is crucial to understand that slight alterations in the negotiator’s position, including the rise of what is done in the shadows, can initiate a dynamic shift in the negotiation (Fells, 2009, p. 107). Therefore, it is significant to understand what both parties have on their mind while performing the negotiation (Benoliel, 2011, p. 87).

Negotiation always concerns two things, including substance (what people have to say about the issue) and relationship (reconciliation of terms in the relationship such as equality and subordination) (Dows, 2009, p. 134). It is crucial to understand that obtaining resolution in the substance portion of the negotiation does not certainly stand for the fact that there will be a resolution in the relationship. Thus, it is significant to perform negotiation in a way, which will create rather than impede future relationships (Dows, 2009, p. 134). The incessant relationship is more crucial than the result of a certain negotiation (Dows, 2009, p. 135). Therefore, integrative negotiation is more important than distributive negotiation. The project manager has decided to perform shadow negotiation with ISV’s major executive. The shadow negotiation has demonstrated that Partner, Inc. is highly interested in continuing collaboration with ISV and, therefore, can allow a minor cessation. In addition, shadow negotiation has revealed the fact that ISV’s competitors lowered their BARNA to $15,000 in order to intercept ISV’s clients who are more interested in prices rather than software quality. This shadow negotiation has dynamically changed the negotiation intercourse as the relationships between the companies are based on trust and credence rather than problem confrontation. Both companies have appeared to be interested in obtaining their gains with the help of each other. ISV has become interested in demonstrating software quality through Partner, Inc.’s major project utilization, while Partner, Inc. has become interested in continuous cooperation with possibility of getting serious discounts.

Thus, the analyzed example demonstrates that the shadow negotiation alludes to the parallel and additional dynamic, which appears while parties work on issues that set them apart. In fact, these two processes are not divisible and allow observing what is occurring from these two perspectives (Dows, 2009, p. 178). It allows focusing on how parties deal with their problems and work towards agreement. Shadow negotiating demonstrates how parties attract attention to what has been demonstrated and said and what is done to capture the process of positioning (Thompson, 2014, p. 54). Positioning in the shadow negotiation incorporates the way the sides manage to display themselves and how they declare and preserve legitimacy and credibility (Thompson, 2014, p. 54). Partner, Inc. has demonstrated itself as highly successful in claiming and maintaining credibility and legitimacy, which has become a major reason of setting win-win and integrative cooperation.

Parties’ Positions

It is obvious that ISV demonstrates better BATNA and thus stands in a controlling position. Thus, Partner, Inc. has been supposed to take position that is more reactive. ISV is a popular software creator and marketer company, while Partner, Inc. is a comparatively new and highly promising company in the market. Partner, Inc. has lower higher limit than the highest BATNA of ISV, which is at the same time high enough to suit the company. Despite the fact that Partner, Inc. does not have the controlling position, the company has been able to use its chance to use turns, which has made it defensive. The company’s project manager utilizes a number of strategic moves, including provision of annual reports, which demonstrate the company’s continuous growth and requirement for high-quality software. In addition, the project manager has decided to build relationships on trust and credence, questioning ISV concerning its competitors and their current BATNAs. Afterwards, the project manager has used the turn of naming all competitors who provide false information concerning their lowest BATNA limits and revealing to the ISV’s executive truth concerning competitors’ attempts to lower the price for the similar software, supporting words with all necessary documents. These turns have allowed engaging the other side in collaboration. Therefore, the company has been able to utilize appropriate power moves to persuade ISV during the negotiation. Partner, Inc. has initiated the negotiation, creating appropriate reasons to start the negotiation, as well as applying particular pressure for convincing the other side to launch the process. 

ISV has demonstrated minor problems with competitors and concerns regarding cooperation with Partner, Inc. as it is a comparatively new company in the market. Nevertheless, this software vendor has had a serious reason of initiating and completing the negotiation. Competitors of the company have decided to lower their BATNA in order to intercept ISV’s potential and existing clients. As Partner, Inc. required ISV’s software to perform a global and serious project, ISV obtained a possibility to advertise their software and demonstrate its quality and reliability. Since ISV is the best quality software vendor with numerous clients and market networks, it has obviously obtained a controlling position. However, Partner, Inc. has been able to utilize a single crucial appreciative move when persuading the other party to reach a win-win situation as it provided information about the software market that the company lacked. This has been a highly difficult move for Partner, Inc., as the company has been supposed to provide all required information to support its words, which required time and numerous efforts. It has allowed the company to become successful.

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