Introduction
My primary objective as the Director for Middle East Operations for BebsiCo was to ensure that the company reaches an agreement with Bakra Beverage at a price below $6.75 million. The recent scandal with Kabir Cola was not yet disclosed; therefore, there was no opportunity to have another round of negotiations. The effects of postponing the decision were disastrous for various reasons.
First, the scandal would be disclosed, which would allow BebsiCo to ask for more money. Second, any delay meant that Loca Cola could enter the market before BebsiCo. Finally, the boss would not be pleased with the outcomes, which would be disadvantageous for my future career. Since I had little insight into the financial position of Bakra Beverage, I decided to promote trusting relationships with the negotiator and make sure that everyone has a clear understanding of requirements and benefits.
Discussion with the opponent
I was the first to start the conversation and disclose the information about the intentions of BebsiCo. I stated that our company wanted to see Bakra Beverage as its distributor in the Kumari market. I decided that it was vital for the opponent to know that the point of the discussion was not whether there should be a deal. I wanted to discuss the terms of the agreement and stating that upfront made the atmosphere more trusting. I also mentioned that BebsiCo valued the partnership with Bakra Beverage, which ended five years ago due to instability in the country, and expressed that the company was pleased with the results and the terms of previous business relationships. The opponent also mentioned that the terms of the previous contract were acceptable and offered to base the new deal on the old agreement.
I saw that my opponent was unsure about the exact figures and hesitant to make any propositions because he was afraid to be cheap. I realized that I was in the position of power and offered $5.5 million as a fair amount based on the fact that it was $1 million more than was offered to Kabir Cola. I explained the raise by the fact that BebsiCo would need Bakra to reach at least 75% of the market. The opponent replied that $6.6 million was more appropriate since it was the old arrangement plus five years’ inflation. After a short discussion, we decided to capitalize on $6 million. The deal was acceptable for BebsiCo since it was inside BATNA and would help to promote BebsiCo’s reputation for helping developing economies and promoting human rights.
I believe that acting from the perspective of power did work very well as the price almost reached the upper limit of $6.75 million. However, the fact I could insist on 75% of market coverage was beneficial. I also believe that a trusting approach helps to relieve the pressure and stay away from panic decisions. However, such an approach would be troublesome if I were to take my opponent’s place.
While the negotiation was fairly agile, my opponent seemed too afraid of saying or doing something wrong. Therefore, I often felt that if I were to put more pressure, he would agree to any deal. Even though the negotiations went well, my opponent’s approach would guarantee the outcome if I decided to be more aggressive. In short, being more proactive would help the negotiations go smoother.
Conclusion
The simulation provided considerable insights into the importance of preparations. Breaking down all the inputs provides a sense of what can be considered a good outcome. Instead of being afraid of being too cheap, it is more beneficial to focus on building trustful relationships that can lead to a productive partnership. I learned to understand that any result is good if it meets the criteria identified before the negotiations.