Your Analysis Of The Negotiation
While writing about the negotiation, there is a need to cite Ramundo (1994, p. 9) who points out that, ‘It is clear that the manager who applies negotiation concepts and techniques in the performance of his managerial tasks enjoys a competitive, career-enhancing advantage over his colleagues.’
The negotiation is taking place so that the theater WCT Company can strike a deal with POP Production Company involved in staging live entertainment to stage a comedy, Oceania that appeals to all ages.
The deal is to structure that would be profitable to the theater company compared to its best alternative the ‘Five and Dime’ a product of UPSTAGE Production Company that only appeals to older audiences whose profit to WCT is estimated to be $100,000.
It is worth noting that the deal will be co-production meaning that the theater company, WCT and POP Production will have to share the costs of the show as well as the ticket revenue. However additional prom catering will be taken by WCT while sell of merchandise such as T-shirts, Caps will go to the coffers of POP production.
- List the items to be negotiated. If appropriate, feel free to go beyond those specified in the documents you received. (3 points)
There are a number of items that need to be addressed before the deal is structured and agreed upon.- How to share profit from the show
- Lodging and meals issues while the crew is in town
- Crew salary
- Time the play will be staged (Number of stage play)
- List the PERIPHERAL elements (other than positions and interests) which may have an impact on the negotiation and explain why. These may include (but are not limited to) emotions, feelings, relationships, cultural variables, etc. (3 points)
While speaking about cultural negotiating behavior, I would like to draw your attention to Hendon’s affirmation (1996, p. 9) that, ‘The greater the cultural differences, the more likely barriers to communication and misunderstandings become.’
So, for this reason, one important element that might have an impact on the negotiation is cultural differences or variables. It is no doubt that each party in the negotiation comes from different cultural settings. As a manager for WCT, I understand that we exhibit an entrepreneurial culture which fully emphasizes on innovation as well as taking risk.
However our counterpart on the other hand is characterized with maintaining loyalty, tradition as well as internal maintenance. This culture is consensual in nature.
For this reason, although my company might go an extra mile in taking risks, POP will only take what is traditional to them, being paid for meals and lodging and their usual salaries. It is worth noting that since the two parties are American based, there would be no serious cultural issues apart from what has been mentioned.
Another issue is relationship between the two parties. Thus, this question is considered to be very important, as Kalbfleisch (1993, p. 1) states that, ‘Interpersonal conflict is not perceived as a single, monolithic phenomenon to relationship parties.’
As noted in the case, these two companies have enjoyed the corporation between them and the mutual gains attained are so enormous that no one party would wish to do away with the other. For this reason, it is worth noting that negotiation is all about relationship especially when one party needs the consent of the other to attain its need.
During negotiation I foresee a situation where either of the companies will have to trade-in and give up one or two of their demands, for instance WCT might be compelled to increase the crew salary from $175,000 for the sake of it POP so that the later can easily come to showcase their new play in the coming days.
Similarly, since POP acknowledged that they have had a good relationship with WCT and they have been making profit, they might also give in terms of profit sharing provided the income from sale of merchandise is substantially higher. This will greatly impact on how the two parties will make their choices considering the fact that both need each other in future.
It is also no doubt that feelings and emotion from both sides of the negotiating teams will impact on how the exercise will be carried out. For instance, Bearison (1986, p. 14) states that, ‘Instead, the process of getting things done with words, the task of making good the pragmatics of language, depends on some rather subtle but robust skills for negotiating the intended meanings of our utterances in interaction with others.’
It has been observed that emotions influences how one makes sense of his or her surrounding since it is part of intangible needs especially when negotiating. In this case, my company WCT would feel that it has gotten the best deal in terms of maximum profit.
Considering the fact that am capable of handling my feeling and emotions by always using polite words, being more creative as well as showing respect for others and showing empathy will help in effectively communicating the views of the company regarding the deal with POP Production Company. On the same note, when feelings and emotion tend to flare, then anger and fear will be eminent.
This might result in loss of trust, narrowing focus from the main objectives of a deal to behaviors that leads to anger and misdirecting the goals and purpose of a deal. However having dealt with POP previously, the two parties have had a positive relationship that has led to building of trust hence making the impact of feeling and emotion not to be an issue of concern.
Another factor that might influence the negotiation is with regards to legitimacy. Once Mcginnis (2009, p. 1) said that, ‘The world does not have a recognized international rulemaker in humanitarian law, and certainly not one with any democratic legitimacy.’ In spite of the citation, it is doubtful whether legitimacy is considered to be not important value.
The negotiation is related to legitimacy and this will be guided by the blue book value from both sides. It is clear that from WCP no matter the situation, the board of directors will not pay crew salaries exceeding $250,000. On the same note, POP Production will at no time allow the host not to foot the lodging as well as meals bills.
Analysis Of Interests, Objectives And Currencies (both sides)
Items To Be Negotiated
For the cast and crew salary, the board of directors based on the laid down rules, can only release $120,000 this thus is the limit and the opening. However for the target, the value $175,000 was arrived at considering the fact that profit sharing formula has not yet been agreed upon and setting it at that will make POP accept a deal where the profit sharing might not be 50-50 basis.
The lodging and meals opening was arrived as $30,000 since I was willing to provide the cast with all meals but they foot the bills for lodging. The target which is $95,000 was arrived at since it includes everything paid for the cast and crew in terms of lodging and meals applicable only if POP stick on its guns.
Regarding the profits, the lowest that the board of directors can accept is $450,000 which is 50% of the ticket revenue. However, I would like the company to receive 75% of the profit and for that matter; the opening is $675,000 while the target is $550,000. The value is attained after considering the fact that there are hire chances for WCT to foot the lodging and meals bills.
Assumptions about the counterpart’s TARGETS and LIMITS:
Since we have worked with POP previously, they clearly know that know the salary for a cast and crew of 100. However, since they do not know the amount of revenue that will be generated while I clearly understand the estimate, sharing it half way might be pushed for by the production company that is why the value stands at $450,000.
For lodging and meals, the production company is expecting WCT to full y bear the cost. Based on the hotel rates, the value is approximately $100,000. However, there is a chance that if possible WCT can only foot $30,000 which is meals.
Preparing Your Strategy And Your Negotiation Approach
What alternatives are available to you in this negotiation?
There are two major alternatives in the negotiation, one is to share profits in a 50-50 basis and only foot meals bills. This will result in WCT spending $30,000 and the agreed cast and crew salary which will be $175,000. Another alternative is for my company WCT to pocket 75% of the profit, pay cast and crew $120,000 and fully meet the lodging and meals bills. Another minor alternative is to go by what the other partner has in stake.
Which of these alternatives is your BATNA?
In any negotiation setup, one has to fully prepare himself or the team with a best alternative to be used incase the current one fails. For me, my BATNA will be second one in which WCT to pocket 75% of the profit, pay cast and crew $120,000 and fully meet the lodging and meals bills. This is because WCT will still make profit and maintain the good working relationship with POP production Company.
What assumptions can you make about your counterpart’s Alternatives and Batna?
The assumptions I hold about POP Production Company are; they will no go anything short of being accommodated and meals fully paid, they also expect crew salary of $120,000 and to share profit in a 50-50 basis
List ALL the questions you plan to ask your counterpart to uncover his/her needs and interests, and to validate or invalidate your assumptions about him/her
- Please let me know your expectation in this deal.
- Is showing your cast Oceania in WCT of benefit to your company, please elaborate
- Are you willing to take in 25% of the profit from ticket revenue?
- Can you foot the bill for cast and crew lodging and meals?
What information do you feel you should PROVIDE to your counterpart?
It would be rational for me to tell the other party that revenue generation from tickets is a subject of the percentage of how the theater room will be full. Additionally I will let them know that the board of directors is only capable of paying them $120,000 in terms of salaries and other expenses.
What information do you feel you should WITHHOLD from your counterpart?
One set of information I will withhold from POP Production Company negotiating team is with regards to the corporate autograph parties which are deemed a special event. The details regarding the income opt to be kept a secret.
What Creative Options do you want to explore during this negotiation? Complete the table below to explain your ideas
List of References
Bearison, D. (1986) Thought and Emotion: Developmental Perspectives. Hillsdale, NJ: Lawrence Erlbaum Associates [online] available from [9 October 2011]
Hendon , R. (1996) Cross-Cultural Business Negotiations. Westport, CT: Praeger. [online] available from [9 October 2011]
Kalbfleisch, P. (1993) Interpersonal Communication: Evolving Interpersonal Relationships. Hillsdale, NJ: Lawrence Erlbaum Associates [online] available from [9 October 2011]
Mcginnis, J. (2009) ‘Notre Dame Law Review’. Democracy and International Human Rights Law [online] available from < Questia. Web> [9 October 2011]
Ramundo, B. (1994) The Bargaining Manager: Enhancing Organizational Results through Effective Negotiation. Westport, CT. [online] available from [9 October 2011]