NEGOTIATION: THEORY, CONTEXTS, AND PRACTICE
Part A
Negotiating parties develop BATNA in the course of their negotiation operations as a safety net to ensure their position and future is effectively safeguarded despite the direction taken in the negotiation. It is vital to note that all the negotiating parties engage in the process with the view of benefiting or attaining high-profit levels. In the case, of failure or challenges in the negotiation process presentation, the BATNA as the fallback plan. The BATNA provides the negotiating parties with the most advantageous alternative that the negotiating parties can take in the cases that the agreement or the negotiations fail. The BATNA marks the negotiating party alternative for the unsuccessful negotiations. There is a great need for negotiating parties to develop a BATNA before they start engaging in any negotiating process. Getting to the negotiation process with known BATNA information arms organizations with an alternative in the case of failed negotiations empowers one with the negotiating power and established a reservation point. The difference between the BATNA of both the negotiating parties presents an area of the potential agreement, thus making it possible to enter into business agreements. Therefore, developing BATNA ensures that negotiating parties enter into agreements such that both parties achieve benefits and profits when a deal is made. There is a need to carefully develop a BATNA while at the same time think objectively and critically on the BATNA of the other negotiating party to ensure that mutual benefit is realized from the deals made in the case negotiations and agreements fail.
The incorporation of BATNA in the course of making negotiation between different negotiating partners ensures mutually beneficial agreements are made even in the event that negotiations fail. This approach ensures that deals must be made despite the prevailing situation between the negotiating parties. Negotiations fail since both the negotiating parties intend to maximize benefits and profits from the deals made. The negotiating parties fail to make compromises to give way for the success in the negotiation process. This fact makes the negotiation to be and standstill despite the two parties requiring a deal to be made for success in their different operations. The creation of a BATNA ensures that one has the limits they can accept the different deals in the case that the negotiation fails. On the other hand, having the information on the BATNA of the counterparty enhances the setting and adjusting the own BATNA to the point that it is within the potential agreements zone. This approach ensures that despite both the parties failing to make an agreement, they can enter a deal using their BATNAs for the mutual benefit of every party to the negotiation.
The BATNA between the two parties ensures that both the parties have sufficient negotiating power such that the negotiation partners are able to maximize their chances of making deals and make profits/ benefits. The negotiating power, in this case, arises since the companies have information on the limits they can go in the negotiation to realized rational profits levels. This fact makes them engage in active negotiation with the intention of raising profits and benefits above that could be made in the cases of a BATNA. As the profit levels rise above the profit that would be made in the case of a BATNA, then an organization is assured that it is in the right path as per the negotiation process. On the other hand, having information on the BATNA of the counterparty ensures that one can effectively make negotiation with the other parties while still maintaining the potential agreement zones. The bargaining power will be achieved when one company advances on high levels within the potential agreement zone. Therefore, having BATNA information of both the negotiating parties ensures that they have the bargaining power since they have sufficient on the gains to be achieved from both the parties ones a deal is sealed.
BATNA differences between the negotiating parties both parties have a reservation point meaning the set the lowest prices they are willing to accept when negotiations fail. The negotiation parties enter into the negotiation with the intention of making the highest possible profit from the different deals. However, it is important to note that making deals beyond a certain level/price can result in losses being recorded. In this regard, there is need to set prices beyond which the negotiating parties cannot sign a deal or agreement. The BATNA incorporates the reservation points to establish the point or the level that an organization can enter a deal so as to realize some profits event in the case that negotiations fail. On the other hand, having the BATNA of the counterpart enables one to estimate the reservation point or prices within the reservation point. In the course of negotiation, one ensures that they based their negotiation on the preservation point as established under the BATNA, thus making it possible to maximize on the profits while reducing the loss levels. Therefore, there is a great need to develop a BATNA before negotiation while has information about the BATNA of the counterparty to ensure the negotiation are within the reservation point, thus making it possible to make deals.
The BATNA is applied in two stages before and after the negotiation starts, thus making it easy to find a way for a business or operations deal. The pre-negotiation BATNA enables an organization to make changes on factors that can control or influence the outcome of a negotiation. In this regard, organizations handle the different factors in their interest while considering the interest of the other party to ensure that chances of entering into a deal are increased before engaging in any negotiations. On the other hand, when the negotiations start the BATNA element of being dynamic comes into play. The dynamic aspect of the BATNA ensures that changes in different elements and factors of negotiations can be changed in the interest of bringing both parties to a deal even after negotiations have failed. The BATNA development process needs to consider the profit point of one organization while considering the benefits of the counterparty since one has the BATNA for consideration.
Organizations getting into a negotiation need to develop BATNA for their own interest while considering the BATNA of the counterparty, thus increasing the chances of making a deal even in cases that negotiations fail. The BATNA is employed as a last resort in the negotiation process to ensure that least interests of every party are incorporated in the deal, thus making it possible to enter in a deal that is mutually beneficial. BATNA need to be viewed as an ongoing, dynamic measure of negotiating strength that enables the negotiating parties to make decisions on whether to enter into a deal or quit. The adoption of BATNA in the process of negotiation ensures that the negotiating parties adopt an informed and disciplined approach in the negotiation. The fact that all the negotiating parties have their BATNA as well as those of the counterparties they are able to incorporate their interest and those of other parties in the negotiation thus ensuring a mutually benefiting deal is made.
Part B
Organizations that have been in business and relationship need to consistently negotiate on business terms due to changes in economy and environment, thus achieving sustainability in the business operations. In this case, TNL and PVS have being engaged in business for a period of more than fifteen years, and changes in the market and the environment have proved unbearable calling for the two businesses to engage in negotiation in the interest of continued business operations. TNL is involved in supplying fresh produce such as root crops and brassicas to supermarkets owned by PVS. In the period that the two companies have been in business, there have been regular negotiations on prices and supplies in line with the changes in the market. In the recent past, the cost incurred by TNL in supplying different products due to the additional cost of freight and security against terrorist incursions. In this regard, TNL is need of capital sourcing for capital to create private security for patrolling the farms in the interest of cutting the security costs. However, TNL is not interested in raising the issue of capital bit instead wishes to engage in negotiation to increase overheads cost in transport and wages to ensure the security costs are sufficiently covered. On the other hand, PVS is faced with challenges cutting some costs such as transport, heating, wages, and lighting and struggling with competitions. Therefore, in this case, TNL would wish to revise the costs by the inclusion of additional costs while TVS would wish to reduce the costs by all means and thus there is need for negotiation to gain a common ground that would enhance the attainment of mutually beneficial agreements.
Advice to TNL lead-negotiators
TNL Company is interested in raising capital to cater to the arising financial needs due to security and freight costs. The negotiators at TNL needs to consider the background information on the issue of negotiation to make sure that they can effectively convince PVS to raise the buying price to cater for their security and freight costs. The TNL negotiators need to approach the negotiation table having sufficient I formation gathered through background operations. Sufficient information strengthens the bargaining point to the negotiators’ advantages. For instance, TNL needs to have information on the approach that has been adopted by other similar companies engaged in similar operations. This fact makes it possible for PVS to be convinced about the need to commit additional money for TNL operation.
The TNL needs to be armed with the goals of the negotiations to ensure that they gain maximally in the discussions. The goal of the negotiation is to increase the selling price or overheads for the fresh products to cater for the additional freight and security expenses. The goals set should be set within a specified range within which the TNL can accept a deal. The range within which the acceptance should be made should ensure that the additional expenses are efficiently covered. Therefore, TNL having set goals within a range ensures that TVS is convinced to fall within the price that the additional cost will be covered.
The TNL needs to have a plan for the process of spearheading and managing the negotiation process with the need to achieve the desired goals. Plans are important to ensure that one can navigate through unforeseen obstacles by effectively through the adoption of contingency plans and hypothetical scenarios. The planning enables the TNL to be prepared to handle any eventuality that can arise in the course of the negotiation. For instance, in the case, TVS negotiators protest the new prices or deal what actions should be taken, such as walking away or providing an alternative deal. On the other hand, the TNL can start at presenting the issues at hand, thus establishing the need for revising the prices. In this case, the TVS can be relied on in giving a solution to the existing problem. Therefore, having a plan develops the process of bringing the counter negotiator to an agreement.
Advice to the PVS lead-negotiators
The PVS lead negotiators are to ensure that the prices of the fresh products from remains the same or reduce in the interest of competition and meeting other expenses. The negotiators, in this case, need to be prepared to effectively handle the negotiations to their advantage. The TVS negotiators need to have confidence while approaching the negotiation process, thus making it possible for them to stand their ground. This approach will make it possible to convince TNL to stick to the earlier prices or even reduce the prices to ensure that PVS will have the upper hand in the market. For instance, confidence can be detected from the fact that PVS has the option of buying one of the Kenyan companies to reduce the expenditure. This will mean that TNL will be out of the business, thus inclining them to take the current offer from PVS.
PVS negotiators need to have a sense of self-interest in the negotiation since they need to effectively reduce their expenditure to navigate in the market that is characterized by competition and high cost of running the business. The reduction in the cost of running the business needs to start with the reduction of fresh supply cost from TNL. This fact should ensure that the negotiators guard their self-interest at any cost for this negotiation can mean success or failure of the business. In this regard, the PVS need to push TNL to reduce the price of the fresh products or give them another deal that will safeguard their interest, thus ensuring that their survival in the market is attained.
PVS need to approach the negotiation with a great sense of objectivity in ensuring that the long business relationship thrives and continues to flourish. PVS and TNL have been in a business relationship for a period exceeding fifteen years, and thus there is a need to ensure the relationship remains sustainable by making the condition favourable for each other. The objectivity, in this case, calls for equal observation of interest of both the parties. For instance, PVS need to see that TNL has raised genuine concerns due to additional expenditure on freight and security charges and thus make appropriate deals share the burden of the additional costs. On the other hand, PVS can decide to pay for the freight and the security costs in the interest in maintaining business relationships. Therefore, objectivity in the negotiation ensures that companies can accommodate each other issues, thus enhancing a sustainable business relationship.
(ii) The best alternative to a negotiated agreement
The BATNA ensures that both parties factor in the genuine issues brought by the two negotiators and thus incorporated in the deal. The BATNA is developed in the case that both the companies fail to agree on a deal. Therefore, both the companies set leverage through setting limits in the negotiation while at the same time maintaining a room for bargaining. In the case of the TNL and PVS, the issue of concern is the additional cost of freight and security charges. The two companies need to establish a process of settling the additional cost. In this regard, the best alternative to a negotiated agreement will be to cost-share the additional costs of security and freight. This approach ensures that no single company is overburdened with the additional cost and thus ensuring that the business operations and relationship are sustainable.
Part C
The negotiation issues in part A and part B have differences and similarities that need to be considered in ensuring that deals are achieved despite the challenges and barriers. First, part A and B indicate that there is a need for a plan before negotiation to achieve. However, the negotiation process in the different parts can take different paths in the interest of finding the solutions to the negotiations barriers.
Negotiation in part A and B indicate a great sense of flexibility in attaining the goals of the negotiation. The flexibility is indicated from the applications, best practices, approaches and tactics employed in the course of making a deal. The differences arise in the different paths adopted in exploiting the flexibility nature of the negotiations. The different paths adopted are directed towards ensuring the deals are attained despite the challenges.
Part A and B success is based on having sufficient background information on the issues and aspects of the negotiations. Background enables one to have the bargaining power as one have information to compel the counterparty to take the desired position. In the case of BATNA one party having its information and strength intact while at the same time having information on the other partner BATNA information makes it possible to exploit them to accepting an identified position. In the case of part B, the information gathered entails benefits, strengths and weaknesses of the counterparty to make it easy to convince to enter into a deal.
Conclusion
Negotiation is a vital aspect of every business as it enhances the continuity of businesses operations, especially when underlying issues are affecting preventing businesses operations and deals. Barriers and challenges to businesses operation arise due to the changes in the market and in the environment, thus making it unprofitable to conduct business operations. In this regard, businesses engage in negotiation to accommodate and compromise issues affecting their business partners, thus making it easy to proceed with business operations. BATNA is employed in the negotiation of the case fail, but some limits can be exploited to accommodate the negotiating parties, thus making it possible to achieve a deal. The negotiating parties success in the employment of BATNA is made possible when they have sufficient information about the counterparty. On the other hand, in the negotiation between the TLN and PVS, every party need to be effectively prepared for the negotiation by incorporating the points of strength to the point of attaining the best alternative to a negotiated agreement.
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