In simpler terms, the full form of BATNA is Best Alternative to a Negotiated Agreement. It is one of the most important tools, which are used by negotiators in order to handle the imbalances occurring during the negotiation of financial resources with the opposing party (Harvard University, 2012; Andrade et al., 2010; Kim & Fragale, 2005). Thus, the client’s BATNA is identified to be at a value of AUD$2,000,000, which can be depicted from the below table 1. If possible, increase in additional rate, either 15% or 20% can be negotiated as well.
The client’s reservation value is identified for being at a minimum price of AUD$2,200,000 as estimated in the above table 1. It can be understood that this value is the maximum price that will be paid by the consumer based on attaining success in negotiation in the advertising campaign with the new customer. Thus, the alternative price to be expected was AUD$2 million, which is the actual BATNA value of the client. This is expected to be made through the negotiation of the advertising campaign (Hu 2015).
Another Party involved in this case is Decathlon Sporting Goods, as they had offered a price amount, which was not intimidating. Table 2 above projects the maximum value offered by them at a price of AUD$482,921, so, it is understood that the alternative price to be expected (BATNA) from the Decathlon Sporting Goods was AUD$482,921. Similarly, the above table 2 also highlights the reservation value amounting to be AUD$531,213 including the additional 10%, which is expected by the Nike Inc. (US) of Australia after successful negotiation.
ZOPA range is referred to as the Zone of Possible Agreement and is implemented when a party hired negotiates in terms of the products to be endorsed, especially through advertising campaigns. It can only be identified after succeeding in negotiating at a fair price accepted by both the parties (Lai & Turban 2008). In the current scenario, the ZOPA range is expected to be an additional of 10%-20% of the total expected negotiation price of AUD$2 million.
At the time of negotiation, several strategies can be used by a negotiator in terms of generating positive outcomes of ZOPA range. One of the effective strategies to attain the desired outcome is to engage in various transactions taking place under the negotiation process. This also includes residing within the national boundaries of Australia and a social security number of a negotiator (Stephen Dale). Enabling the users to join directly in the official website of Nike Inc. (US) by providing their respective email addresses can ensure verifying the client and negotiators. Besides, ensuring that a negotiator has a valid account number, a presence of minimum Fair Isaac Credit Organization (FICO) credit score of at least 520 along with the presence of valid address and driving license can help in generating a greater proportion of the ZOPA range. Another approach can be proposed to the lenders for verifying all the aspects to be practiced. Maintaining privacy information of a negotiator, the borrowers and lenders can communicate with them after verification can create effective and higher chances of meeting the expected goal. This can be considered to be a greater proportion of ZOPA range starting from a minimum of additional 10% to the 20% or more than the overall expected value of $2 million (Gonzalez & McAleer 2011).
There are several more strategic approaches through which a greater proportion of the ZOPA range can be enabled. It is usually known that online platforms are common for communicating with the negotiator about the negotiation. This approach can be effective by implementing the strategy of face-to-face communication. This can be applied by a negotiator to communicate with their targeted client for persuading or convincing them to make a deal at a reservation value for the contract. In casual terms, a negotiator when negotiating with the client or a buyer may close the deal and move on to the next interested client for making a promising deal. However, this approach has been observed to have a negative impact. Instead of approaching this tactic, staying to one potential client with the capability to make a deal at a reservation value can be productive. Prioritising the client’s perspective and persuading them through social interaction can help in making the deal (Schroeder et al. 2014; Larrimore et al. 2011; Murtoaro & Kujala 2007; Lax & Sebenius 2004).
Stage 2: Negotiation
Richard Marsh
Email: [email protected]
13-02-2019
By email: [email protected]
Stephen Dale
Chief Executive Officer
Bell Potter Securities
Dear Stephen,
I want to confirm that you have been appointed as an agent for our company to represent the tennis sensation, Roger Federer to negotiate in terms of promotional campaign contract. This contract involves an endorsement of the tennis shoe, which is the latest product in the global market sold by the reputed Nike Inc (US) website; www.nike.com/au
Re: Negotiation for Roger Federer Endorsement Contract
This is to inform you that one of the alternative retailers of sporting goods, Decathlon Sporting Goods approached us for handling these activities. However, they offered us with a fee of only AUD $482,921, so I would want you to endorse the activity in order to negotiate this contract with Nike Inc (US). I expect a negotiation at an appropriate fee with a minimum of an additional 10% more than the previously offered fee.
As our agent for Roger Federer, instructions for the negotiation of the advertising campaign contract will be detailed when you contact the agent (Shawn Higgins) of Nike Inc (US) in his e-mail [email protected] .com.
You will also be negotiating the duration of advertising campaign because keeping it for longer duration can lead to overexposure. This can further affect the endorsement value of Roger Federer. If the campaign exceeds the duration of 3 months, it can negatively impact whereas if it less than 3 months can be favourable. Even if it is exactly 3 months then, it will have no effect.
We expect Nike Inc (US) to make sales worth of $2 million however as expected, they have estimated a bit less due to the contract fee of the campaign. If this happens, I would request you to negotiate the clause of contingency for the inclusion of the contract for avoiding any impossibility.
I hope to receive a successful negotiation report from you on this advertising campaign contract with Nike Inc (US).
Stephen Dale
Email: [email protected]
13-02-2019
By email: [email protected]
I thank you for joining hands with our company (Nike Inc. (US) for making our advertising campaign successful by agreeing on the contract deal made by our negotiator. I am pleased that you chose the right decision in making a deal for endorsing our new shoes based on the preference of the tennis sensation Roger Federer. We were in search of a business party for endorsing the highly valued and new launched shoe in the world of sports. With your presence, we are not worried about the investment made by you on the advertising campaign but instead, this enabled us to focus greatly upon the advertising campaign for making it more effective and productive. We were also able to exceed the sales of over AUD$2 million through the advertising campaign. Though this initiative, we were able to provide you with a return at a rate of an additional 5% of your overall investment made in the campaign.
Besides the endorsement returns, which you would be receiving will be based on the below figure for the stated time period after the campaign of advertising the product starts. Since business is bound to go through challenging situations, we were able to avoid similar issues. Overall, your involvement was a major part of the company’s success in generating sales of AUD$2 million through the advertising campaign. We now know each other, our company have decided to make a deal with you in the future at a negotiable price for new campaigns. To become regularly updated about the services, which you will be receive in future and regulations of investment, you can directly consult with our agent Shawn Higgins through his email ([email protected]).
I would want to give full credit to our negotiator for making the advertisement campaign successful through your negotiating skills and abilities. Often, I have observed that not all the negotiators at the present generation of the digital era can succeed in negotiating, but I think you were able to execute the strategies of negotiation. Effectiveness was also displayed under several areas of the negotiation process. Even the use of communication through online was made effective, in addition to. face-to-face communication. On comparing the two communication approaches, effectiveness rate was higher for face-to-face communication with the client. Since our company will be conducting more number of events associated with a similar product in the future, I would want you to take part in it as a negotiator in future and I hope you look forward to co-operating with the same level and same intent, which was shown similarly in the present advertising campaign
Yours sincerely,
Richard Marsh
References
Francisco, A.,, Paulo, N., Davide, C., John., Z., & José N 2010, ‘Using BATNAs and WATNAs in online dispute resolution’, Conference Paper, pp. 5-18.
Gonzalez, L., & McAleer, K 2011, ‘Online social lending: A peak at U.S. prosper & U.K. ZOPA’, Journal of Accounting, Finance and Economics, vol. 1, no. 2, pp. 26 – 41.
Harvard University 2012, ‘BATNA basics: Boost your power at the bargaining table’, Management Report, pp. 1-11.
Hu, Q 2015, ‘Bundling and consumers’ reservation value: Effects on market entry 2015’, Technology and Investment, vol. 6, pp. 77-81.
Kim, P. H. & Fragale, A. R 2005, ‘Choosing the path to bargaining power: An empirical comparison of BATNAs and contributions in negotiation’, Journal of Applied Psychology, vol. 90, no. 2, pp. 373-281.
Lai, L. S. & Turban, E 2008, ‘Groups formation and operations in the web 2.0 environment and social networks’, Group Decision and Negotiation, vol. 17, no. 5, pp. 387-402.
Larrimore, L., Jiang, L., Larrimore, J., Markowitz, D., & Gorski, S 2011, ‘Peer to peer lending: The relationship between language features, trustworthiness, and persuasion success’, Journal of Applied Communication Research, vol. 39, no. 1, pp. 19-37.
Lax, D. A. & Sebenius, J. K 2004, ‘How no-deal options can drive great deals: When actions away from the table eclipse face-to-face negotiation’, Improving the Practice of Management, vol. 78, no. 7, pp. 1-9.
Murtoaro, J. & Kujala, J 2007, ‘Project negotiation analysis’, International Journal of Project Management, pp. 1-12.
Schroeder, J., Rien, J., Gino, F., & Norton, I. M 2014, ‘Handshaking promotes cooperative dealmaking’, Harvard Business School, pp. 1-37.
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