Negotiation is an important stage which is used by the parties to find common grounds regarding the terms and conditions of the subject. It includes preparations, strategies, persuasion, communication and identification of key focus areas in the contract. It is essential for both the parties to understand various aspects and stages of the process. The three main stages include pre negotiation, negotiation and post negotiation decisions (Menkel-Meadow and Schneider, 2014). It includes BATNA (Best Agreement to Negotiated Agreement) and ZOPA (Zone of Possible Agreement). The present report is based on the negotiation process of celebrity endorsed advertisement campaign for Mike Hussey. He is a former Australian cricketer and the negotiation is with Channel Nine’s cricket coverage.
BATNA (Best Agreement to Negotiated Agreement) is considered as the best alternative course of action which is taken if the negotiation fails. On the other hand, Reservation value is the least amount for which the person agrees to enter in a contact. The price claimed by the manager of Mike Hussey is $ 1 million. The BATNA for the client is $ 800,000 and the reservation value is $750,000. The BATNA and reservation value has been increased due to the likelihood and interest of other party in entering the endorsement contact with the client. Aggressive technique has been used because the other party is expected to bargain and negotiate on the terms of the contract (Keough, 2017). Apart from this, the client has many other companies which are offering him competitive prices.
The BATNA for Channel Nine is $ 725,000 and their reservation value is $740,000. The BATNA for the company is weak because they have fewer alternatives (Mazei, Hüffmeier and Hertel, 2015). They need Mike Hussey for the endorsement of their cricket matches and post shows. They have already decided to enter into contract with him in their discussions with the board. After assessing the BATNA and reservation value of Channel Nine it can be seen that it is reasonable offer from the client’s side. The other celebrities who are hired for the endorsement by Channel Nine have received the same amount of money. The BATNA of Mike Hussey is strong in comparison to the company. It will provide better opportunities to the client in negotiating with the deal (Morley and Stephenson, 2015). The company may extend the number of years for the contract which will be considered at the time of negotiations.
ZOPA (Zone of Possible Agreement) range is the space between the party’s reservation prices (Pruitt, 2013). The reservation price for the client is $750,000. On the other hand, the reservation price for Channel Nine is $740,000. The difference between the two prices is the ZOPA range in this situation. It can be positive or negative depending upon the buyer and seller. In this case, the ZOPA is negative as the client is expecting more while the Channel is offering less. But there is less gap between the two which increase the possibility of negotiation and entering into an agreement. Furthermore, the stance of the client is strong because Channel has less option. The best strategy to claim better proportion of ZOPA is to reduce bluffing because it can affect the relations with the company (Valley, 2015). The strong position should be used to convince the other party to enter into agreement.
The negotiation process with Channel Nine is very important and it is essential for the negotiator to follow a systematic approach (Ting-Toomey, 2017). It will help him to gain deeper understanding about the other party and it increases the chances to enter mutual agreement stage. The steps which have to be used in the process are:
Planning: It is important for the negotiator to understand the perception and requirements of the other party. Preparation has to be done in advance to make sure that all the objectives are clearly specified by both the parties. Bluffing should be avoided because it affects the relations and send negative expressions (Rubin and Brown, 2013).
Setting standards: It is beneficial to set standards for the negotiation. The initial proposal was received by both the client as well as Channel Nine. The time constraint and the place were decided to where negotiation phase will take place. Apart from this, the issues which both agree and the issues which need negotiation were identified and shared with each other (Morley and Stephenson, 2015).
Providing justification: The justification should be provided to the other party to increase their satisfaction level. It will create a win-win situation and both of them will be happy with the deal. Documentation can be exchanged to get further clarifications (Ren and Zhang, 2014).
Bargaining: A proper bargaining method should be avoided and the other party’s consideration should also be understood. The suggestions and alternatives given by Channel Nine were considered and proposal was given to them in exchange as well (Mehta, Mor Yap and Prasad, 2015). Both parties should focus on getting on same track and they should avoid bluffing.
Closure: Channel Nine and the negotiator of Mike Hussey both took some time to make sure that they understand all the terms and conditions. The objectives were revisited before arriving at the outcome. Finally, the agreement was done in a written format and follow-ups were taken (Keough, 2017).
|
Date |
Methods |
Item discussed |
Outcome of the communication |
|
1st May 2017 |
Sharing proposals in a written format |
Initial terms and conditions |
The terms and conditions were agreed. The contract was for three years. |
|
1st May 2017 |
Interpersonal meeting |
Price proposals |
The price proposals were shared but client demanded increase in price. |
|
4th May 2017 |
Interpersonal meeting |
Final price for the contract |
$750,000 was the final price which was accepted by both the parties. |
|
4th May 2017 |
Interpersonal meeting and written documentations |
Changes in the terms and conditions |
Written documentation was done. |
|
4th May 2017 |
Documentations |
Things which will not be included in the contract or bounded through contract |
Certain points were included in the contract such as travelling expenses to be beard by the company, client cannot enter contract with other channels for 3 years etc. |
This is to inform you about the proposal for Channel Nine’s cricket coverage. The initial terms and conditions included a three year contract with Channel Nine for their endorsement and cricket coverage. They have also agreed to pay for the travelling and accommodation charges for their brand promotion. The earlier price which was quoted by them was $725,000 for the contract. The price quoted by the manager was $ 800,000. The company wanted to reduce the number of years with the same price. But this proposal was rejected after discussing with you. Channel Nine has less time to find a sport personality and they are offering huge amount for the advertisement campaign. They are also ready to price all the additional services and benefits apart from this.
After a long negotiation, the price of $750,000 has been decided by mutual agreement. The contract will be for three years and they will be proving travelling and accommodation. The company is interested only in hiring reputed and famous personality like you. It will be beneficial for long term relations with them. Furthermore, this is that highest price which they have offered to any sports celebrity. All the terms and condition have been read and evaluated. The condition for the expanses for travelling, accommodation and other related activities have been included. They have also included a clause that Mike Hussey cannot enter into contract with other cannel for three years till the contract expires. It is justified as they have been very supportive in accepting all the terms and condition laid down you.
Therefore, it will be beneficial for you to join Channel Nine Team for three years. They have big brand name in the country and they want you to represent them. They have everything in written documents which have been checked. It is according to the terms that we demanded from them. It is advisable to enter into contract with them as they have been very excited to have you as their endorser.
Conclusion
It can be concluded that negotiation is systematic process which involves understanding and assessing the requirements of other parties. The BATNA (Best Agreement to Negotiated Agreement) and reservation value should be decided after evaluating the number of alternatives and option available for the client. The ZOPA (Zone of Possible Agreement) has to be assessed and opportunities have to be utilized to gain more proportion of the gap. Furthermore, the communication logs have to be prepared and recorded. Apart from this, post negotiation documentation have to be done to make sure all the conditions are included in the contract.
References
Goldberg, S.B., Sander, F.E., Rogers, N.H. and Cole, S.R., 2014. Dispute resolution: Negotiation, mediation and other processes. Wolters Kluwer Law & Business.
Keough, C.M., 2017. Negotiation and Bargaining. The International Encyclopedia of Organizational Communication.
Mazei, J., Hüffmeier, J., Freund, P.A., Stuhlmacher, A.F., Bilke, L. and Hertel, G., 2015. A meta-analysis on gender differences in negotiation outcomes and their moderators. Psychological bulletin, 141(1), p.85.
Mehta, P.H., Mor, S., Yap, A.J. and Prasad, S., 2015. Dual-hormone changes are related to bargaining performance. Psychological science, 26(6), pp.866-876.
Menkel-Meadow, C.J. and Schneider, A.K., 2014. Negotiation: Processes for Problem Solving. Wolters Kluwer Law & Business.
Menkel-Meadow, C.J. and Schneider, A.K., 2014. Negotiation: Processes for Problem Solving. Wolters Kluwer Law & Business.
Morley, I. and Stephenson, G., 2015. The social psychology of bargaining (Vol. 17). Psychology Press.
Pruitt, D.G., 2013. Negotiation behavior. Academic Press.
Ren, F. and Zhang, M., 2014. A single issue negotiation model for agents bargaining in dynamic electronic markets. Decision Support Systems, 60, pp.55-67.
Rubin, J.Z. and Brown, B.R., 2013. The social psychology of bargaining and negotiation. Elsevier.
Ting-Toomey, S., 2017. CONFLICT FACE-NEGOTIATION THEORY. Conflict Management and Intercultural Communication: The Art of Intercultural Harmony, p.123.
Valley, K., 2015. Social Distance and Negotiation.
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