Strategizing & Planning for two negotiations
Introduction
Negotiation is referred to as the process through which two individuals or parties settle their disputes by eliminating the factors of differences. Negotiation also comprises agreements based upon which arguments are being settled (Lewicki, Barry, & Saunders, 2016).
This report is based upon opening up a new establishment hence the process related to it such as negotiation and strategic planning will be addressed in this report. The report has been divided into two sections comprising of part A and part B, where based upon three essential elements the report will be presented in a brief and summative assignment that includes negotiation, strategy selection, and planning.
Part A.
Negotiation goals
Identify two negotiation goals
The two negotiation goals for the Café establishment in downtown Edmonton are as following.
• To provide $ 10,000 of profit during the end of 1st year on the selling of their products to Janice Lindeman.
• To provide additional rent of $ 27 per square foot of rental service for space to Janice Lindeman after one year of business operations.
The goals of the negotiation have been set out based on the brief agreement between the café owner and owner of the space Janice Lindeman.
The owner was asking for $ 12,000 of profit and $ 30 per square foot rent for the café business. But after a brief negotiation, both parties have settled on the above agreement terms. Hence, the above goals are justified according to the situation.
Strategy selections
Explain your choice of strategy and the tactics
Examining the negotiation goals I have taken up the integrative negotiation strategy based on which I have found out a way through which both the owner of the space and I can develop a win-win situation for ourselves. The strategy of integrative negotiation makes it easier for both the entities to work together and determine a beneficial solution (Fleming & Hawes, 2017).
In this case, Janice Linden has got an offer that he feels is profitable for herself, earning $ 10,000 makes her 1,20,000 thousand per year which is a good deal. On the other hand, I can also save $ 24,000 thousand per year and invest the amount in the growth of the business.
Planning
Assembling the issues, rank their importance and define the bargaining mix
Identifying the issues that might have a negative impact on establishing the core business includes as following.
• Negotiating for the rental space with the owner
• Determining the profit-sharing ratio with the Janice Lindman
• Accessing the business environment of the coffee industry
• Determining the price and latest trend among coffee business
• Determining the target market
Bargaining mix
Substantive interests: During this stage of the bargaining mix both that parties me and Janice Lindman engage in conflict on the terms of negotiating on earning a large profit share and more values.
Process-based interests: During this stage, both parties were concerned about the results that are to be generated through the negotiation stage.
Relationship-based interests: Examining this stage of the bargaining mix it has been noticed that both the concerned parties look towards building the relationship for future business prospects.
Intrinsic relationship: Values within the relationship are being generated through this negotiation stage in order to strengthen the existing relationship between the two concerned parties.
Instrumental relationship: In this stage of bargaining mix both parties receive some tangible or substantive values that grow their friendship.
Interests in principle: Through this stage of bargaining mix common interest among the two parties is being maintained that eliminates the risk of conflict during negotiation.
Define the interests of each party
Examining the interest of each party it has been noticed that through the negotiation process I am looking to get a better deal which will keep my interest in leasing the space so that I can open up a new café in downtown Edmonton (Hendricks, 2017).
I am looking to rent the space for $ 27 per square foot that will make it easier for me to open up the store while managing other requirements as well. Whereas, the interest of Janice Lindman is to earn profit along with availing a higher lease amount while renting out space to me.
While she managed to accept on a common term but on a condition that after one year I will have to increase the profit-sharing ratio while providing the same amount of fare for leasing the space.
Why do these matter to you
The negotiation process matters to me the most as because based on the outcome of the negotiation I will be able to open up the café outlet along with investing a small amount of money in different business activities so that I can achieve my short-term goals easily (Horton-Deutsch & Sherwood, 2017). Moreover, the negotiation plan will also help me in determining my future strategies for business expansion.
Which interest has been considered intense or instrumental
Instrumental negotiation has been carried out with Janice Lindeman where both the concerned parties negotiated on the basis of different terms in order to extract outcome that makes it easier for both of them to enjoy a win-win situation.
During the process of instrumental negotiation, the central focus is on achieving outcomes without being reaching out for an agreement. Hence, instrumental interest has been considered by both the respective parties.
Explain your alternatives (BATNA)
BATNA is known as the best alternative to a negotiated agreement, this process is being used for the purpose of identifying alternative options in terms of closing a negotiation process (Schaerer, Teo, Madan, & Swaab, 2019).
In this scenario, if Janice Landeman does not agree to the above mention terms then I will propose another alternative idea. I will pay her $ 30 per square foot of space area for lease but I will negotiate in terms of paying her $ 10,000 as profit, I will tell her if I earn $ 35,000 profit at the end of the first year then I will pay her $ 10,000 or else she will be paid $ 8,000 as per profit sharing ratio. State your negotiation limits, including a resistance point
My negotiation limit will be based upon offering her $ 27 per square foot as rent for space and $ 10,000 as profit if she agrees then the deal will be feasible for both of us and if she resists then I will resist my negotiation to paying her $ 30 for the per square foot rent and $ 8,000 as profit.
Based on your research, state what you think the other party’s goals and resistance points are
Janice Linderman’s resistance point will be to negotiate up to receiving $ 12,000 as profit and at least $ 27 as the rent for space area, as she also knows that once the business start running then she will also earn more profit.
State your target and opening bids target and opening bids will be to offer her $ 25 for the lease of space and $ 10,000 as profit, I will try to negotiate on this offer as I will have to manage my expenses so that I can sustain the business and pay out my extra expenses.
Access the social context of the negotiation
The social context of the negotiation will be to foster future relationships so that better business opportunities can be generated and more profits can be earned.
Diagram of field analysis
Figure 1: The social context of Negotiation Field analysis
Source: Author
Part B.
Negotiation goals
Identify negotiation goals
• To provide a Hydrid pricing strategy and open two separate coffee sections for students and workers.
• To earn a profit of $ 35,000 at the end of the first year along with achieving at least 2% growth.
Identify issues associated with each negotiation goal
• Maintaining service standardisation along with offering different services to cater to both the target segment.
• Growing competition from local coffee shops and changing trends in the industry.
Strategy selection
Explain your choice of strategy and the tactics
An accommodative negotiation strategy will be undertaken in order to maintain a relationship between me and my partner at a personal level. The accommodative negotiation will also help us in resolving conflict along with taking up decisions that will generate higher success for the start-up business form (Brett, 2017).
Based on the accommodative strategies insights will be gained in order to construct goals that increase the competency and eliminating the risk that might lead to an impact on the overall growth of the café business. Moreover, this strategy will also motivate the employees within the organisation to work efficiently towards achieving the set objectives of the establishment.
Planning negotiation
Assembling the issues, rank their importance and define the bargaining mix
• Negotiating in terms of deciding the format of the store
• Deciding on the pricing strategy
• Determining the profit sharing ratio
• Services to be offered
Bargaining mix
• Substantive interests: During this stage, the conflict between the partners will be resolved in regards to deciding decisions that will generate high success and profit for them.
•Process-based interests: Through this process, the partners will undertake a BATNA process to decide on alternative options through which common interest can be achieved (Khan & Baldini, 2019).
•Relationship-based interests: Fostering both personal, as well as professional relationships, will be developed through this stage so that the overall operation of the business can be performed successfully (Smith, 2018).
•Intrinsic relationship: Mutual interest and values are being shared among both the partners so that both of them through their ideas can help in establishing the café outlet and drawdown growth.
•Instrumental relationship: The profit-sharing ratio in this stage of the bargaining mix helps in maintaining the instrumental relationship between the partners.
•Interests in principle: Beliefs and common ethics are being shared as part of the principle that helps both the partners in carrying the task without engaging in conflict.
Define the interests of each party
Evaluating the interest of both the partners in the business it has been noticed that one of the partners prefers to go for premium products at higher prices alongside establishing the café as Edmonton’s nightlife scene. Whereas, on the other hand, the other partner prefers to design the store as more down-to-earth which would serve moderate-to-affordable priced items.
There are contrasting differences in the interest of both the parties therefore negotiation process will be considered where through accommodating strategies the partners will bridge the relationship between them. The BATNA process will also be used in terms of determining the best alternative options.
Explain your alternatives (BATNA)
Based on the situation identified in the above section it has been noticed that both of the partners have different opinions in regards to designing the format of the café, hence a situation of conflict was bound to take place (Brett & Thompson, 2016).
The implementation of BATNA benefits both the partners in resolving the issues that include sitting down together and identifying the best possible way through which market needs can be understood.
After a brief examination of the Edmonton market for café, they noticed that it is best to open two sections one each for students and one for workers along with using a hybrid pricing strategy. It has been noticed that with a hybrid pricing strategy it becomes easier for the new café outlet to generate more target customers along with earning higher profit opportunities.
Explain two options that would meet the interest of each party
Based on the pieces of evidence gathered from the negotiation process of both the partners the two options that will help them in meeting their interest is as follows.
• Opening up a mixed format of cafe that will both serve as nightlife for the workers and down to earth atmosphere for the students.
• Deciding the services and pricing strategies based on the purchasing capability of Edmonton’s people.
Negotiation framework
Anticipate purchase requirement: While opening up the café the purchase requirement list comprises tables, chairs, chandeliers and kitchen types of equipment.
Determining if negotiation is required: Negotiation will be required while determining the types of services and pricing strategy will be considered.
Plan for negotiation: Accommodating strategies will be used in terms of fostering relationships during planning for negotiations (Bazerman, Gino, & Shonk, 2017).
Conduct the negotiation: Negotiation will be performed between the two partners through using the BATNA process.
Execute the agreement: Win-Win agreement will be executed based on the decision that has been taken by both partners.
Where, when and how will you conduct this negotiation
The negotiation will take place in Edmonton between me and my other business partner, the time of the negotiation will be on the 12th of February 2020. The whole negotiation will be carried out in the form of BATNA and accommodating strategies so that better relationships and decisions can be taken in order to inculcate growth within the café start-up business organisation.
Diagram of field analysis
Figure 2: The social context of Negotiation Field analysis
Source: Author
Conclusion
The above report was based upon evaluating the negotiation process between the space owner of Janice Lindeman and among the business partner. The negotiation process was divided into two sections where negotiation goals with Janice Lindeman have been evaluated in terms of paying her profit and the amount of space rent.
A win-win negotiation situation has been developed with the owner of the space. BATNA has also been described in part A, where an alternative solution has been designed. Whereas, during Part B negotiation was performed with the partner, in this section accommodative strategies were used to establish a relationship and with the mutual decision the store layout format has been designed to attract customers from the Edmonton location.
References
Bazerman, M., Gino, F., & Shonk, K. (2017). London: Pearson.
Brett, J. (2017). Culture and negotiation strategy. Journal of Business & Industrial Marketing, 1(1), 10.
Brett, J., & Thompson, L. (2016). Organizational Behavior and Human Decision Processes. Negotiation, 136(1), 68-79.
Fleming, D., & Hawes, J. (2017). The negotiation scorecard: a planning tool in business and industrial marketing. Journal of Business & Industrial Marketing, 1(1), 10.
Hendricks, C. (2017). Improving schools through action research: A reflective practice approach. London: Pearson.
Horton-Deutsch, S., & Sherwood, G. ( 2017). Reflective practice: Transforming education and improving outcomes (Vol. 2). London: Sigma Theta Tau.
Khan, M., & Baldini, G. (2019). In The Palgrave Handbook of Cross-Cultural Business Negotiation. In U. t. Negotiation. London: Palgrave Macmillan, Cham.
Lewicki, R., Barry, B., & Saunders, D. (2016). Essentials of negotiation. London: McGraw-Hill Education.
Schaerer, M., Teo, L., Madan, N., & Swaab, R. ( 2019). Current opinion in psychology. London: Power and negotiation: review of current evidence and future directions.
Smith, R. (2018). In Learning in Work. In N. a. Products. London: Springer, Cham.
