Negotiation Strategy Article Analysis
NEGOTIATION STRATEGY ARTICLE ANALYSIS 8
NegotiationStrategy Article Analysis
NegotiationStrategy Article Analysis
Despitethe fact that supply managers in the modern business world haveunlimited access to a wide range of auction technology tools ande-sourcing, conventional methods of business like negotiations arestill widely practiced. Negotiations are seen as a perfect way ofestablishing or adjusting business relationships with eithercompeting firms or lower performing companies. Managers and seniorprocurement officials admit that negotiation is the most preferredway to handle alliances and strategic business relationships.Relationships in business that result from negotiations account for alarge percentage of business operations. Many negotiation expertsobserve that 75% of time spent in the negotiation process involvesgetting stakeholders for the negotiating approach. Once this is done,sealing a business agreement becomes easier. An analysis of twoarticles describing business negotiations in different industrieswithin Fortune 500 companies sheds light on the different negotiationstrategies, the planning for negotiation and how the cases apply inthe work setting.
Amazon:The Gazelle Project
Amazonis a worldwide multination known for its online business platformthat sells different items from books, machines, computers, clothesto kitchenware. The Gazelle Project, which is what Amazon called itsinitiative to convince publishers by giving them better deals, wasfounded on business negotiations. Such a business negotiation was animportant one because Amazon needed to maintain its status as aleading worldwide publisher and seller of books and articles. Themanagement banked on the CEO Jeff Bezos to conduct the negotiation.
Profiling the Business Negotiating Team Personnel
Amazonuses this technique by developing a list of who will be on the otherside of the table. It is important to get to know the individualsthat will be involved in the negotiation process before meeting themin person. According to Amazon, trust takes time to earn and the moreyou go ahead earlier and put the base and foundations of a businessrelationship, the more you are likely to win the trust of the otherparty on the negotiation table(Baer, 2014).With this technique, Bezos took the time to select a perfectnegotiating team.
Whenusing the strategy, it is important to meet with one or two of thecompany’s executives several months before conducting an importantnegotiation. The motive of the meeting is to create a typicalbusiness relationship review and does not need to be official. Amazonin their Gazelle project with other publishers wanted to be like theGodfather, making an offer to small publishers that wereirresistible.
Reviewing the History of the Company
Thetechnique is used to assess the performance of the negotiatingparty`s business success alongside that of Amazon. In the Gazelleproject, Amazon wanted to acquire publishing rights from MelvillePublishers, which was a fledgling company. Therefore, the strategycame in handy by Bezos trying to convince the co-founder of Melvilleon the advantages of having the books published and sold on Amazon.
Underthis technique, Amazon collects the business history, which it usesas a platform for holding the business negotiations. According to thestrategy, it is necessary to seek an employee who has hadrelationships before with the negotiating company. The informationonce acquired may be useful in providing advice for the negotiatingapproach(Baer, 2014).Additionally, the information might reveal contract details that willbe important for the signing of any agreed negotiations.
Microsoft:The Microsoft-Nokia Deal
On3rdSeptember 2013, Microsoft announced that a deal that would see thetechnology giant acquire the Finnish mobile company Nokia’sservices and handset at the cost of $7.2 billion had been finalized.This is a deal that involved two multinational companies, with bothsides having strong incentives to join forces(Staff, 2017).Already, Samsung and Apple Inc. were fast taking thetelecommunication industry with Nokia losing a significant ground asit failed to keep up with innovations such as touch screens. Ballmerapproached Nokia’s CEO Stephen Elop and proposed a possibleacquisition and a major negotiation strategy often used whenacquiring a multinational company.
TheMicrosoft negotiating team consists of the external and the innercircle, which have made it a formidable negotiator. The circles haveled to the investment of extensive resources and time in themanagement ND preparation of an Enterprise Agreement (EA)negotiation.
1.MergingBusiness Cultures Strategy
Microsoftfaced much more complexity because of the cultural difference betweenthe US and Finland. A major challenge was integrating employees fromthe two different cultures due to cultural barriers and differences.The emerging business culture strategy is always a lengthy processand confusing(Staff, 2017).The lengthy process of negotiations is due to among other factorslike joining two major world companies, each of which is emblematicof its way to the mother country.
Accordingto the strategy, it makes sense to maintain the unique identity ofeach organization and borrow only the best of both. Additionally,national culture only marks one facet of a national identity, whichgives the advantage to view negotiation counterparts as uniqueindividuals in the process and not cultural ambassadors.
2.Setting Priorities in Objectives
Underthis strategy, a negotiating party can have a set of alternativepositions that range from the least acceptable to the most favorable.In most cases, both parties do not succeed in having the mostfavorable alternative accepted. However, a party can still insist onit, especially on multicultural and multinational negotiations.
Inthe Microsoft-Nokia Deal negotiations, the alternative that wasaccepted lay somewhere along the line of compromise and analternative, which was neither the best nor the worst for each party.Therefore, the settlement was reached somewhere within the bargainingarea. The final position that is adapted in this strategy is definedby the relative strength of the negotiating parties with a generalbackground of other negotiating factors. From this strategy, the artof negotiation is to have one’s objectives lifted to the maximumpossiblemaximum extent and to have a compromise in the areas that areleast important to one’s side.
Althoughthe Microsoft-Nokia Deal was signed in 2013, Ballmer called it amonumental mistake. This lead to the writing off billions of dollars,which was referred to as the impairment charge(Staff, 2017).The writing off involved $7.6 billion, an amount that was close towhat the company had paid for Nokia and its patent rights.
TheImpact of Planning
Earlierplanning had a huge impact on the success of acquiring publishing andselling rights of fiction books from Melville. Bezos selected a taskforce that was limited to seven people to conduct the actualnegotiating process. The earlier selection of a small manageable teamallowed the participants to test their ideas without many onlookerswho could dilute the process(Baer, 2014).The technique also guarded the team against groupthink.
Thetwo circles strategy used by Microsoft includes an external circlethat has the duty to interact with customers while the inner circleworks behind the scenes. In the Microsoft-Nokia Deal, preparations bythe circles began 18 months before the actual Enterprise Agreement(Staff, 2017).Due to early planning and market studies of business transactionsbetween the US and Finland, Microsoft was able to sign the deal andovercome all the legal barriers. As an international agreement, thecircles had to plan and present proposals four times to authoritiesand the Nokia Company before the agreement was signed.
TheAmazon’s strategy of reviewing the history of the counterpartcompany applies in normal work setting especially when thenegotiations involve a long-term contract or deal. Understanding thehistory of the other company makes the negotiating team understandthe successes of the counterpart company, its legal environment aswell as marketing strategies. The information becomes helpful inanalyzing whether the counterpart’s business procedures are in lineor will be favorable to the business.
Microsoft’sstrategy of setting priority in objectives applies when what is to benegotiated is of huge benefit for both companies. The strategyapplies to a major merger or acquisition, where the priorities haveto be set and should be in line with the objectives of each company.Despite the fact that companies may be operating in differentindustry sectors, the strategy allows for more objectivity so thatboth parties are not compromised into signing an agreement that mightbe harmful to either side. Additionally, since the negotiations leadto a bargaining platform, the strategy becomes applicable still whendoing business with small companies.
Inconclusion, a detailed analysis of two articles describing businessnegotiations in different industries within Fortune 500 companiessheds light on the different negotiation strategies, the planning fornegotiation and how the cases apply in the work setting. From thecases, the companies employ different strategies that are in tandemwith the company’s policies and objectives. The strategies areapplicable in contemporary business activities and have a hugeinfluence on both domestic and international businesses.
Baer,D. (2014, March 17). 5Brilliant Strategies Jeff Bezos Used To Build The Amazon Empire.Retrieved from Business Insider:http://www.businessinsider.com/the-strategies-jeff-bezos-used-to-build-the-amazon-empire-2014-3?IR=T
Staff,P. (2017, February 27). TopInternational Negotiation Case Studies in Business: TheMicrosoft-Nokia Deal.Retrieved from Havatd.edu:http://www.pon.harvard.edu/daily/international-negotiation-daily/top-10-international-negotiations-of-2013-the-microsoft-nokia-deal/
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