Introduction to Negotiation Strategy
At Oak Spring University, we provide corporate level professional Negotiation Strategy and other business case study solution. At a Crossroads: The Strategic Dilemma at PENPOL case study is a Harvard Business School (HBR) case study written by Rajasree K. Rajamma, Catherine Giapponi, Arun Kumar S Rao, Chandrasekhar Padmakumar. The At a Crossroads: The Strategic Dilemma at PENPOL (referred as “Urology Bag” from here on) case study provides evaluation & decision scenario in field of Strategy & Execution. It also touches upon business topics such as - negotiation strategy, negotiation framework, .
Negotiation strategy solution for case study At a Crossroads: The Strategic Dilemma at PENPOL ” provides a comprehensive framework to analyse all issues at hand and reach a unambiguous negotiated agreement. At Oak Spring University, we provide comprehensive negotiation strategies that have proven their worth both in the academic sphere and corporate world.
What’s my BATNA (Best Alternative To a Negotiated Agreement) – my walkaway option if the deal fails?
What are my most important interests, in ranked order?
What is the other side’s BATNA, and what are his interests?
Vasudev Nair, CEO of PENPOL, a medical devices company in India, was facing a financial crisis. With debt mounting and cash flow becoming increasingly problematic, he had to make some decisions about the future of the company. Incorporated in 1987 under Nair's leadership, PENPOL began as a producer of hematology products with the introduction of its innovative blood bag product. The blood bag business was expanded with the introduction of multiple types of bags and blood bag equipment. In 1993 the company entered the urology business with the introduction of urine bags and within four years the urology line was expanded to include stone management devices, leg bags and foley catheters. Growth in the urology business was met with limited success however, and by 1998 PENPOL had exited all but the urine bag product line. The failed launches resulted in huge inventories of unsold goods and problems getting payment from stockists (distributors) that contributed to the company's mounting debt and cash problems. In addition, the Urology Division's flagship product, the urine bag, faced intensified price competition. PENPOL's Blood Bag Division was also suffering due to increased competition in the Indian market. Vasudev Nair had to stop the bleeding. He considered a few alternatives. Knowing that the company had no more access to debt financing, he considered the possibility of securing private equity or the infusion of funds from some of the co-owners of PENPOL. With this infusion of funds, could he or should he save both the Blood Bag and Urology Divisions? Should he divest or sell the Urology Division in order to bring in funds to shore up the blood bag business? Divesting the Urology Division would mean sacrificing the star product, the urine bag, which after much effort was gaining acceptance in the market. Given that a competitor had expressed interest in the company, he considered establishing a joint venture with the competitor.
By interests, we do not mean the preconceived demands or positions that you or the other party may have, but rather the underlying needs, aims, fears, and concerns that shape what you want. Negotiation is more than getting what you want. It is not winning at all cost. Number of times Win-Win is better option that outright winning or getting what you want.
Options are the solutions you generate that could meet your and your counterpart’s interests . Often people come to negotiations with very fixed ideas and things they want to achieve. This strategy leaves unexplored options which might be even better than the one that one party wanted to achieve. So always try to provide as many options as possible during the negotiation process. The best outcome should be out of many options rather than few options.
When soft bargainers meet hard bargainers there is always the danger of soft bargainers ceding more than what is necessary. To avoid this scenario you should always focus on legitimate standards or expectations. Standards are often external and objective measures to assess the fairness such as rules and regulations, financial values & resources , market prices etc. If the negotiated agreement is going beyond the industry norms or established standards of fairness then it is prudent to get out of the negotiation.
Every negotiators going into the negotiations should always work out the “what if” scenario. The negotiating parties in the “At a Crossroads: The Strategic Dilemma at PENPOL” has three to four plausible scenarios. The negotiating protagonist needs to have clear idea of – what will happen if the negotiations fail. To put it in the negotiating literature – BATNA - Best Alternative to a Negotiated Agreement. If the negotiated agreement is not better than BATNA then there is no point in accepting the negotiated solution.
One of the biggest problems in implementing the negotiated agreements in corporate world is – the ambiguity in the negotiated agreement. Sometimes the negotiated agreements are not realistic or various parties interpret the outcomes based on their understanding of the situation. It is critical to do negotiations as water tight as possible so that there is less scope for ambiguity.
Many negotiators make the mistake of focusing only on the substance of the negotiation (interests, options, standards, and so on). How you communicate about that substance, however, can make all the difference. The language you use and the way that you build understanding, jointly solve problems, and together determine the process of the negotiation with your counterpart make your negotiation more efficient, yield clear agreements that each party understands, and help you build better relationships.
Another critical factor in the success of your negotiation is how you manage your relationship with your counterpart. According to “Rajasree K. Rajamma, Catherine Giapponi, Arun Kumar S Rao, Chandrasekhar Padmakumar”, the protagonist may want to establish a new connection or repair a damaged one; in any case, you want to build a strong working relationship built on mutual respect, well-established trust, and a side-by-side problem- solving approach.
According to
Harvard Business Review
, there are three types of negotiators – Hard Bargainers, Soft Bargainers, and Principled Bargainers.
Hard Bargainers – These people see negotiations as an activity that they need to win. They are less focused less on the real objectives of the negotiations but more on winning. In the “At a Crossroads: The Strategic Dilemma at PENPOL ”, do you think a hard bargaining strategy will deliver desired results? Hard bargainers are easy to negotiate with as they often have a very
predictable strategy
Soft Bargainers – These people are focused on relationship rather than hard outcomes of the negotiations. It doesn’t mean they are pushovers. These negotiators often scribe to long term relationship rather than immediate bargain.
Principled Bargainers – As explained in the seven elemental tools of negotiations above, these negotiators are more concern about the standards and norms of fairness. They often have inclusive approach to negotiations and like to work on numerous solutions that can improve the BATNA of both parties.
Open lines of communication between parties in the case study “At a Crossroads: The Strategic Dilemma at PENPOL” can make for an effective negotiation strategy and will make it easier to negotiate with this party the next time as well.
Rajasree K. Rajamma, Catherine Giapponi, Arun Kumar S Rao, Chandrasekhar Padmakumar (2018), "At a Crossroads: The Strategic Dilemma at PENPOL Harvard Business Review Case Study. Published by HBR Publications.
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