Introduction to Negotiation Strategy
At Oak Spring University, we provide corporate level professional Negotiation Strategy and other business case study solution. Assessing the Franchise Option case study is a Harvard Business School (HBR) case study written by Surinder Tikoo. The Assessing the Franchise Option (referred as “Franchising Franchise” from here on) case study provides evaluation & decision scenario in field of Innovation & Entrepreneurship. It also touches upon business topics such as - negotiation strategy, negotiation framework, Growth strategy, Marketing.
Negotiation strategy solution for case study Assessing the Franchise Option ” 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?
By 2005, franchise systems will account for an estimated one-half of U.S. retail sales. But prospective franchisors need to consider carefully whether to expand a business by franchising or by opening company-owned outlets. The advantages of franchising include allowing the firm to overcome resource constraints of limited capital and thin the ranks of experienced managers. Franchising also provides a means of trading off certain functions; franchisees are more efficient in performing functions whose average cost curve turns up relatively quickly. It obviates the need for monitoring (and its attendant costs) because franchisees have invested their own capital and are motivated to work hard for profitability. It offers substantial efficiencies in promotion and advertising by leveraging the value of a trademark and brand image. And, of course, it helps in managing one's risks, because franchisors can eventually convert profitable franchise locations into company-owned operations (although this strategy raises certain ethical concerns). A beginning firm, however, needs to outline its business goals over an extended period and analyze how it can use franchising to fulfill those goals. Factors that bear upon the relative desirability of the franchise option include labor- vs. capital-intensity, demand variability, the importance of repeat customers, and the role of changing technology. A firm might well find that a "mixed system" (a mix of franchised and company-owned stores) optimizes its cost-benefit balance.
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 “Assessing the Franchise Option” 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 “Surinder Tikoo”, 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 “Assessing the Franchise Option ”, 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 “Assessing the Franchise Option” can make for an effective negotiation strategy and will make it easier to negotiate with this party the next time as well.
Surinder Tikoo (2018), "Assessing the Franchise Option Harvard Business Review Case Study. Published by HBR Publications.
Feel free to connect with us if you need business research.
You can download Excel Template of Case Study Solution & Analysis of Assessing the Franchise Option
Basic Materials , Metal Mining
Technology , Computer Hardware
Basic Materials , Fabricated Plastic & Rubber
Consumer/Non-Cyclical , Food Processing
Services , Motion Pictures
Technology , Semiconductors
Financial , Regional Banks
Transportation , Water Transportation
Utilities , Electric Utilities
