Introduction to Negotiation Strategy
At Oak Spring University, we provide corporate level professional Negotiation Strategy and other business case study solution. DR. REDDY'S: MEDICINE IS FOR PEOPLE, PROFITS FOLLOW case study is a Harvard Business School (HBR) case study written by Bala Chakravarthy, Sophie Coughlan. The DR. REDDY'S: MEDICINE IS FOR PEOPLE, PROFITS FOLLOW (referred as “Rhp Pill” from here on) case study provides evaluation & decision scenario in field of Leadership & Managing People. It also touches upon business topics such as - negotiation strategy, negotiation framework, .
Negotiation strategy solution for case study DR. REDDY'S: MEDICINE IS FOR PEOPLE, PROFITS FOLLOW ” 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?
This case describes the launching of a polypill at Dr. Reddy's to help patients with a high risk of Cardio Vascular Disease (CVD) prevent a second heart attack or stroke. Called the Red Heart Pill (RHP), this combination pill included four therapeutic agents: One to lower cholesterol, the other two to lower blood pressure and a fourth, Aspirin, to thin out the blood.Taken together they were estimated to lower the risk of a second heart attack or stroke by 55%.The RHP was particularly attractive to treat the poor. At a treatment cost of just US$ 25 a year, the RHP was expected to make a major dent in lowering CVD-related deaths and disabilities in India. Dr. Reddy's had completed clinical trials to launch the pill in India and international clinical trials were under way to launch the pill in other markets. The company also hoped to introduce a variant of the pill for primary prevention, helping patients with a low to moderate risk of CVD avert a first heart attack or stroke. The case details the many dilemmas that the top management team of Dr. Reddy's faced in pursuing the RHP project. The active ingredients in the RHP were generic drugs; and yet, because the combination had never been offered before, the RHP had to go through clinical trials to prove its bioequivalence to each of the constituent drugs. The RHP also had to be marketed to physicians and could be sold only through a prescription. The added R&D and marketing costs had to be recouped through the price of the RHP, although this price had to be closer to generics prices. In addition, it would be hard to get a patent for the RHP. Here was a pill that was neither a new discovery drug nor a straight generic. Shaping a strategy for it was demanding and yet if the RHP could be launched successfully, there would be several other opportunities for a combination pill to treat other chronic diseases like depression and osteoarthritis. Learning objectives: The case is a good vehicle to discuss the changing landscape of the global pharmaceutical industry which is faced with the simultaneous challenge of a thinning new product pipeline and increasing pressures from government regulators and third party payers to cut costs. Projects like the RHP at Dr. Reddy's provide examples of the new business models (and the dilemmas that underlie them) that industry leaders would have to consider. Projects like the RHP at Dr. Reddy's provide examples of the new business models (and the dilemmas that underlie them) that industry leaders would have to consider. The case also provides an excellent background from which to profile effective social entrepreneurs, such as the executive in charge of the RHP, Raghu Cidambi.
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 “DR. REDDY'S: MEDICINE IS FOR PEOPLE, PROFITS FOLLOW” 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 “Bala Chakravarthy, Sophie Coughlan”, 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 “DR. REDDY'S: MEDICINE IS FOR PEOPLE, PROFITS FOLLOW ”, 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 “DR. REDDY'S: MEDICINE IS FOR PEOPLE, PROFITS FOLLOW” can make for an effective negotiation strategy and will make it easier to negotiate with this party the next time as well.
Bala Chakravarthy, Sophie Coughlan (2018), "DR. REDDY'S: MEDICINE IS FOR PEOPLE, PROFITS FOLLOW Harvard Business Review Case Study. Published by HBR Publications.
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