Introduction to Negotiation Strategy
At Oak Spring University, we provide corporate level professional Negotiation Strategy and other business case study solution. Overstock.com and Worldstock case study is a Harvard Business School (HBR) case study written by James A. Phills, Lyn Denend. The Overstock.com and Worldstock (referred as “Worldstock Overstock.com” 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, Innovation, Internet, Social enterprise, Strategic planning.
Negotiation strategy solution for case study Overstock.com and Worldstock ” 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?
In mid-2006, Overstock.com faced a daunting set of business challenges. Founded in 1999 as an online "closeout" retailer, the $800 million company had more than 15 million unique visitors a month, 10 million life-to-date customers, and greater than 500,000 active SKUs in roughly 20 product categories. However, while it had come within one half of a percent, the firm had yet to realize an annual profit. Moreover, the tremendous growth that had enabled the company to become on online shopping giant appeared to be slowing at an alarming rate. At least partly as a result of the challenges facing the core business, Worldstocki??the company's socially responsible initiativei??was also in jeopardy. Started by CEO Patrick Byrne in 2001, the division leveraged the firm's infrastructure to market handicrafts produced by third world artisans to the mainstream U.S. retail market via a designated portal on the Overstock.com website. However, working with third world artisans turned out to be significantly more expensive than originally anticipated. By mid-2006, Worldstock's "self-sustaining" model for economic development was projected to contribute nearly $1 million to the company's losses that year. Although most managers were cautious about criticizing the CEO's "pet project," a few felt the company had to address (what they saw as) the negative the impact that Worldstock was having on Overstock's financial performance. As a result, all those committed to the Worldstock model, from CEO Byrne to Division Manager Angela Ramirez, faced the thorny questions about how to balance these new fiscal imperatives with the group's philanthropic and social objectives. While no one wanted to openly acknowledge it, some stakeholders wondered if Worldstock might eventually be shut down or spun off if the situation did not improve.
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 “Overstock.com and Worldstock” 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 “James A. Phills, Lyn Denend”, 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 “Overstock.com and Worldstock ”, 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 “Overstock.com and Worldstock” can make for an effective negotiation strategy and will make it easier to negotiate with this party the next time as well.
James A. Phills, Lyn Denend (2018), "Overstock.com and Worldstock Harvard Business Review Case Study. Published by HBR Publications.
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