Chapter 6 - Negotiation Essentials: What All A Startup Entrepreneur Cannot Afford To Miss?

Summary

Learning Objectives

• 1. Understand the role of planning and scripting in negotiation

• 2. Exploring priorities of negotiating parties and utilizing winning strategies

• 3. Review concepts of BATNA and ZOPA

• 4. Importance of offering alternatives and de-anchoring negotiations

• 5. Tactical challenges and neutralization of dirty tricks

Opening Scenario: Simon & Schuster vs Barnes and Noble

When months of negotiation with publishing house Simon & Schuster reached a standoff, Barnes and Noble attempted to gain leverage by significantly reducing its orders of Simon & Schuster titles and engaging in other hardball negotiation tactics, such as refusing to book the publisher’s authors for in-store readings. Given that Barnes and Noble sells about 20 percent of consumer books in the United States, Simon & Schuster editors and their associated agents and writers were “apoplectic” about the bookseller’s decision to use them as a bargaining chip.

As the last major retail bookstore chain in the United States, Barnes and Noble has been pressing publishers to make steep concessions to enable its survival against Amazon.com and other online retailers. The bookstore chain reportedly sought significantly lower wholesale prices for Simon & Schuster’s books and tried to charge the publisher more to display its title in its stores. Simon & Schuster said it simply could not afford to abide by Barnes and Noble’s terms.

The two companies later issued a joint statement saying they had resolved their disagreement and looked forward to jointly promote Simon & Schuster’s books. Though details of the agreement remain unknown, any gains they achieved would be undercut by the profits each side lost during the months of impasse, when Simon & Schuster books were missing from display tables and shelves. Such penalties often end up undercutting both parties to a negotiation.

Planning and Scripting in Negotiation

Planning is an essential strategic entrepreneurial activity. In the case of negotiations involving entrepreneurs with other entrepreneurs and organizations, planning is even more critical. The reason for the claim is that entrepreneurs oversee their own decisions and do not have the brainpower afforded to large corporations. Large corporations can form committees to oversee negotiation planning and have set a standard of procedures for negotiations.