Planning for Rapid & Scott Negotiation
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Planning for Rapid & Scott Negotiation
In any negotiation, preparation is crucial; and having a set, outlined process to follow when preparing helps mitigate a potential oversight of any significant issues within the negotiation. Following a set process also helps one stay on task and in-line with what the important issues and factors are in a negotiation. In Bargaining for Advantage, G. Richard Shell provides a well-structured framework to follow in planning for a negotiation. For this reason, I used Shells negotiation preparation framework to plan for the negotiation between Rapid Printing Company (Rapid) and Scott Computers, Inc (Scott).
The first step to prepare for my negotiation is to outline the actual problem. While at first the problem seems to be relatively straight forward, upon thinking on it further it becomes a bit more ambiguous. The initial problem seems to be that Rapid is unsatisfied with the product we sold them because they cannot operate the program without the necessary application program, and for this reason they are refusing to make the agreed-upon payments for our hardware and operating program. However, upon further analysis, I do not think this is the actual problem. If this was the problem, it would simply be a matter of using the contract as evidence of our agreement. The real problem for us is that because Rapid is experiencing extreme financial difficulty, a judgment against them in our favor will actually end up costing us money as we will pay significant costs for the trial and most likely never receive any settlement compensation from Rapid. For this reason, our actual problem in this negotiation is that we must negotiate with B.R. Brown from Rapid to figure out a way to settle the disagreement in a way in which we will still receive the outstanding payments Rapid owes us, without damaging our reputation from the point of view of other clients.
The second step in our process is to outline our goals and decision makers. The first part of this step is to develop a high expectation. I typically consider this to be my initial offer in order to set the expectations as well as the other partys frame of reference as high as possible. In this instance, my initial offer is to settle with Rapid, paying them nothing, but allowing them to pay only the outstanding payments and then resume their regular monthly payments to us rather than to pay the full amount immediately as the contract states. In addition, because we know they need an application program in order to run the operating program successfully, and because they are currently experiencing financial hardships until they get the program running, we will allow them to defer payments until they attain an application program to work with the operating program (See Appendix A). Once we get SCPPI through field development, we will offer it to Rapid at market value so that they can ensure their operating system is running efficiently. Clearly, this is a bit of a stretch to believe Rapid will even consider it, but by setting expectations as high as possible; we leave ourselves more room to negotiate.
My actual bargaining goal in this instance would be to settle the disagreement by paying nothing to Rapid, but also relieving them of paying the total amount owed to us immediately. Instead, we will offer for Rapid to pay only outstanding payments and to defer future payments until they attain an application program which can work in conjunction with their operating program and hardware. If they do not attain an application program prior to SCPPI completing field development, we will offer it to them at a 10% discount with free installation. Once they acquire an application program, payments will resume as normal (See Appendix A)
Our bottom line in this case is to settle and cut our losses. Rather than going through with the trial with little upside and paying $50,000 in legal fees, we will allow Rapid to breach the contract if they agree to make all outstanding payments, remove all our operating programs from their systems, and return all hardware. While this is not ideal, and we will still incur a loss, the loss will not be nearly as great as if we have to spend $50,000 in legal fees for a case in which we never realize any settlement compensation because of Rapid filing for bankruptcy. The most negative effect this solution will have will be on our reputation with other clients.
In this case, the target decision-maker is the President and Chairman of Rapid, B.R. Brown. For this reason, we decided to forego meeting with any lawyers and requested to meet with B.R. Brown directly. This will help to not only avoid any ambiguity in reaching an agreement, but it will also help establish a better relationship with B.R. Brown and Rapid.
Potential influencers to B.R. Brown will be his lawyers, consultants, Dee Williams, and program operators. We already decided to avoid negotiating with the lawyers and go straight to Brown. However, we may want to look more into talking with Rapids program operators in order to get a better idea of what they need in terms of an application program. Also, Dee Williams from Rapid may have a significant influence being as he is the one responsible for purchasing our operating program and hardware. Since we already have an established relationship with him, we may want to consider talking with him prior to negotiating with Brown (See Appendix A).
Continuing through the planning process, we must analyze the underlying needs and interests of ourselves and Rapid. One of our needs is to earn income. Rapid has somewhat of a conflicting interest with regards to this because a portion of the income we need to earn comes at the expense of Rapid. Rapid has a similar need earn its own income. In this case, we actually have a shared interest in Rapids profits because more income for them means they can afford to make their payments to us. Perhaps, we could explore opportunities to help Rapid generate income.
Another shared interest between each of us is to find or develop an application program that works in conjunction with our operating program. Doing this means increased profits for both of us. We may be able to allow Rapid to use SCPPI on a trial basis why it goes through field development and help them to work out the kinks, or we may want to look at finding an application program from a third party for Rapid to use.
Rapid also has an interest to recoup lost profits from not having an efficient operating system. This is a conflicting interest with us because they are looking to recoup these profits at our expense.
The other interest we have is to maintain a strong reputation. We do not want other clients seeing us as weak or conceding. This seems to be an ancillary interest in this case, but it could potentially conflict with Rapids