Best Alternative to a Negotiated Agreement – Business Assignment Law

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Assignment Task :
 Stage 1:
BATNA is the abbreviation for the “Best Alternative to a Negotiated Agreement” and is a technique being used in the least provision to conclude an agreement when the agreement is going out of hand (Sebenius, 2017). This is basically the last option to negotiate with a single client, and if you have a good BATNA, you can leave that client if the deal does not comply with your standards (Jeffrey, and Jim 2012). Reservation value is the compromise point of acceptance of the negotiated agreement, which is the minimum value to be accepted by the seller and the maximum value to be paid by the purchaser (Di Napoli, Pisa, and Rossi, 2013). BATNA is the best alternative to the negotiated agreement, while the value of the reservation is the least advantageous amount for that agreement (Odell, 2012).
 
Best Alternative to a Negotiation Agreement 
My client, Elite Sports Star, is approached by DeGrandis Sporting Goods for the contract of an advertising campaign to endorse our sports star for their soccer shorts. My client also has an offer from the alternative sports good’s retailer Sports Land, so this alternative offer from Sports Land is my client’s Best Alternative to Negotiation Agreement (Di Napoli, Pisa, and Rossi, 2013).  Sports Land has offered $521,740 for the campaign, but my client wants to negotiate a 15 percent growth in this value, so my client’s “reservation value” is $600,001.
 
DeGrandis BATNA & Reservation value
DeGrandis is interested in entering into a contract with a sports star to endorse their soccer shorts in the advertising campaign. Gareth Bale’s contract fee is $720,000, which is too high. So, in this scenario, the Best Alternative to Negotiation Agreement and their “reservation value” of DeGrandis Sporting Goods for 3 months is $682,000.
 
 Zone of Possible Agreement Range 
This part of the report will explain the term Zone of Possible Agreement range and the negotiation strategies to claim a higher amount of Zone of Possible Agreement in this scenario.
 
Negotiation Strategies
The strategies for claiming higher value of the Zone of Possible Agreement range to increase the larger percentage of your benefit are given below;

Anchoring: If you have complete information about the value of the other party’s reservation, you can make the first offer. The best thing is to make the first offer outside the Zone of Possible Agreement range so that you have a chance to negotiate the maximum value for the reservation of the other party.

Rationale: Your first offer should not be so far away from the Zone of Possible Agreement range that it is immediately rejected by the other party. When the value offered by the other party is so insistent that it is not within the range of Zone of Possible Agreement, then in this scenario, a complete rejection is the best option. (Warren, Mansbridge, 2013)

Response: In this, you are not the anchor, but by giving an authentic response, you can take the customer’s attention away from the first offer for your benefit. By using the Counter-Anchor strategy, negotiations can be pursued by making an equally insistent offer, but there is a risk that the deal will be cancelled so that moderation is appreciated (Gunia, 2017)

Satisfaction: The conclusion of the agreement should ensure the satisfaction of the other party that they have made the right deal otherwise it may have an impact on future relations (Ting?Toomey, 2017)

First Offer: It varies based on how much information you have about the of Zone of Possible Agreement range to make the appropriate first offer, otherwise let the other part make the first offer (Pruitt, 2013).

 
Stage 2:
On behalf of my client (Elite Sports Club) I will using an anchoring strategy to claim a greater percentage of ZOPA value, as I am well informed of the other party’s reservation value (DeGrandis). My first offer will be substantially higher than $682,000, which is the other party’s reservation value, so that I can maximize the benefits to my client by improving Pareto. The price reduction estimated by DeGrandis on the Gareth Bale endorsement fee is 15 per cent but my offer will be 10 per cent higher than $682,000 so that, after negotiation, DeGrandis is inclined to pay less than its reservation value but higher than my client’s reservation value. Gareth Bale requested to get $630,000 for a 10-week advertising campaign and 20% from monthly wholesale in the next 6 months with a potential extension of the contract. Newest economic data showing that COVID-19 pandemic incised sales revenue in the sports clothing industry and the product will be also propagated by Gareth Bale in upcoming. The 2021–22 UEFA Champions League. Hence, it will increase the sale of the soccer shorts. This will be a profit for Elite Sports Club and DeGrandis as both the companies will generate revenue in the time when all the sports enthusiasts have increased due to the pandemic. However, DeGrandis offered $700,000 for three months for which my client Elite Sports Club is ready to accept the contract.
 
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