Negotiation Simulation: Alpha-Beta
ABOUT YOUR TEAM
1. What is your overall goal?
Our topmost need is to attain greater scale economies in production by significantly boosting overseas sales of robots. We especially want to develop a presence in the currecnt small but rapidly growing Alphan market. We choose this goal since it is SMART. We focus on a specific goal that developing a presence Alphan market. If we can get stable sales channels and attain a considerable profit within 7 years, we will say the goal has been reached. Moreover, our company has decided to collaborate with Alpha Inc. and we have made some tentative agreement during the past five months. Thus, it is realistic for our company to sale robots in Alphan market successfully.
2. What are the issues?
* The number of different models involved. We would like provide small number to Alpha Inc., because given the advantages of long production runs we must make sure there are always new models will appear in the market and worry about technology loss. However, Alpha Inc. wants many models so that they can be more initiative and can learn more technology from our company to open their own business. * The quantity of our units to be imported by Alpha during Phase 1. We desire our business can have a rapid growth and deep penetration. We therefore would like the number to be as relatively large. However, Alpha Inc. may import the units according to their basic capacity and market expectations. * The royalty rate to be paid to us during Phase 2. The higher the rate, the more money we will get, the more money Alpha Inc. will pay. * Access to vision technology. We would like complete access to Alpha Inc.’s R&D advances in artificial vision and the opportunity to sell vision-equipped robots in all markets. However, we still don’t know if Alpha Inc. will agree to sell this technology to us.
3. How important is each issue to you?
The first three issues are more important. We worry that Alpha Inc. may become a competitive monster and haunt us in the future. Therefore, it is important to limit the model number. Moreover, the second issue refer to the development of our business in Alphan market, thus we must persuade them to import more units during the negotiation. The third issue directly refer to how much money we can get during the Phase 2, we should try to establish a high but reasonable rate. Compared with other issues, the last one is not quite important since even we cannot make an agreement for this problem we will lose nothing. However, we still need to try our best to persuade them as this may improve the quality of our robots.
4. What is your target?
2 models with 250 units, 5% on gross sales for royalty rate and get access to vision technology by US$ 30 million.
5. What is your BATNA?
3 models with 200 units, 4.5 % on gross sales for royalty rate and get access to vision technology by US$ 35 million.
6. What is your resistance point (i.e., the worst agreement you are willing to accept before ending negotiations)? 4 models with 180 units, 4 % on gross sales for royalty rate and get access to vision technology by US$ 38 million.
7. What is your opening offer?
2models with 300 units, 6 % on gross sales for royalty rate and get access to vision technology by US$ 25 million.
ABOUT THE OTHER TEAM
1. What might be their overall goal?
Developing their own business by cooperating with Beta Inc. and get more market share in Alphan market.
2. How important is each issue to them?
Each issue is important. They want to a number of models so that they can reduce the control or effect of Beta Inc. and learn more technology so that they can create their own products finally. Moreover, when they import units from Beta Inc. they must make sure the units can meet the market demand and their product ability. In addition, they want a low royalty rate which means...