Negotiation, Conflict and Contracts Management:
Negotiation factors and tools, Nontraditional Contracts and Arbitration
Hua, Li
Embry Riddle Aeronautical University Student
LGMT536 Purchasing and Supply Chain Management
Maggie Rivers
November 15, 2021
When buyers and sellers think of negotiations, price is at the top of their mind, it is the most valuable factor that most parties use to determine best results. Beyond that, there are many other nonprice factors during negotiations such as delivery schedules, lead-time requirements, expected product and service quality levels, special packaging, handling, and shipping requirements. All of these factors can affect delivery service and customer satisfaction. The more specifically that these factors are addressed up front, the less likely that serious problems will occur later (Monczka et al., 2020).
BATNA was originally used by Roger Fisher and William Ury in their 1981 book entitled “Getting to Yes: Negotiating Without Giving in.” BATNA (n.d.). Just like the title BATNA implies, without revealing their bottom line a negotiator can still achieve their goal.
BATNA is a negotiator’s best alternative option to a negotiated agreement. It is the most advantageous alternative that a negotiating party can take if negotiations fail to produce an agreement BATNA (n.d.). It’s a minimum acceptable position in the bargaining zone which a negotiator could take (Monczka et al., 2020). Therefore, a negotiator should take extra caution to ensure that his or her reservation point or BATNA is never revealed to the other party (Monczka et al., 2020).
Triangle Talk is a simple negotiation planning tool, it can help the negotiator begin the initial preparation for an upcoming negotiation by knowing the involved parties wants and needs (Monczka et al., 2020).
Triangle talk is needed to know what both parties need and want, making them heard by each other, and for proposing actions both parties can accept (Freedman, 2001). During the Triangle talk, role-play practice could help provide insight to a supplier’s anticipated wants and needs, helping the buyer when approaching negotiations (Monczka et al., 2020). It is important to remain flexible, fair, and reasonable so that the parties can work out an agreement in which they are both better off (Monczka et al., 2020).
Therefore, Triangle Talk concept is not only for one party’s goal. Corroboration and concession could be exchanged for something else of value to each other resulting in a win-win negotiation.
When a company tried to implement Jaggaer procurement solution software, they needed to consider particular IT systems contract issues. Such as system contracting risks, levels of service, price, performance criteria, and procedures. It’s hard to determine the level of service for IT businesses because of its particular character. Service range and price always depend on the performance criteria put forth. Purchasers should focus on price, performance and procedures during the negotiations.
IT System Contracts are typically a long-term contract, because it pertains to maintaining a system. Once a company contracts with an IT system provider, it’s hard to switch to another. So before signing, the supplier and buyer should clearly address the above IT contract system issues in the contract clauses and appendixes as needed. To avoid later conflict during contract implementation (Monczka et al., 2020).
Companies involved in a dispute may not be willing to spread their trade secrets or dirty laundry in public (Monczka et al., 2020). Therefore, nonlegal action, arbitration, is both supplier and buyer preferred while managing contract disputes. They can keep their privacy while saving time and energy as compared to involving the courts to settle their disputes.
Arbitration is a submission of a disagreement to one or more impartial persons with the understanding that the parties will abide by arbitrator’s decision (Monczka et al., 2020). Arbitration can also prevent hostility, it is cheaper and faster than litigation, and has simplified rules for evidence submission compared to litigation (Reba, n.d.).
When implementing arbitration, minitrials and rent-a-judge are available techniques (Monczka et al., 2020). The minitrial and rent a judge have similarities and differences. They are similar in that the results are non-binding, and the two companies make their case to a convening authority. The difference is that during rent-a-judge, frequently a retired judge is hired and the hearing must follow all legal court precedents for evidence submission (Monczka et al., 2020).
There are a few options which play key roles during arbitration settlement. Privacy, time and the total amount of energy consumed. Based on these three options, arbitration will settle in different formats. In nonbinding arbitration, If the parties do not agree to a final decision or wait longer than a stated time allotted, then the case will likely return to court. (Reba, n.d.)
References
Reba, B. K. (n.d.). Arbitration Pros and Cons. NOLO. https://www.nolo.com/legal-encyclopedia/arbitration-pros-cons-29807.html
BATNA. (n.d.). https://corporatefinanceinstitute.com/resources/knowledge/deals/what-is-batna/
Monczka, R., Hanfield, L., Giunipero, L. Patterson, J., (2020). Purchasing and Supply Chain Management, 7th Edition. Cengage
Freedman, R. (2001, July 23). Negotiating skills for IT consultants. Tech Republic. https://www.techrepublic.com/blog/it-consultant/negotiating-skills-for-it-consultants-117437/
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