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Power in Negotiations: How to Maximize a Weak BATNA

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This past November, in an unusual move, Costco, the largest wholesale club in the United States, removed Coca-Cola products from its shelves and posted messages telling shoppers that Coke products would not be available until the company lowered its prices. Coke products returned to Costco shelves within a few weeks, but the dispute shed light on the dog-eat-dog nature of price negotiations between manufacturers and retailers. Negotiators tend to want the best of both worlds. One solution to this apparent dilemma is to craft umbrella, or framework agreements. The term umbrella is more commonly used in the business world, while framework is more widely used in legal and diplomatic circles. Such agreements set out general principles that will apply to more specific give-and-take contracts in the future. An umbrella agreement between a soft-drink company such as Coca-Cola and a retailer such as Costco, for example, would typically cover issues such as exclusivity, invoicing, confidentiality, and termination. Subsequent short-term contracts would set prices and promotional allowances for specific products. In theory, working on these two different levels benefits everyone, as it allows customers and suppliers to create stable relationships even when market changes are largely unpredictable. Mouzas concludes that the virtue of umbrella agreements is that they give parties room to adapt to changing business conditions. When such contracts are one-sided, however, they can tilt the bargaining table in future negotiations and even lead to public disputes. Small correction point: the Stefanos Mouzas that you mention in the article is a professor at Lancaster University Management School in England, not the University of Bath. Click here to cancel reply. Your email address will not be published. Save my name, email, and website in this browser for the next time I comment. Preparing for Negotiation Understanding how to arrange the meeting space is a key aspect of preparing for negotiation. This discussion was held at the 3 day executive education workshop for senior executives at the Program on Negotiation at Harvard Law School. Remember Me This setting should only be used on your home or work computer. Lost your password? Create a new password of your choice. All rights reserved. Daily Blog. Program on Negotiation Harvard Law School. Leave a Reply Cancel reply Your email address will not be published. Stay Connected to PON. Preparing for Negotiation. Crisis Negotiation Lessons: The U.

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