Task I

1. As FRANK, you do not want to burn the bridges. Somewhere deep

inside your heart you know that SHAKTI AUTOMOTIVE LIMITED is
not entirely wrong in its claims. However, you are deeply upset about
the remark of ‘substandard’ products made by YASHVIR. Also, you
are unsettled about SHAKTI’s new business ally NEUTRON. Ideally,
you would want to regain the trust of SHAKTI and significantly
reduce the amount claimed. But you do not want to come across as a
soft negotiator either. What Negotiation Techniques /Strategies
would you use to achieve the above? Write about any four of your
preferred strategies giving reasons for the same.

Answer

1. Numerically Superior Bargaining Team:-

As a negotiator, I will first prefer the numerically superior bargaining team for
down toning the demand of the counter part of negotiating team. It will
intimidate the SHAKTI AUTOMOTIVE LIMITED lone adversary; as they
have to concentrate on more and monitor the verbal and non-verbal signals.
Negotiators apply various techniques/strategies. It will pressurized the Chairman
‘YASHVIR’ by pointing out his remark which has created an intricate situation for
SANGHAI LTD. With better preparation and efficient team, this strategies will
counterbalance the tone of SHAKTI AUTOMOTIVE LIMITED and we can
put our demand more authoritatively and so that they can downsize the claimed
amount.

Most legal negotiations are conducted on a one-on-one basis, with a single

attorney interacting with a single counterpart. In some instances, however,
parties attempt to obtain a tactical and psychological advantage by including
extra people on their bargaining team. They hope that the additional participants
will intimidate their lone adversary and be more likely to discern the verbal leaks
and nonverbal messages being emitted by that individual

2. Extreme Initial Demands/Offers:-

If the first strategy fails to obtain the desired result as SHANGHAI PVT LTD.
expected from the negotiating table, I, Frank, will go for extreme initial
 demand/Offers. SANGHAI will ask the SHAKTI AUTOMOTIVE LIMITED to
pay the claimed compensation amount as they have violated the terms of the
contract by disrespecting the goodwill of the SHAGHAI by calling its product
substandard. We will ask to repudiate the contract between them and
NEUTRON, which also deal in automobile pistol parts or we will put non-
competitive clause during the negotiation.

Or,

We will offer extreme low so that they can come on same front on negotiating
table claiming fewer amounts for the compensation or make them to repudiate
the contract between then and NEUTRON. Extreme low offer can coerce them,
so that SANGHAI can label their claim unrealistic and secure a upper hand
position on the negotiating table.

In this strategy, people enter in negotiations with high aspiration levels to obtain
more beneficial results than those who begin with less generous expectations.
Bargainers who can rationally defend their seemingly unreasonable initial offers
may be able to induce careless adversaries to reconsider their own preliminary
assessments. By seeing, extreme position of both side, individuals begin to doubt
the propriety of their own positions, they are in trouble. They may even lose
touch with reality and accept the skewed representations being advanced by their
counterparts.

3. Best Offer First Bargaining:-

If both of the above technique fails to achieve a satisfactory result for the SANGHAI,
Frank will apply Best Offer First Bargaining technique. In this, Frank will put together a
best offer to SHAKTI AUTOMOTIVE LIMITED and asked to pay 20 crore as
compensation for the derogatory statement about SHANGHAI and tender an
unconditional apology and accept the non-competitiveness clause for the South
Asian Region namely in India, Bangladesh, Sri Lanka and Nepal.

Or,

SANGHAI LTD. Will try to settle the conflict between the both the parties which
aroused due to misunderstanding. To keep Relationship Bridge intact and for
 future prospect of business/transaction, SANGHAI will propose best option ‘it
will forgo the claimed amount and in return it will ask not to enter into any
contract with third party for motorcycle pistons.

Best-offer-first gives only a chance to counterpart of the negotiating table. In this

approach negotiating party either accepts the offer of walk out from the
negotiation. So its features, sometime it is known as take-it-or-leave-it. It exudes a
patronizing arrogance, with offerors effectively informing offerees that they know what is
best for both sides. This technique also deprives counterparts of the opportunity to
participate meaningfully in the bargaining process.

4. Aggressive Behavior:-

If above all techniques trembled to accomplish the expected outcome, Frank will
employ ‘aggressive behavior’. He will try to realize the seriousness of the
misconduct of the YASHVIR (Chairman of SHAKTI AUTOMOTIVE LIMITED)
by calling out product of SANGHAI LTD’s product as substandard. By this
approach, Frank will assert SANGHAI claim in aggressive manner and try to
dominate on the negotiation table. Frank will dominantly ask the YASHVIR to
drop the absurd claim and publish an unconditional approach to SANGHAI LTD
for damaging the goodwill of the company and demand a compensation of RS. 30
Crore. So that future business prospect always remains open with SHAKTI
AUTOMOTIVE LIMITED.

Or

By deploying aggressive behavior on negotiation table, Frank will reduce the

compensation amount to RS. 20 Crore and put a non-competitiveness clause
during the negotiation for derogatory remark about the SANGHAI LTD. So that
SHAKTI AUTOMOTIVE LIMITED cannot deal in motorcycle pistons in entire
South Asian region for a term of 3 years. If YASHVIR does not come on same line
on negotiation table; Frank will try to dominate by his aggressive behavior by
asking to tender an unconditional apology and full amount of compensation. So
that Yashvir , at least come closer to first term.

Aggressive behavior is usually used to have a great impact on counterparty. It is

supposed to convince counterparts of the seriousness of one’s position. It is also
used by anxious individuals to maintain control of the bargaining agenda. By
being overly assertive, aggressive negotiators may be able to dominate the
 interaction. In this, negotiators attempt to augment their aggressive style with
gratuitous sarcasm. Their goal is to make their counterparts feel so
uncomfortable they will be induced to make excessive concessions in an effort to
end their unpleasant interaction. Individuals who use this approach judiciously
may obtain beneficial agreements on some occasions, but they risk needless no
settlements from counterparts who refuse to tolerate their offensive behavior.

2. As FRANK of SHANGHAI ENGINE COMPONENTS INDIA PVT. LTD,

give a clear insight into your BATNA, WATNA and BOTTOMLINE,
alongwith reasons for the same.

A. BATNA:- Best Alternative To Negotiated Agreement

BATNA is used to compare a pending settlement offer to the best outcome at

trial. Using this point of reference, the negotiator will determine whether the
settlement offer is close to, equals, or exceeds the best outcome at trial, after
adjusting for the litigation expenses of trial, the risk of losing, and the delay in
resolving a dispute.

If SANGHAI LTD. applies BATNA for assessing the best alternative of various
negotiated agreement between them and SHAKTI AUTOMOTIVE
LIMITED. First it will assess the amount going to receive from the SHAKTI
AUTOMOTIVE LIMITED as a compensation reward after the litigation in
court. If SANGHAI gets an amount equal to RS. 40 Crore or more for goodwill
damage compensation from YASHVIR (chairman of SHAKTI
AUTOMOTIVE LIMITED) with a non-competitiveness for 3 years in South
Asia Region. Then Frank will prefer to knock the door of court for breach of
contract by SHAKTI AUTOMOTIVE LIMITED.

After assessing the various alternatives, Frank does not see any change in the
amount and penalty in the form of non-competiveness. Then he will prefer to
go on negotiation table where there chance of getting compensation amount of
RS. 30 crore with non-competitiveness clause in negotiation for 3 years.
B. WATNA: Worst Alternative To Negotiated Agreement

If SANGHAI LTD. applies WATNA for assessing the Worst alternative of

various negotiated agreement between them and SHAKTI AUTOMOTIVE
LIMITED. First it will assess the amount going to lose after the trial to
SHAKTI AUTOMOTIVE LIMITED as a compensation reward after the
litigation in court. If SANGHAI is asked to pay an amount equal to RS. 40
Crore or more for breach of contract on part of them and with a non-
competitiveness in same business for 3 years in South Asia Region. Then Frank
will not prefer to let matter reach to the court.

After assessing the various alternatives, Frank sees that in worst scenario case,
SANGHAI will get an adverse decree from court as a result it will cost huge to
the company and also damage the goodwill in the market. As a result there is
chance of lose the market to other company. Frank will assert to dispose of the
matter on negotiating table and forgo the compensation amount and ask the
SHAKTI AUTOMOTIVE LIMITED to just tender an unconditional
apology to SANGHAI.

WATNA is assist the negotiator in determining whether a settlement offer

exceeds a party's worst possible outcome at trial. Using the WATNA will help a
negotiator determine whether a settlement offer falls within the range of
projected trial outcomes by establishing the low alternatives to settlement.

C. Bottomline

If SANGHAI LTD. assess their bottom line and will walkout after this. After
this bottom line, SANGHAI will not move further during the negotiation.
Frank will assess the bottomline of his company and the counterparty. After
assessing this line, Frank will set a tone for the negotiation. If SANGHAI set
RS. 10 Crore or non-competiveness clause as bottomline for negotiation. As
long as bottom line is not affected by the negotiating parties SHAKTI
AUTOMOTIVE LIMITED. Frank will readily available on negotiating table.
But when, SHAKTI AUTOMOTIVE LIMITED is not ready to give RS. 10
Crore and also not agree on non-competiveness clause. Then, Frank will walk
out of the negotiation and will explore other alternatives.
Every bargaining interaction begins with the Preparation Stage, as each party
attempts to ascertain the pertinent factual, legal, economic, and political
information. Each participant establishes a resistance point or bottom line. In
negotiation, parties only focus on their bottom lines when they have to decide
whether to continue interactions that appear to be going nowhere. On the
other hand, less skilled negotiators tend to focus excessively on their bottom
lines from the beginning of their interactions.