Teaching notes
The parties should be able to come to an agreement – there are no deal breakers buried in the case and the zones of possible agreement (ZOPA) are broad. There are ample opportunities for agreeing on the key issues and creating much more new value. The success of the students should be based on their ability to create new value. Some areas might include:
-
Zen: Joint events or publications. These could be adjusted to minimize religious ideas and maximize the mental and cognitive benefits of Zen practice.
-
Logo placement: Solutions should include visible placement of the logo similar to Intel’s “Intel Inside” campaign.
-
Piracy: Agreements about protecting the software could include co-development and sharing of staff such that they can confidently share the risks and benefits and react to changes in the market.
-
Buyout: A complete buyout of ZawaSoft by the larger company could make sense and allow for far more joint new value creation because the firms are no longer separate and will work for common causes.
|
Confidential information for ZawaSoft Corp.
ZawaSoft is a small company with only three years of history from the technology cluster in Fukuoka, Japan. There are 35 employees with and an annual revenue of ¥10,000,000,000.
Your software could be used in many industries from small electronics to bicycle batteries to equipment in space. Anywhere rechargeable batteries are used, you can make them last longer. What most businesses, including Pak-Ton, don’t know: You protect your software by embedding it in the controller chip where it is encrypted. The software is only unencrypted when used in active memory, so therefore it is immune to all but the most sophisticated forms of copying and piracy. You expect that both your security technology and “On the Spot” will improve over the years as you continue developing it.
Goals
You want a two to four year contract that includes:
-
Your company name to be used on the batteries (or other final product) so you can improve your brand
-
A non-exclusive deal so you can sell similar software to other customers in other industries
-
A price of no less than ¥2,000,000,000 per year for several years, or at least $30 million for only one year
BATNA: Sony would like to buy the technology for ¥11,000,000,000, but they would not allow ZawaSoft to continue selling or using or developing the product.
Note: Your shareholders, interested in quick returns, have suggested you sell immediately to Sony or get a non-exclusive high value contract for several years with Pak-Ton and other companies.
Exercises
-
Who will you include in the negotiating team from these staff members: Marketing team leader; Head of marketing; CFO; CEO; Legal officer; Lead software engineer; Chief Technology Officer (CTE).
-
Plan your negotiation strategy – reserve price and positions, the topics to discuss, the sequence of topics, opening offers, linked issues you want to include, new value creation possibilities, etc.
-
Use one or more planning tools found in the Appendices of this book (e.g., interest and priority cards, Raiffa scorecard, backward planning, or other tools).
|
Confidential information for Pak-Ton
Pak-Ton is an established battery manufacturer in Nagoya with 7,000 employees around the world and an annual revenue of ¥500,000,000,000.
Your batteries are used in small electronics around the world. You are the leader in this field with 55% of market share worldwide for rechargeable electronic batteries.
You believe “On the Spot” will improve your sales perhaps for a year or two. It might improve your brand image, too. Best of all, it might help you stay ahead of your rivals, Sony and Panasonic. However, you know how difficult it is to protect software from piracy and theft. You worry that ZawaSoft’s “On the Spot” software could be widely available in just a few years, or even months.
Confidential information about goals
You want:
-
An exclusive deal, at least for electronic batteries used for small electronic equipment (less than two pounds in weight)
-
A price of ¥3,000,000,000–¥4,000,000,000 for a one-year agreement (or more for multiple years)
-
You could pay 15% more per year if you have reason to be so satisfied about the agreement
-
Term: one to two years seems best unless you are confident that the software would be safe longer; three years is possible, but not more than three and a half years
BATNA: Sell your batteries without ZawaSoft’s software – Pak-Ton batteries are the best on the market even without “On the Spot”
Exercises
-
Who will you include in the negotiating team from these staff members: human resources staff, CEO, battery production manager, software engineer, electronics engineer, marketing strategist, head of product development, and legal officer?
Plan your negotiation strategy – reserve price and positions, the topics to discuss, the sequence of topics, opening offers, linked issues you want to include, new value creation possibilities, etc.
-
Use one or more planning tools found in the Appendices of this book (e.g., interest and priority cards, Raiffa scorecard, backward planning, or other tools).
|
Notes for Recruit the best!
Teaching notes
Students are expected to prepare their reserve points, understand their BATNA and have some idea about the other side based on the general information and confidential material.
Careful exchange of information, listening skills and probing will be necessary to correctly get the fine details such as the number on the shirt.
|
Confidential information for agent representing Bolas Chojonez
You would prefer a shorter contract, three or at the most four years, because you hope Bolas might leave Nuernburg and move up to a top club in this league. For now, Nuernburg is a good starting place, perhaps an easy starting place for Chojonez, but there are 11 other teams in the Bundesliga that you can consider.
Chojonez wants you to get special compensation for any games missed, losing only half of what players usually lose for missed games.
You want as high a salary as possible. The contract should start above the team average with increases after the first year. Chojonez does not seem to care about the salary (he just wants to play), but you will take a percentage as your commission, which you wish to maximize.
Generally you want to protect Chojonez from the distractions of public appearances so he can concentrate on developing his skills. On average, players in this league make three to five public appearances a year (other than games). He is a very shy player, so you want him to play without the pressure of extra public events. After all, if he improves you will earn a lot from his future contracts!
It may seem unimportant, but Chojonez wants to have the number “02” (oh-two) on his shirt – it is his lucky number. This is more important to him than getting maximum pay. In fact, he will probably refuse to play if he does not get the correct number.
As the agent, you will receive a small percentage of the total agreement, so be sure to get a lot of money!
|
Confidential information for FC Nuernburg
You are cautious about the player’s skill – he is too young to be sure about. For this reason, you want to get a long contract, five to eight years, with an agreement that you can buy the contract out and end it after a few years if necessary. You are aware that Chojonez is good – but not reliably great, at least not yet. Therefore you could spend your money recruiting two or more less impressive players and improving them.
You want to pay a reasonable salary, but the team cannot afford too much. A good starting salary would be around the team average, preferably below, with a chance to grow. Your total budget for team pay is €9.5 million for this year, and you expect this to grow in coming years. You can be flexible about the amount deducted per missed game, pay in the second year, etc.
You want to include Chojonez in public relations events as much as possible. This means a couple of times each month. You believe these public appearances directly increase the number of people attending games and watching on TV, which means more income for the team.
You are preparing a press release to announce this agreement (but of course not all the details), and the fact Chojonez will wear number 32, a historically lucky number for the club. Other numbers are available, including 1, 2, 3, 5, 11, 19, 22, 27, 31, and 37. There are no numbers higher than 39 and no numbers with a zero due to casual club tradition.
|
Share with your friends: |
