Jewel is negotiating with Condor to purchase Z-2 CPUs. Jewel's best alternative to a negotiated agreement (BATNA) is to purchase the CPUs from ACME for $35 per unit. Jewel's reservation price for purchasing from Condor is $33 per unit. There are two potential cases: 1) If Jewel successfully negotiates with ACME and can purchase for $28 per unit, then Jewel's BATNA and reservation price for Condor decreases to $28 per unit. 2) If negotiation with ACME is unsuccessful, then Jewel's BATNA and reservation price for Condor remains $33 per unit. The zone of possible agreement (ZOPA) for the negotiation
Original Description:
Negotiation Skills Case Study
Original Title
Jewel’s BATNA is That if Condor Doesn’t Negotiate With Him
Jewel is negotiating with Condor to purchase Z-2 CPUs. Jewel's best alternative to a negotiated agreement (BATNA) is to purchase the CPUs from ACME for $35 per unit. Jewel's reservation price for purchasing from Condor is $33 per unit. There are two potential cases: 1) If Jewel successfully negotiates with ACME and can purchase for $28 per unit, then Jewel's BATNA and reservation price for Condor decreases to $28 per unit. 2) If negotiation with ACME is unsuccessful, then Jewel's BATNA and reservation price for Condor remains $33 per unit. The zone of possible agreement (ZOPA) for the negotiation
Jewel is negotiating with Condor to purchase Z-2 CPUs. Jewel's best alternative to a negotiated agreement (BATNA) is to purchase the CPUs from ACME for $35 per unit. Jewel's reservation price for purchasing from Condor is $33 per unit. There are two potential cases: 1) If Jewel successfully negotiates with ACME and can purchase for $28 per unit, then Jewel's BATNA and reservation price for Condor decreases to $28 per unit. 2) If negotiation with ACME is unsuccessful, then Jewel's BATNA and reservation price for Condor remains $33 per unit. The zone of possible agreement (ZOPA) for the negotiation
Submitted By- Shivam Goyal a.) Jewels BATNA is that if Condor doesnt negotiate with him, he can buy Z-2 CPUs from ACME at $35/ unit.
b.) The reservation price for Jewel i.e. the most that it will pay to Condor for Z-2 CPU will be $33/unit because he is already getting it at $35/unit from ACME so there is no point in buying from Condor if he is not offering less than ACME. And also, BETA is offering Z-1 for $38/unit and it has been estimated that Z-1 benefits over Z-2 at about $5/unit, therefore reservation price for Z-2 will be $33/unit.
c.) Jewels BATNA has upgraded because
Case 1- If 50% probability of negotiation holds true and the price is negotiated to $28/unit. Than the BATNA will change from $35 to $28/unit.
Case-2 If 50% probability doesnt hold true for negotiation than there will be no shift in BATNA.
d.) There are two different cases- Case-1- If Jewel negotiates with ACME holds true The reservation price for Condors CPU will be less than $28/ unit
Case 2- If negotiation doesnt take place The reservation price will be $33/unit (because it is said than Z-1 is $5/unit more beneficial than Z-2).
e.) Condors BATNA is to Jewel at $33/unit and that is only possible if they have information about their competitors to Jewel. Jewel is highly likely to accept the offer at $33/unit.
f.) Condors reservation price is any price which is above their liquidation price i.e. $15/unit and moreover liquidation doesnt leave good reputation of company in the market.