Entrepreneurial Negotiation

The five simulations included in this version of a short course cover multiple realms in which entrepreneurship (including social entrepreneurship) can occur. PowerGraphics is a two-party negotiation between business partners concerning the ownership of a new computer program one of them has developed. MedLee introduces a cross-cultural communication element to a negotiation between two companies (in different parts of the world) about a possible joint venture in the medical technology field. Bullard Houses builds on a two-party negotiation between a buyer and a seller regarding a complex real estate deal where BATNAs are hard to estimate and very important. Technology Equipment Partners simulates a possible joint venture between two companies that includes a long-term purchasing agreement. Aerospace Investment is the most complex simulation and builds on the role plays that precedes it. It involves an inventor and an investor trying to reach agreement on multiple dimensions of complex term sheet. The simulation is unusual in that it includes a separate “subject evaluation” dimension to the negotiation.

Recommended Simulations

PowerGraphics

PowerGraphics, by Michael Watkins, Marjorie Corman Aaron, and Joshua Weiss, is a two-party, two-hour integrative negotiation between business partners concerning the ownership of a new computer program one of them has developed. Phoenix Software, Inc. is a small closely held corporation that develops and markets software for microcomputers. The six-year-old company was founded by Dana Monosoff, a brilliant programmer who is responsible for the company’s products and became its general manager and president, and Chris Hill, an accountant and computer hobbyist who provided the capital. Monosoff and Hill are each 50% owners. The company has done moderately well, but now faces a crisis resulting from a dispute between the partners over ownership and disposition of PowerGraphics, and new product developed by Monosoff, at least partly on his own time and definitely against Hill’s wishes. Monosoff and Hill have agreed to discuss the problems. At issue is the ownership of PowerGraphics, the need to hire a management expert, and the future of Phoenix, Inc. Major lessons include joint problem solving, relationship dynamics, and the use of objective criteria.

MedLee: In Pursuit of a Healthy Joint Venture

MedLee, by Candace Lun and Jeswald W. Salacuse, is a two-party, three-hour, four-issue negotiation between representatives of two companies with different national and corporate cultures regarding a possible joint venture. MedDevice, a U.S.-based Fortune 500 company that manufactures high technology medical equipment, and Lee Medical Supply, a small Thailand-based company that distributes medical equipment in Southeast Asia, seek to conclude a joint venture. MedDevice and Lee Medical Supply differ greatly in their corporate cultures, which are shaped by their national cultures and the demands of their respective industries. MedDevice, a publicly traded company in a highly regulated industry, is rule-oriented, efficient, structured, data driven, and merit-based. Lee Medical Supply, a family-owned and operated company, places a high value on relationships and family loyalty, and favors informal consensus arrangements over rules. The respective negotiators must develop a way for companies with such divergent cultures to work together. Major lessons include cross-cultural negotiation, principal-agent dynamics, and divergent assumptions.

Bullard Houses

Bullard Houses, by Ron Karp, David Gold, and Mox Tan, is a two-party, two-hour, multi-issue real estate negotiation between representatives for a buyer and seller, where BATNAs are important. Downtown Realty, Inc. owns the historic Bullard Houses, a set of 51 attached brownstones in the city of Gotham. Downtown is eager to sell the property and has several offers on the table. One offer proposes to convert the Houses into apartments, another into townhouses, and a third into a sophisticated marketplace. Downtown has not yet seen the offer of a fourth developer, Absentia, Ltd. Absentia is unfamiliar with Downtown’s other offers, but is confident that its offer will be appealing, although it is unwilling to reveal its exact plans. Each of the four offers presents a quite different financial package, each of which must be evaluated by Downtown in terms of present value. Both sides must take into consideration financial needs, tax implications, personal interests, and future dealings with the city Zoning Board. The negotiation involves attorneys representing Downtown Realty and Absentia, Ltd. Major lessons include BATNA, use of objective criteria, and principal-agent dynamics.

Technology Equipment Partners

Technology Equipment Partners, by Tracey Brenner and Lawrence Susskind, is a two-team, six-party, three-hour, four-issue negotiation between representatives of two corporations setting up a simultaneous high-tech joint venture and purchasing agreement. Advanced Sensor Technologies (AST) is a leading manufacturer of chemical sensors. Technology Equipment Partners (TEP) manufactures the type of equipment AST uses to produce its sensors. AST and TEP are meeting to set the terms of a potential joint development and purchasing agreement. Three senior executives from each company will negotiate. They will try to reach agreement on four issues: tool price, order schedule, payment schedule, and intellectual property. Major lessons include the mutual gains approach, use of objective criteria, and agreement compliance.

Aerospace Investment: Balancing Veture and Relationship Capital

Aerospace Investment, by Nicholas Sabin, is a two-person, two-hour scored negotiation simulation involving a venture capital investment. Individuals are scored on their ability to attain favorable investment terms for themselves and on the quality of the relationship they develop with their potential business partner. The simulation introduces the incorporation of process and relationship interests into negotiation strategy. Relationship-straining conflict has been purposefully included in the negotiation to assess students’ ability to deal with difficult demands while maintaining a positive relationship. Major lessons include integrative negotiation, collaborative problem solving, and relationship dynamics in negotiation.

Recommended Books

Samuel Dinnar and Lawrence Susskind, Entrepreneurial Negotiation: Understanding and Managing the Relationships that Determine Your Entrepreneurial Success, Palgrave McMillan, 2018.

Jeswald Salacuse, Real Leaders Negotiate: Gaining, Using, and Keeping the Power to Lead Through Negotiation, Palgrave Macmillan, 2017.