5 Negotiation Examples That Will Inspire You To Negotiate Better
📖 Table of content
- 1. Deal Termination Between Kraft Foods and Starbucks
- 2. Warner Vs CBS
- 3. Talks Between The North and South Korea
- 4. The Sino-British Joint Declaration
- 5. The Biggest Ponzi Scheme in the United States
Negotiation Experienceis the Key
To a professional negotiator or procurement manager, experience is always the best teacher to become a good negotiator. You take those moments of victory and relish it while you hold on to those moments of defeat and you learn from each painful memory.
Of course, while experience is just one of the many facets of becoming an expert negotiator, it is very easy to learn because the most important negotiations are somehow memorable for everyone involved.
And even if a person is not involved, stories of successful negotiations are now available for people to read thanks to the Internet!
This is why in this article, we are going to share with you 5 negotiation examples and 7 renowned negotiators that will inspire you to negotiate better.
5 Real Life Negotiation ExamplesThat Will Inspire You to Negotiate Better
1. Deal Termination Between Kraft Foods and Starbucks
Starbucks and Kraft formed a partnership in 1998 to distribute Starbucks packaged coffee in grocery stores. However, as the coffee industry landscape evolved, particularly with the surging popularity of single-serve coffee pods, Starbucks sought greater flexibility to adapt to market trends.
In 2010, Starbucks proposed buying out Kraft’s contract for $750 million to terminate the agreement Kraft objected to the deal termination, Kraft raised objections, but Starbucks proceeded with the termination nonetheless.
Subsequently, Starbucks witnessed significant growth in its share of the single-serving coffee pod market and grocery-store product sales. To resolve their dispute over this contract termination, the two companies resorted to arbitration after failing to settle independently.
In 2013, the three-year dispute between Kraft Foods and Starbucks regarding the distribution of the latter’s packaged coffee in grocery stores reached its conclusion.
In November of 2013, an arbitrator ruled that Starbucks had breached the agreement, ordering the coffee giant to pay Kraft Foods $2.75 billion to settle the dispute.
What can I learn from it?
This business between Starbucks and Kraft Foods demonstrates how the ever-changing dynamics of marketplace trends can render the previously negotiated business agreements unsuitable over time.
A valuable lesson to learn from this dispute is the importance of creating flexible business contracts. In their initial agreement, Kraft and Starbucks might have benefited from including provisions for scheduled renegotiations.
However, Kraft and Starbucks could have made their initial agreement better by adding a plan to review and change the terms as the market changed.
They could have also agreed on what would happen if they wanted to end the deal early, like paying penalties or compensation. In short, being flexible and thinking ahead in contracts is essential when dealing with changing markets.
2. Warner Vs CBS
In October 2013, Time Warner Cable faced a significant crisis when it reported an unprecedented quarterly loss of television subscribers, with 306,000 customers out of its 11.7 million-strong base choosing to cancel their subscriptions. This problem was due to its dispute with the television network CBS over programming fees.
This dispute was so bad that Time Warner Cable temporarily stopped showing CBS in some big cities like New York and Los Angeles. In the end, CBS got to be victorious in this dispute. CBS secured a substantial increase in fees for its programming in the affected blackout areas, raising the fee per subscriber from about $1 to $2.
Additionally, CBS gained the digital rights to distribute its content through online platforms like Netflix. Time Warner Cable conceded largely due to its fear of losing a significant portion of its subscriber base if the dispute disrupted the broadcast of Monday night football on CBS.
What can I learn from it?
This dispute highlights that trying to be tough in negotiations, like what Time Warner Cable did, can often make things worse. Instead of helping, it can backfire on you. It’s better to find a solution that works for both sides.
Winning at the other person’s expense usually doesn’t work out well in the long run. Thus, seeking mutually beneficial solutions is usually what makes negotiation successful.
3. Talks Between The North and South Korea
In June 2013, there was an opportunity for North and South Korea to come together in Seoul for high-level government talks aimed at improving their strained relationship.
However, before the talks even began, a dispute arose over the rank of each side’s chief delegate.
South Korea had appointed its vice unification minister as its chief delegate, which offended North Korea, leading them to demand a more senior representative from the South.
This escalated into a face-saving battle, with both sides refusing to back down on the delegate selection issue.
Eventually, North Korea canceled the talks, accusing the South of insulting them. This situation highlights a critical aspect of negotiations which is the importance of saving face.
In this case, South Korea missed an opportunity to engage with North Korea by not conceding on the relatively minor matter of delegate status, which would have allowed North Korea to save face.
What can I learn from it?
The lesson that you can learn from here is that in negotiations, it’s not just about the deal itself, it’s also about treating each other with respect and saving face.
Sometimes, negotiators get so caught up in looking good themselves that they forget to help the other side feel good too.
If you criticize or doubt someone too much during negotiations, it can make them feel bad and act in a way that’s not helpful. This is especially true for people who are sensitive to criticism.
So, it’s smart to understand that saving face is important and sometimes giving in a bit on smaller issues can make negotiations go better and keep a good relationship with the other side.
4. The Sino-British Joint Declaration
A critical negotiation that occurred more than three decades ago is gaining significance in today’s Hong Kong, which has been in a state of unrest since the introduction of an extradition bill in 2019.
This bill could have allowed Hong Kong criminal suspects to be sent to mainland China for trial. While the bill has been withdrawn, widespread protests continue.
The negotiation in question is the Sino-British Joint Declaration of 1984. Back then, China’s leader and the UK’s Prime Minister talked about what would happen to Hong Kong.
The UK, which had control of Hong Kong for a long time, agreed to give it back to China on July 1, 1997. This agreement states that China’s rules for Hong Kong would stay the same for 50 years, including its legal system, until 2047.
However, China now says this deal only counted until 1997, and the UK doesn’t have rights concerning Hong Kong since then. The UK disagrees and insists that it’s still a valid deal.
This issue makes it more complicated because of recent elections in Hong Kong where pro-democracy people won, and because the US made a law supporting Hong Kong, which made China mad.
The UK is not as strong as the US, so it’s in a tough spot. However, the UK lacks the leverage the US possesses, especially with the support of the European Union.
Damaging the UK-China relationship over an issue with limited potential outcomes would be unwise, especially as the UK seeks to build alliances in a changing global landscape.
What can I learn from it?
The lesson you can learn from here is that historical negotiations and agreements can have lasting repercussions, even decades later.
It also underscores the complex challenges of international diplomacy and the need for careful consideration of national interests and alliances when dealing with contentious issues.
In this case, the UK’s position is complicated by its limited leverage compared to major global players like the US, highlighting the importance of strategic diplomacy in international relations.
5. The Biggest Ponzi Scheme in the United States
Bernie Madoff, the stockbroker behind one of the largest Ponzi schemes in the United States, had the unwitting help of many investors who trusted his fraudulent fund despite having suspicions.
Some investors questioned how his fund consistently outperformed the stock market for years, a feat that seemed statistically impossible. However, they chose not to investigate further and brushed aside their doubts.
Harvard Business School’s Max H. Bazerman explains that even individuals with strong ethical values can engage in unethical behavior without consciously realizing it.
This phenomenon is referred to as “bounded ethicality,” where people unknowingly act against their values, especially in high-stakes situations like negotiations.
During negotiations, “ethical fading” occurs as the desire to win overshadows ethical considerations, leading to unintentional deception.
What can I learn from it?
This example highlights that ethical lapses can happen without you realizing it, especially in high-pressure situations like negotiations.
It’s important to be aware of this tendency and strive to make ethical decisions even when you’re focused on achieving your goals. This helps maintain trust and integrity in your personal and business relationships.
7 Renowned NegotiatorsThat Will Inspire You
Life is a constant battle of wills. Whatever stage you are in life, there will always be a time when you need to put in a lot of effort to get what you want. Whether it’s studying to pass an exam, researching for a thesis, looking for your first job, or working for your next job promotion, life will always be full of challenges.
But the key here is what you do to those challenges to succeed.
People react differently to challenges. Some would face it head-on; others would retreat and wait for the right moment. But in everything that you do, negotiations will always be an important aspect of getting your hopes and dreams.
It’s said that a person who is skilled in negotiation can handle everything that life has to offer. Whether it’s good or bad, negotiating your way into getting the results that you want is certainly a useful skill that everyone wants to have.
In the video below, we are going to dive into the 7 renowned negotiators worldwide and what we can learn from them.
The stories that we’ve shared with you can teach you how you can be adaptable and a forward-thinker in negotiations.
In negotiations, you must always strive for a win-win situation for you to build a strong relationship with the other party. The lessons that you learned hold relevance not just in business but also in your everyday interactions and relationships with your family, friends, and co-workers.
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