Negotiating and Conflict Resolution
MGT 4320-01; T/TH 12:30-1:45; Fall 2010
Professor: John Ferguson, J.D.
Student: Jeremy Carter
TABLE OF CONTENT
1. Body of Paper…………………………………………………………………...3-9
2. Works Cited………………………………………………………………...……10
This paper is in reference to an integrative negotiation situation that was
experienced by Jeremy Carter during the 2010 Fall semester at Baylor University. The
negotiation and transaction occurred over a three month period, from July to October.
This paper will discuss the reason for the transaction, how research was done in
relationship to the transaction, why the transaction took place or what caused the
transaction to conspire. Also being described: the method of interaction that took place
between the parties during the transaction, how the transaction took place, and the
additional step-by-step details of the actual transaction.
On a late summer afternoon in July having fun on the lake, a friend pointed out
that the tube was no longer holding air. This was not a good sign and indicated that
multiple fixes had finally failed. Upon inspection, it was discovered that the source of
the leak was severe. The leak was located on a seam and seams leaks are often not
repairable; the pressure placed on the tube is often too great for patches in these areas.
This is when the search for alternatives began. Option one: try to patch it yet
another time with a high probability that the patch will fail. Option two: search for
another tube. Tubes could be found through a variety of ways from Craigslist to eBay,
boating accessory suppliers web-sites to boating magazines, local boating dealers, to
borrowing one from a friend. This list of alternatives all made up my BATNA (best
alternative to a negotiated agreement).
It was now time to do the pre-negotiation work of collecting information on what
Jeremy would accept in the next tube. Jeremy had to decide his preferences such as size,
shape, covering, and weight capacity. The negotiation terms that were important are
pricing, shipping costs, warranties, and quality of the tube. The ranking of these features
broke down as follow: 1st warranty (most important), 2nd pricing, 3rd quality, and 4th is
shipping (least important). The next step was initiating the negotiation with the seller or
supplier. The seller in this situation is a company called The House Board Shop, located
in Minneapolis, Minnesota. Jeremy found the company on an internet search and also a
boating magazine that he receives regularly.
Jeremy then proceeded to start the negotiation by calling the phone number in the
magazine. After a sales representative named Brent introduced himself, Jeremy
proceeded to briefly tell him what products interested him. Brent made some
recommendations and also told Jeremy about the tubes that were currently on sale.
Jeremy stated that he was really interested in a less expensive tube than Brent initially
mentioned. Jeremy’s emphasis seemed to be only on pricing at first, but in reality he was
interested in other features as well. This was a typical practice of bait-n-switch; Jeremy
knew the specific tube that he was interested in, it was called the OBRIEN X-SCREAM.
The OBRIEN X-SCREAM is a heavy duty inflatable four person boating tube, with a
diameter of 96” which met all of Jeremy’s requirements. Jeremy let Brent start by
describing the basic features of a smaller tube called the BOMBER. Brent also explained
the qualities, advantages, and disadvantages of the tube. Jeremy asked him if the tube
would withhold the abuse that he put tubes through, explaining to Brent how his previous
tube had ripped numerous times, how he was sick of patching the tube multiple times and
wanted something that was durable. Brent then asked if Jeremy would be interest in a
larger tube, which would end up being a better deal and was also the tube Jeremy initially
researched and wanted. Brent explained that the OBRIEN X-SCREAM was constructed
of a thicker vinyl than the cheaper BOMBER (the one Jeremy previously owned).
Jeremy proceeded by asking questions about the pricing, quality and warranty of the tube.
Brent said that the $279 price included paid shipping and a 30 day warranty. This was a
little more than $100 over the BOMBER price which Brent told Jeremy about initially.
Jeremy told him that the OBRIEN X-SCREAM was beyond his budget, but wanted the
quality it offered. Jeremy explained that he couldn’t make a decision at the moment and
would call back later. Before ending the call, Jeremy asked Brent for his direct phone
extension, so that Jeremy could continue the negotiation and relationship at a later time.
Jeremy hoped this would help him get the best deal, since he had already built rapport
and trust with Brent.
A few days later Jeremy called back and asked for Brent. Jeremy refreshed Brent
on who he was, the man interested in the OBRIEN X-SCREAM just a few days prior.
Jeremy notified Brent that he really could not afford the retail price of $279.95. Jeremy
asked Brent if he could come down to $229.95 since it was already late summer and the
peak season for boat accessories sales was nearing the end. Jeremy avoided making too
generous of an initial offer by offering below his target point. Jeremy told Brent that he
was originally looking to spend less than $200.00. Brent agreed with the angle Jeremy
presented about being late in the season and asked Jeremy if $249.95 would be an
acceptable price. Jeremy thought this would be a good agreement since his aspiration
point was to be under $250 out the door (included all additional costs such as shipping
and warranties). By this point, both parties had embraced a mutual adjustment. Jeremy
told Brent that he would agree to the deal as long as he would extend the warranty to
more than 30 days. Brent offered to extend the warranty to 90 days to help lesson Jeremy
buyer’s remorse. Jeremy told Brent they had a deal. The deal included a price of
$249.95, a 90 day warranty, and free shipping. Now that both Jeremy and Brent agreed
on the terms the negotiation, they could close the deal, Brent then collected Jeremy’s
contact and payment information. In the end, the negotiation was a win-win deal for both
parties, also referred to as an integrative negotiation. The House Board Shop would
receive a value in the form sales or income and Jeremy would receive value in the
physical product while Brent received commission. The next day Jeremy received an
email receipt with the tracking information, making the contract official. Within a few
days Jeremy would receive the product in the mail.
Now it was time to enjoy the tube and watch the pain it would inflict on riders.
During the next few weeks, the tube would be put to the test, more times than not the tube
would win the battle between rider and tube. However, this did not last long. On the
fourth weekend of use, the tube had yet another major leak spring open from one of the
seams and was located on the top side of the tube. Leaks in this location are often not
repairable, causing Jeremy to think to himself how could this leak have been caused, but
could figure it out. After a few days, Jeremy decided to call Brent to see what he
thought. Jeremy hoped that he could get Brent to see it as a warranty issue and replace
the tube due to inadequate product quality. Brent told Jeremy to hold while he checked
with the store manager on how to handle the situation. Brent discovered from the
manager that the O series of tubes had quality issues and multiple seam failures. There
had been a batch in production that had been incorrectly constructed and had been
improperly glued on the seams, which was most likely the cause of the tube’s problem.
Brent gave Jeremy three options: the first was to exchange the tube for a new one; the
second was to return the failed tube and select another model in exchange; the third
option was to just get a refund. Jeremy thought it would be best to just do the exchange
for the same model, since Jeremy had received such a great deal on the original one. But
before making the decision Jeremy needed to ensure the return shipping costs would be
paid for by the Shop. Brent notified Jeremy that all instruction for returning the old tube
would be included in the new tube package. The paper work specified that Jeremy
needed to return the old tube within 15 days. If not, Jeremy would incur an additional
charge on his credit card. Jeremy wondered if the Shop would allow him to keep the old
tube since they would probably scrap the old tube anyways, so Jeremy decide to call
Brent back to see if there was anything the Shop could do to make it happen this one
time. This would also save the Shop on shipping costs. Brent understood Jeremy’s
argument, but insisted that it was a company policy and that Brent did not have authority
over the decision. Brent said that the Shop does not recommend repairing leaks in areas
such as Jeremy described to him. Jeremy again reiterated that it would save the
company money if he just kept the tube. Brent explained to Jeremy that the manufacturer
didn’t recommend patching leaks that occur on the seams and that they had to send the
defective one back to the manufacturer. In the end, Jeremy received a great deal on a
new tube and even managed a replacement tube free of charge. How could he complain?
The negotiation started by researching the possible products available, setting a
BATNA using internet-web sites such as Craigslist, eBay, and direct boating accessory
companies. Once Jeremy determined the range and reservation point that he was willing
to pay, he proceeded with the actual negotiation using the direct method of gathering
information by conversation with Brent the salesman. By planning ahead of time, Jeremy
set a bargaining mix of issues, and then ranked them according to their importance. This
was a good tool to keep Jeremy focused on the right features so he would push for the
most important issues first. Jeremy felt these first few steps were critical in directing the
negotiation in his favor. Jeremy had already determined his reservation, aspiration, and
settling point by this time, making the process less stressful and helping him focus on his
goals. Jeremy also had determined that he needed to take a chance and go against the
typical social constraints associated with buying from a source over the phone. They are
often seen as inflexible on product pricing and warranty. Jeremy decided that his best
tactic was to have rational reasons to back up his terms, but Jeremy did not want to use a
hardball approach. This would likely alienate the Brent and knew that he would probably
be buying items from the Shop in the future. Jeremy thought it was important to build a
connection with the selling party, so he proceeded by describing how he had enjoyed a
recent store visit over a summer internship trip to Minnesota. This technique of
relationship building would help build trust and make the negotiation more amicable
between the parties to sway the negotiation in his favor. During the negotiation, Jeremy
spoke about how he really enjoyed previous product purchased. Jeremy also understood
that the Shop was in business to make a profit and made it clear that he would help the
Shop as much as possible with future sales through referrals. The negotiation resulted in
an integrative outcome for both the Shop and Jeremy. The Shop gained sales and profits
while Jeremy gained a product that he would enjoy.
However, there were some aspects of the negotiation that Jeremy would have
changed if he were to start over. Jeremy would have preferred to keep the old leaky tube
and salvage it, since the Shop would most likely discard it. Ideally, Jeremy wanted to
work this into the exchange, rather than just sending it back. Brent definitely took
multiple different approaches when trying to close the deal, referring to the free shipping,
best quality product on the market, limited stock levels and number of product produced.
He said that it is hard to tell when the next shipment would be delivered. This was
testing the two dilemmas: first of trust and second of honesty. Was Brent really telling
the truth or was he misrepresenting the product and being bias? If he was bluffing, this
could lead Jeremy to dissatisfaction and ultimately create conflict between the two
parties. He also mentioned a deal sweetener, saying that he would throw in a free duffle
bag with any purchase made that day. In conclusion, Jeremy ended up receiving a new
tube in exchange for the old tube. Jeremy decided returning the old tube was the best
way to avoid the additional expenses of keeping the tube. Jeremy and Brent finished the
negotiation in an integrative agreement.
The House Burton Snowboards, Snowboard Boots, Bindings, Jackets, Pants, Clothing,
K2, Ride, DC, Holden, Bonfire. Web. 09 Nov. 2010. <http://www.the-house.com/>.
TRANSWORLD - WAKEBOARDING Dec. 2010.
The House Invoices ( 3 pages )
o Original invoice (Appendix A)
o Return invoice (Appendix B)
o Return label (Appendix C)