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Background:
A leading international retail company, GlobalRetail, is in negotiations with a fast-growing ecommerce company, E-Shop, to form a strategic partnership. The purpose of the partnership is to
combine GlobalRetail’s vast distribution network with E-Shop’s innovative online platform to reach a
larger global market. The negotiation involves both companies discussing the terms of revenue
sharing, operational responsibilities, and market expansion goals.
As the lead negotiator from GlobalRetail, your goal is to come to a mutually beneficial agreement.
Both companies are eager to close the deal, but throughout the negotiation process, both sides
struggle to see a way to achieve a win-win solution.
Scenario:
The negotiation has been ongoing for several weeks, with multiple rounds of meetings and
exchanges of proposals. Initially, the discussion focuses on two key areas:
1. Revenue Split: E-Shop demands a 70%-30% split of the profits, citing their technological
expertise and intellectual property. GlobalRetail counters with a 50%-50% split, arguing that
their established distribution network and global market reach are equally important.
2. Operational Responsibilities: E-Shop wants to maintain control over the online platform and
customer service, while GlobalRetail insists on overseeing logistics and distribution to ensure
a seamless process across its global network.
Negotiation Dynamics:
Despite both companies claiming that they want a win-win agreement, the negotiations quickly
begin to stall. The discussions often break down into heated debates, with both sides holding firm to
their positions and seeing the other as an adversary. At several points, both parties end up
frustrated, with no progress made toward a final deal.
You, as the lead negotiator for GlobalRetail, begin to notice a few key patterns:
1. Illusory Conflict: E-Shop argues that their technological innovations are the core of the
partnership’s value, while GlobalRetail insists that without its logistical and distribution
capabilities, the business cannot scale. However, both sides fail to recognize that these areas
are complementary rather than conflicting. In reality, both technology and logistics will play
critical roles in the partnership’s success, but neither party is effectively acknowledging the
potential for joint gains.
2. Fixed-Pie Perception: Both GlobalRetail and E-Shop fall into the trap of seeing the
negotiation as a zero-sum game. They assume that if one side gets more of the profits or
control, the other side will lose. This leads to deadlock, with both sides unwilling to move off
their initial positions.
3. Lack of Awareness of Suboptimal Outcomes: Neither party is aware that they are leaving
money and resources on the table. While both sides hold firm to their demands, they fail to
explore how creative solutions could expand the pie and allow for a better overall
agreement.
4. Expanding the Pie vs. Claiming Resources: At one point, GlobalRetail’s negotiator suggests
that the partnership could involve joint ventures in new markets, as well as the possibility of
leveraging E-Shop’s data to create new product lines. However, the conversation quickly
shifts back to negotiating percentages and control rather than exploring how to expand the
pie. The focus on short-term revenue splits rather than long-term growth is limiting the
potential of the deal.
Questions for Students:
1. Why do you think both sides are unable to reach a win-win agreement?
2. What are the key reasons that lead to suboptimal outcomes in this negotiation?
3. How might illusory conflict and the fixed-pie perception be influencing the negotiation
process?
4. What steps could the negotiators take to expand the pie and avoid leaving resources on
the table?
5. How can negotiators balance the need to claim resources with the opportunity to expand
the pie?
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