Final Paper

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Apr 3, 2024

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Final Paper – Bakra Beverage Name: Asaf Shiri Role: Sales Director at Bakra Beverage Name and role of counterparty: Connie Tejada, BebsiCo’s Director of Middle East Monetary Results: 12 months contract of $3.5m between 50%-70% distribution, after that, additional $0.5m for every 5% distribution increase. Non-Monetary Results: Collaborating with Bakara board member to strategize Go-To-Market approach for the chain restaurants. Dedicated marketing budget to adjust BebsiCo products to the local market. Short description: We met to discuss Bakra Beverage and BebsiCo’s soft drinks distributing contract in Kumar. The meeting length was 64 minutes. In the following report, will analyze the three main parts of the negotiation process: preparation, during negotiation, and post negotiation. The three parts are interconnected and all parts include course concepts. The last part is derived from the first two parts and includes key course takeaways and a “work plan” for future negotiations. Preparation I had enough time to prepare which allowed me to understand better the case. I asked the six fundamental questions in order to frame my strategy. The fundamental questions helped me understand who is sitting in front of me. I knew that we weren’t BebsiCo’s first choice but the fact that they reached out, revealed that they had an issue with Kabir Cola and provided me with information I can leverage. Bakara’s detrimental financial situation did not influence my strategy when going into the negotiation. I was prepared to answer the concerns by explaining the positive outlook of the economy; the economy is entering a new more positive stage. I started to list strengths and weakness, looking for value creation opportunities such as the connection of the board member to the restaurant chain. I planned to raise it after having raised

the topic of the fee because I wanted to soften my fee offer. I built a plan of a tiered fee structure with a base fee of $5m and additional $0.5m for every 5% increase in distribution. One takeaway I had from previous negotiation exercises was preparing questions in advance. Asking the other side questions might reveal information that can help my position in the negotiation. Also, it shifts the initiation to your side and helps you maintain control of the conversation. This allowed me to find weakness about the Kabir Cola issues. When analyzing my BATNA and ZOPA, I came to realize that I didn’t have a BATNA as my manager requested to close the deal no matter what and the alternative was to go bankrupt. As for the ZOPA, it was between $0-$6m, which is a big range. Though it’s the reality, it is challenging to be in situation when you have no BATNA. Therefore, I used the data I have about similar deals that can serve as benchmark. I used those as my imaginary BATNA in order to ground me to a higher offer. Also, not having BATNA pushed me to come prepared and make the most out of the deal because you don’t have another option. Additional preparation that helped me was to put the entire negotiation plan on a paper and work with it, while adding notes during the meeting. At work I usually come with an empty page and fill it in during the meeting, this time, the page was full before the meeting started. During Negotiation I felt well prepared for the negotiation. The preparation helped me to build a solid narrative around my company’s strengths. I was able to present a strong narrative on why BebsiCo should not be worried about Bakra Beverage’s financial situation. As a preview to the offer details, I provided an overview on the positive outlook and strengthened the narrative that BebsiCo should partner with us. I wanted to present optimistic and justified aspirations through my market

expectation . This approach eliminated counter arguments made by BebsiCo about lowering the fee due to the risk of the deal. In terms of negotiation style, because I came prepared, I was on the high levels of assertiveness (Competing-Collaborative). My prepared questions reveled weakness on the other side’s position; I asked about Kabir Cola and it revealed a weakness of BebsiCo. From that moment, I anchored my position, and I spiced it up with the fact that we were the best option given our competitor is unable to get the deal. I knew that the other side is bluffing when they said that they have other options besides us. I wanted to initiate the first offer, but the other side then offered $2.5m, which anchored me toward a lower fee than I expected. I was not prepared to get a low ball. At the beginning, I felt the “winner's curse” tendency as our situation is not that bad and Bakara Beverages will not go bankrupt. Then, I presented my disappointment because it was significantly lower than the $5m I planned to offer. Unfortunately, I did not follow my plan and offered $3.5m as base fee. I was being accommodating to the other side on the expense of my interests. Immediately after that I explained the rest of the offer. The rest of the offer remained unchanged, but my starting point was lower than I planned. From that moment I was less prepared to compromise because the rest of the offer (tiered fee structure) eliminated the other side’s concern on the economy uncertainty. If we don’t a reach high distribution percentage, they don’t need to pay an additional fee. After the part of presenting the offer as a whole, we discussed the threshold from which we get additional fees. During the rest of the negotiation, I explained the rationale of my offer and why it makes sense for us to be paid more if the distribution increases. Using my notebook during the meeting, helped me to convey the message more clearly. Though I was anchored at the base fee, I managed through the narrative of “pay for success” to anchor the tiered structure and reach $6m if we crossed the 70% distribution. Also, at some point, I think that the other side did not

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