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Negotiation: the Contract for Analysis of Data Accuracy System in American Express with Vendor

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Last week, I conducted an interview with Cory Labanow who is now the vice president of Goldman Sachs and also happen to be a professor in Baruch College. He talked about a negotiation that he did when he was in American Express as a senior manager within Global Strategy and Capabilities. He negotiated a contract with a vendor for analyzing data accuracy system in American Express. He just had to give a data list that the company wanted the vendor to analyze but there were a few concerns with the contracts. There are three major concerns; price, abilities and consistency of analyzing the data. Depending on the number of the data lists, the price was varying and the capabilities of the vendor is kind of limited. And also, the data lists from American Express would be different and the company expected the vendor to be able to do which is considered as an important factor in the contract from the company. On the other hand, the vendor expected the company have consistency with the data lists so that they could have a smooth process with the analysis. It took him about six weeks to negotiate with the vendor for the differences.

When he negotiated for the price, American Express had enough budgets to pay the price the vendor was asking for and also for the vendor, it could be considered as a good price. However, the vendor had to agree to work with different data lists for every month and they had to handle the hiring people for the projects. So he made an agreement with the vendor that he would give notices to them sixty days earlier if there were any changes in data lists and also the vendor expected the company not to drop less than twenty percent of the data lists. In terms of what Cory said, I don’t see any of the emotional factors involved in the negotiation expect the fact that they have their own self-interest which seemed to take a lot of influence in the negotiation which leads to the fairness in the negotiation. The company was able to give the price for what they wanted but the vendor wanted to have a smooth operation with the analysis. In terms of conflict solution theory, it would seem like cooperative according to Williams Study in “Shattering Negotiation Myths Empirical Evidence on the effectiveness of Negotiation,” but in my opinion, it is more like “accommodating. ” The negotiating was successful and it seemed fair to the both parties.

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However, the vendor has to give up its self-interests which is to have consistency in data lists to have a smooth analysis process in return for more amount of price. During the interview, Cory said that he had to think about the facts what is important for his company and what is also important for the vendor during the negotiation. By looking at this, the negotiation process seemed to follow Roger D Fisher’s five steps of negotiation principles. As I mentioned before, the negotiation didn’t seem to involve any emotional factors and both of the parties were seemed to be “psychologically prepared” as Professor Roger said. Both of the parties had their own interests but they did only focus on the issues by separating from the other party without damaging their relationship. They tried to understand each other’s interests and they focused on communicating and listening to each other’s viewpoints to overcome misinterpretation and misunderstanding during the negotiation. American Express aired its interest to the vendor while the vendor did the same. Instead of negotiating the terms first, they first tried to understand each other’s circumstances and both of them thought each other as negotiators which leaded to the success of the negotiation. At the beginning of the negotiation, both of the parties had the same interest which is to form a contract and to do business together. However, along the negotiation, there were some interests differ from each other and both American Express and the vendor focused only on their interests opposed to the positions as Professor Roger stated. Both of the parties aired their interests and viewpoints and discussed them together to reach an impact instead of focusing on the different issues. As Professor Roger stated for the fifth step of negotiation principles, “the person who has alternatives can affect the relative strengths between the parties so as to weigh the outcome to that person’s advantage. ” As American Express had more options give in terms of budgets, times, and the amount of data lists, it has the advantages over the vendor which was also a factor that lead to the success of the negotiation. However, as I was mentioned before, the vendor was more likely to accommodate what American Express’ needs which leads to a dilemma for the third step of Roger D Fisher negotiation principles for this case.

Roger D Fisher stated, “negotiators concentrate on inventing options for mutual gain. ” Both of the parties did “invented” options for the mutual gains, but the interests were more likely to be biased to the side of American Express maybe because of the fact that it was able to produce more alternatives during the negotiation process. In this case, we can consider that both of the parties can have mutual gains by creating options but on the other hand, people who can give alternatives are more likely to have advantage for their own-self interest during negotiation. And finally, Roger stated that negotiators who use “objective criteria” instead of resolving the differences during the process can lead to the success of the negotiation. American Express and the vendor’s main objective is to make a contract for analysis of data accuracy system. As I mentioned before, they have three major concerns. Instead of focusing on their problems, both of the parties aired their reasons to support their own self-interests and main objective. They put their agreements in the contracts and resolve their dispute. While focusing on the main objective, the reasons for supporting the objective from the both parties were seemed to be fair but again, American Express was able to gain advantages because it was able to create more options which could be also seemed as more reasons to support its main objective. To be concluded,

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