Business Negotiation Strategies

Negotiation is a process involving discussion of two or more parties that have
different objectives and needs. The goal of the discussion is to arrive at a solution that is
acceptable to all the parties that are involved in the negotiation. In business negotiations
occur both informally during day-to-day interactions and formally through negotiation of
various legal contracts such as service delivery, lease, and sale. Effective negotiation skills
not only help businesses to arrive at solutions that best serve their interests but also helps
them to establish better relationships with their stakeholders such as employees, customers,
suppliers, financiers, and government. Such good relationships help businesses to avoid
unnecessary conflicts and problems and, therefore, contributes to its success. This paper
examines the strategies that major business organizations use during negotiations to arrive at
a solution that serves their interests while at the same time helping them to avoid unnecessary
conflicts and problems in the future.

Samsung and Apple Negotiation Over Patent Rights

Apple and Samsung are among the biggest and best-known technology companies in
the world. Apple is an American-based multinational company that is involved in the design
and production of electronics equipment such as smartphones and tablets as well as software
(Staff, 2019). Samsung, on the other hand, is a South-Korean multinational corporation that
produces electronics devices such as televisions, computers, and smartphones as well as
many other technology products (Staff, 2019). Even though these two companies are fierce
competitors, they also cooperate with each other in a number of areas. For instance, Samsung
is one of the largest suppliers of Apple while Samsung uses Apple’s products in the design of
many of its products.

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It is this latter relationship that led to Apple suing Samsung for patent infringement in

2011. According to Apple, Samsung copied many technological aspects of its iPhone in the
      development of its smartphones (Staff, 2019). Due to such copying, Apple argued that
      Samsung had failed to respect intellectual property rights. Therefore, it wanted Apple to pay
      it for violation of its intellectual property rights and to stop usage of its intellectual properties
      in the design of its smartphones.
      Samsung countered Apple’s lawsuit with a lawsuit of its own which accused Apple of
      infringement of its intellectual property rights related to Apple’s use of Samsung’s wireless
      transmission technology and other patents (Staff, 2019). Even though both companies at first
      used litigation to settle their problems, they both expressed willingness and desire to
      negotiate with each other and reach a solution that was acceptable to both of them. In
      particular, Apple was willing to have the dispute settled through negotiation in order to
      maintain good relationship with Samsung, one of its biggest suppliers. However, negotiation
      between the companies failed and Apple went to court where it won the case against
      Samsung for copyright infringement (Staff, 2019). Samsung also won in other courts against
      Apple for copyright infringement but the amounts it won were less than those of Apple.
      Impact of Planning on Negotiations Between Samsung and Apple
      The paths that the two companies took during the negotiation process were a result of
      extensive planning by both parties. In the case of Samsung, it knew that it was in a strong
      negotiation position against Apple because it was also one of its biggest suppliers (Staff,
      2019). As a major supplier of Apple, Samsung believed that Apple would not push its case so
      hard against it. The risk of destroying the relationship with one of its key suppliers was just
      too big for Apple to take. Therefore, it was not eager to give in to the demands of Apple
      quickly. It hoped that over time, Apple would come to the realization that maintaining good

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relationship with one of its most important suppliers was more important than winning the
patent infringement case.
As for Apple, while it was aware of the importance of Samsung in its supply chain, it
felt that a temporary friction in their relationship was a worthwhile risk to take in its quest to
make Samsung to stop its intellectual property infringement and pay for infringement acts
that the company had already committed. Apple’s research showed that it had strong case
against Samsung and was likely to emerge victorious in any type of dispute resolution
mechanism that the two companies would have adopted. It is for these reasons that Apple was
ready for both direct negotiations with Samsung as well as litigation of their case in courts.
Thus, in both the case of Apple and Samsung, planning played a key role in the strategies that
they employed to resolve the case.

The Walt Disney and Lucasfilm Negotiation

The Walt Disney and Lucasfilm are both well-known brands in the entertainment
industry. The Walt Disney is the bigger company of the two and owns a global portfolio that
includes brands such as Pixar, ESPN, Disney, and Marvel (Shonk, 2020). Lucasfilm, on the
other hand is a television and film production company that was formed by George Lucas, a
renowned filmmaker. The studio is well-known for producing famous franchises such as
Indiana Jones and Star Wars.
In 2012 the two companies began negotiations for The Walt Disney to acquire
Lucasfilm. As a company focused on producing exceptional family-oriented programs, The
Walt Disney company felt that Lucasfilm would be a great addition to their brand. George
Lucas, the owner of Lucasfilm, planned to retired but wished to see production of his famous
franchises such as Star Wars continue so that future generations would also enjoy the story
(Shonk, 2020). Therefore, he felt that the Walt Disney company was best-positioned to carry

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on the legacy of his work. However, he wished to continue holding merchandising and
licensing rights for his works. He also wanted a guarantee that he would his creative input to
future episodes of his most famous franchises.
All the demands of Lucasfilm were agreeable to The Walt Disney chief executive
who realized the great value of adding the film production company to its list of family-
oriented brands. Knowing the value of the acquisition, the Walt Disney company adopted
yielding strategy where it acquiesced to almost all of the demands of Lucasfilm (Shonk,
2020). In fact, to smoothen and hasten the transition of Lucasfilm from an independent
company to one owned by The Walt Disney, the chief executive of The Walt Disney
company offered George Lucas a position in the company. Having agreed on all terms of the
acquisition, Lucasfilm officially became part of The Walt Disney company.
Impact of Planning on The Walt Disney and Lucasfilm Negotiation
In preparation for negotiations with The Walt Disney company, George Lucas sought
to make Lucasfilm as attractive for sale as possible. For instance, he hired new writer and
president to spearhead works for the company’s next movies. These moves strategic as they
were bound to increase the value of the company because whoever was going to buy it was
going to profit from the company’s upcoming works.
The Walt Disney company also did extensive research to determine the suitability of
Lucasfilm in terms of appeal of its brand and interests of its owner. It found that Lucasfilm
was as family-oriented as the company’s other brands. It also found that the main interest of
the company’s owner was the maintenance of the legacy of his work after retirement. Money
was only a secondary consideration. Having concluded that Lucasfilm was an excellent
acquisition for The Walt Disney company and the demands of the owner were relatively
minor, The Walt Disney company took a yielding approach in the negotiation with George

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Lucas. It accepted all the demands made by Lucasfilm and then paid a sum of money that was
acceptable to both of them for the acquisition of the company.
Negotiation Strategies Comparison

In the case of Apple and Samsung both parties adopted tough negotiation stances with
each seeking to take a position and course of action that would guarantee a favorable
outcome and protect their interests in both the short term and the long term. Apple’s goal was
to stop infringement of its intellectual property rights by Samsung. It knew that it had a
strong case against Samsung. However, it was also reluctant to weaken its relationship with
one of its biggest suppliers. That is why it was fine with the court-ordered mediation between
the two companies. When the negotiations broke down, it was willing to go back to the court
because it knew that it was likely to win.
Samsung, on the other hand, sought to exploit its position as one of Apple’s main
suppliers and Apple’s own intellectual property infringements to secure a favorable outcome
for itself. Thus, since both companies considered their positions to be strong against the
other, they adopted hardball negotiation tactics where neither of them was willing to yield to
the demands of the other.
These hardball negotiation tactics contrasted with the negotiations between The Walt
Disney company and Lucasfilm. In the latter case, both companies realized from their
research that they could easily negotiate a win-win deal. Therefore, The Walt Disney
company took a yielding approach to the negotiations and accepted most of the demands that
Lucasfilm made.
The yielding approach to negotiation is common when there are no major points of
disagreement between the negotiating parties and the final decision is likely to be a win for
both parties. However, when there are many disagreements over an issue and outcomes are

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likely to create winners and losers, parties involved in the negotiations are likely to employ
hardball negotiation tactics as it was the case between Apple and Samsung.

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References

Shonk, K. (2020, May 26). Star Wars Stories: George Lucas and a Strong BATNA, passed
over. Harvard Law Review.
https://www.pon.harvard.edu/daily/batna/star-wars-stories-george-lucas-and-a-strong-
batna-passed-over/.
Staff, P. (2019, May 14). Top Negotiation Case Studies in Business: Apple and Dispute
Resolution in the Courts. Harvard Law Review
https://www.pon.harvard.edu/daily/business-negotiations/top-business-negotiations-
of-2013-apple-versus-samsung/?amp