Negotiation Strategies for Endorsement Contracts: A Case Study of DeGrandis Sporting Goods

This document discusses the negotiation strategies used by DeGrandis Sporting Goods to secure an endorsement contract with Usian Bolt. It covers BATNA, Reservation Value, ZOPA, and other negotiation concepts. The document also includes a sample negotiation letter and a reference list.

Running head: NEGOTIATION
Negotiation
Name of the Student
Name of the University
Author Note

1NEGOTIATION
Stage 1:
Answer 1
In Getting To Yes Fisher and Ury (1981) presented the idea of BATNA as the best
alternative to a ‘negotiated agreement’ is introduced. This however is not a fixed value
but an alternative course of action. Signing a contract with Cathy Freeman is an option
available to DeGrandis in the event no contract is reached with Usian Bolt.
The Reservation value is $700,000 as Cathy Freeman’s contract fee of $823,530 can be
further reduced by 15% on effective negotiation by other agents of DeGrandis. The
Reservation point for the period of contract is 3 months or more as a period less than this
is detrimental for the company.
Answer 2
The option available to Usian Bolt and Elite Sports Stars, the agency representing him, is
a contract with Athlete’s Heaven for $521,740. The Reservation value could be $521,740
or a value slightly higher than this, if the agency expects to get an increase on this
contracting fee. Let us assume following the trend in the trade Elite Sports Stars can get a
15% increase on this value. The reservation value for Usian Bolt and thus Elite Sports
Stars is 600,000. The endorsement campaign for athletes is only beneficial if they are
short lived and therefore the reservation point for the period of contract is 3 months or
less.
Answer 3
A Zone of Possible Agreement exists in between the Reservation values of the two
negotiating parties. In the given instance it is between $600,000 and $700,000. All
effective negotiations must take place within this range.

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Another factor of agreement is the time period of the contract, there is hardly a zone or
scope for negotiation here as the parties have opposing interests in the matter and the only
middle ground is a period of 3 months.
The expected production revenue is to be higher for Elite Sports Stars than for
DeGrandis. DeGrandis views it at $1.1 million this sets the lower end of the negotiation
spectrum; the anticipated revenue of Elite Sports Stars can only be deduced at the time of
negotiation and a compromise must be reached on the value of expected revenue. A
decision can be effectively reached after a compromise and trade-off according to Munier
and Shakun when different parties have different expectation. However, it must be
established that the aim of this negotiation is not to reach a compromise, where neither
party gets what they desire but to create value, that is over and above what the parties had
anticipated when negotiation was entered. The goal is to reach a win-win situation that is
have a Collaboration (Coburn 2015). While implementing this negotiation strategy one
must be careful that both the parties have the same goal and motive in mind, this style of
negotiation can only be adapted if there is mutual trust and understanding between the
parties. This style will be detrimental if the other side is aggressive or competitive.
Information shared must be done with caution and tact. The personality of the agent of
Elite Sports Star would also impact the strategy and execution of the negotiation and the
same must change and adapt as the negotiation proceeds (Maklasova and Tatarko 2018).
A complimentary negotiation strategy and behavior is what makes for a good negotiation
(Corken and McGreevy 2016).
A negotiation strategy is based on the power that one possesses in the process of
negotiation, the power is usually derived from the other available options to the current
negotiation (Zahariadis 2016). The power derived from the BATNA leads for successful
negotiation hence it becomes essential to accurately develop a strategy (De Vries, Leenes

3NEGOTIATION
and Zeleznikow 2005). All forms of dispute resolution require requires establishing the
BATNA, ZOPA and sometimes also the Worst Alternative to a Negotiated Agreement,
the WATNA (Neves, Zeleznikow and Vicente 2016).
Negotiation should be conducted while keeping in mind the aspirations of the parties or
their clients, this also helps determine the value of the negotiation (Barry and Freidman
2006). Simultaneously importance must be given to the reasons behind what a party
wants, once the motivations behind what a person wants is explored a successful
negotiation can take place. The value lies in the reasons behind a negation and not just the
cost and contract fees.
Anchoring is anther essential strategy in negotiation, it allows for the mood and tone of
all future offers within the negotiation, the same however should be done carefully and
with caution and only when one is sure of their position and the other side’s Reservation
Value (Maaravi and Hameiri 2018; Loschelder et all 2016)
The concept of ZOPA was introduced by Raiffa as early as 1982 and is a concept used in
all negotiations and being continually renewed and updated to also include Aspirational
values and considerations.

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Stage 3:
[Your Name]
Email: [Your email address]
[Date]
By email: [Client email address]
Fergus DeGrandis
Chief Executive Officer
DeGrandis Sportiing Goods
Dear Fergus,
RE: NEGOTIATION FOR USIAN BOLT ENDORSEMENT CONTRACT
Thank you for your instructions.
I wish to confirm that the contract for endorsement of running shoe has been negotiated
with Usian Bolt who is being represented by Elite Sports Stars for $687,455 for a period
of 5 months. Additionally, a contingency term has been fixed if there is an increased
revenue more than $1.1 milllion of $200,000 to be paid to Usian Bolt.

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The negotiations took place over email with Krupeshkumar Patel an agent of Elite Sports
Stars who was representing Mr. Bolt. Their initial offer was at $1,000,000 which after
several rounds of negotiation we were able to reduce to $687,455. They were not willing
to budge below $700,000 but did so after some persuasion.
We also expressed our desire to contract with Cathy Freeman in the event that these
negations prove to be unfruitful as we have a fixed budget for endorsement of running
shoes. The period of the contract was not debated highly and was decided to be 5 months
from the get go, which is of great benefit to DeGrandis as sports stars rarely go for
contacts over two or three months.
As our expected increase of revenue is $1.1 million the contingency term has been
agreed upon for a price higher than this. The company has to pay $200,000 only in the
event that the revenue rises over $1.2 million from the sales of running shoes.
We are glad to have got a deal with the greatest on the earth, Usian Bolt and hope you
appreciate our efforts for the same.
Yours sincerely,
[Your name]

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Reference List:
1. Munier, B. and Shakun, M. eds., 2012. Compromise, negotiation and group decision
(Vol. 1). Springer Science & Business Media.
2. Fisher, R., Ury, W., and Patton, B. (1991). Getting to yes: Negotiating agreement
without giving in (2nd Edition). New York: Penguin.
3. Maklasova, Ekaterina and Tatarko, Alexander, Relationship Between Personality
Meta-Traits and Negotiation Styles (October 18, 2018). Higher School of Economics
Research Paper No. WP BRP 98/PSY/2018.
4. Corken, R. and McGreevy, P.D., 2016. Organisations, people and policies: barriers
to good negotiation in the NSW planning system. Australian Planner, 53(4), pp.302-309.
5. Zahariadis, N., 2017. Bargaining power and negotiation strategy: Examining the
Greek bailouts, 2010–2015. Journal of European Public Policy, 24(5), pp.675-694.
6. Hooper, M.J., 2016. The global business handbook: The eight dimensions of
international management. CRC Press.
7. Coburn, C., 2015. Negotiation conflict styles.
8. de Vries, BR, Leenes, RE and Zeleznikow, J 2005, Fundamentals of Providing
Negotiation Advice Online: the Need for Developing BATNAs. in J Zeleznikow & AR
Lodder (eds), Second International ODR Workshop (odrworkshop.info). Wolf Legal
Publishers (WLP), Tilburg, pp. 59-67.
9. Neves, J., Zeleznikow, J. and Vicente, H., 2016. Quality of Judgment Assessment. In
Interdisciplinary Perspectives on Contemporary Conflict Resolution (pp. 96-110). IGI
Global.

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10. Barry, B. and Freidman, R. (2006). Bargainer Characteristics in Distributive and
Integrative Negotiation.
11. Raiffa, H., 1982. The art and science of negotiation. Harvard University Press.
12. Maaravi, Y. and Hameiri, B., 2018. Deep Pockets and Poor Results: The Effect of
Wealth Cues on First Offers in Negotiation. Group Decision and Negotiation, pp.1-20.
13. Loschelder, D.D., Trötschel, R., Swaab, R.I., Friese, M. and Galinsky, A.D., 2016.
The information-anchoring model of first offers: When moving first helps versus hurts
negotiators. Journal of Applied Psychology, 101(7), p.995