Reference no: EM13985308

The Facts-

Steven and Andy have been friends since junior college, having played together on the school's rugby team. In the years since past, both Steven and Andy have grown apart and have not seen or spoken to each other since graduation. Steven has gone on to be a reputable computer engineer working in the competitive video game industry, working for the acclaimed company, "Firestar". Andy on the other hand, has risen as a director in an investment fund company, "AYB".

Recently, AYB took the decision to acquire Firestar in its bid to gain a market share in the video game industry. Andy was given authority over Firestar in this acquisition, which effectively made him Steven's new boss. In relation to the operations of Firestar, the management of AYB has instructed Andy to reduce its costs and increase profits accordingly, when deciding on projects.

On the first day after the acquisition, Steven was genuinely surprised to see Andy stroll into Firestar's office as part of the new management. As one of the more senior staff on the team, Steven draws a higher salary than most and is naturally concerned about how the change in management will affect him; whether he will receive a pay cut and or lose his job. Steven has to provide for his family, including his son, who has special needs. Steven is also currently pursuing a part-time diploma in occupational therapy in the evenings in order to help with his son's condition. The previous management of Firestar had allowed Steven to take time off to pursue this diploma and Steven is concerned that the new management under AYB may not be as kind.

If things do not work out for Steven, he may be forced to seek employment with another gaming company. However, he does not have any concrete offers at the moment, and he is concerned about taking a pay-cut if he needs to change employers, given that he earns a high salary as a senior computer engineer. In this scenario, Steven may not be able to obtain his part-time diploma.

Before the change in management, Steven had also developed new projects for Firestar, including "Sceptre" and "4058 AD". Unfortunately, the previous management did not approve of either Sceptre or 4058 AD due to their high project costs. Consequently, Steven felt disrespected and unrecongised as a senior staff member of Firestar, given that the previous management turned down both projects hastily. Steven hopes that the new management under AYB will give him due respect, and allow him to develop both Sceptre and 4058 AD. Given the opportunity, Steven is certain that he and his team can develop and deliver both Sceptre and 4058 AD within 9 months (September 2016). Based on Steven's experience and acumen, he is certain that both games will be commercially successful. However, he will require an initial outlay of at least S$250,000 to defray the costs of development.

On the management end, Andy is newly married and has racked up large debts in giving his wife the ideal wedding at the Marina Quay Hotel. He has taken a loan of S$250,000 from TownBank and has a period of 12 months to repay the loan. Given that he is a young director, Andy is concerned that his partners in AYB are closely monitoring his job performance and will only continue having him as a partner if he delivers by reducing the costs and increasing the profits of Firestar. Specifically, the management board of AYB has given Andy 12 months (December 2016) and a budget of S$600,000 to make Firestar a success.

Andy is eager to prove himself as an astute director within AYB and to gain recognition for his stellar work. On the other hand, Andy has been trying to find meaning in his work. He has been looking for means to display his innate creative writing skills. In fact, he hopes that the recent acquisition of Firestar may give him some opportunity to be involved with its projects; as a writer for instance.

If Andy does not perform well with Firestar, he may be forced to leave AYB and take up work with another investment company. Thankfully for him, Andy has been approached by talent scouts to work for "MNC Fund", another investment fund company, although the terms of employment have not been specifically spelt out. Andy is concerned that if he were to seek employment elsewhere, he may not be able to repay the debt of S$250,000 to TownBank if his salary is reduced.

In light of the information above, Steven and Andy are scheduled to meet to see if they can negotiate agreements as to how to proceed with the operations and future of Firestar, and in turn themselves

Question 1 - List the SEVEN (7) elements of principled negotiation.

Question 2 - List and explain the Interests of Steven and Andy.

Question 3 - Demonstrate the idea of the Zone of Possible Agreement for the future projects of Firestar (I.e. What is ZOPA? What is the range the parties can agree on?)

Question 4 - Develop THREE (3) possible options for Steven and Andy at their meeting. Explain why each option may be feasible for both parties.

Question 5 - List and Analyse the Best Alternative to a Negotiated Agreement for both parties (i.e. state the respective BATNA for each party and explain each of them).