2 3
Negotiations: Author Hal Stack for Chelst and Canbolat important to the catcher as the opportunity to get back to his hometown and
launch his career in broadcasting. Nevertheless, there remains the intangible issue of self-image and concern that the salary be appropriate to his status as an
experienced, nationally known player.
15.6 Negotiating a Dispute
Many negotiations result from disputes or rejected claims. The dispute might be with a contractor over the quality of work performed, with a car dealer over
the warranty on a new car, or with a supplier over the terms of a contract. Disputes may be approached in different ways. A common approach is to resort
to a rights-based approach and sue the other party or take the issue to arbitration. Alternatively, the parties might attempt to use a power-based
approach such as a hostile takeover, a strike, or switching suppliers. Both of these approaches have high costs associated with them, resulting in winners and
losers and producing suboptimal outcomes. A better approach is to take an interest-based approach and negotiate an agreement.
9. Activity – Interests, rights, and power in resolving disputes: Consider a negotiation identified in Activity 1 that involved a dispute. Select one
of those negotiations where a rights- or power-based strategy was used and describe the outcome. How might an interest-based approach
have been used?
________________________________________________________ Now consider the case developed by Goldberg and Brett 2004. A
hospital experiencing annual losses of 3 million has been advised by its consultant to invest in a point-of-care clinical information management system.
This system would utilize hand-held computers that the consultant projects would generate net savings of 7.5 million per year. Accordingly, the hospital
has awarded a 6.8 million contract to install the system over a one-year period. The company receiving the contract had pioneered the development of hand-
held wireless devices such as used in the shipping industry and has been anxious to move into the healthcare field.
Implementation proceeded on schedule, with the hardware fully installed in three months and the medical decision support system in four and a half
months. It was at this point that the hospital notified the IT company that it was expected to write data entry software for the clinical information interface
system. The goal was for the new system’s electronic forms to look like the hospital’s paper forms and thereby reduce the cost of training staff. The IT
company, however, insisted that it was not contractually required to develop this new software and that to do so would take nine months and an additional 1
million, whereas it would be faster and less costly to provide a generic version of the software. The hospital indicated that it was only interested in software that
modeled its forms and thus stopped payment and sued the company for the 2.6
2 4
Negotiations: Author Hal Stack for Chelst and Canbolat million already paid, as well as 30 million in damages. After reviewing the
contract with the hospital, the IT company counter-sued for breach of contract for the 4.2 million it had not yet received. The company’s attorneys were
confident that they would prevail in court but noted that the legal fees would be 275,000. The attorneys also noted that winning the suit might push the hospital
into bankruptcy and therefore recommended exploring an out-of-court settlement. Thus, although the IT company was in a strong legal position, its
bargaining power was considerably weakened due to the hospital’s financial position..
Table 15-8: Interests of the hospital and the IT company In negotiating a settlement, the parties identified their issues and interests,
summarized in Table 15-8. The key to such negotiations is finding a solution that furthers both parties’ interests more than the legal alternative. This might
include the hospital agreeing to use the IT company’s generic software program and the IT company using the hospital as a beta site for its wireless clinical
information system. This arrangement would enable the IT company to establish a leadership position in a key market and would enable the hospital to quickly
gain financial solvency. In addition, the partnership would enable both parties to gain a marketing advantage from promoting the new system.
Distributive issues remain before the parties can close the deal. The IT company has already invested 250,000 in the development of the generic date
entry software and estimates that it would take three months and another 250,000 to complete the development. How much, if any, of this cost should the
hospital pay? Using the generic software would increase training costs for the hospital by 250,000 to 300,000. Would the IT company help defray this cost?
The parties might also agree to a profit-sharing arrangement on the generic data entry software, or agree on linking the hospital payments to the savings that will
accrue with the implementation of the system. Whatever the final form of the agreement, both parties have significant reasons to ensure its success.
15.7 Agents and Multiparty Negotiations Hospital
