Business Negotiations – Apple and Samsung

Business Negotiations – Apple and Samsung

Business negotiations involving corporate entities, vendors, and employees are central to the successful running of a business. Negotiations in business primarily seek to resolve conflict and leave every party satisfied. All parties to a negotiation must be willing to make offers and compromise their demands to avoid an impasse. The goal of a business negotiation should be to obtain a win-win situation whereby all parties in the negotiation benefit from the final agreement. This essay discusses Apple and Samsung’s patent infringement dispute and negotiation, decision analysis tools used in negotiations, application of BATNA in negotiations and negotiation best practices.

Apple and Samsung’s Patent Infringement Dispute and Negotiation

Apple Inc. was the first smartphone manufacturing company to conceive the production of Android-supported OS smartphones and tablets. However, Samsung entered the market as a follower but has overtaken Apple by taking the larger market share. The rivalry between Apple and Samsung over patent rights has been a subject of legal litigation in US courts as Apple sues Samsung over patent infringement. One such case was in 2011 when Apple accused and sued Samsung of copying their iPhone features in Samsung’s newly launched Samsung Galaxy S series (Albasoos & Al Musallami, 2020). The court found Samsung culpable and ordered the company to pay Apple a whopping 1.05 billion for the harm caused by the infringement (Albasoos & Al Musallami, 2020). On the other hand, Samsung countersued Apple for using its wireless transmission technology without paying.

According to Albasoos and Al Musallami ( 2020), the two companies compromised to use out-of-court negotiations in 2018 for their current and future patent disputes. Following a series of lawsuits and counter-suits in various regions of the world, the decision was made to use out-of-court solutions. Two main reasons are central to influencing the two companies to settle disputes out of court. One of the reasons is that Apple is Samsung’s main supplier, and the constant legal suits were damaging their partnership. Also, the unending legal suits put the reputations of the two most popular smartphone companies at stake and would likely cause them to lose their market share.

Decision Analysis Tools Used in Negotiations

One of the simplest and most effective decision analysis tools that may be used in business negotiations is the negotiation matrix. A negotiation matrix considers critical elements when negotiating- issues, positions, interests, and options. The potential payoff and benefits from a visualized outcome in a negotiation are considered before arriving at a decision. Apple and Samsung considered the payoffs that an out-of-court settlement would have on their business and partnership and decided that it was the best decision.

Negotiator-Cognition Issues Faced

According to Caputo (2013), Apple and Samsung’s patent infringement battle demonstrates a preference for competitiveness over collaboration. The two businesses became involved in the industry, and negotiators should have recognized that they were dependent on one another. However, typical of competition, the two firms focused on emerging top and outdoing each other, leading to protracted lawsuits. Notably, confirmation bias led to Apple’s initial lawsuit. Apple executives filed a lawsuit despite knowing that they relied on Samsung 3G technology. Confirmation encourages overconfidence and selective attention, as evidenced by Apple’s decision to disregard the benefits of Samsung’s infrastructure.

Application of BATNA in Negotiations

The Best Alternative to a Negotiated Agreement (BATNA) concept has proved its usefulness in negotiated agreements. BATNA concept applies to negotiations where all possible resolutions to the agreement have been exhausted, leading to an impasse (Sebenius, 2017). It is a solution outside the current set of solutions acceptable to both parties in a conflict. A BATNA gives bargaining power and safety to parties involved in a negotiation (Sebenius, 2017). In the Apple and Samsung conflict, Apple’s BATNA was to cease legal litigation and continue its partnership with Samsung since the company’s devices relied on the Samsung 3G technology. On the other hand, Samsung’s BATNA would continue with litigation as the potential of losing more in the patent fights was more likely.

Negotiation Best Practices

Parties that follow best practices in negotiations tend to achieve favorable positions. There is a need to apply negotiation skills. According to (Saee, 2008), what matters in a negotiation is not the reality but a negotiator’s perception of reality, and this is likely to encourage hardline positions. Therefore, instead of focusing on areas of difference, negotiators should attempt to understand their opponent’s position and convince them why an alternative position is better. Also, negotiators should consider cross-cultural differences while negotiating. Consistently, cultural factors influence the positions that negotiators take. For instance, negotiators of Asian descent may be assertive in negotiations (Saee, 2008). Therefore, understanding such differences will avoid hardline positions that may hinder negotiations.

Conclusion

Apple Inc. and Samsung’s conflict and eventual resolution offer a classic example of a successfully resolved conflict through negotiation. Following back-to-back lawsuits and counter-suits, the two companies ended their legal battles and decided to settle their infringement issues out-of-court. The case shows that a negotiation matrix, a business negotiation tool that visualizes the outcomes of a negotiation, is important when negotiating. Also, The BATNA concept is applied in the case, as it helps negotiating parties formulate alternative solutions to avoid an impasse if the initial negotiation attempt fails.

.References

Albasoos, H., & Al Musallami, N. (2020). The conflict between Apple and Samsung over patents and copyrights. Bussecon Review of Social Sciences (2687-2285), 3(3), 1–17. https://doi.org/10.36096/brss.v3i3.206

Caputo, A. (2013). A literature review of cognitive biases in negotiation processes. International Journal of Conflict Management, 24(4), 374-398.

Saee, J. (2008). BEST PRACTICE IN GLOBAL NEGOTIATION STRATEGIES FOR LEADERS AND MANAGERS IN THE 21ST CENTURY. Journal of Business Economics and Management, 9(4), 309–318. https://doi.org/10.3846/1611-1699.2008.9.309-318

Sebenius, J. K. (2017). BATNAs in Negotiation: Common Errors and Three Kinds of “No.” Negotiation Journal, 33(2), 89–99. https://doi.org/10.1111/nejo.12176

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Research and select a company or organization that has been in some type of current negotiations (e.g., union contracts, mergers, buy-outs, product disputes, patent infringement.). Then, summarize the company or organization’s history and current negotiation status. Highlight some of the negotiator-cognition issues they may have encountered during negotiations. Discuss decision-analysis tools that are used in negotiations. Were any of these tools used by your company during negotiations? Next, explain what a BATNA is and how it is used during negotiations. Try to determine if one or both sides had a BATNA and, if so, summarize your understanding of it. Finally, provide recommendations for the company to use in future negotiations based on what you have learned in this unit. How could they use best practices in negotiations to improve future negotiations?

Your case study should be a minimum of two pages in length. You must use at least two academic sources, and any information from those sources should be cited and referenced in APA format.