Contract Negotiation with the Navy

Verizon Wireless Corporation plans to conclude an arrangement with the Navy. The business aims to provide the Navy with speech and information services. Verizon is standardized in 4G LTE, while maintaining other older networks, including 2G GSM/EDGE and 3G UMTS (Verizon, 2017). The Navy needs versatility in network styles as they often operate in areas with limited network coverage. In addition, the company will provide the Navy with television services.Verizon Wireless Company has always built on a ten percent profit margin for all commercial jobs. However, the consideration of taking a reduced profit is essential to win the contract with the Navy. The reduction in the targeted profit margin will demonstrate the flexible nature of the company and also meet its profit objectives. One of the objectives that the reduction in targeted profit will meet is a growth of the sales of Verizon Wireless Company (Koch, 2015). The telecommunication industry in the United States is highly competitive with many players, and it is important for Verizon Wireless Company to increase its market share.

Rationale

Verizon Wireless Company aims at making as many sales as possible. If the company wins the contract with the Navy, it will increase its market share significantly. Sales growth is a profit objective of the company as it ensures the survival of the business. Verizon Wireless Company will make enough profits to meet its daily operational costs such as paying for employees, service provision and addressing the needs of its customers. Moreover, an increase in the size of the market share increases the business. Therefore, the company will benefit from economies of scale. The economies of scale allow a company to practice mass production which reduces operational costs and in the end contributes to profit growth.

Profit Satisfying

Verizon Wireless Company experienced a decrease in its total profit during the beginning of 2017. During the end of its first quarter, its net income had fallen from $4.31 billion to $3.45 billion (Venugopal, 2017). The reduction in profits occurred despite the re-launch of the company’s unlimited data plans. As such, there is the need for Verizon Wireless Company to reconsider its options when providing services to its customers to ensure survival in the business.

Rationale

Verizon Wireless Company needs to reach out to more customers get to the profit levels it has been enjoying in the previous years. Moreover, there is the need to ensure flexibility when dealing with different customers to ensure that their clients do not opt for substitute products (Koch, 2015). Although Verizon Wireless Company always built on a ten percent profit margin, the company will be willing to take lesser profits to win the contract with the Navy. The lower profit margin will be enough to make the company comfortable and expand its market share.

Negotiation Strategies to Employ

Making Multiple Offers Simultaneously

During the negotiation, the procurement officer for Verizon Wireless Company must ensure that h/she makes multiple offers simultaneously (Lewicki, Saunders, & Barry, 2015). If the purchasing officer puts only one offer on the table, h/she will not learn much if the Navy officer turns it down. Therefore, the procurement officer should develop some offers that are valuable to the company and provide them to the Navy. If all the proposals are rejected, the procurement officer will seek to improve the one that appears best to the Navy officer. During the reviewing of the offer, the procurement officer will build up on the initial stand point by creating value through the propositions to ensure a win-win outcome for the two parties. Moreover, the procurement officer will make sure that both sides mutually benefit from the offer to be developed.

Rationale

The strategy of making multiple offers simultaneously will signal that the procurement officer is flexible and accommodating in nature (Lewicki, Saunders, & Barry, 2015). As such, the Navy's contract administration officer will also feel the need to appear considerate since no one wants to appear selfish during a contract negotiation no matter how tough a negotiator they are. Therefore, the Navy's contract administration officer will give in to one of the offers that appear to meet the needs and expectations of the navy. The strategy of making multiple offers simultaneously will also make it easier for both parties to negotiate any parts of the accepted offer that may require adjustments.

Contingent Agreement

In a negotiation, parties may reach an impasse especially when they have different beliefs about the likelihood of future events (Shell, 2014). For instance, the procurement officer for Verizon Wireless Company may feel that h/she will deliver the project defined in the contract on time and under budget whereas the Navy contract administration officer feels that the proposal is unrealistic. Since the Navy contract administration officer is a tough negotiator, h/she is likely to be specific about compliance of the Verizon Wireless Company with the terms of the contract.

Rationale

The availability of a contingent agreement will reduce the risk of future uncertainty since it will provide the solutions if the Verizon Wireless Company fails to honor the terms of the contract (Shell, 2014). The contingent agreement will explain details such as penalties for noncompliance, expectations of both parties for the future and the repercussions and rewards for either following or disregarding the terms of the contract. Since the contingent agreement shows the commitment of the company to honoring the terms of the contract, it will increase the chance that the navy contract administrator will be satisfied and consequently the likelihood that Verizon Wireless Company will win the contract.

References

Koch, C. (2015). Good Profit: How Creating Value for Others Built One of the World's Most Successful Companies. New York: Crown Business.
Lewicki, R., Saunders, D., & Barry, B. (2015). Negotiation. New York: McGraw-Hill Education.
Shell, R. (2014). Bargaining for Advantage: Negotiation Strategies for Reasonable People. New York: Penguin Books.
Venugopal, A. (2017, April 20). Verizon's Profit Plunges 20% as it Loses Wireless Subscribers. Retrieved from businessinsider.com: http://www.businessinsider.com/verizon-earnings-q1-2017-2017-4?IR=T
Verizon. (2017). What We Do. Retrieved from verizon.com: http://www.verizon.com/about/our-company