When not to negotiate?

I got thinking about this thanks to an excellent post by Anand Sridharan, that said (among other things), that investors and companies that value the firm at more than 30% apart should walk away, as there is little common ground. In general, there is a deeper question, relevant to life in general - when do you give up? This could be a business deal, a relationship, an experiment ... heck, even an exam ! I will focus on what I believe is the most common incarnation of this question - a group (2 or more) of people making a decision. This could be a team staffed on a work assignment, or even a couple "sorting things out".

The decision to not negotiate should be based on two things - (a) how far apart the opposing positions are and (b) the estimated willingness to find common ground. I once negotiated a car purchase for a friend, and started with a dramatic (almost ridiculous) offer, but both I and the salesman wanted to make the deal - which is (b) - so we eventually hammered out a deal.

My hypothesis is that if neither (a) nor (b) exist, dont negotiate. Else, negotiate until common ground is found or neither (a) nor (b) exist. Thoughts?

How important is exclusivity to premium brands?

This question has a multitude of applications - For example, Is creating a low cost car (The A-class) detrimental to the Mercedes brand? Does a business school, say Wharton or Kellogg, dilute its brand by having many more students on its rolls (via executive MBA programs) than a peer school that grants full-time MBAs only (say HBS or Stanford) ? Does the availability of Paul Mitchell shampoo at the local pharmacy (the brand used to be sold through hair salons) make it a mass market brand?

A brand is associated with a set of values or emotions - lets begin with that definition. Logically then, the next question is - is exclusivity a value intentionally associated with a brand? Yes, for the examples above - a car, a business school and a shampoo - as well as others. Does then a reduction in exclusivity reduce the premium of the brand? Premium is the additional willingness to pay for an item beyond its functional value. I would argue that premium is proportional to exclusivity, and therefore as exclusivity reduces, the willingness to pay approaches the functional value of the product or service in question.

I have not researched this question extensively, and must also point out that there may be more pressing goals for a firm than maintaining premium. Consider BMW, which has a strong, sporty brand image, is now going to enter the market for minivans. In this example, the need for growth (revenue, profit etc.) is better served by capturing the market of not-so-young folks (likely with kids) that are about to 'graduate' from an M3 to a minivan made by another vendor than by keeping the same level of willingness to pay on the M3. Hence, in terms of shareholder value (and some excel model floating at BMW), this is the right choice to make.

Thoughts?

Whither general management curriculum ?

At Wharton, a common question this year is - whats your major? You could have one, two or even three majors in the MBA, but what if you have no major? Thats my usual answer to that question - I have no major, which makes some people think Im joking.

Im not, and here's why - Im getting myself a general management education. There is no major by that name, so what will be will be ... viola, no major!

Fall 2005, Im taking 2 finance classes (advanced corporate finance, corporate valuations), 1 accounting class (problems in financial reporting), 1 strategy class (strategic planning and control), 1 operations/marketing class (retail supply chain management) and 1 real estate class (international real estate comparisons). I expect to take a similar eclectic mix in Spring 2006.

Thats my general management curriculum, and it doesnt have a 'major' name yet. I think by the time I get to the end of my MBA, my courses will come together to fullfill the requirements for me to get me a legit major, until then, I have no major.

Why there is more Internet innovation ahead of us than behind?

This first came up in a chat with a VC friend, about whether undisclosed technology will work out on the web. As we talked, I realised that any technology that makes our increasingly online life more like our (current or desired) offline life, will eventually work - someone will find a business model that will work. Its only a matter of time.

This may well be a good test of (pie-in-the sky?) consumer Internet ideas - I have tested a few ideas, including the one in that chat, and this seems to provide a good data point.

Consider that, and the fact that we have only truly started tackling the problem of text on the web (most search, email, www - all text!), and that much of our communication in the offline world uses sounds and sight, imagine how much needs to be done ! We have barely built the plumbing of the Internet, I would wager there are a couple of decades of application innovation (which in turn will drive more plumbing innovation) for us to get anywhere near that goal. The rise and rise of VoIP is just one example of how much room there is for application innovation, especially when it tackles a more intuitive communication tool - sound, as opposed to text.

This is my first blog post !